Lean Logistics

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Lean Logistics

• Operations, Operating Arrangements, and
  Synchronization

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What is Lean Logistics ?

• Superior ability to design and administer
  systems to control movement and geographical
  positioning of raw materials, work-in-process,
  and finished inventories at the lowest total
  cost.

3
Why?

• Service Benefits
• Availability of inventory
• Operational performance (delivery time)
• Service reliability (measurement of above)
• Cost Minimization
• Total Costs Logisitics Model
• Wrong Lowest cost for each indiv logistics item
• Right Functional costs interrelate, determine
  and use Activity-based Costing

4
Goal

• Logistics Value Proposition
• Master the art of matching operating competency
  and commitment to key customer expectations and
  requirements at a realistic cost expenditure.

5
What is Integrated Logistics Operations ?

• Internally to the enterprise, the integrated
  information and value-add activities that lead to
  purchasing, mfg, and merchandising
• Externally, the extension of the internal
  information and value-add activities to
  incorporate customers and suppliers to become
  part of a overall supply chain

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Logistics Information Requirements
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Consulting and Software CompaniesIT in SCM

• JD Edwards
• SAP
• I2 Technologies
• Caterpillar Logistics
• Crowe Chizek
• IBM
• Price Waterhouse Coopers

• Manugistics
• E.piphany
• Oracle
• Microsoft
• BEA Systems
• PeopleSoft
• Computer Associates

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Operating Arrangements

• Echelon
• Classic Inventory at each stage
• Typical Break-bulk or Consolidation
• Out-of-favor Not Out-of-Use
• Why?
• Total Cost Analysis justifies
• Large volume shipments sorted, positioned for
  customer requirements
• Example Farmer Jack, Kroger, ACE Hardware

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Operating Arrangements

• Direct
• 20 years
• Premium transport and IT
• Benefits
• Reduce anticipatory inventories
• Eliminate intermediate product handling
• Disbenefits
• High transportation cost
• Loss of control (unexpected events) (No back-up)

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Operating Arrangements

• Flexible
• Total Cost Analysis (lowest attainable cost)
• Customer Requirements
• Service Commitment (driver Competition)
• Infrastructure
• Network
• Transportation
• Inventory Management
• IT

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Logistical Synchronization

• Coordinate flow of materials, products, amd
  information between SC partners
• Objective reduce duplication redundancy
• Re-engineer (re-design) internal operations of
  individual firms
• Objective leverage overall SC capability
• Goal Utilize individual firm core competencies
  to achieve overall reduction of inventory dwell
  time.
• Achieve Synchronize timing of supply with demand
  requirements.

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Logistical Performance Cycles
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Basic Market Distribution Performance-Cycle
Activities
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Performance-Cycle Uncertainty