logplan by i dep man studies
TRANSCRIPT
-
8/8/2019 LogPlan by I Dep Man Studies
1/20
International Business Management
LOGISTICS MANAGEMENT
-
8/8/2019 LogPlan by I Dep Man Studies
2/20
Objectives:
1. Make available the right quantity of right quality productsat the right place and time in the right condition.
2. Reduce costs of operations: Cost reduction (variable costs)
Capital reduction (investment, fixed costs)
3. Service Improvement
Three objectives of logistics
Definition:
Logistics management is a process of planning, executing, and
controlling the efficient, effective, flow and storage of goods and
services, and related information from point of origin to point of
consumption for the purpose of conforming to customerrequirement.
-
8/8/2019 LogPlan by I Dep Man Studies
3/20
Marketingorientation
(competitive
advantage)
Time and
place utility
Efficient
movement to
customer
Proprietary
asset
Natural
resources (land,
facilities, and
equipments)
Human
resources
Financial
resources
Information
resources
Management actions
Planning Implementation Control
Logistics Activities
Customer Service
Demand forecasting
Distribution
communications
Inventory control
Material handling
Order Processing
Parts and service
support
Plant and warehouse
site selection
Procurement
Packaging
Return goods handling
Salvage and scrap
disposal
Traffic and
transportation
Warehousing and
storage
Raw
materials
In-process
inventory
Finished
goods
Inputs into logistics
Suppliers
Logistics management
Customers
Outputs of
logistics
Components of
logistics management :
-
8/8/2019 LogPlan by I Dep Man Studies
4/20
Three categories:
Production
Storage
Transportation
Inputs: resources.
The term Resource applies to all of the factors
of production, including materials (e.g. cotton,
parts), equipment (e.g. machines or vehicles),
energy (e.g. oil, coal, electricity) and labor.
-
8/8/2019 LogPlan by I Dep Man Studies
5/20
PRODUCTION: Fundamental logistics questions are: (1) when should a
resource be produced; and (2) where should a resource be
produced.
The when question includes the topics of aggregate resourceplanning, and production scheduling.
The where question includes the topics of facility location and
production allocation.
Some of the important production questions are:
(a) What outside source should be used to supply a part?
(b) Where should a new facility be built?
(c) When should a facility produce different items, taking into account:
Seasonal demand patterns?
Demand uncertainty?
Cost of operating single, double, triple shifts?
Labor costs?
(d) When should a firm use two or more sources for a part?
-
8/8/2019 LogPlan by I Dep Man Studies
6/20
INVENTORY: Fundamental logistics questions are (1) when should a
resource (material, machine or labor) be put in inventory and taken
out of inventory; and (2) where should a resource be stored.
The when question includes the general topics of economic-order-
quantity models, safety stock models and seasonal models, and
specialized topics of fleet management, and personnel planning.
The where questions includes the topic of inventory echelons.
Some of the important inventory questions are:
(a) How much does it cost to store resources in inventory?
(b) How much safety stock should be carried in inventory to prevent
against running out of a resource?
(c) How much inventory should be carried in order to smooth out
seasonal variations in demand?
(d) Where should replacement parts be stored in multi-echelon
inventory system?
-
8/8/2019 LogPlan by I Dep Man Studies
7/20
TRANSPORTATION: Fundamental logistics are: (1) where should
resources be moved to, and by what mode and route; (2) when
should resources be moved.
The where question includes the topics of terminal location,
vehicle routing, and shortest path methods and network flow
allocation.
The when question includes the topic of distribution rules.
Some of the important questions are:
(a) When should shipment be sent through terminals, and when
should shipment be sent direct?
(b) Which, and how many, terminals should shipments be sentthrough?
(c) What are the best vehicle routes?
(d) When should a vehicle be dispatched over a route?
-
8/8/2019 LogPlan by I Dep Man Studies
8/20
Logistics - Science of managing (controlling) the movement and
storage ofgoods (or people) from acquisition to consumption.
Goods: Raw Materialsp Final products, and everything in between.
Logistics for services & people similar to goods logistics.
Ex. Police, fire, ambulance, passenger airlines, taxi cabs, etc.
Movement = Transportation (between locations).
Storage = Inventory, Warehousing (at locations).
Difference between acquisition and consumption is a matter of space
and time.
NOTE: Logistics does not dealwith Technology of Production, such
as the design of machines and vehicles and the design of finished
products.
Focus: Best way to overcome space and time that separates acquisitionand consumption.
-
8/8/2019 LogPlan by I Dep Man Studies
9/20
1998 CLM DEFINITION OF LOGISTICS
.is that part of the supply chain process that
plans, implements, and controls the efficient,
effective flow and storage of goods, services,
and related information from the point-of-
origin to the point-of-consumption in order to
meet customers' requirements.
Council of Logistics Management, 1998;
www.CLM1.org
-
8/8/2019 LogPlan by I Dep Man Studies
10/20
Five Business Systems - Tightly Interconnected Within The
Organization
MeasurementDecisions
Management
Systems
RewardDecisions
StrategicDecisions
TransportationDecisions
SourcingDecisions
InventoryDecisions
LogisticsSystems{
Price
DecisionsPromotionDecisions MarketingSystems
ProductDecisions
Place (How,where, how
much) }ProductionScheduling
Decisions
ProductionCapacity
Decisions
Shop FloorDecisions
Manufacturing
Systems}
Product
Design
Decisions
Process
Design
Decisions Engineering
Systems}
Copyright 2000 - All Rights Reserved
-
8/8/2019 LogPlan by I Dep Man Studies
11/20
Logistics Mission [A Bill of Rights]
Logistics embodies the effort to deliver:
the right product
in the right quantity in the right condition
to the right place
at the right time
for the right customer
at the right cost
-
8/8/2019 LogPlan by I Dep Man Studies
12/20
Activities and Logistics Decisions
Transportationrate and contract negotiationmode and service selectionrouting and scheduling
Inventories
finished goods policiessupply schedulingshort term forecasting
Warehousingprivate vs. publicspace determinationwarehouse configurationStock layout and dock designstock placementCross-docking
Facility Location
determining location, numberand size of facilities
allocating demand to facilities
Customer Service
determining customer wantsdetermining customer responseto service changes
Materials Handlingequipment selectionequipment replacementorder picking procedures
Packaging designOrder Processing
order procedure determinationProduction Schedulingaggregate production quantitiessequencing and timing of
production runs
-
8/8/2019 LogPlan by I Dep Man Studies
13/20
Logistics Planning
Decide what, when, how in three levels:
Strategic long range > 1 year Tactical - < 1 year horizon
Operational frequently on hourly or daily basis
Examples of DecisionsType Strategic Tactical Operational
Location
Transportation
Order Processing
(CS)
#Facilities, size,
location
Mode
Selecting order
entry system
Inventory
positioning
Seasonal ServiceMix
Priority rules for
customers
Routing
Replenishment Qty
and timing
Expediting orders
-
8/8/2019 LogPlan by I Dep Man Studies
14/20
The Logistics (Strategic) Planning TriangleThe Logistics (Strategic) Planning Triangle
Which mode?
Which carrier?
Which route?
Shipment size andfrequency?
Where?, Howmany? What size?
Allocation?
Strategy/Controlsystem?
How much?
Where?
-
8/8/2019 LogPlan by I Dep Man Studies
15/20
Transport Fundamentals
Transport involves
equipment (trucks, planes, trains, boats, pipeline),
people (drivers, loaders & un-loaders), and
decisions (routing, timing, quantities, equipment size,
transport mode).When deciding the transport mode for a given productthere are several things to consider:
Mode price
Transit time and variability (reliability)
Potential for loss or damage.
NOTE: In developing countries we often find itnecessary to locate production close to bothmarkets and resources, while in countries withdeveloped distribution systems people can live in
places far from production and resources.
Most important component of logistics cost.
Usually 1/3 - 2/3 of total cost.
-
8/8/2019 LogPlan by I Dep Man Studies
16/20
Routes of Goods
Goods atshippers
Freightforwarderwarehouse
Airterminal
planeair
Freightforwarderwarehouse
Goods atconsignees
Container
terminal vesselsea Maychange
transpor-tationmodes
truck
landrailway
land barge
mid-streampier
bulk goodssea
let us guess
-
8/8/2019 LogPlan by I Dep Man Studies
17/20
AirRapidly growing segment of transportation industry
Lightweight, small items [Products: Perishable and time sensitive
goods: Flowers, produce, electronics, mail, emergency shipments,
documents, etc.]
Quick, reliable, expensive
Often combined with trucking operations
Rail
Low cost, high-volume [Products: Heavy industry, minerals, chemicals,
agricultural products, autos, etc.]
Improving flexibility
intermodal serviceTruck
Most used mode
Flexible, small loads [Products: Medium and light manufacturing, food,
clothing, all retail goods]
Trucks can go door-to-door as opposed to planes and trains.
Single-mode Service Choices and Issues
-
8/8/2019 LogPlan by I Dep Man Studies
18/20
Water
One of oldest means of transportLow-cost, high-volume, slow
Bulky, heavy and/or large items (Products: Nonperishable
bulk cargo - Liquids, minerals, grain, petroleum, lumber,
etc )]
Standardized shipping containers improve serviceCombined with trucking & rail for complete systems
International trade
Pipeline
Primarily for oil & refined oil productsSlurry lines carry coal or kaolin
High capital investment
Low operating costs
Can cross difficult terrain
Highly reliable; Low product losses
Single-mode Service Choices and Issues (Contd.)
-
8/8/2019 LogPlan by I Dep Man Studies
19/20
Transport Cost Characteristics
Fixed costs:
Terminal facilities
Transport equipment
Carrier administration
Roadway acquisition and maintenance
[Infrastructure (road, rail, pipeline,navigation, etc.)]
Variable costs:
Fuel
Labor
Equipment maintenance
Handling, pickup & delivery, taxes
NOTE: Cost structure varies by mode
-
8/8/2019 LogPlan by I Dep Man Studies
20/20
Transport Cost Characteristics
Rail
High fixed costs, low variable costs High volumes result in lower per unit (variable) costs
Highway
Lower fixed costs (dont need to own or maintain roads)
Higher unit costs than rail due to lower capacity per truck
Terminal expenses and line-haul expenses Water
High terminal (port) costs and high equipment costs (bothfixed)
Very low unit costs
Air
Substantial fixed costs
Variable costs depend highly on distance traveled
Pipeline
Highest proportion of fixed cost of any mode due to pipelineownership and maintenance and extremely low variable costs