logistics management 2
DESCRIPTION
TRANSCRIPT
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Logistics
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Objective of information and
logistics management
Minimise logistics costs
Deliver maximum customer service
Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill
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Objectives of the supply chain
manager 1. Communication increase along chain –
uninterrupted flow
2. Cost control: decreasing inventory,
keeping high C-service levels …
decrease supplier base and develop
supplier relationships
3. Standardisation of parts … on time,
happy customers, reduced inventory …
Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill
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Factors to be taken into
consideration
• IT systems
• Cost
• Customers
Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill
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IT
Data on:
• Inventory
• Transportation
• Distribution facilities
• Customers throughout supply chain
• Invoices and payments
Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill
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Cost & C-service
Transport
Inventory
Stockout
Materials handling
Warehousing
Order processing
Communication
Dependability
Time
Convenience
Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill
Total logistical cost factors Customer service factors
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How customer service standards will differ by type
of firm
Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill
Type Customer service standard
Wholesaler At least 98 percent of orders filled accurately
Manufacturer Order cycle time of no more than five days
Retailer Returns accepted within 30 days
Airline At least 90 percent of arrivals on time
Trucker A max of 5 percent loss and damage per year
Restaurant Lunch served within 5 minutes of order
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PRINCIPLES OF SUPPLY CHAIN
MANAGEMENT
1. Communication
2. Flexibility, inventories and customer service
3. Decision-making
4. Metrics and data-collection:
• Quality
• Delivery
• Flexibility
• Cost
• After-sales support
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COMMUNICATION
A clever retailer would share the point-of-
sale data and forecasts with suppliers
Till point link from retailer to supplier …
automatic ordering …
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THE BASIS FOR GOOD
CUSTOMER SERVICE
Flexibility Customer service
Inventory
Influence
Influence
Influence
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DECISION-MAKING
strategic
tactical
operational
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PRINCIPLES OF SUPPLY CHAIN
MANAGEMENT
1. Communication
2. Flexibility, inventories and customer service
3. Decision-making
4. Metrics and data-collection:
• Quality
• Delivery
• Flexibility
• Cost
• After-sales support
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METRICS AND DATA
COLLECTION
Metric = standard of measurement
against performance … benchmark
Can only KNOW if have data …
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Logistics costs:
• Transportation
• Operation of distribution centres
• Management of finished goods inventories
• Order processing for sales
Source: Kerin, Hartley, Berkowitz & Rudelius, 2006: Marketing, McGraw Hill
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(1) quality
• functionality
• conformance
• reliability
• durability
• safety
• serviceability
• aestetics
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(2) delivery
• speed
• reliability
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(3) flexibility
• mix flexibility
• changeover flexibility
• design flexibility
• volume flexibility
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(4) cost
Just so that ops and supply chain usually account for
most of organisations’ cost … thus target for cost
reduction …
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(5) after-sales support
Especially if there is a high price tag to product …
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Pitfalls of supply chain inventory management and their symptoms
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Pitfalls
1. No supply chain metrics
2. Inadequate definition of customer service
3. Inaccurate delivery status data
4. Inefficient information systems
5. Ignoring the impact of uncertainties
6. Simplistic inventory stocking policies
7. Discrimination against internal customers
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Pitfalls
8. Poor coordination
9. Incomplete shipment methods analysis
10. Incorrect assessment of inventory costs
11. Organisational barriers
12. Product-process design without supply
chain considerations
13. Separation of supply chain design from
operational decisions
14. Incomplete supply chain
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• Higher competition i.e. pimp local
manufacturing
• Longer order-to-delivery times
• Less-dependable forecasts
• Reduced production flexibility
• Higher levels of inventory
• Thus, coordination should be better
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Improving supply chain
management
• Integration
• Coordination
General coordination
Multi-plant coordination
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= systematic approach to
examining the development of
competitive advantage
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Marketing And
Sales
Support activities
Primary activities
HRM
Technology department
Procurement
Outbound logistics
Operations
Inbound
logistics Service
Firm infrastructure
margin
margin
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Core business processes
• Product development
• Inventory management
• Order-to-payment
• Customer service