Business Logistics 101

1
Business Logistics 101

• Martin Dresner
• University of Maryland
• Robert H. Smith School of Business

2
Agenda

• Logistics Defined
• New Logistics Strategies
• Final Remarks

3
Pipeline View
Transportation
Transportation
Transportation
Suppliers
Consumers
Manufacturer Distributor Retailer
Warehousing
Warehousing
4
Logistics Activities

• Transportation
• Warehousing
• Inventory Management
• Materials Handling
• Purchasing
• Order Processing

5
New Paradigm
Information Technology
Third Party Provider
Manufacturer
Suppliers
Distributor
Retailer
Consumers
Carriers
Carriers
Carriers
6
Alphabet Soup of Logistics Strategies

• JIT - Just-In-Time
• ER - Efficient Replenishment
• CR - Continuous Replenishment
• ECR - Efficient Consumer Response
• VMI - Vendor Managed Inventory
• SBT - Scan-Based Trading

7
Just-In-Time Purchasing

• Frequent shipments of small quantities
• Short time windows for deliveries
• Increased traffic on highways and in metropolitan
  areas
• Partially offset by suppliers locating near
  customers

8
Vendor Managed Inventory

• Vendor determines shipment amounts and timing
  based on customer needs
• Requires tie-in between vendor and customers
  inventory system
• Vendor may still deliver on a JIT basis with time
  windows set by buyer
• Traffic impact remains

9
Scan-Based Trading

• Suppliers are paid by retailers when consumer
  purchases are scanned at check-out
• Requires item information (e.g., price paid by
  retailer) to be included in retailers cash
  register information system
• Supplier and retailer need to closely link
  information systems (e.g., same item codes)

10
Scan-Based Trading

• Big advantage is that retailer no longer needs to
  check in items when they are delivered by
  suppliers
• Supplier can set delivery times during off-peak
  hours
• Supplier can deliver JIT but with a reduced
  impact on roadways

11
Final Remarks

• Firms are using information technology to change
  the way they conduct their logistics operations
• New logistics strategies can have dramatic
  impacts on transportation infrastructure
• The better these strategies are understood, the
  better able we will be to make the appropriate
  infrastructure decisions