Logistics

Objective of information and

logistics management

Minimise logistics costs

Deliver maximum customer service

Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill

Objectives of the supply chain

manager 1. Communication increase along chain –

uninterrupted flow

2. Cost control: decreasing inventory,

keeping high C-service levels …

decrease supplier base and develop

supplier relationships

3. Standardisation of parts … on time,

happy customers, reduced inventory …

Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill

Factors to be taken into

consideration

• IT systems

• Cost

• Customers

Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill

IT

Data on:

• Inventory

• Transportation

• Distribution facilities

• Customers throughout supply chain

• Invoices and payments

Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill

Cost & C-service

Transport

Inventory

Stockout

Materials handling

Warehousing

Order processing

Communication

Dependability

Time

Convenience

Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill

Total logistical cost factors Customer service factors

How customer service standards will differ by type

of firm

Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill

Type Customer service standard

Wholesaler At least 98 percent of orders filled accurately

Manufacturer Order cycle time of no more than five days

Retailer Returns accepted within 30 days

Airline At least 90 percent of arrivals on time

Trucker A max of 5 percent loss and damage per year

Restaurant Lunch served within 5 minutes of order

PRINCIPLES OF SUPPLY CHAIN

MANAGEMENT

1. Communication

2. Flexibility, inventories and customer service

3. Decision-making

4. Metrics and data-collection:

• Quality

• Delivery

• Flexibility

• Cost

• After-sales support

COMMUNICATION

A clever retailer would share the point-of-

sale data and forecasts with suppliers

Till point link from retailer to supplier …

automatic ordering …

THE BASIS FOR GOOD

CUSTOMER SERVICE

Flexibility Customer service

Inventory

Influence

Influence

Influence

DECISION-MAKING

strategic

tactical

operational

PRINCIPLES OF SUPPLY CHAIN

MANAGEMENT

1. Communication

2. Flexibility, inventories and customer service

3. Decision-making

4. Metrics and data-collection:

• Quality

• Delivery

• Flexibility

• Cost

• After-sales support

METRICS AND DATA

COLLECTION

Metric = standard of measurement

against performance … benchmark

Can only KNOW if have data …

Logistics costs:

• Transportation

• Operation of distribution centres

• Management of finished goods inventories

• Order processing for sales

Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill

(1) quality

• functionality

• conformance

• reliability

• durability

• safety

• serviceability

• aestetics

(2) delivery

• speed

• reliability

(3) flexibility

• mix flexibility

• changeover flexibility

• design flexibility

• volume flexibility

(4) cost

Just so that ops and supply chain usually account for

most of organisations’ cost … thus target for cost

reduction …

(5) after-sales support

Especially if there is a high price tag to product …

Pitfalls of supply chain inventory management and their symptoms

Pitfalls

1. No supply chain metrics

2. Inadequate definition of customer service

3. Inaccurate delivery status data

4. Inefficient information systems

5. Ignoring the impact of uncertainties

6. Simplistic inventory stocking policies

7. Discrimination against internal customers

Pitfalls

8. Poor coordination

9. Incomplete shipment methods analysis

10. Incorrect assessment of inventory costs

11. Organisational barriers

12. Product-process design without supply

chain considerations

13. Separation of supply chain design from

operational decisions

14. Incomplete supply chain

• Higher competition i.e. pimp local

manufacturing

• Longer order-to-delivery times

• Less-dependable forecasts

• Reduced production flexibility

• Higher levels of inventory

• Thus, coordination should be better

Improving supply chain

management

• Integration

• Coordination

General coordination

Multi-plant coordination

= systematic approach to

examining the development of

competitive advantage

Marketing And

Sales

Support activities

Primary activities

HRM

Technology department

Procurement

Outbound logistics

Operations

Inbound

logistics Service

Firm infrastructure

margin

margin

Core business processes

• Product development

• Inventory management

• Order-to-payment

• Customer service