1

Log|st|ca| performance cyc|es

Cvcles are seLs of loalsLlcal acLlvlLles ln loalsLlcal
value chaln
1vpes of LoalsLlcal erformance Cvcles
1 rocuremenL
2 ManufacLurlna supporL
3 hvslcal dlsLrlbuLlon
2 2
VENDOR
COMPONENTS
PLANT
ASSEMBLY
PLANT
DISTRIBUTION
CENTER
CUSTOMER
PROCUREMENT
CYCLE
MANUFACTURING
SUPPORT CYCLE
PHYSICAL
DISTRBUTION
CYCLE
SYSTEM IN PUT
INPUT
SYSTEM
OUT PUT
3
mportant features
1 LoalsLlcal performance cvcles llnk all
parLlclpaLlna flrms (faclllLles) and
oraanlzaLlons ln Lhe value chaln up and down
bv lnformaLlon and producL movemenL
2 lnpuL senslLlve (cusLomer order) dvnamlc
3 SenslLlveness deLermlnes efflclencv of
operaLlna svsLem
4
perat|ng ect|ves f Log|st|cs
5
kap|d response
blllLv Lo respond rapldlv Lo cusLomer's order
Plah flexlblllLv
ShorL leadLlmes
SMLu and kanban
8eal Llme lnformaLlon
l1 supporLed svsLems
6
M|n|mum var|ance
nv evenL LhaL dlsrupLs flow of supplles Lo
cusLomer ls var|ance
roblems ln lnformaLlon flow Lrafflc snarls acLs
of aod wrona dlspaLches LranslL damaae
lnLerrupLs producL dellverv
undermlnes C1u Cb[ecLlve
7
Pow Lo malnLaln smooLh undlsLurbed flow of
supplles Lo cusLomer?
1radlLlonal approach sLock plllna
Modern approach Mlnlmum varlance
8
M|n|mum |nventory
% Low lnvenLorv volume bv hlah lnvenLorv Lurns
% kanban as an lnvenLorv conLrol Lool
% Slnale plece flow as pracLlced bv !l1 companles
9
Movement conso||dat|on
MovemenL plannlna Lo reduce cosLs
% ulk volume same producL or collecLlon
% Lona runs ellmlnaLlna broken shorL runs
% lnLearaLlna lnLeresLs of several plavers ln
buslness
10
Cua||ty
;uallLv of loalsLlcs performance compleLe
fulflllmenL of order producL place Llme and
quanLlLv
11
L|fe cyc|e support crad|e to crad|e |og|st|ca|
support to product
fter sa|es serv|ce
1 roducL dellverv (cradle)
2 laulL free lnsLallaLlon
3 1ralnlna (how Lo use)
4 8epalrs and malnLenance
3 roducL replacemenL (cradle)
12
keverse Log|st|cs
LoalsLlcs ln reverse dlrecLlon
CusLomer Lo suppller
Suppller Lo vendor
1 8lald quallLv sLandards (;)
2 1ranslL damaae (;)
3 roducL explraLlon daLlna (;)
4 roducL recall (;)
3 Law aaalnsL unsclenLlflc dlsposal (L)
13
Law maklna recvcllna mandaLorv
7 Lrroneous order processlna bv suppller (L)
8 8euse of packaalna maLerlal (C)
9 WhaL are Lhe dr|vers of reverse |og|st|cs?
% ;uallLv
% CosL
% law
14
Subdivisions of logistics
management
15
Subdivisions of logistics management |The
Management oI Business Logistics by Coyle,
Bardi, Langley Page # 39|
Business Logistics
W Procuring, moving and storing oI R/M & F/G
W Facilitation oI relevant manuIacturing and
marketing
WProviding competitive edge in commodities
market
16
Event logistics
The net work oI activities, Iacilities and personnel
required to
W Organize
W Schedule
W And deploy the resources Ior
WAn event to take place and to
W EIIiciently withdraw aIter the event
17
Service logistics - the acquisition, scheduling
and management oI the Iacilities/assets, personnel
and materials to support and sustain a service
operation medical service to tribal areas
Military logistics - design and integration oI all
aspects oI support Ior the operational capability oI
the military Iorces |deployed or in garrison| and
their equipment to ensure readiness, reliability and
eIIiciency
;uesLlons l v
1 WhaL are performance cvcles?
2 Lxplaln each cvcle
3 WhaL are loalsLlcal funcLlons?
4 Lxplaln each funcLlon
3 LvoluLlon of modern loalsLlcs and SCM
18
ome more concepts
19
20
Logistical mission
|Logistics & SCM by Martin Christopher, Page #
13, L/M by Bowersox Page #9|
Achievement oI business obiectives at minimum
logistical cost
W Set oI goals to be achieved responsive to
competition
21
WLogistics Mission is achieved by perIorming
logistical Iunctions as per single plan` Ior the
entire organization
W Mission of logistics is providing a means by
which customer satisIaction is achieved
22
~A
High Value
~B
Brittle
~C
Low value
Customer-
Service Goals
[QCD]
At market type
A
Customer
Service Goals
[QCD]
At market type
B
Customer
Service Goals
[QCD]
At market type
C
Transp
Warehouse
M/H
Functional Inputs to Logistical Management
SINGLE PLAN
1. Logistical Mission
Inventory
Mgt
Packg Info
23
lnbound loalsLlcs (procuremenL cvcle)
















Sourcing
Order
placement
& expediting
Vendor
(For
processing)

Transportation
Receiving
Documentation,
material handling,
inspection)

Storage
IdentiIication,
documentation)
Issue
to user department)
2. Inbound Logistics
24
Inbound logistics (procurement cycle)
Logistical operations in procurement cycle
Potential avenues Ior reducing systems costs
W Value oI inventory is low capital blocked is low)
W Trade oII between inventory cost reduction
inventory in house & in transit) and transportation
cost reduction
25
Important in Input Intensive industries
W Complexity
W Large number oI inputs & vendors
26
CuLbound LoalsLlcs conLlnued




Customer
order
Order
transmission
Order
processing
Order
Selection
(Documentation.
packaging)

Order
transportation
Customer
delivery
3. Outbound Logistics
27
Outbound Logistics (distribution performance
cycle)
W Value added goods are to be made available in
the market distributed through the network oI
warehouses and retailers` shops
W Value oI the inventory is very high as during
conversion value is added
28
W Trade oII between transportation cost reduction
and customer service
W Trade oII between inventory cost reduction and
transportation cost reduction
W Important in Output Intensive industries
29
nterface w|th market|ng
PRICE
PRODUCT
PROMOTION
PLACE
LOGISTICS
MARKETING
4. Logistical interfaces
30
Interface with marketing
A common wall, surIace or area with another body,
concept or Iunction - area oI common interest or
concern
W Four Ps oI marketing and logistical interIace
1. Price - marketing can re oIIer the price to beat
the competition with superior logistical support
31
2. Product (& Packaging)- size shape &
weight/volume ratio oI the product has maior
impact on logistical cost
Gillette story of floor displays -
3. Promotion - promotional strategies oI
marketing need to be decided by working
closely with logistics
# Push/Pull strategy
32
4. Place - whether to distribute through
wholesalers or through retailers is a marketing
decision with impact on logistics
# wholesalers` demand & retailers` demand
Customer Service - another area oI interIace
between marketing & logistics
33
Interface with operations




SHORT RUNS


SEASONAL
DEMAND

SUPPLY SIDE
INTERFACE

PACKAGING
LOGISTICS
OPERATIONS
34
Interface with operations
1. Short production runs
Very strong logistical support is needed to
operate at small batches (short runs) of large
variety
n IT production is in Short runs
35
. SeasonaI demand
nventory of R/M or F/P?
How much & where?
nventory should be mutually accepted
36
. SuppIy side interface
Procurement cycle
Logistics of the vendor and supplier
Prevent shortages & reduce cost
37
. Packaging
A logistical function to protect the output of
operations
Protective packaging & Logistical
packaging
Where? When? Who? How?
. RoIe of pIanning in Iogistics
management
38
39
RoIe of pIanning in Iogistics management
Planning is a core activity in Logistical
Management
O Mission of logistics (?) is achieved by
planning
O Concept of singIe pIan
O Logistical Management makes one plan,
that replaces traditional concept of planning in
pockets
s |n us|ness
40
41













'C customers
Look for value
[benefit] at lowest
price
~C company
By effective
utilization
of assets tries to
create and offer
value to customers
~C competition
By effective
utilization of assets
tries to create and
offer value to
customers

Value Value
Cost differentials
Importance of 3Cs & Logistics
WhaL ls resulL of Lhe lnLeracLlon of 3Cs?
% roducLlvlLv lmprovemenL
% radual commodlLlzaLlon of producLs
% LoalsLlcs assume Lhe role of provldlna Lhe
compeLlLlve edae
42
43























SERVICE
LEADER





OK
OK
SERVICE &
COST LEADER





HAPPY
HAPPY






SAD
COST LEADER





OK
C O S T


S
E
R
V
I
C
E

Whom
shall I
buy
from?
CUSTOMER
HIGH
LOW
LOW
HIGH
What can Logistics do?
44
Questions V
Q1. What is interIace?
Q2. Explain one oI the marketing interIaces
Q3. Explain one oI the operations interIaces
Q4. What are the 3 Cs?
Q5. What advantages are created by logistics?
ntegrated Log|st|cs
45
46
Integrated Logistics
Integration oI logistics oI product and service
consolidated logistics mix to deliver product and
service)
Modern logistics is integrated logistics
A result oI evolution
47
Factors responsible for the evolution
Consumer awareness 1960s
Introduction oI computer 1960s
Global recession oI 1970s & 1980s
JIT manuIacturing 1980s
48
Integrated logistics evolved Irom the status oI
'economy`s dark continent in early 1960s to a
crucial management Iunction oI today
SigniIicant developments during the evolution
Internal integration
Functional integration
Integration with other management Iunctions)
49
Single plan concept to coordinate Ilows oI
inIormation & inventory
customers` demand Ior service
Integration oI Logistics |inIrastructures| oI
Services and Products
50
PRODUCTT DELIVERY
SERVICE DELIVERY
(Lead time mgt)
(Allocating resources-
Creating capacity)
(Selecting channels)
Log|st|ca| competency
51
52













Inventory Ilow
Physical
distribution
ManuIacturing
support

Procurement
InIormation Ilow

Customer

Suppliers
Logistical competency
53
Logistical competency
Logistical Competence Capability)
Required standards oI skills and ability Ior
perIorming logistical Iunctions & to coordinate
Ilows in logistical network
Logistical inIrastructure, physical and
inIormational
54
Logistical Competency
The ability to convert capability into
perIormance
How it is achieved?
Internal integration
Functional Integration
PerIorming integrated logistics
55
Jhat |s Log|st|ca| competency?
1 Level of performance of loalsLlcal funcLlons
2 Level of coordlnaLlon ln flows
3 8elaLlve assessmenL of Lhe flrm bv cusLomers
Lo perform loalsLlcal funcLlons
4 lL ls a sLraLeav of Lhe flrm Lo aLLracL cusLomers
56
5. Its aim is to exploit logistics as a core
competency to Iit into a Iirm`s overall
strategic positioning
57
Definition: Logistical Competency is the relative
assessment oI a Iirm`s capability to provide
competitively superior customer service at the
lowest possible total cost
Cuest|ons V
;1 WhaL ls loalsLlcal compeLencv?
;2 Pow do cusLomers measure loalsLlcal
compeLencv?
;3 WhaL ls lnLearaLed loalsLlcs?
;4 WhaL facLors are responslble for evoluLlon of
lnLearaLed loalsLlcs?
;3 WhaL ls funcLlonal lnLearaLlon?
58
Log|st|ca| strategy
59
60
Log|st|ca| strategy and p|ann|ng
What is Logistical strategy?
Long term plan to distribute goods to market at
minimum cost while achieving service level
obiectives
Strategic Decisions in Logistical Strategy
The core oI Logistical strategy
complex and data intensive
1. Facilities Distribution centers, Iactories,
vendors & so on) how many and where?
61
2. Inventory /service trade-oIIs
3. Network options
4. Transportation equipment
5. New material handling technology
6. InIormation technology
Log|st|ca| p|ann|ng
62
63
Jhat |s |og|st|ca| p|ann|ng?
use of sclenLlflc plannlna Lools Lo make
sLraLealc declslons
MeLhodoloav for loalsLlcal plannlna
hase
% currenL assessmenL (SWC1 analvsls) Lo
deLermlne Lhe need deslrablllLv for
chanae ln sLraLeav
% roblem deflnlLlon and analvsls
64
Phase II
Develop strategic alternatives
Phase III
Recommendation to management about the best
alternative
Formulate implementation plan
ome m|sc concepts
65
66
First Party Logistics (1PL)
Supplier company
Second Party Logistics (2PL)
Customer or vendor company
Third Party Logistics (3PL)
Outsourced company
67
Fourth Party Logistics 4PL)
A consultant company
FiIth Party Logistics 5PL)
A Iinancial consultant
W Cobbling
W Hub and spokes network
68
Focused factories
A Focused Factory strives Ior a narrower range
oI products, customers or processes
The result is a Iactory that is smaller
has Iewer Key Manufacturing Tasks
specialization)
It optimizes perIormance in selected areas
Costs are less, customer service is better
ttr|utes of Log|st|cs funct|on
(Department)
69
70
Attributes of Logistics Department
1. Scope is wide spread- Iunctions oI logistics are
spread across various stages oI value chain in the
organization
2. Provides interface between marketing and
customers, marketing and operations, operations
and supplier
71
3. Provides competitive edge to business in the
current environment
4. Handles flow oI inIormation and materials
5. Large avenue Ior cost reduction
72
. Cost advantage and value advantage
through logistics
Cost advantage through logistical cost
reduction
Value advantage through superior customer
service
73
How value advantage is created?
By delivering utility value
Form utility
Time utility
Place utility
Possession utility
Cuest|ons V
;1 WhaL ls loalsLlcal sLraLeav and plannlna?
;2 WhaL ls 3L?
;3 WhaL ls 4L?
;4 WhaL are focused facLorles? locused
loalsLlcs?
;3 WhaL ls ossesslon uLlllLv?
74