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Dimensions of Logistics
Learning Objectives - After reading this
chapter, you should be able to do the following:
Understand the role and importance of
logistics in private and public organizations.
Discuss the impact of logistics on the
economy and how effective logistics
management contributes to the vitality of the
economy.
Understand the value-added roles of logistics
on both the macro and micro level.
Explain logistics systems from several
perspectives.
Chapter 2 2
Learning Objectives
Understand the relationship between logistics
and the other important functional areas in a
company, including manufacturing,
marketing, and finance.
Discuss the important management activities
in the logistics function.
Chapter 2 3
Learning Objectives
Analyze logistics systems from several
different perspectives to meet different
objectives.
Determine the total costs and understand the
cost trade-offs in a logistics system from a
static and dynamic perspective.
Chapter 2 4
Logistics Profile:
Jordano Foods
Jordano Foods is a major vendor for SAB
Distribution, and must decide if it wants a
supply chain relationship with SAB.
Jordano’s CEO put together a study team to
evaluate the impact of adding a logistics
systems approach.
As you read this chapter, look for ways for
Jordano to improve its logistics processes and
supply chain relationship with SAB.
Chapter 2 5
Dimensions of Logistics:
Introduction
Logistics has come a long way since the 1960s.
The big challenge is to manage the whole
logistics system in such a way that order
fulfillment meets or exceeds customer
expectations.
Focus of this chapter is upon the individual
firm’s logistics system but also recognizing that
no logistics system operates in a vacuum.
môi trường chân không
Chapter 2 6
Figure 2-1
Contemporary Supply Chain Pipeline
1998 10.1
1996 10.3
1995 10.4
1990 11.4
1985 12.3
1980 15.7
0 5 10 15 20
Chapter 2 8
Logistics in the Economy:
A Macro Perspective
As indicated in Figure 2-2, logistics costs as a
percentage of GDP have declined from 16
percent in 1980, to under 10 percent in 1999.
Early to mid-1970s saw the figure closer to 20
percent.
phản ánh
This reflects a serious improvement in the
efficiency of logistics systems.
Figure 2-3 shows a further breakdown of
logistics costs for 1999.
Chapter 2 9
Figure 2-3:
Total Logistics Costs --- 1999
Chapter 2 10
Figure 2-4:
Inventory Sales Ratio
Chapter 2 11
Logistics in the Economy:
A Macro Perspective
Cục Dự trữ Liên bang
Chapter 2 12
Logistics in the Economy:
A Macro Perspective
The two largest cost categories in logistics
systems are transportation and inventory.
While we will look at this in Chapter
vận chuyển hàng hóa chi phí
9, motor
carriers’ share of total freight expenditures is
$450 billion versus $99 billion for all other
carriers.
so với
Chapter 2 13
What is Logistics?
Increased recognition through news media,
corporate-owned trailer promotions, and
television
Increased sensitivity to service quality
provided by logistics
Logistics definitions provided in Table 2-1 on
the following slide.
Chapter 2 15
What is Logistics?
Popular logistics terms:
Logistics Management
Materials Management
Marketing Logistics
Industrial Logistics
Distribution
Chapter 2 16
What is Logistics?:
21st Century View of Logistics
Business Logistics – supply chain process that
plans, implements, and controls the efficient,
effective flow of goods, services, and related
information from the point of origin to the point
of use or consumption in order to meet
customer requirements. hội nhập, tích hợp
Military Logistics – design and integration of all
aspects of support for the operational capacity
of the military forces, and their equipment to
ensure readiness, reliability, and efficiency.
Chapter 2 17
What is Logistics?:
21st Century View of Logistics
Event Logistics – network of activities, facilities,
and personnel required to organize, schedule,
and deploy the resources for an event to take
place and to efficiently withdraw after the
event. mua lại, thâu tóm
Service Logistics – acquisition,tàischeduling, and
management of the facilities/assets, personnel,
sản
Chapter 2 18
What is Logistics?:
Value-Added Role of Logistics
Most commonly referred to in terms of
economic utilities:
Form utility (what)
Chapter 2 20
Logistics in the Firm:
The Micro Dimension
Logistics Interfaces with
Operations/Manufacturing
Logistics Interfaces with Marketing
Logistics Interfaces with Other Areas
Chapter 2 21
Logistics in the Firm: Logistics Interfaces
with Operations Manufacturing
Length of production runs
Balance economies of long production runs
inventory to balance
lead production times.
Chapter 2 22
Logistics in the Firm: Logistics Interfaces
with Operations/Manufacturing
Supply-side
dự trữ
interfaces
đầy đủ
Stocking adequate supplies to ensure
không bị gián đoạn uninterrupted production now a logistics
function.
Protective packaging
Principal purpose is to protect the product
from damage.
Foreign & third party alternatives
Some logistics functions are being
outsourced.
Chapter 2 23
Logistics in the Firm:
The Micro Dimension
Logistics Interfaces with Marketing:
The Marketing Mix – Four Ps
Price
Product
Promotion
Place
Chapter 2 24
Logistics in the Firm:
Price
Carrier pricing
Generally, since the larger the shipment, the
quantity discounts.
Volume relationships
Volumes sold will affect inventory requirements.
Chapter 2 25
Logistics in the Firm:
Product
Consumer packaging
Generally, since the size, shape, weight and other
Chapter 2 26
Logistics in the Firm:
Promotion
Push versus pull
The most important factor is that the logistics
Channel competition
The more popular a product, the easier it is to
Chapter 2 27
Logistics in the Firm:
Place
Wholesalers
Generally, since wholesalers are combining
Chapter 2 28
Logistics Interfaces with
Other Areas
Manufacturing and marketing are probably the two
most important internal, functional interfaces with
logistics.
Other important interfaces now include finance and
accounting.
Logistics can have a major impact on return on
Chapter 2 29
Logistics Activities
Transportation Production planning
Storage Purchasing
Packaging Customer service
Materials handling Site location
Order fulfillment Other activities
Forecasting
Chapter 2 30
On the Line:
Toyota Distribution
Moves more than 8 million parts and accessories every
month.
Computer modeling re-designed the 30 year old
distribution network.
Software looked first at Lexus Division and then at the
entire network.
Resulted in two DCs, one in California, another in
Kentucky, feeding nine smaller DCs located around the
country.
The new network both improved customer service and
lowered costs.
Chapter 2 31
Approaches to Analyzing Logistics
Systems: Materials Management v.
Physical Distribution
Frequently the movement and storage of raw
materials is far different from the movement
and storage of finished goods.
Four different classifications of logistics systems
Balanced system - e.g., consumer products
Chapter 2 32
Approaches to Analyzing Logistics
Systems
Cost Centers
Treating logistics activities as cost centers makes it
Chapter 2 33
Table 2-2 Analysis of Total Logistics Cost with
a Change to Higher Cost Mode of Transport
System 1 System 2
Cost Centers
Three Warehouses Five Warehouses
Transportation $ 850,000 $ 500,000
Inventory 1,500,000 2,000,000
Warehousing 600,000 1,000,000
Cost of Lost Sales 350,000 100,000
Total Cost $ 3,300,000 $ 3,600,000
Chapter 2 35
Figure 2-6 Nodes and Links in a
Logistics System
Chapter 2 36
Figure 2-7
A Simple Logistics Channel
Chapter 2 37
Figure 2-8
A Multi-Echelon Logistics Channel
Chapter 2 38
Figure 2-9
A Complex Logistics Channel
Chapter 2 39
Logistics and Systems Analysis
Cost Perspective
Keep in mind that the most efficient
Chapter 2 40
Logistics and Systems Analysis
Level of Optimality
There are often constraints working which
Chapter 2 41
Figure 2-10 Levels of Optimality
in Economic Environments
Chapter 2 42
Techniques of Logistics System
Analysis: Short-Run/Static Analysis
Chapter 2 43
Table 2-4 Static Analysis of C & B
Chemical Company (50,000 pounds of
output)
Chapter 2 44
Techniques of Logistics System
Analysis: Long-Run/Dynamic Analysis
This technique is illustrated in Figure 2-11.
Comprised a graph of the fixed and variable
costs of at least two alternative logistics
systems.
The graph may have at least one indifference
point, but may have multiple points of
indifference.
Examine the data presented in Figure 2-11.
Chapter 2 45
Figure 2-11
Dynamic Analysis
Chapter 2 46
Dynamic Analysis
System 1 chi phí biến đổi
Total Cost = Fixed Costs + Variable Cost/unit x number of units
y = $4200 + 0.0315x
System 2
Total Cost = Fixed Costs + Variable Cost/unit x number of units
y = $4800 + 0.0230x
Trade-off Point
System 1 Total Costs = System 2 Total Costs
$4200 + 0.0315x = $4800 + 0.0230x
0.0085x = $600
x = 70,588 pounds
Chapter 2 47
Logistics in the Firm: Factors Affecting
the Cost and Importance of Logistics
Competitive Relationships
Inventory/order cycle length – see Figure 2-12.
Product Relationships
Product dollar value/logistics costs – see Figure 2-15.
Figure 2-17.
Spatial Relationships
Examine Figure 2-18.
Chapter 2 48
Figure 2-12 The Relationship between
Required Inventory and Order Cycle
Length from a Customer Perspective
Chapter 2 49
Figure 2-13 The General Relationship of
the Cost of Lost Sales to Inventory Cost
Chapter 2 50
Figure 2-14 chi phí thiếu hàng so với chi phí tồn kho
Chapter 2 51
Figure 2-15
The General Relationship of Product
Dollar Value to Various Logistics Costs
Chapter 2 52
Figure 2-16 The General Relationship of
trọng lượng riêng
Product Weight Density to Logistics Costs
Chapter 2 53
Figure 2-17 The General Relationship of
Product Susceptibility to Loss and
Damage to Logistics Costs
Chapter 2 54
Figure 2-18
Logistics and Spatial Relations
Chapter 2 55
Chapter 2:
Summary and Review Questions
Dimensions of Logistics