E Logistics Services


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E Logistics Services

  1. 1. e-Logistics Services From Warehouse to Logistics Service Center 64157 電子商務模式設計與應用 國立中山大學企管所 2002 Spring, Week 4-2 <ul><ul><li>黃光彩 博士 </li></ul></ul><ul><ul><li>太世科公司 </li></ul></ul><ul><ul><li>2002/04/20 </li></ul></ul>
  2. 2. Complexity of a Typical Global Supply Chain Supercharging Supply Chains Ernst & Young LLP Supplier Roadways Roadways Freight Forwarder Customs Agent Port Ocean liner Airways Roadways Road + Rail RDC Customer’s Warehouse Customer (Retailer) Consumer Home Plant
  3. 3. The Evolution of Enterprise Applications % Penetration Time ERP Supply Chain Execution 100%
  4. 4. What is Logistics? Logistics is defined as the process of movement of materials and products into, through and out of a firm. The Logistics Flow Chart SALES FUNCTION (SUPPLIER) TRANSPORTATION PURCHASING FUNCTION (DISTRIBUTOR) SUPPLIERS SALES FUNCTION (DISTRIBUTOR) TRANSPORTATION PURCHASING FUNCTION (CUSTOMER) WAREHOUSING
  5. 5. The Logistics Channel <ul><li>Suppliers </li></ul><ul><li>Sales (Supplier) </li></ul><ul><li>Transportation </li></ul><ul><li>Purchasing (Distributor) </li></ul><ul><li>Warehousing </li></ul><ul><li>Sales (Distributor) </li></ul><ul><li>Transportation </li></ul><ul><li>Purchasing (Customer) </li></ul>
  6. 6. Cross Functional Nature of Logistics <ul><li>Front end - Distributor Purchasing and Supplier Marketing Interface </li></ul><ul><li>Middle - Warehousing and Transportation </li></ul><ul><li>Back end - Customer Contact (Marketing) </li></ul>Functions of Logistics FRONT END MIDDLE BACK END
  7. 7. Key Logistics Activities <ul><li>Customer Service Levels - Set by Marketing based on Operations Capabilities </li></ul><ul><li>Transportation </li></ul><ul><ul><li>Routing and Vehicle Scheduling </li></ul></ul><ul><li>Inventory </li></ul><ul><ul><li>R.M. and F.G. stocking policies </li></ul></ul><ul><ul><li>Break Bulk </li></ul></ul><ul><ul><li>Consolidation </li></ul></ul>
  8. 8. Support Activities <ul><li>Warehousing </li></ul><ul><ul><li>How many? </li></ul></ul><ul><ul><li>What configuration? </li></ul></ul><ul><ul><li>Where to hold inventory? </li></ul></ul><ul><li>Materials Handling - ASRS, RF, Bar Coding, Etc. </li></ul><ul><li>Purchasing - Supplier selection, Purchase timing, </li></ul><ul><li>Quantity, and Quality </li></ul><ul><li>Scheduling - Interface marketing and production </li></ul><ul><li>Information Maintenance </li></ul><ul><ul><li>Data Collection </li></ul></ul><ul><ul><li>Data Integrity </li></ul></ul>
  9. 9. Objectives of Logistics Strategy <ul><li>Process Reduction - Cycle time, Lead time, Automation </li></ul><ul><li>Capital Reduction - Inventory investment, number </li></ul><ul><li>of warehouses </li></ul><ul><li>Service Improvement - the antithesis of the foregoing </li></ul>
  10. 10. Industry Specific Logistics Services Industry Industry Size L M S Traditional WMS Providers Segment Market by Customer Size Traditional: CPG Apparel Grocery Food Service 3PL Opportunity: Healthcare Electronics Automotive New Logistics Center Segments Market by Customers’ Vertical Market Size
  11. 11. Logistics Goal: Close Gaps in the Supply Chain <ul><li>Speed to compliance </li></ul><ul><li>Lower inventory </li></ul><ul><li>Cross-docking </li></ul><ul><li>Value-added services </li></ul><ul><li>Higher number of SKUs </li></ul><ul><li>Direct-to-consumer </li></ul><ul><li>Configure-to-order </li></ul><ul><li>Customer / retailer satisfaction </li></ul><ul><li>Operational productivity </li></ul><ul><li>Transportation efficiency </li></ul><ul><li>Improved in-stock positions </li></ul><ul><li>Lower inventory </li></ul><ul><li>Flexible business practices </li></ul>Retailer Requirements Supplier Requirements Imperfect Information
  12. 12. Traditional Distribution Systems Used Multi-Tiered Warehousing Manufacturer Bulk Finished Goods Manufacturer’s Distribution Center Bulk Shipments <ul><li>Hold inventory </li></ul><ul><li>Value added services </li></ul>Retail Outlet Store Distributions Local Retail Distribution Center
  13. 13. Traditional Distribution Center Process <ul><li>Inbound receipt of goods </li></ul><ul><li>Bulk outbound shipments </li></ul><ul><li>Storage of goods </li></ul>1 2 3
  14. 14. Quick Response Initiatives Streamline Distribution Process Manufacturer Retail Outlet <ul><li>Advanced shipping notice </li></ul><ul><li>Bulk or discrete shipments </li></ul><ul><li>Store specific pricing </li></ul><ul><li>Aisle specific palletizing </li></ul><ul><li>High velocity </li></ul><ul><li>Cross-docking </li></ul><ul><li>Flow-through </li></ul><ul><li>Lower inventory </li></ul><ul><li>Greater availability </li></ul>Direct store Delivery Direct-to-Consumer <ul><li>Very high volume </li></ul><ul><li>Mass personalization </li></ul><ul><li>Integrated TMS requirements </li></ul>Manufacturer’s Distribution Center Local Retail Distribution Center
  15. 15. Value-added Logistics Center Process <ul><li>Inbound shipment tracking </li></ul><ul><li>Yard management </li></ul><ul><li>Inbound receipt of goods </li></ul><ul><li>Storage of goods </li></ul><ul><li>Order picking </li></ul><ul><li>Value-added services </li></ul><ul><li>Order packing </li></ul><ul><li>Pack and hold </li></ul><ul><li>Outbound customer compliant shipments </li></ul>4 7 5 6 3 9 1 8 2
  16. 16. Continuously Changing Demands of Retailers K-MART Western Publishing New Practice Old Practice # Orders Destination Frequency IT Requirement 6 Warehouse Monthly Telephone/Paper 17,000 Individual Stores Weekly Electronic Advanced Ship Notice
  17. 17. From Warehouse to Distribution Center “ In order to enable greater customer responsiveness, the traditional role of the warehouse (WMS) is moving toward distribution center. This is a major force in driving the demand for e-Logistics applications.”
  18. 18. Global Operations & Logistics Framework Geographical Integration Sectorial Integration Functional Integration
  19. 19. Geographical Integration <ul><li>Impact of Distribution and Transportation greater </li></ul><ul><li>due to ‘Globalilty’ </li></ul><ul><li>Borders becoming more porous in terms of trade </li></ul><ul><li>Production on global scale --- no longer country-specific </li></ul><ul><li>International Sourcing </li></ul><ul><li>Selling in Multiple Markets </li></ul><ul><li>Data Processing and Communication technology help </li></ul><ul><li>with the geographical integration. </li></ul>
  20. 20. Functional Integration <ul><li>Logistics - cross-functional in nature. Cuts across activities </li></ul><ul><li>and creates interfaces to optimize overall performance. </li></ul><ul><li>Flow management in Global Logistics difficult </li></ul><ul><ul><li>Internationalized Markets </li></ul></ul><ul><ul><li>Competitive products in the Market </li></ul></ul><ul><ul><li>Adaptation of new technology </li></ul></ul><ul><ul><li>Government Regulations </li></ul></ul>
  21. 21. Sectorial Integration <ul><li>Companies are handling logistics issues together beyond </li></ul><ul><li>corporate boundaries. </li></ul><ul><li>Efficient Consumer Response (ECR) </li></ul>Final aim - to reach customer Distributor Consumer Manufacturer Collaborate
  22. 22. Freight Forwarders <ul><li>Freight providers have the earliest instance of </li></ul><ul><li>hub and spoke systems </li></ul><ul><li>Tenders for freight services made worldwide </li></ul><ul><li>Development of Intermodal freight provision </li></ul><ul><li>Mergers between freight providers -- e.g. Airplane companies </li></ul><ul><li>Globalization brings up several issues in order to </li></ul><ul><li>satisfy proximity service </li></ul><ul><ul><li>Use of manufacturer’s sales network </li></ul></ul><ul><ul><li>Setting up Proximity Distribution Centers (PDC) </li></ul></ul><ul><ul><li>Developing central hub for express services and dispatch orders </li></ul></ul><ul><ul><li>Setting up inventory of class A products with storage </li></ul></ul><ul><ul><li>operator, distributor or agent </li></ul></ul>
  23. 23. <ul><li>International Freight Forwarders </li></ul><ul><li>Nonvessel-operating Common Carriers (NVOCC) </li></ul><ul><li>Customs House Brokers </li></ul><ul><li>Export Management companies </li></ul><ul><li>Export Trading Companies </li></ul><ul><li>Shippers Associations </li></ul><ul><li>Export Packers </li></ul>International Trading Operators
  24. 24. Dynamic Forces of Global Logistics The firms adopt different orientations with varying intensities due to the dynamic behavior of the global business environment. INFO USER RESOURCES
  25. 25. Global Logistics’ Orientation <ul><li>Resource Oriented Logistics </li></ul><ul><ul><li>Emphasis towards optimal use of resources -- capital, </li></ul></ul><ul><ul><ul><li>materials and people </li></ul></ul></ul><ul><ul><li>Focuses on the relationship between the functional </li></ul></ul><ul><ul><li>and the geographical </li></ul></ul>Optimize Resources Functional Geographical
  26. 26. Global Logistics’ Orientation <ul><li>Information Oriented Logistics </li></ul><ul><ul><li>Emphasis towards optimal use of information. </li></ul></ul><ul><ul><li>Focuses on the relationship between the sectorial </li></ul></ul><ul><ul><li>and the geographical dimensions </li></ul></ul>Optimal Performance Geographical Sectorial
  27. 27. Global Logistics’ Orientation <ul><li>User Oriented Logistics </li></ul><ul><ul><li>Emphasis on the final customer. </li></ul></ul><ul><ul><li>Using all the supply chain partners to bring their </li></ul></ul><ul><ul><li>expertise in order to best service the customer </li></ul></ul><ul><ul><li>User oriented focus brings about flexibility in the </li></ul></ul><ul><ul><li>logistics channel </li></ul></ul>Customer
  28. 28. Consumer Logistics: <ul><li>“ movement and handling of goods and people that is performed by consumers to facilitate consumption.” </li></ul><ul><li>Granzin (1990) </li></ul>
  29. 29. The Downstream Supply Chain <ul><li>M W R C </li></ul><ul><li>M = manufacturer R = retailer </li></ul><ul><li>W = wholesaler C = consumer </li></ul>
  30. 30. Consumer (Logistics) Behavior Need Recognition Transportation Shopping/Search Exchange Transportation & Storage Production/Consumption
  31. 31. Consumer Behavior--Two Views
  32. 32. Time & Money <ul><li>Where does the money go? (Kelley 1958) </li></ul><ul><ul><li>commodity costs </li></ul></ul><ul><ul><li>convenience costs </li></ul></ul><ul><li>Where does the time go? (Downs 1961) </li></ul><ul><ul><li>travel time </li></ul></ul><ul><ul><li>shopping time </li></ul></ul><ul><ul><li>checkout time </li></ul></ul>
  33. 33. Crowell & Bowers (1977) <ul><li>TC = price + transportation + time </li></ul><ul><li>Add cost of time to the equation and consumers visit fewer stores. </li></ul>
  34. 34. “ Prisoner of Time,” Ms. , Oct. 1988 <ul><li>“ during her or his lifetime, the average American squanders five months waiting for traffic lights to change, eight months opening unsolicited mail, a year looking for misplaced objects, two years in futile attempts to return phone calls, four years doing basic housework, and five years waiting in line--a total of 13 years gone up in smoke.” Pogrebin (1988) </li></ul>
  35. 35. The Alberta Phone Survey <ul><li>Random-digit dialing </li></ul><ul><li>10 call backs </li></ul><ul><li>CATI: computer-assisted telephone interviews </li></ul><ul><li>30-minute confidential interview </li></ul><ul><li>Urban vs. Rural </li></ul><ul><li>Topic: grocery shopping </li></ul><ul><li>R = 67.1% </li></ul>
  36. 36. Shopping List? <ul><li>YES ------- 66% </li></ul><ul><li>NO -------- 34% </li></ul>
  37. 37. Transportation Mode <ul><li>CAR --------- 91% </li></ul><ul><li>FOOT --------- 7% </li></ul>
  38. 38. Stockout Response Stockout of item x at Store A Go to Store B Buy item y Backorder (defer purchase)
  39. 39. Response to Stock-out of Item x at Store A <ul><li>Item x at Store B ------- 47% </li></ul><ul><li>Item y at Store A ------- 15% </li></ul><ul><li>Defer purchase ---------- 32% </li></ul>
  40. 40. Time and Availability <ul><li>Average Travel Time = 13.8 minutes </li></ul><ul><li>Average Shopping Time = 41.2 minutes </li></ul><ul><li>Average Checkout Time = 12.5 minutes </li></ul><ul><li>Average Stock-out = 1.4 items </li></ul>
  41. 41. Predictors of Consumer Satisfaction <ul><li>Stock Availability ------------- YES </li></ul><ul><li>Check-out Time --------------- YES </li></ul><ul><li>Shopping Time ----------------- NO </li></ul><ul><li>Travel Time --------------------- NO </li></ul>
  42. 42. How to: Please the Consumer <ul><li>reduce product prices </li></ul><ul><li>save consumers time (Bender 1964) </li></ul><ul><li>give TLC! </li></ul><ul><ul><li>Tender Loving Care </li></ul></ul><ul><ul><li>Total Logistics Costs </li></ul></ul>
  43. 43. TC = pQ + c(I - A) + a(2D) + wT <ul><li>p = purchase price </li></ul><ul><li>Q = quantity purchased </li></ul><ul><li>c = compromise cost </li></ul><ul><li>I = ideal item; A = actual item </li></ul><ul><li>a = cost of travel ($/mile) </li></ul><ul><li>D = distance to store </li></ul><ul><li>w = cost of time ($/hour) </li></ul><ul><li>T = time (travel + shopping + checkout) </li></ul>
  44. 44. TC = pQ + c(I - A) + a(2D) + wT <ul><li>p = purchase price </li></ul><ul><li>Q = quantity purchased </li></ul><ul><li>FOB origin vs. destination </li></ul><ul><li>Sales tax </li></ul><ul><li>Q = f{family size; vehicle capacity; </li></ul><ul><li>location (urban vs. rural); p} </li></ul>
  45. 45. TC = pQ + c(I - A) + a(2D) + wT <ul><li>c = compromise cost </li></ul><ul><li>I = ideal item; A = actual item </li></ul><ul><li>stock-outs? </li></ul><ul><li>consumer risk perceptions </li></ul><ul><li>reverse logistics implications </li></ul>
  46. 46. TC = pQ + c(I - A) + a(2D) + wT <ul><li>a = cost of travel ($/mile) </li></ul><ul><li>D = distance to store </li></ul><ul><li>consumer perceptions of travel costs </li></ul><ul><li>retail (car, gas) vs. e-tail (computer, AOL) </li></ul><ul><li>reverse logistics implications </li></ul>
  47. 47. TC = pQ + c(I - A) + a(2D) + wT <ul><li>w = cost of time ($/hour) </li></ul><ul><li>T = time (travel + shopping + checkout) </li></ul><ul><li>consumer perceptions of time </li></ul><ul><li>retail vs. e-tail </li></ul><ul><li>retailer impacts checkout, but not travel </li></ul>
  48. 48. “ Home online mantra is ‘logistics’” <ul><li>“ If the key to real-world retailing is location, location, location, then for e-commerce it’s logistics, logistics, logistics.” Carroll (2000) </li></ul>
  49. 49. “ E-Commerce Success . . Order Fulfillment Chaos” <ul><li>“ Companies are figuring out how to sell goods over the Internet, but getting the goods to the customer is another story. As online orders from consumers and businesses soar past the 2 billion per year mark, Net sellers will be faced with logistics chaos.” Anonymous (1999) </li></ul>
  50. 50. B2C e-commerce Markets <ul><li>National markets </li></ul><ul><li>Local markets XXX </li></ul><ul><li>Hour delivery markets </li></ul><ul><li>Copacino (2000) </li></ul>
  51. 51. Caltagirone (2000) <ul><li>“ the online grocery </li></ul><ul><li>business will explode” </li></ul>
  52. 52. Murphy (2000) <ul><li>Online Grocery Sales </li></ul><ul><li>1998 $ 350,000,000 </li></ul><ul><li>2002 $3,500,000,000 </li></ul>
  53. 53. e.g. e-grocers <ul><li>Peapod.com IN BUSINESS </li></ul><ul><li>Webvan.com BANKRUPT </li></ul><ul><li>Groceryworks.com BOUGHT BY SAFEWAY </li></ul>
  54. 54. Peapod.com <ul><li>Top-quality products </li></ul><ul><li>Competitive prices </li></ul><ul><li>Convenience </li></ul><ul><li>First-rate customer service </li></ul>
  55. 55. Webvan.com <ul><li>Selection </li></ul><ul><li>Quality </li></ul><ul><li>Value </li></ul><ul><li>Convenience </li></ul>
  56. 56. B2C Logistics Options <ul><li>Consumer pick-up (drive through) </li></ul><ul><li>Home delivery </li></ul><ul><li>Drop-off/pick-up (mini-storage) </li></ul><ul><li>Office delivery </li></ul>