Professional Documents
Culture Documents
Business Logistics:
A Vital Subject
Logistics in History
IntroductionChapter 1
IntroductionChapter 1
US Civil War
barefooted soldiers
Capture enemy provisions for war
horses
Fodder frequently found, ready-harvested, and neatly
stacked in the fields
H. von Kuhl und J. von Bergmann, 1920
World War II
World War II
World War II
Desert Storm
10
IntroductionChapter 1
11
Supply Chain
Manufacturers
Warehouses
Raw
Material
Customers
Assemblers
Stages
Procurement
Production
IntroductionChapter 1
Distribution
12
Concentrate Plant
Bottling Plants
Distribution Centers
Physical Flows
Suppliers
Customers
IntroductionChapter 1
13
Tactical
Operational
Long term
Mid term
Near term
IntroductionChapter 1
Corporate objectives
Capacity
Facilities size/location
Mode selection
Design of order entry
Inventory positioning
Resource allocation
Seasonal service mix
Contracting, vendor
Selection
Routing and dispatching
Order filling
Replenishment quantities
And timing
14
Transportation
Factory
Transportation
Warehousing
Customers
Information
flows
Transportation
Warehousing
Transportation
IntroductionChapter 1
Vendors/plants/ports
1-2
15
Logistics Defined
IntroductionChapter 1
16
IntroductionChapter 1
17
IntroductionChapter 1
1-5
18
IntroductionChapter 1
19
20
Transportation
Customers
Inventory
or supply source
IntroductionChapter 1
21
Percent of sales
$/cwt.
3.34%
$26.52
Warehousing
2.02
18.06
Order entry
0.43
4.58
Administration
0.41
2.79
Inventory carrying
1.72
22.25
7.65%
$67.71
Transportation
Total
IntroductionChapter 1
Logistics cost
are about 10% of
sales w/o
purchasing costs
22
23
Significance of Logistics
IntroductionChapter 1
24
Target Stores
CEO is a former logistician
Wal-Mart is the largest retailer in
the world!
IntroductionChapter 1
25
Foreign sourcing
Profit
G&A
Profit
G&A
Marketing
Increase
Marketing
Logistics
Logistics
Overhead
Increase
Tariffs
Overhead
Materials
Materials
Labor
Labor
IntroductionChapter 1
Reduction
26
Business logistics
Physical supply
(Materials management)
Sources of
supply
Outbound
logistics
Physical distribution
Plants/
operations
Transportation
Inventory maintenance
Order processing
Acquisition
Protective packaging
Warehousing
Materials handling
Information maintenance
Customers
Transportation
Inventory maintenance
Order processing
Product scheduling
Protective packaging
Warehousing
Materials handling
Information maintenance
1-14
27
Key Activities/Processes
Primary
- Setting customer service goals
- Transportation
- Inventory management
- Location
Secondary, or supporting
- Warehousing
- Materials handling
- Acquisition (purchasing)
- Protective packaging
- Product scheduling
- Order processing
IntroductionChapter 1
28
Customers
Customers/
End users
Suppliers
suppliers
Acquire
Convert
Distribute
IntroductionChapter 1
29
Reality of SC Scope
IntroductionChapter 1
30
IntroductionChapter 1
31
Customer
service goals
The product
Logistics service
Ord. proc. & info. sys.
Location Strategy
Location decisions
The network planning process
C O N T R O L L IN G
Transport Strategy
Transport fundamentals
Transport decisions
P L A N N IN G
Inventory Strategy
Forecasting
Inventory decisions
Purchasing and supply
scheduling decisions
Storage fundamentals
Storage decisions
O R G A N IZ IN G
Study Framework
The focus is
here
IntroductionChapter 1
32
Transport fundamentals
Inventory decisions
Transport decisions
Purchasing
and
supply
scheduling decisions
Customer
Storage decisions
service goals
The product
Logistics service
Information sys.
Location Strategy
Location decisions
The network planning process
IntroductionChapter 1
33
Relationship of Logistics to
Marketing and Production
PRODUCTION/
OPERATIONS
Sample activities:
Quality control
Detailed production
scheduling
Equipment maint.
Capacity planning
Work measurement
& standards
Interface
activities:
Product
scheduling
Plant
location
Purchasing
LOGISTICS
Sample
activities:
Transport
Inventory
Order
processing
Materials
handling
Interface
activities:
Customer
service
standards
Pricing
Packaging
Retail
location
Productionlogistics
interface
MARKETING
Sample
activities:
Promotion
Market
research
Product
mix
Sales force
management
Marketinglogistics
interface
34
1-21
Logistics
Marketing
Relationship of Logistics to
Marketing
Product
Promotion
Price
Place-Customer
service levels
Transport
costs
Inventory
carrying costs
Lot quantity
costs
Order processing
and information
costs
IntroductionChapter 1
Warehousing
costs
1-22
35
make-to-order or make-to-stock
An integral part of the the supply chain
Affects total response time for customers
Shares activities such as inventory planning
Costs are in tradeoff
Production lot quantities affect inventory
levels and transportation efficiency
Production response affects transportation
costs and customer service
Production and warehouse location are
interrelated
IntroductionChapter 1
36
IntroductionChapter 1
37
38
Logistics Principle #1
Logistics Benefits Society
Makes Goods & Services Available
It Influences Price of Goods & Services
It Helps Society Respond to Needs of
Citizens
Standard of Living
Emergency Needs For Food, Medical Care, &
Shelter
IntroductionChapter 1
39
Logistics Principle #2
Logistics Is Pervasive
Affects Every Aspect of Business
Reach Customers
Create Brand Loyalty
IntroductionChapter 1
40
Logistics Principle #3
Logistics Contributes to Companys
Revenues & Growth
Positive Effect on ROI
Substantial Portion of Costs in Many
Industries
Good Logistics Practices Provides
Better Customer Service
Lower Costs
Higher Profits
IntroductionChapter 1
41
Logistics Principle #4
Logistics Plays Key Role in Marketing
Strategy
Supporting Strategies
Price
Product Development
Service
Promotion
42
Logistics Principle #5
Logistics Activities Affect One Another
& Other Functions of Marketing
Not a Single Activity
Combination of Integrated Functions
IntroductionChapter 1
43
Logistics Principle #6
Logistics Fulfills Promises Made by
Other Facets of Marketing
Promises to Customers
Performance
Availability
Price
Creates Demand
IntroductionChapter 1
44