Chapter 2

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Chapter 2

  1. 1. Supply Chain Logistics Management Logistics
  2. 2. Supply Chain Logistics Management <ul><li>Importance of Logistics to Business </li></ul><ul><li>Logistics Value Proposition </li></ul><ul><li>The Work of Logistics </li></ul><ul><li>Logistics Operations </li></ul><ul><li>Logistics Operating Structures </li></ul><ul><li>Supply Chain Logistics Performance </li></ul>
  3. 3. Supply Chain Logistics Management <ul><li>Scope of Logistics </li></ul><ul><li>Logistics Operations </li></ul>
  4. 4. Supply Chain Logistics Management <ul><li>Scope of Logistics </li></ul><ul><li>Logistics Operations </li></ul>
  5. 5. Supply Chain Logistics Management <ul><li>Scope of Logistics </li></ul><ul><li>Logistics Operations </li></ul>
  6. 6. Importance of Logistics to Business <ul><li>Manufacturing -> Consumers </li></ul><ul><li>Logistics Expenditures </li></ul><ul><li>Logistics as a Sustainable Competitive Advantage (SCA) </li></ul>Supply Chain Logistics Management
  7. 7. Importance of Logistics to Business <ul><li>Manufacturing -> Consumers </li></ul><ul><li>Logistics Expenditures </li></ul><ul><li>Logistics as a Sustainable Competitive Advantage (SCA) </li></ul>Supply Chain Logistics Management
  8. 8. Importance of Logistics to Business <ul><li>Manufacturing -> Consumers </li></ul><ul><li>Logistics Expenditures </li></ul><ul><li>Logistics as a Sustainable Competitive Advantage (SCA) </li></ul>Supply Chain Logistics Management
  9. 9. United States Logistics Costs Source: Robert V. Delaney, 11th Annual “State Of Logistics Report” © June 5, 2000 <ul><li>1980 </li></ul><ul><li>GDP $2.88 trillion </li></ul><ul><li>Logistics Cost $451 billion </li></ul><ul><ul><li>15.7% of GDP </li></ul></ul><ul><li>Trans. Cost $214 billion </li></ul><ul><ul><li>47.5 % of Logistics Cost </li></ul></ul><ul><li>1999 </li></ul><ul><li>GDP $9.26 trillion </li></ul><ul><li>Logistics Cost $921 billion </li></ul><ul><ul><li>9.9% of GDP </li></ul></ul><ul><li>Trans. Cost $554 billion </li></ul><ul><ul><li>60.2 % of Logistics Cost </li></ul></ul>$ billion Logistics Transportation 0 100 200 300 400 500 600 700 800 900 1980 1999 1000 Year
  10. 10. Importance of Logistics to Business <ul><li>Manufacturing -> Consumers </li></ul><ul><li>Logistics Expenditures </li></ul><ul><li>Logistics as a Sustainable Competitive Advantage (SCA) </li></ul>Supply Chain Logistics Management
  11. 11. Logistics Value Proposition <ul><li>Service </li></ul><ul><li>Cost Minimization </li></ul>Supply Chain Logistics Management
  12. 12. Logistics Value Proposition <ul><li>Service </li></ul><ul><li>Cost Minimization </li></ul>Supply Chain Logistics Management
  13. 13. Logistics Value Proposition <ul><li>Service </li></ul><ul><ul><li>Logistics Service Quality Process Dimensions </li></ul></ul><ul><ul><li>Logistics Service Quality Outcome Dimensions </li></ul></ul><ul><li>Cost Minimization </li></ul>Supply Chain Logistics Management
  14. 14. Logistics Value Proposition <ul><li>Service </li></ul><ul><ul><li>Logistics Service Quality Process Dimensions </li></ul></ul><ul><ul><ul><li>Procedures </li></ul></ul></ul><ul><ul><ul><li>Contact </li></ul></ul></ul><ul><ul><ul><li>Information </li></ul></ul></ul><ul><ul><ul><li>Discrepancy </li></ul></ul></ul><ul><ul><li>Logistics Service Quality Outcome Dimensions </li></ul></ul><ul><li>Cost Minimization </li></ul>Supply Chain Logistics Management
  15. 15. Logistics Value Proposition <ul><li>Service </li></ul><ul><ul><li>Logistics Service Quality Process Dimensions </li></ul></ul><ul><ul><li>Logistics Service Quality Outcome Dimensions </li></ul></ul><ul><ul><ul><li>Timeliness </li></ul></ul></ul><ul><ul><ul><li>Availability </li></ul></ul></ul><ul><ul><ul><li>Condition </li></ul></ul></ul><ul><ul><ul><li>Accuracy </li></ul></ul></ul><ul><li>Cost Minimization </li></ul>Supply Chain Logistics Management
  16. 16. Logistics Value Proposition <ul><li>Service Benefits </li></ul><ul><li>Cost Minimization </li></ul>Supply Chain Logistics Management
  17. 17. The Work of Logistics <ul><li>Order Processing </li></ul><ul><li>Inventory </li></ul><ul><li>Transportation </li></ul><ul><li>Warehousing, Materials Handling, Packaging </li></ul><ul><li>Facility Network Design </li></ul>Supply Chain Logistics Management
  18. 18. Integrated Logistics Order Processing Inventory Transportation Facility Network Warehousing, Material Handling
  19. 19. The Work of Logistics <ul><li>Order Processing </li></ul><ul><ul><li>order receipt, order assembly, order delivery, invoicing & collection </li></ul></ul><ul><li>Inventory </li></ul><ul><li>Transportation </li></ul><ul><li>Warehousing, Materials Handling </li></ul><ul><li>Facility Network Design </li></ul>Supply Chain Logistics Management
  20. 20. The Work of Logistics <ul><li>Order Processing </li></ul><ul><li>Inventory </li></ul><ul><li>Transportation </li></ul><ul><li>Warehousing, Materials Handling </li></ul><ul><li>Facility Network Design </li></ul>Supply Chain Logistics Management
  21. 21. The Work of Logistics <ul><li>Order Processing </li></ul><ul><li>Inventory </li></ul><ul><li>Transportation </li></ul><ul><li>Warehousing, Materials Handling </li></ul><ul><li>Facility Network Design </li></ul>Supply Chain Logistics Management
  22. 22. The Work of Logistics <ul><li>Order Processing </li></ul><ul><li>Inventory </li></ul><ul><li>Transportation </li></ul><ul><li>Warehousing, Materials Handling </li></ul><ul><ul><li>sorting, sequencing, product modification & assembly, and transportation consolidation </li></ul></ul><ul><li>Facility Network Design </li></ul>Supply Chain Logistics Management
  23. 23. The Work of Logistics <ul><li>Order Processing </li></ul><ul><li>Inventory </li></ul><ul><li>Transportation </li></ul><ul><li>Warehousing, Materials Handling </li></ul><ul><li>Facility Network Design </li></ul>Supply Chain Logistics Management
  24. 24. Logistics Operations Customers Enterprise Customer Service Manufacturing Support Procurement (Purchasing) Suppliers Information Flow Inventory Flow
  25. 25. Logistics Operations <ul><li>Inventory Flow </li></ul><ul><ul><li>Customer Service </li></ul></ul><ul><ul><li>Manufacturing Support </li></ul></ul><ul><ul><li>Purchasing (procurement) Support </li></ul></ul><ul><li>Information Flow </li></ul>Supply Chain Logistics Management
  26. 26. Logistics Operations <ul><li>Inventory Flow </li></ul><ul><li>Information Flow </li></ul>Supply Chain Logistics Management
  27. 27. Logistics Operating Structures <ul><li>Echelon </li></ul><ul><li>Direct </li></ul><ul><li>Combined </li></ul>Supply Chain Logistics Management
  28. 28. Logistics Operating Structures <ul><li>Echelon </li></ul><ul><li>Direct </li></ul><ul><li>Combined </li></ul>Supply Chain Logistics Management
  29. 29. Echeloned Structured Logistics Supplier Storage or Consolidation Warehouse Manufacturer Wholesaler’s Warehouse or Distribution Center Retailer Customer
  30. 30. Logistics Operating Structures <ul><li>Echelon </li></ul><ul><li>Direct </li></ul><ul><li>Combined </li></ul>Supply Chain Logistics Management
  31. 31. Logistics Operating Structures <ul><li>Echelon </li></ul><ul><li>Direct </li></ul><ul><li>Combined </li></ul>Supply Chain Logistics Management
  32. 32. Combined Echelon and Direct Structured Logistics Supplier Storage or Consolidation Warehouse Manufacturer Wholesaler Warehouse or Distribution Center Retailer Customer Direct Delivery
  33. 33. Supply Chain Logistics Performance <ul><li>Performance Cycle Structure </li></ul>Supply Chain Logistics Management
  34. 34. Sources of Performance-Cycle Variation Order Transmission Time Range - Days 1/2 3 1 Customer Delivery Time Range - Days 1/2 3 1 Order Transportation Time Range - Days 2 10 4 Order Selection Time Range - Days 1 20 2 Order Processing Time Range - Days 1 4 2 Total Performance Cycle Time Range - Days 5 40 10

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