Logistics

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Logistics Supply Chain Management
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Logistics

• Oxford dictionary definition
• Art of moving, lodging and supplying
• troops and equipment
• Translating to business environment
• Art of getting the right goods, in the right
  place,
• at the right time and at the right cost

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Materials Logistics

• Directing and regulating the orderly movement of
  material
• and
• related information through the entire
  manufacturing cycle
• i.e. from acquisition of raw material to delivery
  of finished goods

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Definition of Business Logistics (RH Ballou)

• Business logistics deals with all move store
  activities that facilitate product-flow from one
  point of raw material acquisition to the point of
  final consumption, as well as the information
  flows that set the product in motion for the
  purpose of providing adequate levels of customer
  service at a reasonable cost

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What is supply chain? - Definitions

• a system whose constituent parts include
  material suppliers, production facilities,
  distribution services and customers, linked
  together by the feed-forward flow of materials
  and the feed-back flow of information (Slack
  2000)
• a network of connected interdependent
  organisations mutually and co-operatively working
  together to control, manage and improve the flow
  of materials and information from suppliers to
  end users (Christopher 1998)

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Elements of Supply Chain
First-tier Supplier
Second-tier Customer
First-tier Customer
Second-tier Customer
The Product
Purchasing Supply
Physical Distribution
Management
Management
Logistics
Materials Management
Supply Chain Management
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Strategy in the extended enterprise
Corporate Strategy
Supply Sources Distribution
Market
Sales Market
Supply Market
The organisation
The extended organisation
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A Supply Chain Model
Towill, 1994
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Aspects of Supply Chain Management
First-tier Supplier
Second-tier Customer
First-tier Customer
Second-tier Customer
Design Plan Supply chain
Organise Control Supply chain
The Product
Improve Supply chain
Purchasing Supply
Physical Distribution
Management
Management
Logistics
Materials Management
Supply Chain Management
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Logistics SCM

• Entails
• Planning
• Ordering
• Procurement
• Manufacture
• Distribution
• Maintenance
• Management of materials

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Terms explained

• Purchasing Supply management - the function
  that deals with the operations interface with
  its supply markets
• Physical distribution management - the operation
  of supplying immediate customers
• Logistics - the management of materials
  information flow from a business, down through a
  distribution channel, to end customers
• Materials Management - the management of the flow
  of materials information through the immediate
  supply chain
• Supply Chain Management - a concept with a much
  broader span of concern and an holistic approach
  to managing across company (Inter intra)
  boundaries (substantial benefits to be gained by
  strategically trying to drive a whole chain in
  the direction of satisfying end customer).

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History of Logistics

• Engineers continually attempting to improve
  movement of materials
• Henry Ford - model T in 72 hours
• World War II - the role of logistics gained
  greater importance
• In the 1950s and 60s emphasis on Product
  Innovation and Marketing. The efficiency in
  Manufacturing and Distribution became secondary
• Oil shock and emergence of Japanese Production
  Technology
• In the 1990s the significance of Logistics
  Supply Chain increasingly realised

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How Has Our Landscape Changed?

• From vertical organizations to more
  partner/relationship driven organizations
• Increase in outsourcing in non-core competency
  areas (1998 15 in 2000 40)
• Time-to-market acceleration (the five day car)
• Higher demand for customization (Custom Car)
• Enabling technologies, driving business
  efficiencies and adding competitive pressure

Business Week Hambrecht Quist
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How Do Organizations Respond? Organizations
Rated By Performance
Best in Class
World Class
Winners
Country Class
Above average, but think they are good or very
good
Survivors
Below average, but think they are average or
better
Slipping Organizations
Losers
Troubled Organizations
High Performance Benchmarking 20 Steps to
Success H. James Harrington
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Competitive Manufacturing and Logistics

• Growth in manufacturing by Pacific Rim countries
  birth of global manufacturing means
  successful management of international logistics
  essential
• Competitive advantage gained by efficient and
  effective logistics SC process
• Production technology available is identical.
  Ability to select, integrate and operate this
  technology will lead to success
• A home market is safe if the cost of
  manufacturing is less than competitors cost for
  export - transport - import
• Competitive material logistics is the integration
  of materials and information flow into a total
  system

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Supplier/customer Relationship

• Japanese have participative approach with
  suppliers
• Not always true for Western countries
• Obtaining dependable supplies of material
  critical for successful competitive manufacture
• Having a good working relationship can be
  mutually beneficial hence companies become more
  resilient and less vulnerable to change
• Periodic economic swings are inevitable,
  resulting in time delays, planning distortions
  and problems in inventory movements throughout
  the supply chain
• Even greater problems when trading internationally

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Supply Chain Logistics the Economy

• 10-20 of total value-added due to logistics
• various studies emphasise the importance of
  improved productivity in logistics
• greater awareness of significance of logistics
  costs in manufacturing
• a large proportion of total cost due to
  non-manufacturing activities (i.e... RD,
  marketing, customer service)
• increasing emphasise on horizontal integration of
  manufacturing activities
• UK Europe some way behind the Far Eastern
  economies

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Figure - Value-Delivery chain
Manufacturing is a Small part of the
Value-Delivery chain
Sales
Order Entry
Engineering Specification
Scheduling
Manufacturing
Distribution Customer Service
Elapsed Time
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Clockspeed - the Evolutionary Lifecycle of
Business By Charles F. Fine
Product Clockspeeds
Fast lt 6 months to 3 years
Medium 4 to 15 years
Slow 10 to 100 years

• Bicycles
• Automobiles
• Operating Systems
• Agriculture
• Fast Food
• Beer Brewing

• Aircraft
• Steel
• Shipbuilding
• Paper
• Electricity
• Oil

• Personal Computers
• Toys Games
• Athletic Footwear
• Semiconductors
• Cosmetics

How Temporary is your Advantage?
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Recent Developments

• Institute of Logistics ( Transport) set up in
  1988 current membership gt20K
• Senior appointments in Logistics SC, especially
  in retail sector
• Often retailer sector more advanced than
  manufacturing
• Retail sector demanding, flexible, fast
  frequent deliveries from their suppliers
• Pressure to be lean, agile and responsive
• the internet accelerating changes
• competition between supply chains not between
  manufacturers

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Integrated Business Chain
End to End Business Optimization
Collaborative Business Chain Management
Supply Planning
Demand Planning
Product Brand Co.
Consumption
Conception
Sup. Suppliers
Supplier
MFG
Distributor
Retailer
End-User
Technology, Capabilities and Capacity for
Integration
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Integration Realities Business Chain
Relationships
Conception
Product Brand Co.
Consumption
Supplier
Customer
Service Providers
Sup. Suppliers
Supplier
MFG
You have the power
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Future Directions

• Rapid changes occurring due to
• 1) Pressure for change from managerial and
  technical development from within the LSC systems
  itself.
• increased speed and intelligence of computing
  systems for the control of the information flow
  in LSC - Time Compression
• availability of flexible computer facilities will
  enable companies to engage in Dynamic
  Simulation
• These will enhance accuracy of decisions

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Future Directions cont.......

• 2) Pressure for change comes from the wider
  economy, due to
• future uncertainty in consumer markets - hence
  need to develop effective flexible strategies
• market structures changing - increasing
  fragmentation specialisation and growth in
  specialised retailing
• life cycles are shortening with more focus on
  selective and critical customers
• trend towards FMS as opposed to mass production
  to cater for changes in demand etc...
• competitive pressures in market place growing

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Business Survival in Todays Competitive Landscape

• Companies, like species, are competitive beings,
  and while evolving on an absolute basis is nice,
  relative evolution is the only thing that really
  counts. If you only improve as much as your
  natural enemy, youve done nothing to ensure your
  survival!
• J. William Gurley Benchmark Capital
• Lead analyst on Amazon.com IPO