15 the concept of logistics and logistics-efficiency

8/13/2019 15 the Concept of Logistics and Logistics-efficiency

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VIRKSOMHEDSKONOMIHHNIVEAU B

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15. The concept of logistics and logistics efficiency

Logistics

is a holistic system of management used to ensure the necessary

planning, implementation and monitoring of en efficient flow ofmaterials all the way from suppliers of raw materials to final users, aswell as the disposal and recycling of obsolete products all with a viewto satisfying the needs of customers

Definition of Logistics


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15. The concept of logistics and logistics efficiency15.1 The logistic system

Supply

market

Supplier

Sales marketProduction company

ConsumerMiddle-man

Purchasingcontrol

Productioncontrol

Distributioncontrol

Stock of raw

materialsProduction

Stock of

finished products

Middle-

manConsumerSupplier

Recycling

Disposal

Sorting Collection

Waste and recycling market

Retur n logistics

I ncoming logistics I nternal logistics Outgoing logistics

Waste


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15. The concept of logistics and logistics efficiency15.2 Supply Chain Management page 487

Suppliers

of raw

materialsSuppliers

of compo-

nents

Producers

of finished

goods Wholesalers Retailers Consumers


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Supply strategy

Which products should the company produce itself?

Which products should the company purchase from its suppliers?

How close do the company want to be linked to is suppliers?

Production strategy

How to coordinate the production resources

How to organize the production processes

Distribution strategy

Which distribution channels?

15.3 Logistics strategy page 489


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15. The concept of logistics and logistics efficiency15.4 The logistics coordination page 492

Sales

Production

Stock

Purchasing

Finance

Varieties

Delivery speed

Purchasing

quantityDelivery

speed

Many Few

Small

Large

LongShort

Short

Long

Large

Large Large

Small


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15.5.1 Centralising the logistics function

Main advantage a clear overall view of all the logistics activities

Main disadvantage conflicts between the managers of the differentdepartments

15.5 Organising the logistics function page 492

Production

planning

Managing

director

Logistics Production Sales Finance

DistributionStoragePurchasing


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15.5.2 Decentralising the logistics function

Advantages higher degree of flexibility

Disadvantages difficult to ensure an all-round approach

15.5 Organising the logistics function page 492

Production

planning

Managing

director

Purchasing Production Sales Finance

DistributionStoragePurchasing


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Delivery service Delivery speed

Level of stock service Observation of delivery deadlines

Delivery reliability

Delivery flexibility

Delivery information

Logistics costs

Stock costs

Packaging and packing costs

Transport costs

Administrative logistics costs

Nonconformity costs

15.6 Logistic efficiency page 494


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Logistics efficiency - page 498

Delivery service

Logistics efficiency = Logistics costs

Logistics efficiency improves by:

Look at the fraction

Effect of logistics efficiency on Return Of Investment

Better delivery service might increase the turnover

Reduce investment in stocks without reducing delivery service

15. The concept of logistics and logistics efficiency15.6 Logistic efficiency page 494


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20x3 20x4 20x5

Net turnover

- Cost of sales

25.000

14.800

30.000

18.000

33.000

20.000

Gross profit 10.200 12.000 13.000

Ultimo 20x2 Ultimo 20x3 Ultimo 20x4 Ultimo 20x5

Stock 2.500 3.000 3.200 3.300

15.6.2 Stock turnover speed page 500

20x3 20x4 20x5

Primo stock

Ultimo stock

Total

Avarage stock

Stock turnover speed

Number of days in stock

2.500

3.000

5.500

2.750

3.200

3.300

6.500

3.250

3.000

3.200

6.200

3.100

5,4times 5,8 times 6,2 times

67 days 58 days62 days

Stock turnover speed =Cost of stock

Average stock time14.800

2.750= 5,4 times

18.000

3.100= 5,8 times

20.000

3.250= 6,2 timesNo. of days in stock =

360

Turnover speed

360

5,4= 67 days360

5,8= 62 days

360

6,2= 58 days


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20x3 20x4 20x5

Net turnover 25.000 30.000 33.000

Stock costs


Transport costs


1.750

1.250

1.500

800

1.950

1.450

1.850

850

2.075

1.550

2.050

900

Total 5.300 6.100 6.575

15.6.3 Analysing costs of logistics page 503

Indeks 20x3 20x4 20x5

Net turnover

Stock costs


Transport costs


Total

Index figure =

Figure of the year x 100

Figure of the base year

100

100

100

100

100

100

120

111

116

123

106

115

132

119

124

137

113

124


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Priority of delivery service

ABC customers

ABC

products

Qualitative analyses

Questionnaire

Quantitative analyses

Delivery speed

Level of stock service

Delivery deadline

Delivery reliability (quantity))

Delivery reliability (quality)

Delivery flexbility

15.6.4 Analysing delivery service page 504

Compare the actual delivery speed

With the goalNo of orders dispatched x 100

no. Of orders received

Number of orders delivered in the right quality x 100

total number of orders

Number of orders delivered in correct quantity x 100

total number of orders

Numbers of orders delivered on time x 100total number of orders

Number of times changes in orders have been met

Number of request for changes in orders


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Stock turnover speed 20x3 20x4 20x5

Target

Performance

8,0 times

5,4 times

8,0 times

5,8 times

8,0 times

6,2 times

Gap 2,6 times 2,2 times 1,8 times

Level of stock service based on number of orders 20x3 20x4 20x5

Target

Performance

95%

94%

95%

95%

95%

94%

Gap 1% 0% 1%

Level of stock service based on number of order

lines

20x3 20x4 20x5

Target

Performance

98%

95%

98%

96%

98%

97%

Gap 3% 2% 1%

Gap analysis of logistics efficiency page 512


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Benchmarking

Internal benchmarking

Compares one department with other departments of the company

External benchmarking

Compares with the best in the same business

Functional benchmarking Compares with the best in the same area

Benchmarking page 514

15 the concept of logistics and logistics-efficiency

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