Strategic Integrated Logistics Management: Key issues, evolution of strategic integrated logistics integrated

logistics quality and bench marking.

Principle of logistics information: Forms of information, functionality of information, Designing

and evaluating logistics information system, information architecture and application of IT in

logistics,

*Review of Elements of Logistics

*Strategic Integrated Logistics Management: Key Issues

* Evolution

*Logistics Quality

*Benchmarking

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*NetElements Design

*Information

*Transportation

*Inventory

*Warehousing, Material Handling and Packaging

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*Avoid Duplication – does not take away from the coordination between departments and joint planning

*Outsourced activities – the firm should be accountable to their clients’ operating managers

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Manufacturing plants, CDC, Warehouses and Retail Stores

How many are required

Geographic Locations

Elements to be performed at each location

Continuously re-assess reqmts and facilities to reflect demand-supply

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*Of recent origin

*Cause-Effect of more/less Info*Importance of correct trends

*Accuracy of Order

*Error causes disturbance

*Faster information vis-à-vis bunched up data

*Info is linked to Forecasting & Order Management

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*Forecasting Accuracy

*Forecasting fine tuning with online info

*Concepts such as JIT, QR, Continuous Replenishment

*Order Management Process – accuracy of information

*Internal and External Orders

* Facilities and Information determine Transporation requirements

*Private Fleets, Contract Carriage and Common Carriage

*Cost of transportation

* Speed

*Consistency * Cause effect of consistency on logistical system

*Key Issues – Selection of Facility, Transporation Cost and reliability over longer term

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*Objective of Inventory Management*Achieve desired customer service with minimum inventory

commitment

*Basic Goal : Achieve maximum revenue while satisfying customer commitment

*Customer Segmentation

*Product Requirements

*Transport Integration

*Time based requirements

*Competitive Performance

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*Other 4 areas independently determine level of customer service at a cost

*Facililty Selection : *Sorting, Sequencing, Order

selection, Transport Consol, Product Modification & Assembly

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*Inventory Management*Customer Segmentation

*Product Profitability

*Transport Integration

*Time based performance

*Competitive Performance

*Pareto’s Principle/Law

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*Transporation*Cost (total system cost)

*Speed

*Consistency

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*Warehousing, Material Handling & Packaging*Own or otherwise

*Level of handling sophistication

*Master Cartons for multiple handling

*Facility NetElements*Plants, Whses, Crossdocks, Retail stores

*NetElements design involves multiple locations

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Figure 2.2 Logistical Integration

* Information flow from and to customers – Sales activity, Forecasts, Orders and so on

* This information is refined into specific mfg and and purchasing Plans (MRP)

*As Materials in the form of Inventory flow from suppliers through diff stages of manufacturing – a value added flow of Inventory happens – from RM to FG and on to customers

*Key Observations* Shaded Area – Integrating all Internal Functions – is this sufficient?

* To be fully effective …………,?

* Is this process restricted to business corporations…….,?

* Starting Point?

*Material gains value through the process

*Cost of each component – sub-assembly – value added process

* Final Stage of Value addition – real gaining of value?

*Key Observations* Case of a Large Manufacturer – 1000’s of movements – culminating in delivery

* Large Retailer?

* Large Hospital?

* For any type of organization – Logistics is essential and requires continuous management attention!

*Physical Distribution

*Manufacturing Support

*Procurement

*Movement of Finished Goods to Customers

*Customer is the Final Destination

*Key Metric or Criterion : Availability of Inventory

*Key Observations*Marketing Effort – hinges on delivering an assortment of products to the customer

* Space and Time Aspect of Customer Service is served by Physical Distribution

*Many different forms of distribution systems are used

*Overall Objective : Physical Distribution links mfrs, wholesalers and retailers

*Mfg support concentrates in managing what form of Inventory?

*Primary responsibility is to draw up the Master Production Schedule and make available the BOM – RM, Components and WIP to Manufacturing

*Not focus on “How” of Manufacturing

*But focus on “What, When and Where” aspects of manufacturing process – it occurs

*One significant diff between Phy Distribution and Manufacturing Support

* --------------- aspect

* ----------------- aspect of Customer Ordering process (Phy Distribution) is not present in the Manufacturing Support or present to a much lesser degree

*Procurement concentrates in managing what form of Inventory?

*Primary responsibility is to arrange inbound of ------------ from --------- to -----------------

* “Purchasing” in Corporations and “Procurement” in Public Sector “Buying” in Retail/Wholesaling

* “Material” vs “Product” - when material becomes product

* Similarities exist in process between say Grocery Manufacturer Phy Dist and Retail Stores Procurement Operation – Degree of Management Control varies significantly

* Information flow from and to customers – Sales activity, Forecasts, Orders and so on

*Within Logistics system different requirements exist – dependent on urgency, size of lot, value etc.,

*Primary reqmt of info is to reconcile these differences

*Without info., the effort required in a logistical system can be wasted

* Two types : Coordination Flows and Operational Flows

*Planning and Coordination Flows :

*Coordination is the backbone of overall info. System among value chain parts. Results in plans specifying* Strategic Objectives – marketing and financial goals

* Capacity Constraints – External and Internal mfg requirements – limits, barriers, bottlenecks

* Logistical Requirements – distribution facilities, equipments, labour etc.,

* Inventory Deployment – info what, when and where

*Manufacturing Requirements – Production situations MPS, MRP and inv deployment

* Procurement Requirements – in different industries diff requirements

* Forecasts – historical data, current activity levels, planning assumptions to predict future activity levels

*Order Management

*Order Processing

*Distribution Operations

*Inventory Management

*Transportation and Shipping

*Procurement

*Availability* readily and consistently available

*Rapid availability on the trot

*Accuracy*Current Status such as Customer Orders, Inventory Levels

*Lack of Accuracy increases uncertainty and inventory reqmts and vice versa

*Timeliness :

*Exception-based LIS : *To highlight problems and opportunities

*Eg :Inventory status for location, status of replenishment orders

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*Flexibility*Capability to facilitate info as req by different stakeholders

*Must be upgradable for future enterprise needs

*Appropriate Format*Right info in the right structure and sequence

*Depending on the person /hierarchy / location information should be structured in the appropriate format

*Comprehensively presented data in proper format enable more productivity and easier decision making

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*Transaction Systems

*Management Control

*Decision Analysis

*Strategic Planning

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*Transaction Systems*Strong Foundation on which other processes are built

*Rules, Procedures, Standardized Systems

*Large Volume Transactions, Operational day-to-day focus

*Record and initiate individual logistics functions

*Sequence of transactions from Order Entry to Invoicing and Shipment Notification is the transaction sequence

*This whole sequence - online

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*Key Role : Performance Measurement and Reporting*Feedback regarding Supply Chain Performance and Asset

Utilisation

*Example of Supply Chain Performance Measures

*Two key aspects in Performance Monitoring *Historical Performance (as frequently as practical)

* Exception Reporting – foreseeable feature – what can go wrong

* For example, future inventory shortages, future inventory build-ups, potential cost increases, potential asset utilisation related etc.,

*Cost – accurate measure; customer service, service level etc., give an idea of the actual situation

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*Decision analysis involves visualizing, comparing, analysing, evaluating different scenarios - for improving both tactical and strategic effectiveness/efficiencies

*Issues include – Logistics Design, Inventory Control, Segmental Profitability, Resource Allocation and Routing

*Data Base Modelling, Maintenance and Reporting on a Wide range of Parameters

*Decision analyses by their very nature need to be flexible, open and unbiased in order to work on multiple future scenarios

*Users require more expertise and training

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