Logistics

LOGISTICS & SUPPLY CHAIN MANAGEMENT: References: 1. Supply chain management; Strategy, planning and operation; Sunil Chopra and Peter Meindl, 2004 2. Logistics and Supply chain Management, Martin Crestopher, 2000 3. Business Logistics Management, Ronald H. Ballou, 1999 4. Logistics Engineering and Management, Benjamin S. Blanchard, Prentice Hall, 1996 5. Improving Quality and Productivity in the Logistics Process; A.T. Kearney, Inc., 1991 6. Logistics in service organizations, Arthur D. Little and PSU, for CLM, 1991

1

2

.1 .2 .3 .4 .5 .6

1

3

EVOLUTION OF MANAGEMENT FOCUS

1980s 1980s1981 1981 - -1980 - - - -- -1980 -- -- -- -- --- -- -- -- --- -- -- -- ----

1990-2000 1990-20001991 1991 - -1990 - - - -- -1990 -- -- -- -- --- -- -- -- --- -- -- -- ----

---

1970s 1970s1971 1971 - -1970 - - - -- -1970 -- -- -- -- --- -- -- -- --- -- -- -- ----

Customer Value Customer Value

---

Quality Quality

1960s 1960s1961 1961 - -1960 - - - -- -1960 -- -- -- -- --- -- -- -- --- -- -- -- ----

---

Strategy Strategy

1950s 1950s1951 1951 - -1950 - - - -- -1950 -- -- -- -- --- -- -- -- --- -- -- -- ----

---

Marketing Marketing

---

Production Production

4

IN THE WORLD MARKAT

. . . . . .

5

TRADING THROUGH LOGISTICS

COUNTRY

PRODUCT X($) PRODUCT Y($))

TOTAL ($)

A B

250 400

500 300

750 700 1450

COUNTRY

PRODUCT X($) PRODUCT Y($))

TOTAL ($)

A B

250 300

350 300

600 600 1200

6

7

BENETTONS DELIVERY CHANNEL

03 8

08 0005 06 000032

8

NATURE OF THE LOGISTICS PRODUCT

)( Consumer Products )( Convenience Products ) ( ) ) ) ) ) )

) ) ) ) ) )

)( Shopping Products

9

NATURE OF THE LOGISTICS PRODUCT

)( Consumer Products ) (

)( Specialty Products

. :

)( Industrial Products

01

PRODUCT LIFE CYCLE Sales volume

Introduction

Growth

Maturity

Decline

Time

11

BUSINESS GOAL

. : * * * 21

:

1- 2- 3- 4- 5- 6- 7-

31

LOGISTICAL CONSTRAINTS

* *

* * 41

THE LOGISTICS PROCESS SPANS MOST FUNCTIONS OF THE BUSINESS

Result

51

LOGISTICS IMPACT ON ROI

+

/

+

+

61

* *

* *

** *

* *

71

*

** **

81

91

02

12

22

OBJECTIVES OF BUSINESS LOGISTICS

.

: ) ( 32

LOGISTICS EVOLUTION

****

****

****

42

) (

/

52

THE SUPPLY CHANNEL

. : : .

62

LOGISTICS ACTIVITY MIX

: 72

LOGISTICS ACTIVITY MIX

82

THE CRITICAL CUSTOMER SERVICE LOOP

92

LOGISTICS SUPPLY PIPELINE

*

03

LOGISTICS SUPPLY CHAIN

) ( ) (

13

FIRM SUPPLY CHAIN

Transportati on

Warehousing

Transportati on

Custome rs

Factor y Transportati on Warehousin g

Material and information flows

Transportati on

Vendors / Plants / Ports //

32

LOGISTICS NETWORK

.

33

LOGISTICS (CLM) DEFINITION) (

.43

THE LOGISTICS PROCESS

) (

53

THE EXTENDED VALUE CHAIN 63

: 73

LOGISTICS (7 RS) DEFINITION

LOGISTICS IN SERVICE INDUSTRIES

%07 : ) (83

LOGISTICS 4 KEY FINDINGS

1

* : 56% * : 57%

)02%( 93

2

3

4

TWO-PART DEFINITION OF LOGISTICS

: ):(Supply chain logistics

) / ( : )(Service response logistics ): ( 04

ALTERNATIVE LOGISTICS DEFINITION

14

SUPPLY CHAIN LOGISTICS IN SERVICE ORGANIZATIONS

)Marketing (mix ) ) ) ( : : : : 42 )( 24

FOCUS OF SERVICE RESPONSE LOGISTICS

.1

) (

: (34

FOCUS OF SERVICE RESPONSE LOGISTICS

.2

:

.3

: 1- ) ( 2- ) 42 ( 44

/ / / /

54

LOGISTICS INTERFACES IN THE FIRM

/ :

64

LOGISTICS SUPPORT

: / / 74

PRODUCT ACQUISITION & LIFE CYCLE

84

LIFE CYCLE COST

% 06

% 01

% 03

94

) )

.1 .2 .3 .4 .5 .6 .7 .8

05

15

COMMITMENT OF LIFE CYCLE COST

%001

%

%05

25

IMPORTANCE OF LOGISTICS

* . ** ** % * **%

:

.

PUZZLE 35

THE CHANGING LOGISTIC ENVIRONMENT

. : 1- / 2- 3- 4- 45


1- . . . . 55


2- ) (Just in time delivery . ) (Logistics lead time : . . 65


3- . . ): Caterpillar . ( ) (Standardization ): Whirlpool ( 75


4- . . Puzzle . . 85

TRADITIONAL, FUNCTIONAL ORGANIZATION

Input focused, budget driven

59

MARKET - FACING ORGANIZATION

Output focused, market driven 60

LOGISTICS STRATEGY TRIANGLE

* * *

16

2 THE TRANSITION TO SUPPLY CHAIN MANAGEMENT

62

SUPPLY CHAIN EVOLUTION

:

: :

:

36

LOGISTICS SUPPLY CHAIN

) ( ) (

46

LOGISTICS NETWORK

.

56

THE MOVE TO SUPPLY CHAIN CONCEPT

: : 66

: ( ) Word processors

30 years 10 years 4 years 1 Year or less

76

86

) (

( (

96

) (

( (

07

THE SUPPLY CHAIN AND COMPETITIVE PERFORMANCE

) ( .

.

. . .17

DIFINITION OF SUPPLY CHAIN MANAGEMENT

: ) (

) ( )(

) (Demand Chain Management )( )( 27

SUPPLY CHAIN MANAGEMENT Vs LOGISTICS MANAGEMENT

. . : ) (Co-Managed Inventory 37

SUPPLY CHAIN MANAGEMENT (CLM, CSCMP) DEFINITION

()CLM, CSCMP

: . . 47

/

57

/ /

67

SUPPLY CHAIN ARCHITECTURE

77

: : ) ( ) ( : : / : 87

) ( ) ( ) (

97

: : : : : 08

(Partnerships) Partnerships

Arm's-length relationships

Type I

Type II

Type III

Joint Ventures

Vertical integration

81

: )1 (Type )2 (Type )3 (Type )(Coke, and McDonalds 28

: : : ) ( : : 38

: : ) ( : : 48

3 ORDER PROCESSING & TRANSPORTATION DECISION

85


* * *

68

ORDER PROCESSING

** - ** * . = + :) ( 1- Order Preparation ) ( 2- Order Transmittal ) ( 3- Order Entry ) ( 4- Order Filling

78

/

//

88

ORDER PROCESSING

: .

)( Order preparation

) ( . : ) ( ) (

)( Order transmittal

98

ORDER PROCESSING

: ) ( Back order ) ( scanning .

)( Order entry

09

ORDER PROCESSING

: .

)( Order Filling

: )( Tacit rules 19

ORDER PROCESSING

. .

)( Order Status Reporting

) ( ) ( Order batching ) ( Shipment consolidation

29

) )

39

THE ROLE OF TRANSPORTATION IN LOGISTICS

. . . . . 49

TRANSPORTATION SYSTEM

/ . ) ( . . . .59

TRANSPORTATION SYSTEM

. . . . Piggyback . . .69

. 79

Piggybac k Birdybac k Fishybac k

89

LAND BRIDGE 99

. ) ( . . .001

TRANSPOTATION DECISIONS

: 101

TRANSPORTATION SERVICE CHOICES

: )(Piggyback, Fishyback, Birdyback ) ) * * * * * * 201

BASIC TRANSPORTATION COST TRADE-OFFS

: . . ) (. . 301

TRANSPORTATION SERVICE COMPETITIVE CONSIDERATIONS

) ( : / . . . 401

APPRAISAL OF TRANSPORTATION SERVICE SELECTION METHODS

. : ) (. . . 501

4 INVENTORY IN THE LOGISTICS SYSTEM

106


* * *

701

801

A B

A

B

901

THE IMPORTANCE OF INVENTORY

* *

**** ) Manufacturing and Trade ( Inventory **% **% : * * ) ( EDI ) ( JIT Just In Time * *

011

THE IMPORTANCE OF INVENTORY

/

) : ) . * - ** % . : ** % ****** ** * ****** * ****** *% ****** * * * * ******* ) ** % ** * * **% ( . 111

RATIONAL FOR CARRYING INVENTORY

* ) ( Purchase Economics ) ( Transportation Savings . ) ( Safety Stock . ) ( Speculative Purchase . ) ( Seasonal Supply . 211 ) ( Maintenance of Supply Sources

)( Physical Supply Inventory

RATIONAL FOR CARRYING INVENTORY

)( Physical Distribution Inventory ) ( Production Savings . ) ( Transportation savings . ) ( Seasonal Demand . ) ( Customer Service . ) ( Stable Employment .

311

FUNCTIONAL TYPES OF INVENTORY

) ( Cycle Stock ) ( In-Process Stock )( Goods in transit ) ( Buffer Stock or Safety Stock . ) ( Seasonal Stock ) ( Promotion Stock ) : ( ) ( Speculative Stock ) : ( / ) ( Dead Stock 411 .

) ( Production . ) ( Marketing .

) ( Finance ) ( Current Assets . : ) ( Inventory Tradeoffs .

511

INVENTORY COSTS

* . * . * ) ( Trade off . : )( Inventory carrying cost / ) ( Order / Setup cost )( Stock out cost )( In-Transit inventory carrying cost611

INVENTORY CARRYING COSTS

. ) ( Interest or Opportunity Cost .

* - )( Capital Cost

** . . ) ( 711

* - )( Storage Space Cost

INVENTORY CARRYING COSTS

. .

* - )( Inventory Service Cost * - )( Inventory Risk Cost

*- . * - . * - .

811

INVENTORY ORDER / SETUP COST

/ . : ) ) : . -

)( Order cost

911

INVENTORY ORDER / SETUP COST

/ ) ) ) ( * . ( - . . 021

)( Setup cost

INVENTORY CARRYING COST VS ORDER COST

. ) + ( . 121

EXPECTED STOCKOUT COST

. : .

. ) ( . . 221

)( Safety Stock

EXPECTED STOCKOUT COST

. ) ( JIT

)( Cost of lost sales

: **** *** * *** ) Overhead ( costs : ) ( Back order 321

0

0

*Q

Q

421

521

INVENTORY IN TRANSIT CARRYING COST

) ( . FOB . ) ) * ) ) * ) ) * ) ) * ) ) 621

SAFETY STOCK

. . : . ) ( **% ** * ) ** * * ( 721

) ( = ) * - ( /

: :

1B 1A 2A Plan t 3A 3B 2B

.

A B

821

EVALUATING THE EFFCTIVENESS OF INVENTORY MANAGEMENT

* . * . .

)( Customer satisfaction * .

* ) ( Reordering ) ( Resupplying ABC 921

* Back ordering / expediting

EVALUATING THE EFFCTIVENESS OF INVENTORY MANAGEMENT

)( Inventory turnover velocity : * - ** ** - ** ) ( Ratio Of Inventory to sales : . 031

5THE STORAGE & HANDLING SYSTEM

131


* * *

231

THE STORAGE & HANDLING SYSTEM

. . **% . : . ) (331

?WHY FIRMS USE INVENTORIES

. ) ( . . 431 .

REASONS FOR STORAGE

1- + . . 2- ) ( ) ( ) (531

REASONS FOR STORAGE

3- ) ( . 4- 631

STORAGE SYSTEM FUNCTIONS

) ( : 1- )(Holding . : ) ) ) ) ) ) 731

STORAGE SYSTEM FUNCTIONS

2- )(Consolidation ) ( Holding warehouses ) (Distribution warehouse . ) (ORDERS

3- )(Break-Bulk

4- )(Mixing

831

MOVE-STORE ACTIVITIES

Inbound pointUnload, sort, classify, and inspect Warehou se

Check order and classify

Semipermanent storage bay

Move to storage

Outbound point

Move to picking area Order - picking bay Move to dock

139

DISTRIBUTION WAREHOUSE USED TO CONSOLIDATE SMALL INBOUND SHIPMENTS INTO LARGER OUTBOUND SHIPMENTS10.000 I b.

Manufacturer A 8.000 I b.

40.000 I b. 15.000 I b. Distributio n warehouse 7.000 I b.

Manufacturer B

Custome r

A,B,C, D

Manufacturer C

Manufacturer D

140

DISTRIBUTION WAREHOUSE USED TO BREAK-BULK LARGE INBOUND SHIPMENTS INTO SMALER OUTBOUND SHIPMENTSLT L

Custome rA

LT LManufacturer

Low rate TL shipment

Distributio n warehouse

LT L

Custome rB

Custome rC

141

Pr od u A ctManufacturer A

B C A

Product BManufacturer B

A B C

Custome rX

t uc d ro C P

Distributio n warehouse

Custome rY

Manufacturer C

GENERALIZED EXAMPLE OF USING A DISTRIBUTION WAREHOUSE FOR PRODUCT MIXING

142

MATERIAL HANDLING CONSIDERATIONS

) (Compatibility . . : + + + 1- )(Load unitization 2- )(Space layout 3- )(Storage equipment choice 4- )(Movement equipment choice

/ 4 :

341

MATERIAL HANDLING DIMENSIONS & OBJECTIVES

1- 2- 3- 4-

1- 2- 3- 4- 5-

441

LOAD UNITIZATION

. . . . . . . . .

)(Containerization

541

LOAD UNITIZATION

)(Palletization )0484 ( : . . . .641

SPACE LAYOUT

1- : Bays . 2- : 741

SPACE LAYOUT

)(Area system

((Modified area system ),Sequencing .(Zoning, Batching841

SPACE LAYOUT

941

SPACE LAYOUT

051

STORAGE EQUIPMENT CHOICE

: ) (Racks )(FIFO )(Shelf boxes )(Horizontal and vertical dunnage )(Bins )(U-farms 151

MOVEMENT EQUIPMENT CHOICE

) (output ) (fork lift ) (Fork lift truck 21 )0003 ) + +

)(Manual equipment

)(Power-assisted equipment

251

MOVEMENT EQUIPMENT CHOICE

)(Fully mechanized equipment )Automated storage (& Retrieve system, AS/RS : )(Bar coding )(Scanning technology ) ( . 351

Cost

Private warehousing automated handling

Leased warehousing Public warehousi manual handling ng Private warehousing pallet - forklift truck handling

0

a b c a Economical range for public warehousing

d

Annual system throughput

b Economical range for public (leased) warehousing, manual handling c Economical range for public warehousing, pallet - forklift truck handling d Economical range for public warehousing, automated handling. GENERALIZED TOTAL COST CURVES FOR FOUR ALTERNATIVE

STORAGE SYSTEM

154

PRODUCT PACKAGING

* * * * * ) ( * * 551

PRODUCT PACKAGING

: * * .

:* * * *

651

6PURCHASING AND SUPPLY SCHEDULING DECISIONS

(JIT, MRP, DRP)

157


* * *

851

COORDINATION IN THE SUPPLY CHAIN

/ ) ..( 951

061

SUPPLY SCHEDULING

: 1- )(Just In Time, JIT 2-

161

261

JUST-IN-TIME SUPPLY SCHEDULING

) (JUST-IN-TIME . : 1- 2- 3- 4- 5- : 361

) (JIT

)(JIT

/ / /

461

MRP MECHANICS

) (MRP )(MRP 561

) )

Clock style - K 63Salem

Clock style - M 12 Clock mechanism - R 3601

661

MRP() a Initial MRP form ) Completed MRP form (b week 1 2 3 4 5 6 7 8 021 011 09 001 051 021 051 001 004

week 1 2 3 4 5 6 7 8 021 011 09 001 051 021 051 001 053 053 061 082 04 031 032 03 051 003 004 053 053

761

JIT DISTRIBUTION SCHEDULING

861

11003

24 5 6 7 8 1 2 3 4 5002

2

3003

6

7002

8

003 003

002 002

1 003 2 002 3 005 4 0 5 002 6 003 7 005 8 0

961

INTEGRATED SUPPLY CHAIN MANAGEMENT

) ( MRP ) (DRP 1- 2- ) (MRP )(DRP 3- ) (DRP 4- 5- ) (DRP ) (ROP )(EOQ071

) (JIT)(DRP

171

PURCHASING

/ : ) ( )(terms of sale -

271

1- )( 2- 3- 4- 5- )( 1- 2- 3- 371

)04-06% ( 1- 2- 3- 4- ) ( ) ( /471

5% *** million Less **.* million ) ( 9.25 millionb

**.*** ** ) 000.057$ ( Divided by *** million *** million Divided by ** million 9.4$ ( ) million

%5 ) %5.7 ( Multiplie d by %01

$2 million 9.1$ ( ) million

2 ) 40.2 (

05% 5% 04

571

1- )(JIT, hand-to mouth buying 2- )) ( Forward buying (anticipatory ) ( Speculative buying ) ( : - ) (

671

1- )(Mixed Buying Strategy ) (JIT )(JIT ) (JIT ) (JIT )(Dollar Averaging ) ( ) ( :

771

3- )( Quantity Discount ) (

1- ) (Inclusive 2- ) (No inclusive 3- + 871

4- )( Deal Buying ) ( Blanket order contracts ) (stockless purchasing, JIT971

5- )( Contract Buying

)(SOURCING1- ) (linear programming .

2- / 081

TERMS OF SALE & CHAIN MANAGEMENT

: ) = ( Terms of sale + 181

JIT

281

SUPPLIER SELECTION & EVALUATION

: -

381

184

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Logistics