This document provides an overview of logistics and presents two case studies on logistics bottlenecks. It defines logistics as dealing with the physical movement of goods to fulfill an organization's needs. Logistics has existed since antiquity and involves transportation, storage, sourcing supplies, and time management. The document then presents two case studies showing breakdowns originating from poor logistics setups and how they could have been solved, to help readers evaluate their own logistics needs.

1. Low
Signal
Detec/on
©
North
Delta
College
2015
Mathema'cs
applied
to
Business
Theory
1
2
CASE
STUDIES
ON
LOGISTICS
AND
ITS
BOTTLENECKS

2. INTRODUCTION
Low
Signal
Detec/on
is
concerned
about
describing
key
crisis
situa/ons
occurring
in
the
art
of
the
Logis/cian.
Logis/cs
generally
deals
with
the
moving
of
the
physical
goods
necessary
to
fulfil
an
organisa/on’s
needs.
As
such
it
has
one
of
the
oldest
corpus
of
techniques
in
any
branch
of
business
management.
We
will
present
2
case
studies
showing
a
breakdown
origina/ng
in
a
poor
or
incomplete
logis/cs
set
up
and
demonstrate
how
to
solve
them.
The
reader
will
get
the
tools
to
re-­‐ques/on
his
own
logis/cs
needs.
So,
Welcome,
Ladies
and
Gentlemen
to
Low
Signal
Detec/on,
where
your
Logis/cs
and
Supply-­‐Chain
Understanding
will
be
taken
to
new
dimensions
and
your
business
imagina/on
into
a
mind-­‐blowing
journey.
.
Mathema'cs
applied
to
Business
Theory
2

3. SUMMARY
Mathema'cs
applied
to
Business
Theory
3
Part
1:
What
is
Logis/cs
all
about?
A) Defini/on
of
Logis/cs
B) Logis/cs
in
Businesses
C) Logis/cs
MoYos
Part
2:
Case
Study
1:
Processes
BoYlenecks
A) The
Situa/on
B) An
Adventure
C) The
Crisis
D) Consequences
E) How
this
could
have
been
solved
Part
3:
Case
Study
2:
Safety
Stock
A) The
Situa/on
B) Normal
Daily
Rou/ne
C) The
Crisis
D) Consequences
E) How
this
could
have
been
solved
Final
Statement

4. PART
1:
WHAT
IS
LOGISTICS
ALL
ABOUT?
Logis/cs
is
the
art
of
displacing
products,
people
or
equipment
to
fulfil
an
organisa/on’s
needs,
whether
it
is
weapons
for
an
army,
or
taking
businesses’
products
from
factory
to
customers,
or
organising
holidays
for
a
group
of
10
people…
Logis/cs
exists
since
at
least
An/quity
and
started
probably
with
Warfare
to
support
supply
of
arms
to
the
fighters
on
the
baYleground.
Among
others,
Logis/cs
concerns
itself
with
transporta/on,
storage
in
Warehouses,
sourcing
supplies,
Time
management….
It
is
about
making
sure
your
organisa/on’s
physical
movement
of
goods
follows
the
organisa/on’s
needs
and
objec/ves.
Mathema'cs
applied
to
Business
Theory
4
Defini/on
of
Logis/cs

5. Logis/cs
in
Businesses
Most
of
businesses
selling
physical
goods
have
a
Logis/cs
department.
This
department
is
generally
concerned
about
transpor/ng
supplies
from
suppliers
to
the
business’
factories
and
warehouses,
managing
stocks
in
Warehouses
and
then
transpor/ng
finished
goods
to
customers.
In
modern
days,
Logis/cs
is
part
of
a
more
general
framework
called
Supply-­‐Chain
Management
concerned
with
the
full
chain
of
product
flow
from
original
suppliers
un/l
delivery
to
customer.
We
will
plunge
into
this
fascina/ng
subject
in
subsequent
presenta/ons.
Mathema'cs
applied
to
Business
Theory
5
PART
1:
WHAT
IS
LOGISTICS
ALL
ABOUT?
Picture
1:
Logis/cs
in
Businesses
Picture
2:
Logis/cs
&
Supply
Chain
Factory
in
Birmingham
Warehouse
in
London
Area
Warehouse
in
Dubai
Customer
in
Ras-­‐Al-­‐Khaimah
Interna/onal
Transporta/on:
Ship
Truck
Truck

6.
Mathema'cs
applied
to
Business
Theory
6
Logis/cs
MoYos
The
most
famous
moYo
in
Logis/cs
is
the
well
known:
“The
right
Product
at
the
right
/me
in
the
right
place”
In
the
following
2
case
studies
we
will
show
how
this
principle
gets
challenged
in
real
business
situa/ons
where:
In
case
study
1,
profitability
takes
over
true
logis/cs
needs
by
pueng
speed
as
the
ul/mate
principle
of
a
logis/cian
In
case
study
2,
a
small
business
where
the
principles
of
Lean
Inventory
have
not
yet
been
implemented
and
the
CEO
and
his
organisa/on
are
overtaken
by
a
sudden
surge
in
demand.
PART
1:
WHAT
IS
LOGISTICS
ALL
ABOUT?
Picture
3:
Logis/cs
MoYo
11:50 AM
SHELF
A,
RACK
18
B
Case
Study
Objec/ves
Logis/cs
BoYlenecks
Show
an
erroneous
Logis/cs
Principle
Safety
Stock
Why
Lean
Inventory
makes
sense

7. Dutch
explora/on
missions
were
the
first
to
colonise
Mars
in
November
2118
prior
even
to
the
Americans.
2
scien/fic
teams
landed
on
the
Red
planet
at
11
days
interval,
with
liYle
inter-­‐connec/on
except
a
small
communica/on
device
nick-­‐named
Denise
Soren
Layatollah.
Team
A
took
its
headquarters
in
the
Mar/n
Valley
and
very
quickly
built
a
temporary
air
base
in
order
first
to
occupy
properly
the
given
environment
and
then
start
developing
their
project-­‐mission:
“Earthifying
Mars.”
Team
B
arrived
few
thousand
miles
North
and
launched
their
own
out
of
space
Robinsonade
through
more
complex
socio-­‐biological
experimenta/ons,
in
par/cular
ques/oning
the
long
Term
survival
of
both
missions
on
such
a
remote
loca/on
Mathema'cs
applied
to
Business
Theory
7
The
Landscape
PART
2:
CASE
STUDY
1:
Processes
BoYlenecks
Picture
4:
Mars

8. Logis/cs
appears
In
order
to
communicate
properly,
Team
A
had
set
up
Denise
Soren
Layatollah
or
(DSL).
The
objec/ves
were
two-­‐folds:
First,
remain
in
contact
with
Team
B
Second,
support
scien/fic
needs
for
both
Teams.
The
set
up
of
DSL
was
as
follows:
2
small
probes
were
sent
every
day
from
Team
A
near
the
Southern
pole
along
2
geodesic
paths.
The
first
path
linked
back
to
Junc/on
Point
“Ether”
near
Team
B
close
to
the
Equator.
The
second
path
followed
diverse
experiments
i/neraries
on
the
Red
planet.
Team
B
had
on
the
other
hand
the
responsibility
to
provide
Fresh
Food
for
both
missions
in
the
long
term.
In
this
regard,
another
probe
was
sent
at
Junc/on
Point
“Ether”
in
order
to
drop
food,
material
and
other
equipment.
One
of
the
probes
from
Team
A
had
to
collect
them
at
this
same
Junc/on
point.
Mathema'cs
applied
to
Business
Theory
8
PART
2:
CASE
STUDY
1:
Processes
BoYlenecks
Picture
5:
Junc/on
Point
Ether
Team
B
Territory
Team
A
Research
zone
Junc/on
Point
Ether

9. 2
Logis/cs
Processes
We
have
therefore
2
different
Logis/cs
processes
mee/ng
at
a
junc/on
point:
Process
A
star/ng
with
Team
A
and
Process
B
star/ng
with
Team
B.
Mathema'cs
applied
to
Business
Theory
9
PART
2:
CASE
STUDY
1:
Processes
BoYlenecks
Process
A
is
a
pick
process
with
a
2
hours
logis/cs
cycle,
which
means
the
pick
has
to
happen
within
2
hours
of
reaching
the
Junc/on
Point,
if
not
the
process
owner
has
to
move
the
probe
to
another
loca/on.
Process
B
is
a
drop
process,
which
is
/med,
meaning
items
have
to
be
dropped
as
fast
as
possible.
Obviously
for
the
whole
opera/on
to
work
properly,
at
the
junc/on
point,
process
B
has
to
occur
before
process
A.
i.e.
the
item
has
to
be
dropped
at
junc/on
point
before
it
can
be
picked.
Picture
6:
The
2
Logis/cs
Processes
Process
A
Process
B
Ether

10. On
a
normal
day
In
normal
/mes,
no
problem
occurs.
Furthermore,
both
processes
can
be
done
fast
because
they
have
been
engineered
so.
Over/me,
both
Dutch
missions
are
gaining
confidence
as
everything
seems
streamlined,
and
the
DSL
concept
of
exchange
appears
as
the
perfect
solu/on
to
the
Mars
colonisa/on
riddle.
Very
cleverly,
the
colons
have
kept
monetary
transac/ons
alive
and
the
whole
ecosystem
follows
a
free
liberal
economy.
Everything
has
to
be
paid
for,
even
the
transac/ons
on
the
DSL.
The
managers
for
both
processes
A
and
B
quickly
realise
that
in
order
to
make
more
profit
on
the
DSL
speed
is
of
the
essence.
The
faster
the
clerks
do
their
job,
the
faster
the
probes
move,
the
more
money
the
managers
make.
Thus
both
Teams
have
a
Logis/cs
MoYo:
“Speed
is
King”.
Mathema'cs
applied
to
Business
Theory
10
PART
2:
CASE
STUDY
1:
Processes
BoYlenecks
Picture
7:
Free
Liberal
Economy

11. A
mission
cri/cal
day
11
April
2119
is
a
crucial
day
for
both
teams.
A
fundamental
piece
of
equipment
is
going
to
be
exchanged
through
the
DSL.
However
this
is
precisely
the
day
when
the
crisis
happens.
For
some
reasons,
the
probe
of
process
A
is
one
hour
ahead
of
/me
and
the
probe
of
process
B
is
one
hour
late.
Because
A
is
/med
differently
and
has
a
window
of
only
2
hours
to
do
its
job,
it
leaves
the
junc/on
point
without
picking
the
item
causing
the
item
to
be
labelled
as
missing.
Mathema'cs
applied
to
Business
Theory
11
PART
2:
CASE
STUDY
1:
Processes
BoYlenecks
Picture
8:
Missing
the
/me
slot
Time
Process
A
Process
B

12. Consequences
Both
teams
think
the
equipment
has
been
lost
on
the
surface
of
Mars.
Both
Manager
A
and
Manager
B
are
unable
to
find
the
equipment
and
thoroughly
blame
the
other
person
as
responsible
of
the
mishandling.
A
major
crisis
hits
the
opera/ons
of
the
expedi/on
jeopardising
almost
its
survival
on
the
alien
planet.
It
takes
months
to
the
colons
to
overcome
what
at
the
origin
was
only
a
small
mistake.
Mathema'cs
applied
to
Business
Theory
12
CEO
PART
2:
CASE
STUDY
1:
Processes
BoYlenecks

13. Causes
of
the
crisis
Let
us
now
ask
ourselves
what
are
the
causes
of
the
crisis.
It
is
indeed
linked
with
/me
management.
The
fact
that
probe
B
was
1
hour
late
is
certainly
a
managerial
error
but
looking
at
the
deep
root
causes
of
it,
one
sees
there
were
plenty
of
jus/fiable
reasons
why
it
happened.
New
environment,
uncertain
clima/c
condi/ons,
unknown
unknowns
etc…
Something
which
can
happen
to
any
business
on
Earth
too
during
major
external
changes.
More
serious,
is
the
Logis/cs
logic
of
team
A…
which
ar/ficially
increased
the
speed
of
probe
A
to
answer
profitability
needs.
They
were
in
known
business
territory
and
could
have
avoided
the
whole
blunder.
They
would
never
have
imagined
that
in
business
one
can
be
too
much
in
advance…
Mathema'cs
applied
to
Business
Theory
13
PART
2:
CASE
STUDY
1:
Processes
BoYlenecks
Process
Real
cause
of
Time
Mismanagement
A
Wrong
Logis/cs
Logic
B
Unknown
Unknowns

14. Solu/on
to
Case
study
1
Mathema'cs
applied
to
Business
Theory
14
We
see
therefore
that
in
the
Logis/cs
realm,
speed
is
not
necessarily
an
indicator
of
efficiency.
Timeliness
seems
more
appropriate.
There
is
a
reason
why
the
brain
behind
a
business
process
has
precisely
given
that
window
of
/me
to
the
process
and
no
other.
Therefore
speed
is
not
the
answer
to
Logis/cs.
Right
/me,
right
place,
right
product.
What
happened
with
/me
(/me
mismatch)
here
in
this
case
study
happens
very
oqen
with
products
with
real
businesses
on
planet
Earth
precisely
because
speed
is
wrongly
considered
as
the
essence
of
Logis/cs
(or
Opera/ons
Management
in
more
general):
i.e.
The
customer
receives
the
wrong
product.
PART
2:
CASE
STUDY
1:
Processes
BoYlenecks
Picture
9:
Timeliness
vs.
Speed
Timeliness
Speed

15. A
rum
factory
in
Jamaica
We
are
in
a
small
entrepreneurial
rum
factory
on
the
Jamaican
coast
run
as
a
one-­‐man-­‐
show
by
Dr
Grunrelt
with
limited
resources
but
huge
turnover.
The
company
sells
a
niche
product
to
very
faithful
clients
all
over
the
West
Indies
up
to
the
Bermuda
Triangle.
Though
the
customer
base
is
strong,
the
organisa/on
is
very
open
&
dynamic,
expanding
to
new
markets.
Moreover,
its
business
systems
are
very
simple
in
order
to
remain
flexible
and
respond
to
the
very
compe//ve
and
changing
business
environment.
Dr
Grunrelt
is
proud
of
his
achievements
but
some/mes
wonder
how
long
he
can
sustain
it.
Mathema'cs
applied
to
Business
Theory
15
PART
3:
CASE
STUDY
2:
Safety
Stock
Picture
10:
Caribbean

16. Normal
Daily
Rou/ne
Mathema'cs
applied
to
Business
Theory
16
The
Business
processes
are
in
fact
very
basic
in
the
factory.
BoYles
come
in
every
morning.
4
raw,
purchased
ingredients
are
used
to
elaborate
the
final
product
and
are
mixed
first
and
then
filled
in
the
boYles,
which
are
aqerwards
sealed
and
sold
as
it
is.
Among
the
4
raw
ingredients,
there
is
one
key
element,
which
gives
the
“kick”
to
the
whole
product
and
is
called
the
“elixir”
by
the
workers.
It
is
the
Safety
Stock
of
the
Elixir,
which
is
our
main
centre
of
aYen/on
in
this
case
study.
What
is
Safety
Stock?
It
is
the
minimal
stock
one
keeps
in
the
factory
even
if
the
rest
gets
depleted.
It
should
be
large
enough
to
sustain
sudden
surges
of
demand
as
well
as
not
over-­‐
cau/ous
as
storage
costs
money.
Dr
Grunrelt
uses
a
complex
algorithm
to
calculate
it
based
on
es/mated
demand.
PART
3:
CASE
STUDY
2:
Safety
Stock
Picture
11:
BoYles
Picture
12:
Safety
Stock
Safety
Stock
Stock

17. The
Crisis
One
summer
day,
during
a
peak
demand
period,
the
factory
suddenly
runs
out
of
Elixir
and
no
more
boYles
can
be
produced.
Everything
has
to
stop.
Dr
Grunrelt
is
furious.
He
can
see
right
now
the
impact
this
is
going
to
have
on
his
small
business:
Unsa/sfied
customers,
Loss
of
market
share,
boos/ng
compe/tors
and
more
seriously
reputa/on
damage.
He
decides
to
inves/gate
what
has
happened
in
order
to
answer
why
it
has
happened.
Mathema'cs
applied
to
Business
Theory
17
PART
3:
CASE
STUDY
2:
Safety
Stock
Picture
13:
Stock
=
0

18. Mathema'cs
applied
to
Business
Theory
18
Root
cause
analysis
How
come
despite
the
Safety
Stock,
the
stock
of
Elixir
has
fully
vanished?
He
knows
excessive
demand
is
not
an
excuse
as
his
Safety
stock
is
based
on
forecasted
demand.
He
summons
the
Logis/cs
manager
to
give
some
explana/on
on
his
stock
management.
The
truth
suddenly
comes
out.
The
Stock
of
Elixir
is
in
normal
/me
far
too
high
as
it
far
exceeds
demand.
The
warehouse
manager
cannot
keep
control
of
it
and
many
employees
knowing
it
serve
themselves
in
the
stock
for
their
own
personal
use.
Therefore
although
high,
the
real
stock
is
s/ll
significantly
lower
than
the
one
indicated
in
the
Excel
sheets
and
explains
why
the
crisis
happened
in
the
first
place.
Furthermore,
due
to
excessive
stocks
in
regular
days,
the
warehouse
manager
is
at
pain
at
monitoring
who
does
what
on
the
shop
floor
and
if
the
stock
in
hand
matches
with
the
one
on
the
IT
system.
What
is
the
solu/on
to
this
new
riddle?
PART
3:
CASE
STUDY
2:
Safety
Stock

19. How
this
could
have
been
solved
One
good
solu/on
here
would
be
to
switch
to
Lean
Inventory
and
the
Japanese
Kanban
method.
2
Principles
to
respect
here:
Keep
Safety
Stocks
to
their
lowest
levels
in
order
to
monitor
physically
(even
visually)
the
Stock
of
Elixir
Replenish
stocks
each
/me
there
is
a
customer
order
and
only
in
that
case.
Although
this
is
not
the
ul/mate
answer
to
the
crisis,
Lean
Inventory
and
Kanban
are
proven
methods.
Furthermore
it
will
avoid
the
problem
of
having
too
huge
inventory
to
be
monitored
by
a
small
organisa/on
and
employee
chea/ng.
Because
stocks
follow
demand
to
the
leYer
with
minimal
depth,
the
warehouse
manager
should
be
able
to
control
them
far
beYer
as
their
size
will
never
go
off
the
roof.
Mathema'cs
applied
to
Business
Theory
19
PART
3:
CASE
STUDY
2:
Safety
Stock
Picture
14:
Lean
Inventory
Ship
Water
=
Stock
Rocks
=
Demand

20. Final
Statement
We
have
therefore
seen
Logis/cs
in
prac/cal
situa/ons.
How
at
the
end,
the
whole
problem
of
Logis/cs
is
concerned
about
detec/ng
the
opera/onal
obstacles
linked
with
transpor/ng
goods,
storage
or
just
physical
movement
with
a
monetary
purpose.
The
2
case
studies
demonstrated
2
situa/ons
where
boYlenecks
or
crisis
situa/ons
appear,
one
due
to
excess
profit
op/misa/on,
the
second
to
a
lack
of
Lean
Management.
Logis/cs
requires
therefore
common
sense
and
some
basic
prac/cal
guidelines
…
too
oqen
forgoYen
by
many
real-­‐life
businesses.
These
2
case
studies
were
presented
to
show
case
how
and
why
simple
principles
can
be
totally
missed.
.
Mathema'cs
applied
to
Business
Theory
20
FINAL
STATEMENT
Process
apparently
fully
designed
and
streamlined
Looking
closely:
Small
perturba/ons
which
can
clog
up
the
whole
system
Picture
15:
Low
Signal
Detec/on