logistics
TRANSCRIPT
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
THE CHANGING LOGISTIC ENVIRONMENT
1- . . . . 55
THE CHANGING LOGISTIC ENVIRONMENT
2- ) (Just in time delivery . ) (Logistics lead time : . . 65
THE CHANGING LOGISTIC ENVIRONMENT
3- . . ): Caterpillar . ( ) (Standardization ): Whirlpool ( 75
THE CHANGING LOGISTIC ENVIRONMENT
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
LOGISTICS STRATEGY TRIANGLE
* * *
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
LOGISTICS STRATEGY TRIANGLE
* * *
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
LOGISTICS STRATEGY TRIANGLE
* * *
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
LOGISTICS STRATEGY TRIANGLE
* * *
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