Thursday, March 31, 2011

Logistics vs. The Supply Chain - What Are We Fighting About?

Logistics vs. The Supply Chain - 


Asslamualaikum and salam sejahtera
i want to share something that could give some confusing in their mind  especially to anybody tha
t newly step in to the
logistics or to the newbies.
logistics and supply chain?
are they have any different?
and if they do,what kind of different that they have?

In the Beginning

That the thing we now call logistics exists at all is rooted in fundamental disconnects b
etween sources of demand and sources of supply. There have historically been significan
t gaps - no, chasms - between market demands and supply capabilities.


deals with questions of:
  • when a product is desired,
  • where a product is wanted,
  • how much or how many are needed,
  • what mix of products is called for, and
  • how the product(s) are packaged and handled in use.


in its fullest sense, deals with issues of:
  • when a product is made,
  • where it is made (or sourced),
  • how much or how many are made or acquired,
  • what product mix is made or scheduled to be received, and
  • how the product(s) are packaged and handled in process.
The gaps may grow - certainly they become much more complicated - when 
differences between manufacturers and their suppliers, and between immediate 
customers and end consumers, are factored into the equation.

Bridging the Gaps

Here’s where modern logistics comes into the picture. We apply our best thinking and 
effort to making the gaps invisible to the next demand point in the supply chain
. The entire purpose of warehouse/DC location, transportation network structures
, scientific inventory management, customer service functions, and their supporting
 information systems is to get goods to customers when, where, and how they are 
needed. And, incidentally to find the right cost/service balance of inventory,
 storage, and transportation solutions while doing so.
Logistics is the key to being able to make daily shipments of products that 
are only made once every six weeks, of delivering products made in Norfolk, 
Nebraska to a customer in Norfolk, Virginia, of selling a six-pack that was 
manufactured a truck-load at a time, and of delivering the shirt along with the trousers.
So, logistics is a good thing. But, when the gaps are large, or at risk of getting larger, 
there is an increased dependence on flawless logistics performance, logistics costs tend 
to rise, and customer service levels generally decline. These are not good things.

What About the Supply Chain?

Understanding that logistics is the gap filler may make it easier to see that supply 
e gaps will never be so closed as to be truly seamless, we point to the old children’s
 poser, in which it is technically impossible to reach one’s destination by moving 
half the remaining distance with each move. At some point the minute remaining 
distance is irrelevant in practical application, for example as in dancing the tango.
It may be that some have become disenchanted with presentations of supply chain 
concepts that in their most abstract and farthest-out visions seem to expect a universe
 filled with lot sizes of one, cycle times of zero, no inventories and warehouses, and
 free transportation. Of course we will never get there. But, if we can continue to 
halve the distance, so to speak, the remaining gap will get progressively easier to deal 
What supply chain management and integration is really about is changing capabilities 
to allow closing the gaps. It deals with supplier relationships: reducing lead times, 
changing minimum order quantities, upstream value-adding processes, provisioning
/replenishment strategies, consolidated sourcing, and capacity procurement, for 
example. It deals with manufacturing capability and reliability (driving off of restructured
 supplier processes and capabilities): creating the ability and flexibility to manufacture 
daily/weekly instead of monthly/quarterly, reducing the cost/time of set-ups, 
taking lead times from weeks/months to a day or a week, supporting consumption-based
 replenishment, and slashing order quantity requirement. It restructures tactics and 
processes in warehouses: shipping tiers/cases instead of pallets/truckloads, 
assembling store-ready mixed pallets, performing value-adding functions, and 
planning and executing conscious cross-docking. It plans and schedules all of the above 
in total, based on real capability and real demand. It understands demand profiles and 
signals in the customer base, and adjusts planning and execution accordingly.

Logistics capabilities can not, in our view, be separated from how we tune and 
operate the supply chain. All of the planning, and integration, and new-found capability
 is for naught without the capability and reliability of logistics operations. 
The demands for flawless logistics performance are even greater when the 
gaps are made smaller. While costs might go down, and customer service 
improve in the brave new world of Supply Chain Logistics, life is not 
going to suddenly become easy for transportation and warehousing management.

Supply Chain’s Dirty Little Secret

Most graphic presentations of supply chain concept look something like:
traditional chain diagram

Supplier to Customer Supply Chain -

traditional view

It’s clean, it’s straightforward, it’s easy to understand. Never mind that within most every company there are really dozens of supply chains, and never mind that every supplier has a supply chain of his own, as usually do customers, as well. But it tells the basic story in illustrating the elements of the chain that need to be balanced and synchronized. But, how the world really works is a little different.
chain diagram

Supplier to Customer Supply Chain -

realistic view

Warehouse to Warehouse

As the illustration above indicates, a raw materials-to-consumer supply chain entails movement from and to at least five warehouses (six if the kitchen pantry is counted). Far from becoming obsolete, the warehouse and the warehouse manager are critical to synchronized, low-cost, effective integration at every transfer point in the supply chain. But, warehousing in the world of Supply Chain Logistics is not business as usual.
At minimum, the factors to be planned for and managed include:
  • reduced inventories
  • tighter supplier integration
  • smaller, more frequent customer orders
  • smaller pick/ship unit quantities
  • more frequent, smaller receipts
  • virtually 100% accuracy
  • SKU proliferation/turnover
  • faster customer order turnaround
  • faster dock-to-stock movement
  • more planned cross-docking
  • more process variations for value-adding services
  • facility compression/consolidation - doing more with less.
Each of the points above has several important implications, too lengthy to go into here, which might warrant discussion at another time.

Summing Up

In closing, our core messages are that supply chain management and logistics are part of the same solution set, one filling the gaps, and one closing them. It is possible to have passable logistics without supply chain management. It is not possible to have a great supply chain without also having terrific logistics. In either situation, the warehouse has its work cut out for it.

Credited to The Progress Group

                                                                                                                                edited by:
                                                                                                                                Aqmal Chaque Zisa


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