Logistics Management

Introduction to the Course

Jing YuanFeb, 2008

Introduce Yourself

Let’s me know who you are.What’s logistics management?Supply chain management Vs. logistics management

…

Outline

Introduce yourselfWho I amCourse introduction

– Course description– Learning objectives– Textbooks– Grading policy– Schedules

Outline

Introduce yourselfWho I amCourse introduction

– Course description

– Learning objectives

– Textbooks

– Grading policy

– Schedule

Course description

An introductory course in the analysis, design and operation of logistics and supply chain

Presented through lectures along with several case studies and experiments

The lectures consist of nine parts

Learning objectives

Knowledge the strategic role of the supply chain

An understanding of logistic systems & their management problems

Ability to devise workable solutions in business situations

Textbooks

Textbook– Harrison, A. and Hoek, R. V. (2006) Logistics

Management, second edition, 机械工业出版社References (not required)

– Christopher, M. (2006) Logistics and Supply Chain Management: Creating Value-adding Network, third edition, 电子工业出版社

–张余华，现代物流管理，华中科技出版社， 2006年。

Lecture Organization

LecturingVideosGroup exercisesCase discussionCase study presentations

Grading Policy

Grading– Assignment and Quiz 10%

– Midterm 20%

– Final Project 70%Midterm

– Case study

– Final presentationFinal project

– A closed examination held in the last week of term

Schedule

Lectures– 14 weeks

Case study presentations– 2 weeks

Experiments– 2 weeks

Logistics and supply chain

Logistics Management

logistics and Supply chain1

Material and information flow2

Competing through logistics3

Logistics strategy4

Seven-eleven convenience store– Describe the key logistics processes at 7-11.

– What differences between the early reform and the regional distribution center at 7-11.

– What do you think are the main logistics challenges in running the 7-11 operation.

Case study

Case study

Centralized distribution

No distribution center

Built its own distribution center---joint distribution

First stage Second stage Third stage

Key issues

11What is supply chain, and how is it structured?

22What is the purpose of a supply chain?

The Supply Chain Concept

Development of the Concept– Total systems cost - remains an important element

of logistics analysis.

– Outbound logistics – the warehousing and distribution of finished goods.

– Inbound logistics – the receiving and warehousing of raw materials, and their distribution to manufacturing as they are required.

– Value chain analysis integrated logistics activities.

Business Logistics in a Firm

A supply chain is a group of partners who collectively convert a basic commodity (upstream) into a finished product (downstream) that is valued by end-customers, and who manage returns at each stage.

The Supply Chain management Concept

DefinitionDefinitionPlanning and controlling all of the processes that link partners in a supply chain together in order to serve needs of the end-customer.

The process starts with several external suppliers that move milk, cardboard, and plastic to the processing plant.After the milk is processed and packaged, it is delivered to retailers, who sell it to customers. The alternative delivery system is delivery from a warehouse directly to customers’ homes.

Supply chain: structure and tiering

Supply chain: structure and tiering

Supply chain can be fairly complex. The supply chain for a car manufacturer includes hundreds of suppliers, dozens of manufacturing plants (for parts) and assembly plants (for cars), dealers, direct business customers, wholesalers, customers, and support functions such as product engineering and purchasing.

Logistics concept

DefinitionDefinitionThe task of coordinating material flow and information flow across the supply chain.

Activity 1

Wheat Flour

Praline Wafers

Chocolate Confectionerymanufacturer Packing

Creamery(milk)

Cocoabeans Sugar Vegetable

oilCocoabutter Lecithin Emulsifiers,

Salt, etc.

Printedmaterials Aluminium Fiberboard

Multipleretailers

Wholesalers

Others(hospital etc.)

Endcustomers

logistics and Supply chain1

Material and information flow2

Competing through logistics3

Logistics strategy4

Key issue

11What is the relationship between material flow and information flow?

Case study: Seven-eleven

Case study: Seven-eleven’s distribution strategyDelivery arrives from over 200 plantsDelivery is cross docked at DC (over 80

DCs for food)Food DCs store no inventoryCombined delivery system: frozen foods,

chilled foods, room temperature and hot foods

11 truck visits per store per day (compared to 70 in 1974)

No supplier (not even coke!) delivers direct

Case study: Seven-eleven’s Information Strategy

Quick access to up to date information (as contrasts with data)

– High speed data network linking stores, headquarters, DCs and suppliers

– Store hardware– Store computer– POS registers linked to store computer– Graphic Order Terminals– Scanner terminals for receiving

Integrated Logistics Management

Material and information flow

Material and information flow

Material flow

Information flow

Activity 2

Describe the material and information flow in the supply network affecting one of the major products in Activity 1.

logistics and Supply chain1

Material and information flow2

Competing through logistics3

Logistics strategy4

Key issues

11How do products win orders in the marketplace?

22How does logistics contribute to competitive advantage?

Creating logistics advantage: three basic ways

Logistics advantageLogistics advantage

quality time

cost

Creating logistics advantage: controlling variability

Variability undermines the dependability with which a product or service meets target.

Order winners and order qualifiers

Order winnersare factors that directly and significantly help products to win orders in the marketplace.Customers regard such factors as key reasons for buying that product or services.

Different logistics performance

objectives

Order qualifiersare factors that are regarded by the market as an ‘entry ticket’.Unless the product or service meets basic performance standards, it will not be taken seriously.

Activity 3

Compare the details for characteristics of both household appliance and mobile phone’s product lines.

Go on to identify the principal order winners and qualifiers for each product.

Vs.

logistics and Supply chain1

Material and information flow2

Competing through logistics3

Logistics strategy4

The value chain: Linking supply chain and business strategy

NewProduct

Development

Marketingand

Sales Operations

Business Strategy

New ProductStrategy

MarketingStrategy

Supply Chain Strategy

New product Development

Marketingand sales Operations Distribution Service

Finance, Accounting, Information Technology, Human Resources

How to Achieving Strategic Fit

Understanding the Customer– Lot size

– Response time

– Service level

– Product variety

– Price

– Innovation

How to measure?Implied Demand Uncertainty

Levels of Implied Demand Uncertainty

Detergent High Fashion

Low High

Price Responsiveness

Customer Need

Implied Demand Uncertainty

Understanding the Supply Chain: Cost-Responsiveness Efficient Frontier

High

High

Low

LowCost

Responsiveness

Achieving Strategic Fit

Implied uncertainty spectrum

Responsive supply chain

Efficient supply chain

Certain demand

Uncertain demand

Responsiveness spectrum Zone o

f

Strateg

ic Fit

Strategic Scope

Suppliers Manufacturer Distributor Retailer Customer

Competitive Strategy

Product Dev. Strategy

Supply Chain Strategy

Marketing Strategy

Drivers of Supply Chain Performance

Efficiency Responsiveness

Inventory Transportation Facilities Information

Supply chain strategy and structure

Drivers

Competitive strategy

Considerations for Supply Chain Drivers

Driver Efficiency Responsiveness

Inventory Cost of holding Availability

Transportation Consolidation Speed

Facilities Consolidation /Dedicated

Proximity /Flexibility

Information What information is best suited foreach objective