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WK9 Logistics Lecture



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  • E-fulfillmentMany logistical functions and activities occurMore, smaller ordersOrder management and information management systems must handle large volumes of orders Smaller orders dictate open-case pickingProducts slotted to facilitate picking smaller ordersTotes and push carts usedPackaging is small cartons, envelopes, bags suited to holding small quantitiesProducts slotted to facilitate picking smaller ordersTotes and push carts usedPackaging is small cartons, envelopes, bags suited to holding small quantities


  • 1. WK9 Agenda
    Revised homework
    Logistic lecture and exercise
    Pacademy Case Study
    MIB, BBA 2010
  • 2. Logistics Myths
    True or false
    Logistics mean logic.
    Logistics is about transportation cost.
    3PL logistics company handle custom for its customers.
    MIB, BBA 2010
  • 3. Logistics Exercise
    In three groups, choose your product.
    Write the process flow of supply chain starting from raw material to customers.
    What are the issues to consider?
    Where are the cost incur?
    Where can we add value?
    How can we improve efficiency?
    MIB, BBA 2010
  • 4. Logistics
    Council of Logistics Management definition:
    “Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers’ requirements.”
    MIB, BBA 2010
  • 5. Logistics
    MIB, BBA 2010
  • 6. © 2008 Prentice Hall
    Activities in the Logistical Channel
    Customer service
    Facility location decisions
    Inventory management
    Order management
    Production scheduling
    Returned products
    Transportation management
    Demand forecasting
    Industrial packaging
    Materials handling
    Parts and service support
    Salvage and scrap disposal
    Warehousing management
  • 7. © 2008 Prentice Hall
    The Systems and Total Cost Approaches to Logistics
    Total Cost Approach
    Cost trade-offs: changes to one activity cause some costs to increase and others to decrease
    Total Logistics Concept: to find the lowest total cost that supports an organization’s customer service requirements
  • 8. Logistical Relationships within the Firm
    Place Decisions
    Price Decisions
    FOB origin/FOB destination pricing systems
    Landed costs
    Phantom freight
    Freight absorption
    MIB, BBA 2010
  • 9. © 2008 Prentice Hall
    Responsibilities of Logistics Managers
    A specialist
    Freight rates
    Warehouse layouts
    Inventory analysis
    Transportation law
    A generalist
    Understands functional relationships
    Relates logistics to other firm operations, suppliers, customers
    Controls large expenditures
    The CEO of Wal-Mart began his Wal-Mart career in the logistics area!
  • 10. © 2008 Prentice Hall
    Different Supply Chain Configurations
  • 11. © 2008 Prentice Hall
    Supply Chain Management and Integration
    Third-Party Logistics (3PL)
    Logistics outsourcing
    Contract logistics
    3PL provides transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding.
    Fourth-party logistics (4PL) primarily used in global companies: assembles and manages the resources, capabilities, and technology to deliver a comprehensive supply chain solution.
    Lead logistics provider (LLP)
    Supply chain software
  • 12. General Types of Information Management Systems
    MIB, BBA 2010
  • 13. Electronic Commerce and Logistics
    Internet impacts include:
    Logistics functions
    Order management
    Channel design
    4 categories of logistics exchanges
    Enhancing procurement services
    Matching shippers and carriers
    Executing relevant transactions
    Transacting with partners
    What are the differences between Electronic and Traditional Fulfillment? Think about your online purchasing.
    MIB, BBA 2010
  • 14. Order Management
    Order management is the activities that take place in the period between the time a firm receives an order and the time a warehouse is notified to ship the goods to fill that order
    Order planning-connected to sales forecasting
    Order transmittal
    Order processing
    Order picking and assembly
    Order delivery
    Order cycle defined by the buyer: time from when an order is placed to when the goods are received. Also called replenishment cycle
    Getting shorter
    More precise delivery times
    Customer can track orders
    Quality is important and is benchmarked
    MIB, BBA 2010
  • 15. Customer Service
    Activity to make customers happy
    Value-added activities provided by customer service include:
    Placing bar code labels on cartons
    Arranging a carton, pallet, or truck in the sequence the customer would like to unload it
    Inserting documents into cartons
    Blending products
    Adding price tags
    Adding graphics for export goods
    Assembling kits
    Establishing a customer service program
    Ask the customer what is important to them
    Investigate the service offered by competitors
    Consider the cost of alternative service programs
    Analyze the information and write the objectives
    Using the Internet to improve customer service
    MIB, BBA 2010
  • 16. Element of Logistics System
    Protective Packaging and Materials Handling
    Product characteristics :physical, chemical, environmental, etc.
    Packaging: box, wooden pallet, label, etc.
    Material Handling: automation, flexibility, safety, layout, cost, maintenance, unit load, ergonomic, requirement, JIT, energy, etc.
    MIB, BBA 2010
  • 17. Element of Logistics System
    2.) Transportation(domestic): node, links, air, water, motor carriage, rail, pipeline, intermodal transportation, routing guides
    Small volume shipper: Fedex, UPS, DHL, NTC, TNT, Post office <150 pound
    LTL shipper(less than truckload, <150<10,000 pounds): Yellow Freight, Roadway, ABF
    Truckload and carload shipper: Schneider National Van Carriers, J.B. Hunt Transport
    MIB, BBA 2010
  • 18. Element of Logistics System
    3.) Distribution Center, Warehouse, and Plant Location
    Number of facilities: service level, software, time to customers
    Facilities location: natural resource, labor, market, tax, subsidies, transportation, customers, trade pattern
    Lowest cost location: grid system, center of gravity approach
    MIB, BBA 2010
  • 19. Element of Logistics System
    4) Inventory management
    Inventory Turnover= Cost of goods sold/average inventory
    Turnover, carrying costs, and stock out costs
    • Reorder pointROP = Daily Demand x Replenish Cycle + Safety Stock under uncertainty
    Economic order quantity EOQ= √2AB/C
    JIT, Inventory Tracking, Vendor manage inventory,
    MIB, BBA 2010
  • 20. Element of Logistics System
    Public, private, contract warehousing
    Design warehousing: quantity, character of goods, purposelayout
    Safety, security and stock control
    MIB, BBA 2010
  • 21. Element of Logistics System
    6) Procurement
    MIB, BBA 2010
  • 22. Element of Logistics System
    7) International logistic
    MIB, BBA 2010
  • 23. Element of Logistics System
    8) Financial and accounting control
    Worker productivity: scheduling, monitoring
    Goal to achieve lowest cost per volume of output
    Product recall: Batch ID, Six Sigma
    Security: building, computer, document, etc.
    Energy saving
    MIB, BBA 2010
  • 24. Element of Logistics System
    9) System Analysis
    Customerprofitability analysis
    Warehousing productivity analysis
    Transportation cost analysis
    Consolidation analysis
    Direct product profitability analysis
    Industry standards analysis
    MIB, BBA 2010
  • 25. Pacademy Case & Homework
    Revised homework due this Friday
    Read Pacademy case and apply our strategy formulation concepts. Draw the diagrams.
    What other information would be beneficial for your case analysis?
    What are your recommendations?
    MIB, BBA 2010