logplan by i dep man studies

8/8/2019 LogPlan by I Dep Man Studies

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International Business Management

LOGISTICS MANAGEMENT


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Objectives:

1. Make available the right quantity of right quality productsat the right place and time in the right condition.

2. Reduce costs of operations: Cost reduction (variable costs)

Capital reduction (investment, fixed costs)

3. Service Improvement

Three objectives of logistics

Definition:

Logistics management is a process of planning, executing, and

controlling the efficient, effective, flow and storage of goods and

services, and related information from point of origin to point of

consumption for the purpose of conforming to customerrequirement.


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Marketingorientation

(competitive

advantage)

Time and

place utility

Efficient

movement to

customer

Proprietary

asset

Natural

resources (land,

facilities, and

equipments)

Human

resources

Financial

resources

Information

resources

Management actions

Planning Implementation Control

Logistics Activities

Customer Service

Demand forecasting

Distribution

communications

Inventory control

Material handling

Order Processing

Parts and service

support

Plant and warehouse

site selection

Procurement

Packaging

Return goods handling

Salvage and scrap

disposal

Traffic and

transportation

Warehousing and

storage

Raw

materials

In-process

inventory

Finished

goods

Inputs into logistics

Suppliers

Logistics management

Customers

Outputs of

logistics

Components of

logistics management :


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Three categories:

Production

Storage

Transportation

Inputs: resources.

The term Resource applies to all of the factors

of production, including materials (e.g. cotton,

parts), equipment (e.g. machines or vehicles),

energy (e.g. oil, coal, electricity) and labor.


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PRODUCTION: Fundamental logistics questions are: (1) when should a

resource be produced; and (2) where should a resource be

produced.

The when question includes the topics of aggregate resourceplanning, and production scheduling.

The where question includes the topics of facility location and

production allocation.

Some of the important production questions are:

(a) What outside source should be used to supply a part?

(b) Where should a new facility be built?

(c) When should a facility produce different items, taking into account:

Seasonal demand patterns?

Demand uncertainty?

Cost of operating single, double, triple shifts?

Labor costs?

(d) When should a firm use two or more sources for a part?


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INVENTORY: Fundamental logistics questions are (1) when should a

resource (material, machine or labor) be put in inventory and taken

out of inventory; and (2) where should a resource be stored.

The when question includes the general topics of economic-order-

quantity models, safety stock models and seasonal models, and

specialized topics of fleet management, and personnel planning.

The where questions includes the topic of inventory echelons.

Some of the important inventory questions are:

(a) How much does it cost to store resources in inventory?

(b) How much safety stock should be carried in inventory to prevent

against running out of a resource?

(c) How much inventory should be carried in order to smooth out

seasonal variations in demand?

(d) Where should replacement parts be stored in multi-echelon

inventory system?


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TRANSPORTATION: Fundamental logistics are: (1) where should

resources be moved to, and by what mode and route; (2) when

should resources be moved.

The where question includes the topics of terminal location,

vehicle routing, and shortest path methods and network flow

allocation.

The when question includes the topic of distribution rules.

Some of the important questions are:

(a) When should shipment be sent through terminals, and when

should shipment be sent direct?

(b) Which, and how many, terminals should shipments be sentthrough?

(c) What are the best vehicle routes?

(d) When should a vehicle be dispatched over a route?


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Logistics - Science of managing (controlling) the movement and

storage ofgoods (or people) from acquisition to consumption.

Goods: Raw Materialsp Final products, and everything in between.

Logistics for services & people similar to goods logistics.

Ex. Police, fire, ambulance, passenger airlines, taxi cabs, etc.

Movement = Transportation (between locations).

Storage = Inventory, Warehousing (at locations).

Difference between acquisition and consumption is a matter of space

and time.

NOTE: Logistics does not dealwith Technology of Production, such

as the design of machines and vehicles and the design of finished

products.

Focus: Best way to overcome space and time that separates acquisitionand consumption.


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1998 CLM DEFINITION OF LOGISTICS

.is that part of the supply chain process that

plans, implements, and controls the efficient,

effective flow and storage of goods, services,

and related information from the point-of-

origin to the point-of-consumption in order to

meet customers' requirements.

Council of Logistics Management, 1998;

www.CLM1.org


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Five Business Systems - Tightly Interconnected Within The

Organization

MeasurementDecisions

Management

Systems

RewardDecisions

StrategicDecisions

TransportationDecisions

SourcingDecisions

InventoryDecisions

LogisticsSystems{

Price

DecisionsPromotionDecisions MarketingSystems

ProductDecisions

Place (How,where, how

much) }ProductionScheduling

Decisions

ProductionCapacity

Decisions

Shop FloorDecisions

Manufacturing

Systems}

Product

Design

Decisions

Process

Design

Decisions Engineering

Systems}

Copyright 2000 - All Rights Reserved


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Logistics Mission [A Bill of Rights]

Logistics embodies the effort to deliver:

the right product

in the right quantity in the right condition

to the right place

at the right time

for the right customer

at the right cost


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Activities and Logistics Decisions

Transportationrate and contract negotiationmode and service selectionrouting and scheduling

Inventories

finished goods policiessupply schedulingshort term forecasting

Warehousingprivate vs. publicspace determinationwarehouse configurationStock layout and dock designstock placementCross-docking

Facility Location

determining location, numberand size of facilities

allocating demand to facilities

Customer Service

determining customer wantsdetermining customer responseto service changes

Materials Handlingequipment selectionequipment replacementorder picking procedures

Packaging designOrder Processing

order procedure determinationProduction Schedulingaggregate production quantitiessequencing and timing of

production runs


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Logistics Planning

Decide what, when, how in three levels:

Strategic long range > 1 year Tactical - < 1 year horizon

Operational frequently on hourly or daily basis

Examples of DecisionsType Strategic Tactical Operational

Location

Transportation

Order Processing

(CS)

#Facilities, size,

location

Mode

Selecting order

entry system

Inventory

positioning

Seasonal ServiceMix

Priority rules for

customers

Routing

Replenishment Qty

and timing

Expediting orders


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The Logistics (Strategic) Planning TriangleThe Logistics (Strategic) Planning Triangle

Which mode?

Which carrier?

Which route?

Shipment size andfrequency?

Where?, Howmany? What size?

Allocation?

Strategy/Controlsystem?

How much?

Where?


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Transport Fundamentals

Transport involves

equipment (trucks, planes, trains, boats, pipeline),

people (drivers, loaders & un-loaders), and

decisions (routing, timing, quantities, equipment size,

transport mode).When deciding the transport mode for a given productthere are several things to consider:

Mode price

Transit time and variability (reliability)

Potential for loss or damage.

NOTE: In developing countries we often find itnecessary to locate production close to bothmarkets and resources, while in countries withdeveloped distribution systems people can live in

places far from production and resources.

Most important component of logistics cost.

Usually 1/3 - 2/3 of total cost.


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Routes of Goods

Goods atshippers

Freightforwarderwarehouse

Airterminal

planeair

Freightforwarderwarehouse

Goods atconsignees

Container

terminal vesselsea Maychange

transpor-tationmodes

truck

landrailway

land barge

mid-streampier

bulk goodssea

let us guess


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AirRapidly growing segment of transportation industry

Lightweight, small items [Products: Perishable and time sensitive

goods: Flowers, produce, electronics, mail, emergency shipments,

documents, etc.]

Quick, reliable, expensive

Often combined with trucking operations

Rail

Low cost, high-volume [Products: Heavy industry, minerals, chemicals,

agricultural products, autos, etc.]

Improving flexibility

intermodal serviceTruck

Most used mode

Flexible, small loads [Products: Medium and light manufacturing, food,

clothing, all retail goods]

Trucks can go door-to-door as opposed to planes and trains.

Single-mode Service Choices and Issues


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Water

One of oldest means of transportLow-cost, high-volume, slow

Bulky, heavy and/or large items (Products: Nonperishable

bulk cargo - Liquids, minerals, grain, petroleum, lumber,

etc )]

Standardized shipping containers improve serviceCombined with trucking & rail for complete systems

International trade

Pipeline

Primarily for oil & refined oil productsSlurry lines carry coal or kaolin

High capital investment

Low operating costs

Can cross difficult terrain

Highly reliable; Low product losses

Single-mode Service Choices and Issues (Contd.)


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Transport Cost Characteristics

Fixed costs:

Terminal facilities

Transport equipment

Carrier administration

Roadway acquisition and maintenance

[Infrastructure (road, rail, pipeline,navigation, etc.)]

Variable costs:

Fuel

Labor

Equipment maintenance

Handling, pickup & delivery, taxes

NOTE: Cost structure varies by mode


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Transport Cost Characteristics

Rail

High fixed costs, low variable costs High volumes result in lower per unit (variable) costs

Highway

Lower fixed costs (dont need to own or maintain roads)

Higher unit costs than rail due to lower capacity per truck

Terminal expenses and line-haul expenses Water

High terminal (port) costs and high equipment costs (bothfixed)

Very low unit costs

Air

Substantial fixed costs

Variable costs depend highly on distance traveled

Pipeline

Highest proportion of fixed cost of any mode due to pipelineownership and maintenance and extremely low variable costs

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