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15. The concept of logistics and logistics efficiency
Logistics
is a holistic system of management used to ensure the necessary
planning, implementation and monitoring of en efficient flow ofmaterials all the way from suppliers of raw materials to final users, aswell as the disposal and recycling of obsolete products all with a viewto satisfying the needs of customers
Definition of Logistics
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15. The concept of logistics and logistics efficiency15.1 The logistic system
Supply
market
Supplier
Sales marketProduction company
ConsumerMiddle-man
Purchasingcontrol
Productioncontrol
Distributioncontrol
Stock of raw
materialsProduction
Stock of
finished products
Middle-
manConsumerSupplier
Recycling
Disposal
Sorting Collection
Waste and recycling market
Retur n logistics
I ncoming logistics I nternal logistics Outgoing logistics
Waste
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15. The concept of logistics and logistics efficiency15.2 Supply Chain Management page 487
Suppliers
of raw
materialsSuppliers
of compo-
nents
Producers
of finished
goods Wholesalers Retailers Consumers
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15. The concept of logistics and logistics efficiency
Supply strategy
Which products should the company produce itself?
Which products should the company purchase from its suppliers?
How close do the company want to be linked to is suppliers?
Production strategy
How to coordinate the production resources
How to organize the production processes
Distribution strategy
Which distribution channels?
15.3 Logistics strategy page 489
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15. The concept of logistics and logistics efficiency15.4 The logistics coordination page 492
Sales
Production
Stock
Purchasing
Finance
Varieties
Delivery speed
Purchasing
quantityDelivery
speed
Many Few
Small
Large
LongShort
Short
Long
Large
Large Large
Small
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15. The concept of logistics and logistics efficiency
15.5.1 Centralising the logistics function
Main advantage a clear overall view of all the logistics activities
Main disadvantage conflicts between the managers of the differentdepartments
15.5 Organising the logistics function page 492
Production
planning
Managing
director
Logistics Production Sales Finance
DistributionStoragePurchasing
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15. The concept of logistics and logistics efficiency
15.5.2 Decentralising the logistics function
Advantages higher degree of flexibility
Disadvantages difficult to ensure an all-round approach
15.5 Organising the logistics function page 492
Production
planning
Managing
director
Purchasing Production Sales Finance
DistributionStoragePurchasing
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15. The concept of logistics and logistics efficiency
Delivery service Delivery speed
Level of stock service Observation of delivery deadlines
Delivery reliability
Delivery flexibility
Delivery information
Logistics costs
Stock costs
Packaging and packing costs
Transport costs
Administrative logistics costs
Nonconformity costs
15.6 Logistic efficiency page 494
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Logistics efficiency - page 498
Delivery service
Logistics efficiency = Logistics costs
Logistics efficiency improves by:
Look at the fraction
Effect of logistics efficiency on Return Of Investment
Better delivery service might increase the turnover
Reduce investment in stocks without reducing delivery service
15. The concept of logistics and logistics efficiency15.6 Logistic efficiency page 494
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15. The concept of logistics and logistics efficiency
20x3 20x4 20x5
Net turnover
- Cost of sales
25.000
14.800
30.000
18.000
33.000
20.000
Gross profit 10.200 12.000 13.000
Ultimo 20x2 Ultimo 20x3 Ultimo 20x4 Ultimo 20x5
Stock 2.500 3.000 3.200 3.300
15.6.2 Stock turnover speed page 500
20x3 20x4 20x5
Primo stock
Ultimo stock
Total
Avarage stock
Stock turnover speed
Number of days in stock
2.500
3.000
5.500
2.750
3.200
3.300
6.500
3.250
3.000
3.200
6.200
3.100
5,4times 5,8 times 6,2 times
67 days 58 days62 days
Stock turnover speed =Cost of stock
Average stock time14.800
2.750= 5,4 times
18.000
3.100= 5,8 times
20.000
3.250= 6,2 timesNo. of days in stock =
360
Turnover speed
360
5,4= 67 days360
5,8= 62 days
360
6,2= 58 days
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15. The concept of logistics and logistics efficiency
20x3 20x4 20x5
Net turnover 25.000 30.000 33.000
Stock costs
Packaging and packing costs
Transport costs
Administrative logistics costs
1.750
1.250
1.500
800
1.950
1.450
1.850
850
2.075
1.550
2.050
900
Total 5.300 6.100 6.575
15.6.3 Analysing costs of logistics page 503
Indeks 20x3 20x4 20x5
Net turnover
Stock costs
Packaging and packing costs
Transport costs
Administrative logistics costs
Total
Index figure =
Figure of the year x 100
Figure of the base year
100
100
100
100
100
100
120
111
116
123
106
115
132
119
124
137
113
124
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15. The concept of logistics and logistics efficiency
Priority of delivery service
ABC customers
ABC
products
Qualitative analyses
Questionnaire
Quantitative analyses
Delivery speed
Level of stock service
Delivery deadline
Delivery reliability (quantity))
Delivery reliability (quality)
Delivery flexbility
15.6.4 Analysing delivery service page 504
Compare the actual delivery speed
With the goalNo of orders dispatched x 100
no. Of orders received
Number of orders delivered in the right quality x 100
total number of orders
Number of orders delivered in correct quantity x 100
total number of orders
Numbers of orders delivered on time x 100total number of orders
Number of times changes in orders have been met
Number of request for changes in orders
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15. The concept of logistics and logistics efficiency
Stock turnover speed 20x3 20x4 20x5
Target
Performance
8,0 times
5,4 times
8,0 times
5,8 times
8,0 times
6,2 times
Gap 2,6 times 2,2 times 1,8 times
Level of stock service based on number of orders 20x3 20x4 20x5
Target
Performance
95%
94%
95%
95%
95%
94%
Gap 1% 0% 1%
Level of stock service based on number of order
lines
20x3 20x4 20x5
Target
Performance
98%
95%
98%
96%
98%
97%
Gap 3% 2% 1%
Gap analysis of logistics efficiency page 512
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15. The concept of logistics and logistics efficiency
Benchmarking
Internal benchmarking
Compares one department with other departments of the company
External benchmarking
Compares with the best in the same business
Functional benchmarking Compares with the best in the same area
Benchmarking page 514