Logistics Management

Introduction to the Course

Jing Yuan
Feb, 2008
Introduce Yourself

 Let’s me know who you are.

 What’s logistics management?
 Supply chain management Vs. logistics
management
…
Outline
 Introduce yourself
 Who I am
 Course introduction
– Course description
– Learning objectives
– Textbooks
– Grading policy
– Schedules
Outline

 Introduce yourself
 Who I am
 Course introduction
– Course description
– Learning objectives
– Textbooks
– Grading policy
– Schedule
Course description

 An introductory course in the analysis,

design and operation of logistics and
supply chain
 Presented through lectures along with
several case studies and experiments
 The lectures consist of nine parts
Learning objectives

 Knowledge the strategic role of the supply

chain
 An understanding of logistic systems &
their management problems
 Ability to devise workable solutions in
business situations
Textbooks

 Textbook
– Harrison, A. and Hoek, R. V. (2006) Logistics
Management, second edition, 机械工业出版
社
 References (not required)
– Christopher, M. (2006) Logistics and Supply
Chain Management: Creating Value-adding
Network, third edition, 电子工业出版社
– 张余华，现代物流管理，华中科技出版
社， 2006 年。
Lecture Organization

 Lecturing
 Videos
 Group exercises
 Case discussion
 Case study presentations
Grading Policy
 Grading
– Assignment and Quiz 10%
– Midterm 20%
– Final Project 70%
 Midterm
– Case study
– Final presentation
 Final project
– A closed examination held in the last week of term
Schedule

 Lectures
– 14 weeks
 Case study presentations
– 2 weeks
 Experiments
– 2 weeks
Logistics Management

Logistics and supply chain

1 logistics and Supply chain

2 Material and information flow

3 Competing through logistics

4 Logistics strategy
Case study

 Seven-eleven convenience store

– Describe the key logistics processes at 7-11.
– What differences between the early reform
and the regional distribution center at 7-11.
– What do you think are the main logistics
challenges in running the 7-11 operation.
Case study

First stage Second stage Third stage

Built its own

No
Centralized distribution
distribution
distribution center---joint
center
distribution
Key issues

What is supply chain, and

1 how is it structured?

What is the purpose of a

2 supply chain?
The Supply Chain Concept

 Development of the Concept

– Total systems cost - remains an important element
of logistics analysis.
– Outbound logistics – the warehousing and
distribution of finished goods.
– Inbound logistics – the receiving and warehousing
of raw materials, and their distribution to
manufacturing as they are required.
– Value chain analysis integrated logistics activities.
Business Logistics in a Firm
The Supply Chain management Concept

 A supply chain is a group of partners who

collectively convert a basic commodity
(upstream) into a finished product (downstream)
that is valued by end-customers, and who
manage returns at each stage.

Planning and controlling all of the processes

Definition that link partners in a supply chain together in
order to serve needs of the end-customer.
Supply chain:
structure and tiering

The process starts with

several external suppliers
that move milk, cardboard,
and plastic to the processing
plant.
After the milk is processed
and packaged, it is delivered
to retailers, who sell it to
customers. The alternative
delivery system is delivery
from a warehouse directly to
customers’ homes.
Supply chain:
structure and tiering Supply chain can be fairly
complex. The supply
chain for a car
manufacturer includes
hundreds of suppliers,
dozens of manufacturing
plants (for parts) and
assembly plants (for
cars), dealers, direct
business customers,
wholesalers, customers,
and support functions
such as product
engineering and
purchasing.
Logistics concept

The task of coordinating material flow

Definition and information flow across the supply
chain.
 Activity 1
Printed
Wheat Flour Aluminium Fiberboard
materials

Multiple
Praline Wafers retailers

Confectionery End
Chocolate Packing Wholesalers
manufacturer customers

Others
(hospital etc.)

Creamery Cocoa Vegetable Cocoa Emulsifiers,

Sugar Lecithin
(milk) beans oil butter Salt, etc.
1 logistics and Supply chain

2 Material and information flow

3 Competing through logistics

4 Logistics strategy
Key issue

What is the relationship between

1 material flow and information
flow?
Case study: Seven-eleven
Case study: Seven-eleven’s distribution
strategy
 Delivery arrives from over 200 plants
 Delivery is cross docked at DC (over 80 DCs for
food)
 Food DCs store no inventory
 Combined delivery system: frozen foods, chilled
foods, room temperature and hot foods
 11 truck visits per store per day (compared to 70
in 1974)
 No supplier (not even coke!) delivers direct
Case study: Seven-eleven’s
Information Strategy

 Quick access to up to date information (as

contrasts with data)
– High speed data network linking stores, headquarters,
DCs and suppliers
– Store hardware
– Store computer
– POS registers linked to store computer
– Graphic Order Terminals
– Scanner terminals for receiving
Integrated Logistics Management
Material and information flow
Material and information flow

Material flow

Information flow
Activity 2

 Describe the material and information flow in the

supply network affecting one of the major
products in Activity 1.
1 logistics and Supply chain

2 Material and information flow

3 Competing through logistics

4 Logistics strategy
Key issues

How do products win orders in

1 the marketplace?

How does logistics contribute

2 to competitive advantage?
Creating logistics advantage: three
basic ways

quality time

Logistics advantage

cost
Creating logistics advantage:
controlling variability

 Variability undermines the dependability with which a product or

service meets target.
Order winners and order qualifiers

Different logistics
performance
objectives

Order winners Order qualifiers

are factors that directly and are factors that are regarded
significantly help products to by the market as an ‘entry
win orders in the ticket’.
marketplace. Unless the product or service
Customers regard such meets basic performance
factors as key reasons for standards, it will not be taken
buying that product or seriously.
services.
Activity 3

 Compare the details for characteristics of

both household appliance and mobile
phone’s product lines.
 Go on to identify the principal order
winners and qualifiers for each product.

Vs.
1 logistics and Supply chain

2 Material and information flow

3 Competing through logistics

4 Logistics strategy
 The value chain: Linking supply chain
and business strategy
Business Strategy

Supply Chain Strategy

New Product Marketing
Strategy Strategy
New Marketing
NewProduct
product and
Marketing OperationsDistribution
Operations Service
Development
Development andSales
sales

Finance, Accounting, Information Technology, Human Resources

How to Achieving Strategic Fit
 Understanding the Customer
– Lot size
– Response time
– Service level Implied Demand
How to measure?
– Product variety Uncertainty
– Price
– Innovation
Levels of Implied Demand Uncertainty
Detergent High Fashion

Customer Need
Price Responsiveness

Low High

Implied Demand Uncertainty

Understanding the Supply Chain: Cost-
Responsiveness Efficient Frontier
Responsiveness

High

Low
Cost
High Low
Achieving Strategic Fit
Responsive
supply chain

Responsiveness e of it
o n ic F
spectrum Z eg
t
t ra
S

Efficient supply
chain
Certain Implied Uncertain
demand uncertainty demand
spectrum
Strategic Scope

Suppliers Manufacturer Distributor Retailer Customer

Competitive
Strategy

Product Dev.
Strategy

Supply Chain
Strategy

Marketing
Strategy
Drivers of Supply Chain Performance
Competitive strategy

Efficiency Responsiveness
Supply chain strategy and structure

Inventory Transportation Facilities Information

Drivers
Considerations for Supply Chain Drivers

Driver Efficiency Responsiveness

Inventory Cost of holding Availability

Transportation Consolidation Speed

Facilities Consolidation / Proximity /

Dedicated Flexibility
Information What information is best suited for
each objective