You are on page 1of 22

Design for Logistics- suppliers

Presented by:- Group 4 BY- Barun kumar VVSBS

Design for logistics
• It is a series of concepts in the field of supply chain management involving product and design approaches that help to control logistics costs and increase customer service levels. These concepts were introduced by Professor Hau Lee of Stanford University.

Design For Logistics •Product and process design key cost drivers of product cost •Design for Manufacturing used design to decrease manufacturing costs •Major supply chain costs include transportation costs. inventory costs. distribution costs .

and cost of being out of stock) • Materials handling • Order management • Parts and service support • Production scheduling • Procurement • Returned products • Salvage and scrap disposal • Transportation management • Warehousing management . cost of ordering.Activities in the Logistics Channel Activities that are considered to be logistics related include. but are not limited to: • Customer service • Demand forecasting • Facility location decision • Industrial packaging • Inventory management (cost of carrying/holding.

Postponement . Concurrent/Parallel Processing 3.Design for Logistics uses product design to address logistics costs •Key Concepts of Design for Logistics 1. Economic packaging and transportation 2.

of stores enjoy economies of scale .Economic Packaging & Transportation Design products for efficient packaging & storage. pack more compactly •Example: IKEA –traditional furniture sales by make-to-order process –IKEA display all items in large warehouse-like space –products are manufactured in a small number of factories. packed compactly & efficiently in kits & shipped to stores all over the world –large no.

eg.Economic Packaging & Transportation •Retailers prefer compact & stackable products to fully utilize their shelf space & increase revenue per square foot •Ship goods in bulk & complete final packaging at the warehouse or even at retailer •Final packaging of some goods can be delayed until the goods are actually sold. flour. candies •Design packaging for cross-docking repackaging operation .

Concurrent & Parallel Processing Parallel concurrent processing allows you to distribute concurrent managers across multiple nodes in a cluster. fully utilizing hardware resources. you can spread concurrent processing across all available nodes. . Instead of operating concurrent processing on a single node while other nodes are idle. massively parallel. or homogeneous networked environment.

– Adaptability--the ability to integrate with platform-specific batch queue and load-balancing systems to maximize concurrent processing performance on a particular platform. or homogeneous networked environment. . – Single Point of Control--the ability to administer concurrent managers running on multiple nodes from any node in a cluster.Benefits of Parallel Concurrent Processing • Parallel concurrent processing provides Oracle Applications users with the following benefits: – High performance--the ability to run concurrent processes on multiple nodes to improve concurrent processing throughput. – Fault Tolerance--the ability to continue running concurrent processes on available nodes even when one or more nodes fails. massively parallel.

Postponement • Postponement is a concept in supply chain management where the manufacturer produces a generic product. which can be modified at the later stages before the final transport to the customer. .

Postponement •Using the fact that aggregate demand information is always more accurate than disaggregate data •Postponement techniques (delayed product differentiation) -manufacture a generic or family product which can later be differentiated into specific end products •Need to redesign products for postponement .

Design for logistic supplier • MARKETING CHANNEL • Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption. and retailers. • The main actors in the marketing channel: manufacturers. wholesalers. • Each of them assumes an ownership of the inventory of goods: – Ownership channel (movement of the title to the good) – Negotiation channel (buy and sell agreements are reached) – Financing channel (handles payments for goods) – Promotions channel (promoting a new or existing product) – Logistics channel (handles the physical flow of product) • .

One example might be translators. .Sorting out – sorting a heterogeneous supply of products into stocks that are homogeneous 2.The Logistics Channel: • Sorting function – rearranging the assortment of products as they flow through the channels toward the customer. • It has four steps which take place between the manufacturer and the customer (performed by wholesaler. . . usually to retail customers • Facilitators or channel intermediaries are people who take part in the communication process between wholesalers and other actors.Accumulating – bringing together similar stocks from different sources 3. . .Allocation – breaking a homogeneous supply into smaller lots 4. retailer.Assorting – building up assortments of goods for resale. or specialist intermediaries): 1.

Case: HEWLETT PACKARD .

9 months .BECKGROUND • A computer & peripheral products manufacturer founded in 1939 with headquarters in Palo Alto • Established Vancouver Division in WA in 1979 to manufacture Deskjet printer • In 1981.5 months to0. the Division adopted JIT approach to reduce manufacturing cycle time from 12 week to 1 week hours & inventory from 3.

Desk-jet Supply Chain • Desk-jet printers manufactured in Vancouver are sent to distribution centres in US. . Europe and Asia.

each country has specific requirement on power cord. consisting of printers destined for different countries.Desk-jet Supply Chain • Localization of printers . and language manual. transformer. are sorted into 3 groups • 1 week factory cycle time • 1 day to transport to US DC & 4-5 weeks to transport to European & Far East DCs by ocean • Resellers want to keep low inventory while providing a high availability level • Sources of uncertainties: incoming materials. • Finished products. internal process & demand • Management decide to use make-to-stock mode to operate DC to provide high product availability .

inventory level &distribution cost per shipment dollar • DC function as warehouse & support distribution process but not manufacturing.Distribution • DC performance measures • – primary. no MRP • Require 7 weeks’ worth of inventories (safety stock) to meet 98% service level (LIFR).line item fill rate & order fill rate (multiple line items) – secondary . .

Inventory & Service Crisis • Vancouver Division has done a good job in reducing uncertainties from incoming materials internal process but got stuck with how to improve forecast accuracy • Due to forecasting errors. in Europe DC. inventory of models keep piling up while the others stockout • A team has formed to find solutions to the crisis & to revamp safety stock system • Problem of fixing holding cost rate & service level .

The Manufacturing Environment • Rapid Changes – New products rapidly introduced – Short. unknown product life cycles • High Variety of Products • Long Production Lead Times • Increasing storage and transportation costs • Difficult to forecast demand .

high inventory levels & inventory imbalance – localization done in Vancouver • Problems – significant uncertainty. long lead times .HP Case Analysis • HP Europe DC • Recall that – long delivery lead time of 4-5 weeks. too many localization options.

too expensive – Setup a manufacturing plant in Europe volume does not justify – Keep more inventory at Europe DC.just magnify the existing inventory problem – Revamp forecasting system .difficult because of the uncertainties .HP Case Analysis • Recommendations – Reduce lead time by air freight .