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Fundamentals of Logistics and Supply Chain Management

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Fundamentals of Logistics and Supply Chain Management Dr. Mary Collins Holcomb Associate Professor November 16th and 18th, 1999 Agenda The Role of Logistics ... – PowerPoint PPT presentation

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Title: Fundamentals of Logistics and Supply Chain Management


1
Fundamentals of Logistics and Supply Chain
Management
  • Dr. Mary Collins Holcomb
  • Associate Professor
  • November 16th and 18th, 1999

2
Agenda
  • The Role of Logistics
  • Integrated Logistics Management
  • Information Management
  • Implementing Logistics Strategy
  • Supply Chain Management
  • Issues and Challenges

3
The Role of Logistics
4
Logistics Management
  • That part of supply chain management which deals
    with the process of planning, implementing and
    controlling the efficient, effective flow and
    storage of goods, services, and related
    information from point of origin to point of
    consumption for the purpose of conforming to
    customer requirements.
  • -- Council of Logistics Management

5
move
MOVE
move
Tangible goods still have to move (and be
stocked) through space and time. . . new
strategies and methods must create new value.
6
Logistics Management
Transportation costs comprise the single largest
element in most physical distribution systems
7
The
New Logistics
Excellence in distribution transportation adds
value at all levels.
Asset Management
Inventory Deployment/ Reduction
Shared Services
Basic Service
Revenue Enhancement
Operational Efficiency
Planning/Operational
Strategic
8
The
New Logistics
To improve deployment management of assets . .
.
Reduce
1. Rationalize distribution networks 2.
Outsource select processes 3. Explore shared
facilities 4. Understand supply chain tax
implications 5. Consolidate warehouses
6. Replace inventories with information 7. Reduce
distribution cycle time 8. Implement
demand-driven planning
capital expenditures by improving usage of fixed
assets
Reduce
working capital by minimizing inventories
9
Drivers Behind Increase in Transportation
Expenditures
  • Accelerating trend toward leaner, more flexible
    logistics networks
  • Less inventory in the pipeline
  • Increasing demand for synchronized service
  • Increasing requirement for faster more reliable
    transportation service over longer distances

Pressure to reduce cost and improve service
10
Integrated Logistics Management
11
Integrated Logistics
  • PRODUCT FLOW
  • Physical Supply
  • Manufacturing Support
  • Procurement
  • Physical Distribution

12
Integrated Logistics (cont.)
  • INFORMATION FLOW
  • Coordination flows
  • Strategic objectives
  • Capacity constraints
  • Logistical requirements
  • Forecasting

13
Integrated Logistics (cont.)
  • INFORMATION FLOW
  • Operational Flows
  • Order management
  • Order processing
  • Distribution operations
  • Inventory management
  • Transportation

14
Operating Objectives
  • Rapid response
  • Minimum variance
  • Minimum inventory
  • Movement consolidation
  • Quality
  • Life-cycle support

15
Barriers to Integration
  • Organizational structure
  • Measurement systems
  • Inventory ownership
  • Information technology
  • Knowledge transfer capability

16
Measuring Performance
  • Several different approaches may be used to
    measure the functional performance of logistics
  • cost criteria
  • productivity criteria
  • service criteria

17
Measuring Performance
  • Firms evaluate logistics managers primarily on
    the basis of three factors
  • line management ability
  • problem-solving ability
  • project management ability

18
Best of the Best Logistics Firms
  • Organizationally positioned to guide logistics
    activities at all levels - strategic, tactical,
    and operational
  • Internal integration has enabled the development
    of operational excellence, and boundary spanning
    relationships

19
Best of the Best Logistics Firms (cont.)
  • Demonstrated agility in terms of the firms
    competency with respect to relevancy,
    accommodation, and flexibility.
  • Measured performance both internally and
    externally.

20
Information Management
21
Electronic Commerce
  • Examples
  • Electronic data interchange (EDI)
  • e-mail
  • Electronic funds transfer
  • Electronic publishing
  • Shared databases
  • Internet / Web sites

22
(No Transcript)
23
Electronic Commerce Levels
  • LEVEL 1
  • One-way communication
  • LEVEL 2
  • Database access
  • LEVEL 3
  • Data exchange
  • LEVEL 4
  • Sharing processes

24
The Internet Changes Everything!
  • The Internet is ubiquitous.
  • The Internet is user friendly.
  • The Internet is inexpensive.
  • The Internet is global.

25
How Long Until Your Company...
  • Receives over 64 of its 8.5 billion in sales
    over the Internet
  • 70 of all technical support questions are asked
    over the Internet
  • 55 of its employee resumes come over the
    Internet
  • Cisco Systems, USA Today, Sept. 23, 1998

26
Implementing Logistics Strategy
27
If logistics managers do not understand corporate
strategy, they will not be able to make decisions
that are in the best interest of the organization.
28
The Hierarchy of Planning
Strategic Tactical Operational _______
_____________________________ What is the
organizations overall customer service
strategy and what should it be? What are the
best opportunities for cost reduction in
the organizations logistics system? What are
the core competencies of the logistics function,
I.e. which activities should be outsourced?
29
The Strategic Issues and Challenges
  • How to help the firm and its customers deal with
    big changes -- globalization, restructuring,
    competition
  • How to improve profitability (growth) and value
    creation - for the firm and its customers
  • How to raise the performance of all services to
    competitive advantage levels
  • How to integrate/leverage logistics within the
    firm and the supply chain

30
Supply Chain Management
31
The supply chain encompasses all activities
associated with the flow and transformation of
goods from the raw materials stage, through to
the end user, as well as the associated
information flows.
32
How to Achieve Profitable Growth and Value
Creation
i
Cost Minimization
ProfitableGrowth
TaxMinimization
Value
WorkingCapitalEfficiency
Fixed CapitalEfficiency
Time
Based on Supercharging Supply Chains, a new
book by EY/J. Wiley, Inc.
33
Stages of Supply Chain Development
  • STAGE 1 - Fundamentals
  • Focus on quality
  • STAGE 2 - Cross Functional Teams
  • Serve our customers
  • STAGE 3 - Integrated Enterprise
  • Drive business efficiency

34
Stages of Supply Chain Development (cont.)
  • STAGE 4 - Extended Supply Chain
  • Create market value
  • STAGE 5 - Supply Chain Communities
  • Be a market leader!

35
Supply Chain Cost Categories
  • Manufacturing
  • Purchased materials, labor, equipment charge, and
    suppliers margin
  • Movement
  • Transportation, inventory in the pipeline
    (cycle), safety stock, and duty
  • Incentives and subsidies

36
Supply Chain Cost Categories(cont.)
  • Intangibles
  • Quality, product adaptation or performance,
    coordination
  • Overhead
  • Total current landed costs
  • Long-term
  • Productivity and wage changes, exchange rates,
    product design, and core competencies

37
Sluggish Supply Chains
  • Lack of synchronization in materials management
  • Ambiguous goals and objectives
  • Poorly designed procedures and forms
  • Outdated technology
  • Lack of information

38
Sluggish Supply Chains
  • Poor communication
  • Limited coordination
  • Limited cooperation
  • Lack of / ineffective training

39
The Strategic Issues and Challenges
  • How to help the firm and its customers deal with
    big changes -- globalization, restructuring,
    competition
  • How to improve profitability (growth) and value
    creation - for the firm and its customers
  • How to raise the performance of all services to
    competitive advantage levels
  • How to integrate/leverage logistics within the
    firm and the supply chain
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