Page 50 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 2: Introduction to Logistic

that work related to logistics is performed. Inventory is stocked and flows through nodes, Notes
necessitating a variety of different types of materials handling and, when necessary, storage.
While a degree of handling and in transit storage takes place within transportation, such activity
is minor in comparison to that typically performed within a supply chain node, such as a
warehouse. Performance cycles become dynamic as they accommodate input/output
requirements.
The input to a performance cycle is demand, typically in the form of a work order that specifies
requirements for a product or material. A high-volume supply chain will typically require a
different and wider variety of performance cycles than a chain having fewer throughputs. When
operating requirements are highly predictable or relatively low-volume throughput, the
performance cycle structure required to provide supply chain logistical support can be simplified.
The performance cycle structures required to support a large retail enterprise like Target or
Walmart supply chains are far more complex than the operating structure requirements of a
catalogue fulfilment company.
Supply chain output is the level of performance expected from the combined logistical operations
that support a particular arrangement. To the extent that operational requirements are satisfied,
the combined logistical performance cycle structure of the supply chain is effective in
accomplishing its mission. Efficiency of a supply chain is a measure of resource expenditure
necessary to achieve such logistical effectiveness. The effectiveness and efficiency of logistical
performance cycles are key concerns in supply chain management.
Depending on the operational mission of a particular performance cycle in a supply chain
structure, the associated work may be under the complete control of a single enterprise or may
involve multiple firms.

Example: Manufacturing support cycles are often under the operational control of a
single enterprise.
In contrast, performance cycles related to market distribution and procurement typically involve
multiple firms. It is important to realize that transaction frequency and intensity will vary
between performance cycles. Some performance cycles are established to facilitate a one-time
purchase or sale. In such a case, the associated supply chain is designed, implemented, and
abolished once the transaction is complete. Other performance cycles represent long-standing
structural arrangements. A complicating fact is that any operation or facility in one logistical
arrangement may simultaneously be participating in a number of other performance cycles.

Example: The warehouse facility of a hardware wholesaler might regularly receive
merchandise from multiple manufacturers and service competing retailers. Likewise, a motor
carrier may participate in numerous different supply chains, spanning a wide variety of industries.
When one considers a supply chain of national or multinational scope that is involved in
marketing a broad product line to numerous customers, engaging in basic manufacturing and
assembly, and procuring materials and components on a global basis, the notion of individual
performance cycles linking all participating firms’ operations is difficult to comprehend. It is
almost mind-boggling to estimate how many performance cycles exist in the supply chain
structure of General Motors or IBM. Regardless of the number and different missions of
performance cycles a supply chain deploys to satisfy its logistical requirements, each must be
individually designed and operationally managed. The fundamental importance of performance
cycle design and operation cannot be overemphasized: The logistics performance cycle is the
basic unit of supply chain design and operational control. In essence, the performance cycle
structure is the framework for implementation of integrated logistics across the supply chain.

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