Logistics

L I N DEN S M I T H

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 •What is Logistics?
•Why is it Important?
•Development
•Functions
Presentation •Costs
Overview •Design
•Transportation
•Role of the Industrial Engineer
•Conclusions

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 •Storage and flow of products and information from the final
What is production point to the customer1
•Logistics = Materials Management + Distribution
Logistics?
•Supply Chain = Suppliers + Logistics + Customers

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 •Significant cost in the manufacturing process outside of
production
•Sales channels need different levels of service
Why is it
•Performance can be improved
Important?
•Cost can be minimized

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Logistics in the Second
World War

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

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 •National Defense Highway System
•Changes in corporate sales and marketing
Post War •Increased product diversity
Development •New material handling methods
•Robust information systems

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

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The Uber Eats
Model

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 •Receive orders from customers
Order Entry and •Process information
Customer •Select shipping point

Service •Track and report on order status

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 Customer Service Objectives
•Time
•Dependability
•Communications
•Flexibility

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

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

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

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 •Allocate resources to other distribution functions
Administration •Design and manage activities
•Develop control systems

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

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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

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Example:
Canada Post

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 •Sales Model
Distribution •Shipping Point Model
System Design •Transportation Cost Model

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

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Transportation Modes

MOTOR CARRIERS RAILROADS AIR FREIGHT SMALL PARCEL MARITIME

(NATIONAL, CARRIERS
REGIONAL, LOCAL)

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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

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Example – Big
Spruce Brewing

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

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

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

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 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-business-models

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Questions?
HT TPS://YOUTU.BE/PJ_LUFBSOQM?T=41

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