Logistics and Supply Chain
Management: An Overview
A Presentation to

NAPM-Wichita
by

Thomas L. Tanel, CTL,C.P.M.,CCA
Pre...
Definition of Logistics
Logistics is:
the process of planning, implementing, and
controlling the efficient, effective flow...
Global Manufacturing
• Supplier selection
• Location selection
• Product availability
• Logistics
• Cost
• Timing
• Demand...
Global Distribution
• Intermodal

• Licensing

• INCOTERMS

• IFF/CHB Links

• Banking

• Sales Terms

• Customs

• Other
...
The Logistics Process
Order Processing

Seller

Inventory
Management

Production Planning

Warehousing

Customer

Raw Mate...
Third Party Logistics
WHAT IS IT?
• The use of an outside logistics company to perform all or part
of a company’s material...
Third Party Logistics Providers
• What
• Why
• Who
• When
• How
Global Pipeline Visibility
Where is my stuff?
• Via the IFF/CHB
• Via the IMC
• Via the carrier
• Via the internet
• Via p...
Supply Chain Information Systems
PLAN

EXECUTE

MANAGE

MRP

ORDER
PROCESSING

ACCTS RECEIVE

WAREHOUSE

FIXED ASSETS

FOR...
Milestone Measurements

• Milestone tracking
• Alert Notification
• Plan versus actual
Tracking and Tracing
Primary Numbers
MODE
Motor
Rail
Air
Ocean

TYPE OF REFERENCE
Pro Number
Waybill Number
Air Waybill
Bi...
ASNs and Shipping Information
• What is it ?
• What does it show ?
• Types of Information ?
Data Collection
In the future, you MUST become
literate about the following:
Order No. 123456
Carton No. 789

• Scanners

...
Computer System Integration Issues
BATCH
PROCESSING

“REAL-TIME”
PROCESSING

SCAN

SCAN

ACCUMULATE

SEND TO HOST

SCAN

S...
Legacy Systems & SCM Interface
MRP

DRP

SOP

WMS

TMS

OP

SUPPLIERS

ASN

CARRIERS

STATUS

FORWARDERS

PLAN

SHIPPERS

...
Integrated Supply Chain Links
Supplier
Base/ERP

Wholesaler
Distributor

HQ
Advanced
Planning
Systems

Transportation
Carr...
EXTERNAL ENVIRONMENT

TURBULENCE
TURBULENCE
Supply Chain Optimization
Supply Chain Drivers
• Pull system focus

• Aligned for change

• Preferred Supplier

• Logistics excellence

• Electronic...
Logistics—Big Picture Benefits
• Integrated logistics functions translate
into various profit contributions:
– Total logis...
More Profit Potential--$$$
Any “cost saving” that can be made in total
logistics reflects savings at the rate of the
compa...
Supply Base Costs and the
Logistics Pipeline
Why consider the supplier’s
supplier and the logistics pipeline?
• The majori...
General Pagonis and Logistics
A decade after taking the job of VP
of Logistics at Sears, Pagonis said,
“people just don’t ...
The Supply Chain--Logistics Cycle
Demand Planning
• Forecasting
• Market Trends
• Market Conditions
• Business Strategies
...
Synchronized Supply Chain Management
Network optimization software contains advance planning engines to
synchronize and op...
International Transportation and Distribution
CARRIER TYPES:
Usage, Costs
Dependability

FINANCIAL
INSTRUMENTS

versus
DRA...
ADC in the Supply Chain
Goods
characteristics,
capacity, availability,
status

Capacity,
schedules,
status receipts

Capac...
Where Have We Been?—Survival of
the Fittest
Supply Chain Compass-Five Stages
Source: Manugistics
 

The
Fundamentals

CrossFunctional
Teams

Integrated
Enterprise

Ex...
Benefits of Tracking ROI for
SCM Source: Anderson Consulting
• Improving return on assets
benefits
• Revenue growth benefi...
Measuring Up – A Best Practice Model for
Evaluating Supply Chain Performance
Source:Arthur D. Little
Goal

Measure

Improv...
Lord Kelvin on Measures
When you can measure what you’re
When you can measure what you’re
speaking about and express it in...
Prospects for the 21 Century
st

• A competitive advantage today may not be a
competitive advantage in the future.
• Marke...
Optimizing the Supply Chain
What it Means to Your Company
Supply Chain
Management

Optimization

Fulfillment and
Replenish...
Logistics—Putting It All Together
• The Logistics Celerity Challenge
• What it Means to Your Company
• Sensitivity
• Satis...
Global Logistics Strategy
Source: Coopers & Lybrand Consulting
Aligning worldwide
distribution strategies
around sourcing/...
World-Class Logistics
Customer
Focus

Delight the Customer
• Perfect orders
• Responsive
• Very short OTD cycle time
• On-...
What It Means to You Personally
• Ability to view the big picture
• Grasp of supply chain concepts
• Understand the key
pe...
THANK YOU FOR COMING

CATTAN Services Group, Inc.
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Logistics and Supply Chain Management-Overview

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This presentation is designed to take an overview of global supply chain logistics, both in terms of today's supply chain and in the demand flow management process, so you can know how to make the most of this powerful tool. You've probably heard something about these topics. You may even be vaguely familiar with them. But how much do you really know about their strategic importance and the specific benefits you can gain from having a solid understanding of them?

Here's the best way to investigate global supply chain logistics and the impact it can have on your organization. You will have the opportunity to explore a variety of logistics areas , extrapolate their meanings in ways that are appropriate for strategic planning, and apply the techniques needed to make it all work for your organization.

Your business needs and technology are in a constant state of rapid-fire change, but you can count on one thing remaining constant: the need to align logistics strategically with your market needs in order to gain a competitive advantage. This alignment requires building a supply and demand system that truly helps you respond to worldwide changes in sourcing and ever-shifting customer demand. What is the potential effect that global trade management will have on your supply chain? How do you convert digital value inputs into logistics value-added outputs? How can you harness the power of global supply chain logistics as a significant force in the execution of your corporate strategy? How can you gain the information you need to translate abstractions into concrete benefits through supply chain management and continuous flow distribution?

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Logistics and Supply Chain Management-Overview

  1. 1. Logistics and Supply Chain Management: An Overview A Presentation to NAPM-Wichita by Thomas L. Tanel, CTL,C.P.M.,CCA President and CEO CATTAN Services Group, Inc. © 2010 CATTAN Services Group, Inc.
  2. 2. Definition of Logistics Logistics is: the process of planning, implementing, and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services, and related information from point of origin to point of consumption (including inbound, outbound, internal, and external movements) for the purpose of conforming to customer requirements. Source: Council of Logistics Management
  3. 3. Global Manufacturing • Supplier selection • Location selection • Product availability • Logistics • Cost • Timing • Demand requirements • Physical • Labeling • Quality • Formula • Electrical • Origin
  4. 4. Global Distribution • Intermodal • Licensing • INCOTERMS • IFF/CHB Links • Banking • Sales Terms • Customs • Other • Export Packing Send anywhere . . . to anywhere— "Whatever it takes!"
  5. 5. The Logistics Process Order Processing Seller Inventory Management Production Planning Warehousing Customer Raw Material Manufacturing Traffic Management Deliver to Customer Transportation
  6. 6. Third Party Logistics WHAT IS IT? • The use of an outside logistics company to perform all or part of a company’s material management or product distribution function. • It is the integration of information, inventory, warehousing, and transportation services.
  7. 7. Third Party Logistics Providers • What • Why • Who • When • How
  8. 8. Global Pipeline Visibility Where is my stuff? • Via the IFF/CHB • Via the IMC • Via the carrier • Via the internet • Via proprietary software Supplier Inbound Transport Manufacturing Distribution Outbound Transport Supply Chain Information Systems Requirements Ultimate Customer
  9. 9. Supply Chain Information Systems PLAN EXECUTE MANAGE MRP ORDER PROCESSING ACCTS RECEIVE WAREHOUSE FIXED ASSETS FORECASTING IMPORT EXPORT TRAFFIC ACCTS PAYABLE DRP PURCHASING GEN LEDGER
  10. 10. Milestone Measurements • Milestone tracking • Alert Notification • Plan versus actual
  11. 11. Tracking and Tracing Primary Numbers MODE Motor Rail Air Ocean TYPE OF REFERENCE Pro Number Waybill Number Air Waybill Bill of Lading Number Secondary Numbers • Shipper’s invoice number • Shipper’s bill of lading number • Consignee’s order number • Marks and numbers (on the packages) • Date of pickup • Car initial and number • Container number • Flight or voyage number
  12. 12. ASNs and Shipping Information • What is it ? • What does it show ? • Types of Information ?
  13. 13. Data Collection In the future, you MUST become literate about the following: Order No. 123456 Carton No. 789 • Scanners F1=SPL IT F2=OV/ UNDER F3=COM PLETE F4= CANC EL CLR F UNC SHF CTL B C D E F G H I J K L M N O P Q U R S W T Y X B KSP 7 4 1 0 F7 F4 F1 F10 8 5 2 F8 F5 F2 9 6 3 F9 F6 F3 ENTER Integrated Hand-Held Radio Frequency Scanning Terminal • Symbology BASE STATION • Labels/Tags • Radio Frequency V Z • Decoder/terminals SCANNER/RF COMBO WITH DECODER PWR A ANTENNA IF NEEDED • Voice Recognition CONTROLLER HOST COMPUTER WITH SOFTWARE
  14. 14. Computer System Integration Issues BATCH PROCESSING “REAL-TIME” PROCESSING SCAN SCAN ACCUMULATE SEND TO HOST SCAN SCAN ACCUMULATE SEND TO HOST SCAN ACCUMULATE SEND TO HOST SCAN SEND TO HOST
  15. 15. Legacy Systems & SCM Interface MRP DRP SOP WMS TMS OP SUPPLIERS ASN CARRIERS STATUS FORWARDERS PLAN SHIPPERS BOOK CONSIGNEE All manner of DATA is shared ! PO
  16. 16. Integrated Supply Chain Links Supplier Base/ERP Wholesaler Distributor HQ Advanced Planning Systems Transportation Carriers Transportation Carriers Host ERP Operations Management Systems Plant's MES Customer Base/ERP TMS and CRM Warehouse's WMS Distribution Center's WMS
  17. 17. EXTERNAL ENVIRONMENT TURBULENCE TURBULENCE
  18. 18. Supply Chain Optimization
  19. 19. Supply Chain Drivers • Pull system focus • Aligned for change • Preferred Supplier • Logistics excellence • Electronic commerce • Product sold is “service” • Customer Driven • Synchronized supply chain planning and systems. • Market value creation
  20. 20. Logistics—Big Picture Benefits • Integrated logistics functions translate into various profit contributions: – Total logistics costs shaved by 20% – Pretax contribution is 2.4% higher • A typical $100 million business that switches over can realize a savings of 2.4 million.
  21. 21. More Profit Potential--$$$ Any “cost saving” that can be made in total logistics reflects savings at the rate of the company’s cost of capital and frees up that capital for other business purposes. 1.Logistics can have a dramatic impact on whether a company’s profit picture will be colored red or black. 2.Logistics (other than Purchases) may account for more than 15% of a company’s sales dollars, and improvements of 5-25% in the various logistics functions are within reason.
  22. 22. Supply Base Costs and the Logistics Pipeline Why consider the supplier’s supplier and the logistics pipeline? • The majority of supplier costs are controlled or influenced by the pipeline. • If we are to understand the market, we must understand the factors which influence the market. • The pipeline influences the market.
  23. 23. General Pagonis and Logistics A decade after taking the job of VP of Logistics at Sears, Pagonis said, “people just don’t pay attention to logistics, and I try to use whatever technique I can get visibility for it to show that good logistics equals sales and profits.”
  24. 24. The Supply Chain--Logistics Cycle Demand Planning • Forecasting • Market Trends • Market Conditions • Business Strategies Warehouse and Dist'n • Inventory Control and Accuracy • Material Handling • Pull and Ship • Disposal Actions • Documentation Accounting Actions • Invoice Matching • Payables • Volume/Qty Discounts • Cash Discounts Needs Recognition • Design/Needs Specs • Quality Standards • Materials Planning • Requisition Issued Logistics Logistics Management Management Receiving Actions • Receive, Count, Inspect • Accept/Reject • Returns/Reverse Logistics • Loss and Damage Claims • Documentation Purchasing Actions • Source Selection • Source Evaluation • Price / Cost Analysis • Negotiation • Contract Mgm't • Transportation • Supplier Certification • Value Analysis Traffic Actions • Carrier Selection • Routings • Rates and Classifications • Tracing / Expediting • Freight Bill Audits
  25. 25. Synchronized Supply Chain Management Network optimization software contains advance planning engines to synchronize and optimize the supply chain channel for supplier/carrier selection, production sourcing, and inventory pre-build decisions. Reduce Transportation Costs On-Time Delivery Reduce Manufacturing Costs Orders Filled Complete Responsive Production increase turnover reduce Waste and obsolescence Rapid Order Fulfillment reduce inventory
  26. 26. International Transportation and Distribution CARRIER TYPES: Usage, Costs Dependability FINANCIAL INSTRUMENTS versus DRAWBACKS IMPORT LANDED COST LICENSES EXPORT
  27. 27. ADC in the Supply Chain Goods characteristics, capacity, availability, status Capacity, schedules, status receipts Capacity, schedules, status receipts, inventory Demands goods, requests services, requests receipts Service, capacity, schedules, routes, receipts
  28. 28. Where Have We Been?—Survival of the Fittest
  29. 29. Supply Chain Compass-Five Stages Source: Manugistics   The Fundamentals CrossFunctional Teams Integrated Enterprise Extended Supply Chain Supply Chain Communities Business Pain Cost of quality Unreliable order  fulfillment Cost of customer  service Slow growth,  margin erosion Non-preferred  supplier Driving Goal Quality and cost Customer service Profitable  customer  responsiveness Profitable growth Market  leadership Organizational  Focus Independent  departments Consolidated  operations Integrated supply  chains (internal) Integrated supply  chains (external) Rapidly  reconfigurable Process  Change Standard  operating  procedures Cross-functional  communication Cross-functional  processes Customerspecific  processes Reinvented  processes Metric Predictable costs  and rates On-time,  complete delivery Total delivered  cost Share of  customer Net worth IT Focus Automated Packaged Integrated Interoperable Networked Key Tools/ Planning Spreadsheets Point tools Enterprise supply  chain planning Point-of-sale  supply chain  planning Synchronized  supply chain  planning Execution MRP and other  homegrown  applications ERP Customer  management  systems Network-centric  commerce MRP II
  30. 30. Benefits of Tracking ROI for SCM Source: Anderson Consulting • Improving return on assets benefits • Revenue growth benefits • Improved operating efficiencies benefits
  31. 31. Measuring Up – A Best Practice Model for Evaluating Supply Chain Performance Source:Arthur D. Little Goal Measure Improved customer-order fulfillment Fill rate Improved customer satisfaction Survey Supplier order fulfillment Definition Portion of custom orders (either external or internal) that are on time and accurate as the customer would determine Systematic feedback obtained directly from customer(external or internal); likely using a sampling survey Portion of supplier orders that are on time and accurate Supplier quantity Non-conforming or defective items or services divided by total at supplier interface Procurement effectiveness Year-over-year cost reduction on like items (i.e., by commodity family) Days of supply on hand Inventory investment on hand (in dollars) divided by daily ship rate (in dollars) Inventory turns Cost of Goods Sold (COGS) divided by average annual inventory investment Timing Cash-to-cash Elapsed time from payment of suppliers to collection of payment from customers Quality Quality Non-conforming or defective items or services divided by total at customer interface Operational integrity Productivity loss Operational productivity lost due to supply chain nonperformance Better procurement/supplier management Inventory
  32. 32. Lord Kelvin on Measures When you can measure what you’re When you can measure what you’re speaking about and express it in numbers, speaking about and express it in numbers, you know something about it; but when you you know something about it; but when you cannot measure it, when you cannot cannot measure it, when you cannot express it in numbers, your knowledge is of express it in numbers, your knowledge is of a meager and unsatisfactory kind.---Lord Kelvin a meager and unsatisfactory kind.---Lord Kelvin
  33. 33. Prospects for the 21 Century st • A competitive advantage today may not be a competitive advantage in the future. • Market mobility is the key to sustainable competitive advantage. That requires a well- oiled supply chain. • Darwin is often misquoted by people who say, “Only the strong survive.” What Darwin actually said is that it is not the strongest of the species or the most intelligent that will survive—it is the ones who are most responsive to change.
  34. 34. Optimizing the Supply Chain What it Means to Your Company Supply Chain Management Optimization Fulfillment and Replenishment Processes Computer Assisted Ordering & Demand Flow Technology Integrated Planning & Forecasting Processes Integrated Logistics Planning, Forecasting & Collaboration
  35. 35. Logistics—Putting It All Together • The Logistics Celerity Challenge • What it Means to Your Company • Sensitivity • Satisfaction • Circadian Rhythm • Synergism
  36. 36. Global Logistics Strategy Source: Coopers & Lybrand Consulting Aligning worldwide distribution strategies around sourcing/selling business models Key Requirements • Centralized management/worldwide integration • Customer service options • Sourcing initiatives and alliances • Procurement/supplier integration • Global network optimization • Process-driven information systems Reengineering the movement of product to improve availability and lower net landed cost Key Performance Measures Shareholder Measurements • Inventory turns • Asset utilization • Operating costs • Customer satisfaction • Loss management (asset protection) Customer Measurements • Product availability • Flexibility • On-time performance • Speed • Responsiveness • Consistency • Quality Synchronizing processes across all regions/markets Key Organizational Processes Planning and Control • Configuration and scheduling • Demand management and communication • Sourcing strategy • Manufacturing strategy • Supply chain integration • Product life cycle Support • Infrastructure • Information and technology • Key performance indicators
  37. 37. World-Class Logistics Customer Focus Delight the Customer • Perfect orders • Responsive • Very short OTD cycle time • On-time delivery • Tailored logistics systems • Easy to do business with Focus on Growth • Partnerships • Tailored programs • Product availability • “Mutual” success Provide Shareholder Value Minimize Asset Base • Asset consolidation • Cross-docking, flow-through • In-transit merge • Greater use of third parties • Worldwide contracting • Network optimization • Replace inventory with information Understand True Logistics Cost • Activity-based costing • Net landed cost vs. functional lowest costs • External partner linkage • Competitive cost index Enable and Exploit Information Technology Integrate Systems • Common applications • Decision support tools • Leverage capabilities of suppliers • Real-time tracking • Reverse logistics World-Class Infrastructure • Internal and external resources • Training • World-class people • Constant upgrade of capabilities • “Interest in change”
  38. 38. What It Means to You Personally • Ability to view the big picture • Grasp of supply chain concepts • Understand the key performance indicators of logistics • Use of information, enablers, and technology Control of the Supply Chain
  39. 39. THANK YOU FOR COMING CATTAN Services Group, Inc.
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