LOGISTICAL OPERATIONS INTEGRATION l l When LM is

LOGISTICAL OPERATIONS INTEGRATION l l When LM is highly integrated and positioned as a core competency, it can serve as a standpoint for gaining a competitive advantage. To plan and achieve logistical integration : understanding the work of logistics, the operational integration, the operating objectives, basic unit of analysis

THE WORK OF LOGISTICS l l l Coordinating network design : to determine the number and location of all types of facilities required to perform logistics works as well as the inventory policy. The network of facilities The number and type of facilities that incorporate information and transportation capabilities. Geographical variations : complexity degree. Selection criteria : changes in the external environment, products, manufacturing requirements.

l l l l The Importance of Information Forecasting and Order Management Department. Future issues : forecasting accuracy, trends and events. Customers’ requirements. Speed : procedures, the use of EDI, controlling to replace the inaccurate forecasting with faster response to customer requirements. The combination of forecasting and controlling : JIT, QR and CR approaches. More efficient = more sensitive to inaccuracies.

l l l Transportation Private fleet of equipment, subcontracting, using common carriers. Fundamental factors : speed, cost and consistency. Inventory Availability vs cost plus risk : to achieve maximum turnover while satisfying customer commitments. Inventory management policy is based on five aspects of selective deployment : customer segmentation, product requirement, transport integration, time-based requirement and competitive performance.

l l l Confronting a wide range of transaction and customer profitability : purchased products, volume, price, valueadded services and supporting activities. Intending to support core customers (high profitability). Different strategies are applied to inventories in regard to availability and consistent delivery compared to the profitability of the products. High level of support for less profitable items. Type of transportation and facilities.

l l Warehousing, material handling and packaging Loading/unloading, selecting the ‘best’ location, the availability of labor

INTEGRATED LOGISTICS l l l Inventory flow and information flow. Procurement. Manufacturing support. Physical distribution. Planning and coordinating flow : strategy, capacity constraints, logistical requirements, inventory deployment, manufacturing requirements, procurement requirements and forecasting.

OPERATING OBJECTIVES l l l Rapid response. Minimum variance of unexpected event : disruption in manufacturing, goods arriving damaged, incorrect delivery destination, etc. Minimum inventory. Movement consolidation : the larger the overall shipment and the longer the distance transported, the lower transportation cost per unit. Quality. Life-cycle support : after sales support and guarantee, recycled packaging materials.

BARRIERS TO INTEGRATION l l l Organization structure. Measurement system Inventory ownership Information technology Knowledge transfer capability