Logistics

L IN D E N SM IT H

1
 •What is Logistics?
•Why is it Important?
•Development
•Functions

Presentation •Costs

Overview •Design
•Transportation
•Role of the Industrial Engineer
•Conclusions

2
 •Storage and flow of products and information from the final
What is production point to the customer1

Logistics? •Logistics = Materials Management + Distribution

•Supply Chain = Suppliers + Logistics + Customers

3
 •Significant cost in the manufacturing process outside of
production

Why is it •Sales channels need different levels of service

Important? •Performance can be improved

•Cost can be minimized

4
Logistics in the
Second World War

https://youtu.be/aIo9pWtTD6M
?t=27

5
 •National Defense Highway System

Post War •Changes in corporate sales and marketing

Developmen •Increased product diversity

t •New material handling methods

•Robust information systems

6
Distribution
Channels
•Physical & trading
•Long vs. short channels
•Requirements for items
•Outsourcing
•Geographic Segments

7
The Uber
Eats Model

8
 •Receive orders from customers
Order Entry •Process information
and •Select shipping point
Customer •Track and report on order status
Service

9
 Customer Service Objectives
•Time
•Dependability
•Communications
•Flexibility

10
Warehousing
•Receive and verify materials
•Store and manage materials
•Pack customer orders

11
Transportation
•Route, rate, and control carriers
•Ship to distribution centres and customers
•Manage and interact with transport fleet

12
Inventory Management
•Determine quantities needed for desired
turnover, service, and cost objectives
•Order and track materials

13
 •Allocate resources to other distribution functions
Administrati •Design and manage activities
on •Develop control systems

14
Function Summary
1. Order Entry and Customer Service
2. Warehousing
3. Transportation
4. Inventory Management
5. Administration

15
Why Costs Vary – Why are Costs
Similar?
•Physical product and channel differences
•Long term decline in unit weight
•Company Size
•Underlying common factors
•Opportunities to learn across industries
•Since the 1990s total distribution costs steady

16
Example:
Canada Post

17
Distribution •Sales Model

System •Shipping Point Model

Design •Transportation Cost Model

18
Distribution
Centre Location
Modelling
•Linear Programming
•Heuristics
•Simulation
•Map based clustering

19
Transportation Modes

MOTOR CARRIERS RAILROADS AIR FREIGHT SMALL PARCEL MARITIME

(NATIONAL, CARRIERS
REGIONAL, LOCAL)

20
Key Transport Costs
Factor Effect of Increase on Distribution Cost
Shipment Volume Decrease
Two-way Movement Decrease
Weight Decrease – to a point
Freight Value Increase*
Total Inbound and outbound freight Decrease

21
Example –
Big Spruce
Brewing

22
Role of the Industrial Engineer
•Develop regular routing procedures
•Distribution centre location analysis
•Warehouse inventory analysis
•Redistribution rates
•Distribution channel selection

23
Fourth Party •An organization that coordinates 3PL providers for a business
Logistics - •Benefits are situational
4PL

24
Conclusions
•Customers are requesting value-added services
•Service leader vs. cost leader
•Trade-offs
•Sustainability
•Linked with other elements of a company

25
 References
1. Rushton A, Croucher P. The Handbook of Logistics and Distribution Management. 2014. Replica Press, New
Delhi.
2. Logistics in World War II, Final Report of the Army Service Forces. 1948. US GPO, Washington DC
3. Calgary Sun. 2018.
https://calgarysun.com/news/crime/ubereats-driver-charged-with-killing-customer-cops/wcm/e08b5083
-cbb1-4830-a9ec-7da020bf3848
4. Rack Systems Inc. Very Narrow Aisle Pallet Racking. 2019.
https://racksystemsinc.com/pallet-racking/vna-pallet-racking/
5. Arctic airlines say Competition Bureau recommendations show southern 'ignorance’. CBC. 2018.
https://www.cbc.ca/news/canada/north/first-air-canadian-north-merger-recommendation-1.5033627
6. Canada Post. 2017 Annual Report, English. 2017. Canada Post, Ottawa.
7. https://aviation.stackexchange.com/questions/16690/are-there-any-alternative-passenger-airline-busines
s-models

26
Questions?
HTTPS://YOUTU.BE/PJ_LUFBSOQM?T=41

27