1 CONFIDENTIAL
TASKCo Corporation 太世科[email protected] 886-2-8772-2583
e-Logistics ServicesFrom Warehouse to Logistics Service
Center64157 電子商務模式設計與應用國立中山大學企管所
2002 Spring, Week 4-2
黃光彩 博士太世科公司2002/04/13
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Complexity of a Typical Global Supply Chain
Supplier
Roadways Roadways
Freight
ForwarderCustoms
Agent
Port
Ocean
liner
Airways
Roadways
Road+
Rail
RDCCustomer’sWarehouse
Customer (Retailer)
ConsumerHome
Plant
Supercharging Supply ChainsErnst & Young LLP
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100%
The Evolution of Enterprise Applications
% Penetration
Time
ERPERP
SupplyChainExecution
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What is Logistics?
Logistics is defined as the process of movement of materials and products into, through and out of a firm.
The Logistics Flow Chart
SALESFUNCTION(SUPPLIER)
TRANSPORTATION PURCHASINGFUNCTION
(DISTRIBUTOR)SUPPLIERS
SALESFUNCTION
(DISTRIBUTOR)TRANSPORTATION
PURCHASINGFUNCTION(CUSTOMER)
WAREHOUSING
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The Logistics Channel
Suppliers Sales (Supplier) Transportation Purchasing (Distributor) Warehousing Sales (Distributor) Transportation Purchasing (Customer)
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Cross Functional Nature of Logistics Front end - Distributor Purchasing and Supplier Marketing Interface
Middle - Warehousing and Transportation Back end - Customer Contact (Marketing)
FRONT END MIDDLE BACK END
Functions of Logistics
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Key Logistics Activities
Customer Service Levels - Set by Marketing based on Operations Capabilities
Transportation Routing and Vehicle Scheduling
Inventory R.M. and F.G. stocking policies Break Bulk Consolidation
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Support Activities Warehousing
How many? What configuration? Where to hold inventory?
Materials Handling - ASRS, RF, Bar Coding, Etc.
Purchasing - Supplier selection, Purchase timing, Quantity, and Quality
Scheduling - Interface marketing and production
Information Maintenance Data Collection Data Integrity
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Objectives of Logistics Strategy Process Reduction - Cycle time, Lead time,
Automation
Capital Reduction - Inventory investment, number of warehouses
Service Improvement - the antithesis of the foregoing
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Industry Specific Logistics Services
IndustryIndustry IndustryIndustry
Size
Size
LL
MM
SS
Traditional WMS ProvidersSegment Market by Customer
SizeTraditional:
CPGApparelGrocery
Food Service
3PL
Opportunity:HealthcareElectronicsAutomotive
New Logistics CenterSegments Market by Customers’ Vertical
Market
Size
Size
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Logistics Goal: Close Gaps in the Supply Chain
Speed to compliance
Lower inventory Cross-docking Value-added
services Higher number of
SKUs Direct-to-consumer Configure-to-order
Customer / retailer satisfaction
Operational productivity
Transportation efficiency
Improved in-stock positions
Lower inventory Flexible business
practices
Retailer Requirements Supplier Requirements
Imperfect Imperfect InformationInformation
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Traditional Distribution Systems Used
Multi-Tiered Warehousing
Manufacturer
BulkFinished Goods Manufacturer’s
DistributionCenter
Bulk Shipments
LocalRetail
DistributionCenter
Hold inventoryHold inventory Value added servicesValue added services
Retail Outlet Store Distributions
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Traditional Distribution Center Process
1 Inbound receipt of goods
3Bulk outbound shipments
2Storage of goods
11
22
33
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Manufacturer
Manufacturer’sDistribution
Center
LocalRetail
DistributionCenter
Retail Outlet
Quick Response Initiatives Streamline Distribution Process
Advanced shipping notice Bulk or discrete shipments Store specific pricing Aisle specific palletizing High velocity
Cross-docking Flow-through
Lower inventory Greater availability
Direct store Delivery
Direct-
to-C
onsu
mer
Very high volume
Mass personalization
Integrated TMS requirements
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Value-added Logistics Center Process
1 Inbound shipment Inbound shipment trackingtracking
2 Yard managementYard management
3 Inbound receipt Inbound receipt of goodsof goods
4 Storage of goodsStorage of goods
5 Order pickingOrder picking
6 Value-added Value-added servicesservices
7 Order packingOrder packing
8 Pack and holdPack and hold
9 Outbound customer Outbound customer compliant shipmentscompliant shipments
44
7755
66
33
9911
8822
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Continuously Changing Demands of Retailers
K-MART Western Publishing
New PracticeNew PracticeOld PracticeOld Practice
# Orders
Destination
Frequency
IT Requirement
66
WarehouseWarehouse
MonthlyMonthly
Telephone/PaperTelephone/Paper
17,00017,000
Individual StoresIndividual Stores
WeeklyWeekly
Electronic Electronic Advanced Ship Advanced Ship
NoticeNotice
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From Warehouse to Distribution Center
“In order to enable greater customer responsiveness, the traditional role of the
warehouse (WMS) is moving toward distribution center. This is a major force in driving the
demand for e-Logistics applications.”
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Global Operations & Logistics Framework
Geographical Integration
SectorialIntegration
Functional Integration
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Geographical Integration
Impact of Distribution and Transportation greater due to ‘Globalilty’ Borders becoming more porous in terms of trade Production on global scale --- no longer country-specific International Sourcing Selling in Multiple Markets Data Processing and Communication technology help with the geographical integration.
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Functional Integration
Logistics - cross-functional in nature. Cuts across activities and creates interfaces to optimize overall performance. Flow management in Global Logistics difficult
Internationalized Markets Competitive products in the Market Adaptation of new technology Government Regulations
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Sectorial Integration Companies are handling logistics issues together beyond corporate boundaries.
Efficient Consumer Response (ECR)
Distributor ConsumerManufacturer
Collaborate
Final aimFinal aim - - to reach to reach customercustomer
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Freight Forwarders Freight providers have the earliest instance of hub and spoke systems Tenders for freight services made worldwide Development of Intermodal freight provision Mergers between freight providers -- e.g. Airplane companies Globalization brings up several issues in order to satisfy proximity service
Use of manufacturer’s sales network Setting up Proximity Distribution Centers (PDC) Developing central hub for express services and dispatch orders Setting up inventory of class A products with storage operator, distributor or agent
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International Freight Forwarders Nonvessel-operating Common Carriers (NVOCC) Customs House Brokers Export Management companies Export Trading Companies Shippers Associations Export Packers
International Trading Operators
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Dynamic Forces of Global LogisticsThe firms adopt different orientations with varying intensitiesdue to the dynamic behavior of the global business environment.
INFOUSER
RESOURCES
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Global Logistics’ Orientation Resource Oriented Logistics
Emphasis towards optimal use of resources -- capital,materials and people
Focuses on the relationship between the functional and the geographical
Optimize
ResourcesFunctional Geographical
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Global Logistics’ Orientation Information Oriented Logistics
Emphasis towards optimal use of information. Focuses on the relationship between the sectorial and the geographical dimensions
Geographical Sectorial
Optimal Performance
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Global Logistics’ Orientation User Oriented Logistics
Emphasis on the final customer. Using all the supply chain partners to bring their expertise in order to best service the customer User oriented focus brings about flexibility in the logistics channel
Customer
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Factors Pushing Global Logistics
TechnologicalAdvances
Emergence ofGlobal Markets
Global CostForces
Political & Macro-economic factors
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Factors Pushing Global Logistics Global Markets
Competition from foreign firms in local markets. Incredible growth of demand in foreign markets. Global presence used as competitive threat. Change of priorities
Global markets growing faster due to technological advances Products need to be introduced in all markets together.
State of the Art markets driven by customer preferences Firms have to set up production in these areas to maintain their competitive profiles. E.g. Japan - M/c tools
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Factors Pushing Global Logistics
Improvements in Technology Communication faster, easier and cheaper.
Markets characterized by fewer producers and greater diversity in products Shorter product life cycles
Technology advancement become global phenomenon Firms have to start looking at international sources to tap technological services
Global competition forcing companies to locate more R&D and production units closer to the suppliers. Joint ventures between firms to share technological info.
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Factors Pushing Global Logistics Global Costs Forces -- Shift in Logistics costs
Shift in focus from direct labor costs Global environment forcing companies to consider a trade off between labor costs, cost of start-up, fluctuation of currency, inventory costs, cost of quality management and training the local workers leading to island hopping strategy. New Competitive priorities like speed, quality,customization, delivery reliability. Production facilities are becoming more capital intensive
high technology industries R & D costs
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Factors Pushing Global Logistics
Political and Macroeconomic factors Exchange rate fluctuations Regional trade agreements --- NAFTA Trade protection mechanisms
Tariff and non-tariff barriers Technical Standards Health regulations Procurement policies
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How is Global Logistics creating Change? The management has to consider the Global economy
Logistics operations perceived more as Service Provider for cost minimization
Service in the Industry becoming more important than Cost Saving
Logistics activities no longer limited to moving products through the Supply Chain but as an Information Provider for the SC.
Companies moving away from Vertical Integration and towards Supply Chain Integration, with Logistics activities provided externally.
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New concepts in Global Logistics
Delocalization - practice of adding value to the product at different locations closer to the consumer.
Modularization - practice of assembling a product using modules purchased from different sources
Delayed Differentiation & postponement - Customization of the order after demand has been identified
e.g: Labeling the products in the language of the countries that they have to be shipped to
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Benefits due to Globalization of Logistics
Globalization is necessary for long-term survival
Diversity of markets increasing giving rise to Standardization across international markets Product diversity
Ability to access multiple sources of technology
Ability to set up strategic alliances and R & D
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Global Supply Chain – HP Example
HP DESKJET PRINTER SUPPLY CHAIN:
Printers made in Vancouver in two stages Printed Circuit Assembly & Test (PCAT) Final Assembly & Testing (FAT)
Components needed for PCAT & FAT taken from suppliers worldwide & from HP divisions
Printer power supplies custom made for each country with manuals written in that language packed
From Vancouver sent to Distribution Centers worldwide
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ICMANUF.
PRINTMECH.
MANUF.
CUSTOMER
WORLDWIDE
SUPPLIERS
DISTRIBUTIONCENTRES
WORLDWIDE
PRINTEDCIRCUITASSM. &
TESTVANCOUVER
FINALTEST
&ASSM.
VANCOUVER
SUPPLIERACCESSORIES
Global Supply Chain – HP Example
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Logistics Flows
Direct Flow
Reverse Flow
From companies to markets
From markets to companies
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Logistics’ Flows
Internal Logistics External Logistics
DirectFlows
ReverseFlows
Interplants
Warehouse/Warehouse
Plant/warehouse
With suppliers(supply of materials & components)
With customers(products, spare parts, promotional &
advertising materials)
With suppliers(packaging, repairs)
With manufacturers(elimination, recycling)
With customers(overstocks, repairs)
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Strategy for Global Logistics Consolidation points
Break bulk Capacity issues - whether to add processing capability or not
TAIWAN
USA/EUROPEIMPORT
VIETNAM
MALAYSIA
JAPAN
MAKE-BULK OPERATION
Postponement
BREAK-BULK OPERATION
EXPORT
VIETNAM
MALAYSIA
JAPAN
USA/EUROPE TAIWAN
CHINA
CHINA
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e-Logistics — A Modular Approach
Snap-on Modules
Snap-on module architecture
Easily configurable and upgradeable
Product is easily customizable to fit customer requirements
Outbound Wave
management Shipping
Inbound Receipt Put-away Movement
and slotting
ASNASN
Third-Party Logistics Billing
Optimization Suite
Industry Standards
Alert Monitor
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Future Solution Strategy...
Productized logistics execution solution• Fast implementation• Extremely high price / value• Win high market share
Synchronize logistics in our core vertical markets• Expand deep industry knowledge• Integrate industry content databases• Architect for continuous upgradeability
Expand compliance guarantee to all supply chain requirementsGuaranteed compliance with top 100 retailersDevelop additional high value, information-intensive supply chain solutions
... ... Can lead to increasing returns solutionsCan lead to increasing returns solutions
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Integrated Logistics Services
Integrated Logistics is the fusion of information, logistics and transportation technologies to provide rapid response to track and shift assets even while in reroute, and to deliver tailored logistics packages and sustainment directly at the strategic, operational and tactical level of operation
Logistics functions will incorporate information technologies and will work jointly and integrate with other sectors to take advantage of advanced business practices, knowledge economy, and global networks
Information technologies will enhance aircraft, sea liners, and pre-positioning capabilities to lighten deployment loads
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Services provided are both physical and management.
Service levels improve due to improvement in flexibility and inventory management
Cost reduced as compared to in-house logistics provider
In global logistics, versatile markets and products need expert services which can be provided by several 3PL
Third Party Logistics Provider
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Third Party Logistics Provider Use of 3PL allows the firm to penetrate new markets .
Access new technologies
Reduce inherent financial investment risks
Risks of using 3PL The same 3PL might be providing services for competing firms Manufacturer with a good image in the market might get tied down and their image linked with the 3PL
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Range of Services provided by 3PL
Source: J.M. Africk & C.S. Calkins ( Transportation & Distribution, 1994)
Com
plex
ity &
Cus
tom
izat
ion
Complexity & Customization
LowLow
High
High
PhysicalServices
ManagementServices
Physical ContractLogistics Services
• Dedicated contract carrier• Dedicated warehousing
Integrated Contract Logistics• Integrated warehousing & transportation• Integrated carrier management & transportation
Basic Services Management contract logistics Services
• Common Carriage• Public Warehousing
• Traffic Management• Warehouse Management• Import/export Management
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Emergence of Fourth Party Logistics Providers ‘Globality’ and Supply Chain Integration are increasing the
functions of Logistics providers. This has lead to the emergence of consulting firms as fourth party logistics providers
4PLs have the advantage of being in sync with the rapid, enormous changes in Information Technology.
Consultants as 4PLs are used to review bids made by 3PLs, and to align the business processes with the supply chain -- especially critical in case of Global Logistics.
3PL have a larger, more efficient network of transportation & networking, but the 4PL have optimal combination of warehouse capabilities, transportation services and technology
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Development & Role of 4PL
Source: Andersen Consulting http://www.ac.com/services/scm/scm_who_4pl_paper2_b.html
Client Internal LogisticsOperations
Client 3PL
4PLIT ServiceProviders
3PL
Business ProcessManagement
• Greater Functional Integration• Broader Operational Autonomy
Insourcing 1970s-1980s
Outsourcing 1980s-1990s
4PL1990s-2000
Client
Client
Client
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Performance Criteria in Global Logistics
Looking beyond Financial indicators
Cost Initial Cost Lifecycle Cost
Quality Design Quality Conformance to set production standards
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Service Delivery Speed Delivery Reliability
Flexibility New-Product Flexibility-- Ability to introduce a new product fast Customization --- highly segmented markets Product Mix Flexibility --- adjust production mix for demand fluctuations Product Ramp-up Flexibility -- expansion to mass production for uncertain markets
Performance Criteria in Global Logistics
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International Freight Forwarders Buy space wholesale and sell it retail International Freight Forwarders handle more functions than the domestic freight forwarders:
Serve as consultant in export matters Advise on acceptance of letters of credit. Booking space on carriers -- Most of the movement is done via vessel or air. Arrange for insurance Prepare documents like export declarations and consular documents Prepare Bill of Lading -- Forwarders experience needed
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Other International Trading Operators NOVCCs
Perform most but not all of the functions of an international freight forwarder. Specific functionality is trade agreements with carriers NOVCCs affiliate with forwarders to offer the entire range of services
Customs House Brokers Take care of paperwork and movement of goods through customs
Export Management Companies Provides the US firm with information about the overseas buyer Advises the US supplier on requirements of the foreign market in issues like foreign labeling and other specialized functions
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Other International Trading Operators
Export Trading Companies Attempt to combine all facets of international business Used extensively by the Japanese
Shippers Associations Trade groups representing shippers of similar cargo that bargain with ocean steamship conferences as a single entity
Export Packers Expertise is specifically in packaging for the exporter. To allow goods to move through customs easily. E.g taking into consideration weight restrictions etc To prevent the decay/damage of products.
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Nature of the Product Value-add
Product processing Services
Technical Support Inventory Management Financial
Commodities vs. specialty items Delivery
Speed Dependability Flexibility
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Product Life Cycle and Distribution
INTRODUCTION Low Distribution Public Warehouse
GROWTH Projected growth Current network capabilities Changes
MATURITY Optimization
DECLINE Projected cost decreases Needed network scale backs
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Pricing
FOB pricing FOB factory - customer picks up freight
FOB destination - seller picks up freight
Title exchange implications insurance obsolescence
HIGH PRICE LARGE VOLUME ITEMS
LOWER PRICE HIGH VOLUME ITEMS