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DSC GROUP 3, Supply Chain Processes, :, Past, Transition, Present,…
DSC GROUP 3
Six important developments over past decades
Reduced transport
intensity of freight
Products become more
valuable and less bulky
Higher value &
lower volume per shipment
Transport costs become a
smaller proportion of product value
Freight becomes less sensitive
to transport costs
Falling product prices
More competition
between companies
Product prices fall
or remain constant
Companies need
to reduce costs
Transport and inventory become
important areas to save costs
Companies redesign products
and packaging to save costs
Lower transport
cost sensitivity
Deregulation of transport
Government reduces
unnecessary transport regulations
More companies are
allowed to compete
Transport costs decrease
Freight becomes easier
and more efficient to move globally
Productivity movements
Realisation that
traditional freight handling
was slow & labour-intensive
Introduction of
containerisation (1956)
Containers are stacked
& moved more efficiently
Less manual cargo-handling
& better use of space
Lower maritime transport costs
& faster handling
More efficient
global freight movement
Emphasis on
inventory reduction
Realisation that
a large amount of money
is tied up in inventory
Unnecessary inventory is reduced
Just-in-time deliveries
become more common
Lower inventory costs
& greater flexibility
in response to demand
Changes in
company structure
Less vertical integration
& more outsourcing
Suppliers become
more important
Departments work together
instead of operating in silos
Functions become
more closely integrated
Companies focus more on
speed e.g. order-to-delivery time
The distinction between logistics and SCM
SCM
Whole Network Relationships
Upstream
Tier 1 supplier
Tier 2 Supplier
Raw Material Suppliers
Manufacturing
Distributors
Downstream
Retailers
Customers
Logistics
Transportation and Storage
(The EIght Rights)
... in the [right quantity] and [right quality]
... in the [right way]
... the [right product]
... in the [right place] at the [right time]
... for the [right customers] at the [right cost]
The evolution of logistics and SCM
1800s to 1990s
Emergence of SCM
Just in time (JIT) reduces inventory and costs
Supplier coordination which improves efficiency
FOCUS: Integration and cost efficiency
Industrial revolution & mass production
Warehouse and distribution
Railways, ships & trucks
2000s onwards
E-commerce & global supply chain
Technology
ERP & data analytics
IoT & real-time tracking
Automation, AI & machine learning
Sustainability
Sustainable sourcing ( Companies with environmentally friendly practice)
Green transportation
FOCUS: Visibility, agility and resilience
Ancient time / 1800s
Following trade routes
FOCUS: Moving & storing goods
Transportation & storage of goods
Basic inventory management
Supply Chain Processes
Supplier stage supplies order
Buyer returns reveres flows to supplier or third party
Buyer stage receives supply
Supplier stage markets product
Replenishment Cycle
Customer Order Cycle
Procurement Cycle
Manufacturing Cycle
Replenishment Cycle
Buyer stage places order
Supplier stage receives order
:
Past
Transition
Present
Improved transportation
Improved storage & distribution