1、Course Administration TextbookBallou,Ronald H.,Business Logistics Management:Planning,Organizing,and controlling the Supply chain,Fifth Edition,Prentice Hall.ReferencesLambert,D,J.Stock and Ellram,Fundamentals of logistics management,McGraw Hill international editions.Coyle,J.,E.Bardi and C.Langley
2、Jr.,The management of business logistics:a supply chain perspective,7e,Thomson learning.Outline What is logistics?Logistics in a firm Main issues in logistics management Logistics planningExample:a skiwear maker Retail season from Sep to Dec Over 95%of the products are new designs each year Retail s
3、tores are located in North America most outerwear(parkas,pants,suits,shells,and jackets)are produced in Asia Each style comes in several colors and there are several style/colors in totalWhat needs to be done in order to make a sale?Example:Boeing 787Example:Boeing 787 The design of Boeing 787 was f
4、inished in four countries as USA,Japan,Italian,and Russia.In the project of Boeing 787,more than 4 million parts will be produced in more than 40 countries.Boeing only produced less then 10%part in this project.And he will assemble the parts in his own manufactory.Example:Boeing 787WingJapanBodyItal
5、ianUndercarriageFranceRudderChinaWingJapanExample:The hub of FedExMemphisLouisvilleExample:The hub of UPSExample:The hub in Pacific-Asia广州广州Example:The hub in EuropeanChallenges Challenge How to make the manufacture more efficiently,how to connect the difference plants more tightly,how to reduce the
6、 cost and how to increase the service level?What is the basic support to this performance?One answer is logistics But,why?WarehousingWarehousingTransportationTransportationVendors/plants/portsTransportationFactoryTransportationCustomersInformationflowsThe Immediate Supply Chain for an Individual Fir
7、mCR(2004)Prentice Hall,Inc.1-2Value-added Role ProductionFormMarketing*PossessionLogisticsTime and Place*Engineering and Finance may also be involved.Logistics different perspective Management of materials in motion and at rest Inventory Getting the right product to the customer,in the right quantit
8、y,in the right condition,at the right place,at the right time,and at the right cost(called the“seven Rs of logistics”)Customer The branch of military science having to do with procuring,maintaining,and transporting material,personnel,and facilities-DictionaryLogistics different perspective That part
9、 of the supply chain process that plans,implements,and controls the efficient,effective flow and storage of goods,services,and related information from point of origin to point of consumption in order to meet customer requirements Council of Logistics Management Handling the details of an activity C
10、ommon cultureEvolution of Supply Chain ManagementCR(2004)Prentice Hall,Inc.Subdivisions of Logistics Military logistics Event logistics Logistics in manufacturing Logistics in services“Logistics also proved a problem in this idyllic but remote location.The day before the festival,a plane skidded off
11、 the runway,closing Lijiang airport for the day.Music fans,media and performers found themselves grounded.Many had to take overnight bus rides from Kunming to Lijiang.But getting to Lijiang was just the beginning.The festival site itself was a 45-minute drive out of town,in the shadow of Snow Mounta
12、in.Transport problems plagued the weekend,a situation made more unbearable by the weather.”Turned on,turned in and washed out,SCMP,Aug.24,2002“As a combat arms officer,I learned early on that its the logisticians that get you to the battle and sustain you in the battle.”General Colin PowellFormer Ch
13、airman,Joint Chiefs of Staff“An army marches on its stomach!”“Dr.Amy,the medical director of American Red Cross(ARC)s regional blood center for the northern Ohio region located in Cleveland,was in low spirits.Following March,in which severe outdating of blood products had taken place,she was facing
14、an extreme shortage of blood in April.The substantial outdating of blood products in March and their severe shortage in April had proved very costly.She reflected upon the ARCs stated mission“of providing the highest quality blood components at the lowest possible cost.”She wondered if some changes
15、in its blood inventory management program would reduce operating costs for ARC and also increase the availability of blood to the hospitals that it supplies.”Business Logistics Management,Ronald H.Ballou“In two years National Semiconductor reduced distribution costs by 2.5 percent,decreased delivery
16、 time by 47 percent,and increased sales by 34 percent by closing six warehouses around the globe and air-freighting microchips to customers from a new centralized distribution center in Singapore.”Henkoff,R.Delivering the goods,Fortune,Nov.28,1994Outline What is logistics?Logistics in a firm Main is
17、sues in logistics management Logistics planningLogistics Objectives Customer service Cost Add value Time Place Activities Order processing Transportation Inventory Location Warehousing Packaging Material handling Sourcing quality detailed production scheduling equipment maint.capacity customer servi
18、ce standards pricing packaging retail location promotion market research product mix sales force management product scheduling plant location purchasing transport inventory order processing material handlingProduction/OperationsLogisticsMarketingLogistics and Finance/Accounting ROA=(revenue-expenses
19、)/assets Logistics can impact ROA in several ways inventory is an asset on the balance sheet utilization of logistics related assets logistics cost Logistics managers have to justify investment in logistics-related assets.Accounting systems are critical for providing cost information for logistics T
20、he Importance and Challenge Logistics creates values to customers;The costs are significant;Logistics can gain competitive advantage.Product life cycles become shorter and shorter;Supply chain become more complex;Product variety increasesCompetitive advantage Dell Sell directly from its website and
21、call-centers Build to order Outsource component production and express shipping Zara Speed to market in around five weeks(industry norm:6-9 months)Avoid mass production Wal-Mart Collaborative planning forecasting and replenishment Cross-docking RFIDOutline What is logistics?Logistics in a firm Main
22、issues in logistics management Logistics planningLogistics TriangleCustomer ServiceTransportationInventoryLocationOther Issues Warehousing International logistics Reverse logistics IT issues EDI,Internet,ERP and others SourcingPlant:HoustonMarket:ChicagoProduction cost:$8Price at Market:$15Transport
23、ation and storage cost(per cwt):$5Weight per shirt:1 poundExample:current practiceExample:an alternativeRaw materials:HoustonPlant:ChinaMarket:ChicagoImport duty:$0.5Production cost:$4 Transportation and storage costs(per cwt.):$6Weight of raw material:1 poundShipping cost(per cwt.):$2Example:questi
24、ons From a logistics-production cost standpoint,should the shirt be produced in China?What additional considerations,other than the above logistics-production tradeoff,might be considered before making a final decision?Outline What is logistics?Logistics in a firm Main issues in logistics management
25、 Logistics planningDecision area StrategicTacticalOperationalTransportation Mode selectionSeasonal equip-ment leasingDispatchingInventoriesLocation,Control policiesSafety stock levels Order fillingOrderprocessingOrder entry,transmittal,and processing systemdesignProcessingorders,Fillingback ordersPu
26、rchasingDevelopment of supplier-buyer relationsContracting,Forward buyingExpeditingWarehousingHandling equipmentselection,Layout designSpace utilizationOrder pickingand restockingFacilitylocationNumber,size,andlocation of warehousesStrategic,Tactical,and Operational PlanningGuidelines for Logistics
27、Planning Total cost concepts Differentiated distribution Postponement Consolidation StandardizationTotal cost conceptsRailTruckAirCostCost of transportationInventory costInventory and transportation costs trade-offCostCost of transportation,order processing and inventoryLost sales costCost vs.custom
28、er service levelImproved customer serviceCostInventory costRevenueTransportation costRevenueIncreasing number of stocking pointsSetting number of stocking pointsCostInventory holding costLost sales costSetting inventory levelAverage inventory levelCostInventory holding costTransportationcostSetting
29、the frequency of deliveryDelivery intervalDifferentiated distribution Idea:not all products or customers should be treated the same way.Example 1:availabilityA item:gasolineB item:tires,batteries,oil,grease and transmission fluidC item:valve stems,windshield wiper blades,radiator caps,hoses,fan belt
30、s,car wax Example 2:customerCentral warehouseLocal warehouseLocal warehousecustomercustomercustomercustomercustomerExample 3:order statusCUSTOMERPostponement Many retailers do not keep inventory other than samples.(time)Dell Computer configures computer systems to customer orders.(form)Steel service
31、 centers cut standard shapes and sizes of steel products into custom products for customers(form)Central IdeaTo avoid shipping(keeping)goods in anticipation of when demand will occur(time postponement)and to avoid creating the form of the final product in anticipation of that form(form postponement)
32、Chocolate 5 Vanilla 5 demand=8 demand=2Plain 10 Add chocolate flavorAdd vanilla flavorApplicabilityTechnology&process design Feasible to decouple primary and postponed operations Limited complexity of customizing Quick customization Product High commonality of modules High value density of products
33、Market Short product life cycles Demand uncertainty Varied markets and customersConsolidation Inventory Vehicle consolidation Warehouse consolidation Temporal consolidationStandardization Logistics cost increases when product variety increases Example:automakers create product variety by adding or substituting options at the point of sales;Different models of computers share a lot of common components Standard containers
