Logistics Management

Introduction to the Course

Jing Yuan Feb, 2008

Introduce Yourself
Lets me know who you are. Whats 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,

References (not required)

Christopher, M. (2006) Logistics and Supply Chain Management: Creating Value-adding Network, third edition, 2006

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
2 3 4

logistics and Supply chain

Material and information flow

Competing through logistics

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

No distribution center

Centralized distribution

Built its own distribution center---joint distribution

Key issues

What is supply chain, and how is it structured?

What is the purpose of a 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 that link partners in a supply chain together in order to serve needs of the end-customer.

Definition

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

Definition

The task of coordinating material flow and information flow across the supply chain.

Activity 1
Wheat Flour Printed materials Aluminium Fiberboard

Praline

Wafers Confectionery manufacturer

Multiple retailers Packing

Chocolate

Wholesalers
Others (hospital etc.)

End customers

Creamery (milk)

Cocoa beans

Sugar

Vegetable oil

Cocoa butter

Lecithin

Emulsifiers, Salt, etc.

1
2 3 4

logistics and Supply chain

Material and information flow

Competing through logistics

Logistics strategy

Key issue

What is the relationship between material flow and information flow?

Case study: Seven-eleven

Case study: Seven-elevens 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-elevens 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
2 3 4

logistics and Supply chain

Material and information flow

Competing through logistics

Logistics strategy

Key issues

How do products win orders in the marketplace?

How does logistics contribute 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
are factors that directly and significantly help products to win orders in the marketplace. Customers regard such factors as key reasons for buying that product or services.

Order qualifiers
are factors that are regarded by the market as an entry ticket. Unless the product or service meets basic performance standards, it will not be taken seriously.

Activity 3
Compare the details for characteristics of both household appliance and mobile phones product lines. Go on to identify the principal order winners and qualifiers for each product.

Vs.

1
2 3 4

logistics and Supply chain

Material and information flow

Competing through logistics

Logistics strategy

The value chain: Linking supply chain and business strategy

Business Strategy
M Supply Chain Strategy a New Product Marketing rk Strategy Strategy et in New Marketing g Ope Distri Se New product Product and Operations a ratio butio rvi Development Development Sales n ns n ce d s Information Technology, Human Resources Finance, Accounting, al e s

How to Achieving Strategic Fit

Understanding the Customer
Lot size
Response time Service level Product variety Price Innovation How to measure? Implied Demand Uncertainty

Levels of Implied Demand Uncertainty

Detergent High Fashion

Customer Need
Price Responsiveness

Low

High

Implied Demand Uncertainty

Understanding the Supply Chain: CostResponsiveness Efficient Frontier

Responsiveness
High

Low

Cost
High Low

Achieving Strategic Fit

Responsive supply chain

Responsiveness spectrum

Efficient supply chain Certain demand Implied uncertainty spectrum Uncertain demand

Strategic Scope
Suppliers Manufacturer Distributor Competitive Strategy Product Dev. Strategy Supply Chain Strategy Marketing Strategy Retailer Customer

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 Inventory Transportation Facilities Information Efficiency Cost of holding Consolidation Responsiveness Availability Speed

Consolidation / Proximity / Dedicated Flexibility What information is best suited for each objective