15. The concept of logistics and logistics efficiency

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15. The concept of logistics and logistics
efficiency
Definition of Logistics

• Logistics
• is a holistic system of management used to ensure
  the necessary planning, implementation and
  monitoring of en efficient flow of materials all
  the way from suppliers of raw materials to final
  users, as well as the disposal and recycling of
  obsolete products all with a view to satisfying
  the needs of customers

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15. The concept of logistics and logistics
efficiency
15.1 The logistic system
Supply market
Sales market
Production company
Purchasing control
Supplier
Consumer
Middle- man
Production control
Distribution control
Stock of raw materials
Production
Stock of finished products
Middle- man
Consumer
Supplier
Outgoing logistics
Incoming logistics
Internal logistics
Recycling
Sorting
Collection
Waste
Disposal
Return logistics
Waste and recycling market
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15. The concept of logistics and logistics
efficiency
15.2 Supply Chain Management page 487
Suppliers of raw materials
Suppliers of compo- nents
Producers of finished goods
Wholesalers
Retailers
Consumers
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15. The concept of logistics and logistics
efficiency
15.3 Logistics strategy page 489

• 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?

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15. The concept of logistics and logistics
efficiency
15.4 The logistics coordination page 492
Varieties
Many
Few
Sales
Finance
Large
Small
Small
Short
Stock
Purchasing quantity
Delivery speed
Large
Large
Large
Long
Production
Purchasing
Delivery speed
Long
Short
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15. The concept of logistics and logistics
efficiency
15.5 Organising the logistics function page 492

• 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 different departments

Managing director
Logistics
Production
Sales
Finance
Production planning
Distribution
Storage
Purchasing
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15. The concept of logistics and logistics
efficiency
15.5 Organising the logistics function page 492

• 15.5.2 Decentralising the logistics function
• Advantages higher degree of flexibility
• Disadvantages difficult to ensure an all-round
  approach

Managing director
Purchasing
Production
Sales
Finance
Production planning
Distribution
Storage
Purchasing
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15. The concept of logistics and logistics
efficiency
15.6 Logistic efficiency page 494

• 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

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15. The concept of logistics and logistics
efficiency
15.6 Logistic efficiency page 494

• 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

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15. The concept of logistics and logistics
efficiency
15.6.2 Stock turnover speed page 500
Cost of stock Average stock time
360 Turnover speed
360 5,4
67 days
58 days
Stock turnover speed
14.800 2.750
5,4 times
18.000 3.100
5,8 times
20.000 3.250
6,2 times
No. of days in stock
360 5,8
62 days
360 6,2
2.500
3.200
3.000
3.000
3.300
3.200
5.500
6.500
6.200
2.750
3.250
3.100
5,4times
5,8 times
6,2 times
67 days
58 days
62 days
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15. The concept of logistics and logistics
efficiency
15.6.3 Analysing costs of logistics page 503
Index figure
100
120
132
100
111
119
100
116
124
Figure of the year x 100 Figure of the base year
100
123
137
100
106
113
100
115
124
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15. The concept of logistics and logistics
efficiency
15.6.4 Analysing delivery service page 504

• 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

Compare the actual delivery speed With the goal
No of orders dispatched x 100 no. Of
orders received
Numbers of orders delivered on time x 100
total number of orders
Number of orders delivered in correct quantity x
100 total number of orders
Number of orders delivered in the right quality
x 100 total number of orders
Number of times changes in orders have been met
Number of request for changes in orders
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15. The concept of logistics and logistics
efficiency
Gap analysis of logistics efficiency page 512
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15. The concept of logistics and logistics
efficiency
Benchmarking page 514

• 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