Logistics Supply Chain Supply chain is a complex

Logistics

Supply Chain • Supply chain is a complex logistics system in which raw materials are converted into finished products and then distributed to the final users (consumers or companies) Ghiani, Laporte and Mussamannoi, Introduction to logistics systems planning and control, Chapter 1

Distribution Centers • Central distribution Center • Regional Distribution Centers

Inventory Management • Make-to-order • Make-to-stock

Inventory Management • Improving service level • Reducing overall logistics cost (economics of scale) • Coping with randomness in customer demand lead time • Making seasonal items available throughout the year • Speculating on price patterns • Overcoming inefficiencies in managing the logistics system

Distribution strategies • Direct shipment: Factory to customers • Warehousing: Factory to warehouse and customer • Crossdocking (just-in-time distribution): – Incoming shipments (possibly from many manufacturers) sorted, consolidated with other products and transferred directly to outgoing trailers without storing them in warehouses.

Transportation Methods • Private: Own a transportation fleet • Contract transportation • Common transportation

Distribution channel • A path fallowed by a product from manufacturer to the end-user

Transportation cost saving strategies • Freight Consolidation

Logistics management • Capital reduction: Do not invest too much capital into hardware • Cost reduction: min the cost • Service level improvement: Inventory management and continuous flow • Cost vs. service level: !! • Sales vs. Service relationship: Level of logistics service influences the sale volume

Determining the optimal service level Sales Total cost

Decision support systems • • Benchmarking Simulation Optimization Continuous approximation methods: – Estimating demand, Estimating variance on transpiration time; estimating disruptions etc.

Forecasting • Long-term forecasting – One to five years – New items to introduce – Old items to remove • Medium-term forecasting – Months to a year – Tactical planning • Production and distribution plan • Inventory management • Slot allocations • Short-term forecasting – Days to a month – Resource planning – Scheduling

Forecasting • Where, When and quantity estimation • Globalization: Customers are geographically dispersed – Top-down approach in forecasting: • Estimate the global sale • Derive the regional sales from the global figures – Bottom-up approach: • Estimate the local sales • Derive the total sales globally

Forecasting techniques • Qualitative techniques • Quantitative techniques