Supply Chain Logistics Management Chapter 2 Lean Logistics

Supply Chain Logistics Management Chapter 2: Lean Logistics Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

United States Logistics Costs 1980 § GDP $2. 88 trillion § Logistics Cost $451 billion § 15. 7% of GDP § Trans. Cost $214 billion § 47. 5 % of Logistics Cost 1000 900 700 600 $ Billions $ billion 800 500 400 300 200 100 0 1980 Logistics Year 1999 § GDP $9. 26 trillion § Logistics Cost $921 billion § 9. 9% of GDP § Trans. Cost $554 billion § 60. 2 % of Logistics Cost Transportation Source: Robert V. Delaney, 11 th Annual “State Of Logistics Report” © June 5, 2000 Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Integrated Logistics Order Processing Facility Network Warehousing Material Handling Packaging Inventory Transportation Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Logistical Integration Inventory Flow Enterprise Customers Market Distribution Manufacturing Support Procurement Suppliers Information Flow Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Market Distribution Operating Concerns Market Distribution: Activities related to providing customer service. Requires performing order receipt and processing, deploying inventories, storage and handling, and outbound transportation within a supply chain. Includes the responsibility to coordinate with marketing planning in such areas as pricing, promotional support, customer service levels, delivery standards, handling return merchandise, and life-cycle support. The primary market distribution objective is to assist in revenue generation by providing strategically desired customer service levels at the lowest total cost. Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Manufacturing Support Operating Concerns Manufacturing Support: Activities related to planning, scheduling, and supporting manufacturing operations. Requires master schedule planning and performing work-in-process storage, handling, transportation, and time phasing of components. Includes the responsibility for storage of inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement between manufacturing and market distribution operations. Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Procurement Operating Concerns Procurement: Activities related to obtaining products and materials from outside suppliers. Requires performing resource planning, supply sourcing, negotiation, order placement, inbound transportation, receiving and inspection, storage and handling, and quality assurance. Includes the responsibility to coordinate with suppliers in such areas as scheduling, supply continuity, hedging, and speculation, as well as research leading to new sources or programs. The primary procurement objective is to support manufacturing or resale organizations by providing timely purchasing at the lowest total cost. Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Logistics Information Requirements PLANNING - COORDINATION Strategic Objectives Capacity Constraints Forecasting Order Processing Order Assignment Logistics Requirements Manufacturing Requirements Procurement Requirements Transportation and Shipping Procurement Inventory Deployment Inventory Management Distribution Operations OPERATIONS Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Echeloned Structured Logistics INFORMATION FLOWS Supplier Industrial Distribution or Consolidation Warehouse Manufacturer Wholesaler or Distribution Center Retailer Customer Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Echeloned Structured Logistics INFORMATION FLOWS Supplier Industrial Distribution or Consolidation Warehouse Manufacturer Wholesaler or Distribution Center Retailer Customer Support for Direct Delivery Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Flexible Echeloned Structured Logistics INFORMATION FLOWS Supplier Flow Through Service Supplier Arrangements Industrial Distribution or Consolidation Warehouse Manufacturer Wholesaler or Distribution Center Retailer Customer Support for Direct Delivery Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Logistical Performance Cycles Material Source Purchasing Cycle Lead Supplier (Tier 1) Manufacturing Plant Manufacturing Support Cycle Node Distributors Customer Physical Distribution Cycle Transportation Links Communication Links Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Multi-Echeloned Flexible Network 1 2 3 Material Source Manufacturing Plant Warehouse Plant Warehouse Distribution Warehouse Customer Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Basic Market Distribution Performance. Cycle Activities Order Processing Order Transmission Customer Order Selection Order Transportation Customer Delivery Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Procurement-Cycle Activities Sourcing Order Placement and Expediting Supplier Receiving Transportation Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Performance-Cycle Uncertainty Total Performance Cycle 1 Time Range - Days 1/2 10 5 Customer Delivery 40 Order Transmission Time Range - Days 3 1 Time Range - Days 1/2 Order Transportation 2 4 Order Processing 10 Order Selection Time Range - Days 1 3 2 1 2 Time Range - Days 4 20 Time Range - Days Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.