Lm slide chapter 3

LEARNING OBJECTIVESAfter completing this Chapter, students should be able to: ü Identify and describe the basic Logistics systems ü Explain the component activities of each Logistics flo

CHAPTER 3:

TYPICAL LOGISTICS SYSTEMS

ĐẠI HỌC GIAO THÔNG VẬN TẢI THÀNH PHỐ HỒ CHÍ MINH

LEARNING OBJECTIVES

After completing this Chapter, students should be able to:

ü Identify and describe the basic Logistics systems

ü Explain the component activities of each Logistics flow

ü Explain the key issues in each component activities that form a typical Logistics

flow

CHAPTER OUTLINE 3.1 Introduction about Logistics systems

3.2 Components of a typical Logistics system

REFERENCE LIST

[4]-Douglas M.lambert James R.Stock,Lisa M Ellram, Fundamentals of Logistics Management, Mc

grow Hall,1998 – Chapter 1

[15]-James C.Johnson, Donald F.Wood, Daniel L.Wardlow, Paul R.Murphy,Jr (1999), Contemporary

Logistics, Prentice Hall – Chapter 3

3.1 INTRODUCTION ABOUT LOGISTICS SYSTEMS

F

G

B

H B

G G

Pre-processing

Raw materials,

parts

Production plant

Finished goods warehouses

Outbound logistics Inbound logistics

Return logistics

Logistics

Distribution centers Retailers Customers

3.1.1 Inbound Logistics activities

q Sourcing

q Order placement

q Transportation

q Receiving

q Storages and preservation of

materials

q Materials handling

q Information management

3.1.2 Outbound Logistics activities

q Industrial packaging

q Order fulfillment

q Transportation, delivery

q Information management

q Customer service

vIn the Outbound Logistics, distribution centers (DCs) play a key role:

B Plant A

Plant C

DCs C

A

A,B,C

+ DCs as consolidation centers

a b

DCs

Plant A

Plant B

Customer X

Customer Z

A

a b

a b

+ DCs as break-bulk centers:

C

DCs

Plant B

Plant C

Plant A

Customer X

Customer Y B

A

ABC

ABC

+ DCs as product-mixing centers:

3.1.3 Return Logistics activities

- Return the faulty or unsold products

- Return to disassemble the used products

- Return and recycle the packages

Finished

goods

distribut

ion

Customer

Disposal

Suppliers Redistribute

Rehandling

+Burning +Recycle +Return +Refurbish +Repair

3.2 COMPONENTS OF A TYPICAL LOGISTICS SYSTEM

Production planning

Inventory forecasting

Transportation

Warehouse and

Warehousing

Material handling

Inventory and Inventory

control Production planning Order fulfilment Customer service Facility location Procurement

Packaging

Other activities

Logistics system’s components

3.2.1- Inventory forecasting

- Inventory forecasting is the responsibility of

Logistics managers

- Accurate forecasting of inventory requirements

and materials and components is a necessary

condition for inventory control, manufacturing

efficiency, and customer satisfaction

- In order to improve inventory control, ABC

method, MRP, … are frequently used

- Inventory forecasting needs to be in line with

demand forecasting from Marketing function in

order to maintain a proper inventory level

3.2.2- Transportation

Vendor Trans. Wholesalers Trans. Manufacturer Trans. Wholesaler Trans. Retailer/Customer

- One of the key activities in the logistics system

- The major focus of transportation is on the movement of raw materials, components

and finished goods

- Transportation contributes to Time value and Place value

- Logistics manager should be responsible for selecting the transportation modes and

carriers

3.2.3- Warehouse and warehousing

- Warehouses act as the nodes in the Logistics and Supply Chain

- Warehouses are used to store the materials, WIP and finished goods

Warehouse and warehousing add costs to the products

- Warehouse and warehousing also add values to the products rather

than increasing cost

- Warehouse and warehousing-related decisions should include:

+ How many warehouses?

+ Where to locate the warehouses?

3.2.4- Packaging

- Packaging helps to protects the product during transportation and

storage

- Benefits of industrial packaging:

+ Protecting the product during transportation and storage + Increasing safety in product’s loading, unloading, handling + Changing the cargo density

+ Providing information about the product itself

- Each selected mode of transportation shall have specific packaging

requirements

3.2.5- Materials handling

- This activity includes all the tasks which are related to the movement and

placement of goods in a warehouse

- Materials handling is important in warehouse design and efficient warehouse

operations

- Materials handling is also related to other areas in a typical manufacturing

organization

Inventory

classifications

Cycle stock inventory

Safety stock inventory

Pipeline stock inventory

3.2.6- Inventory control

- Inventory adds Time value to the products

- Fluctuated demand, limited manufacturing capabilitiesg need to keep inventory

- Inventory control’s key questions: How much inventory to keep? Where to keep?

- Inventory is related to warehousing and manufacturing process

Assuring adequate inventory levels

Certifying inventory accuracy

3.2.7- Order fulfillment

Short question:

- This activity covers the filling and shipping customer orders

- Leadtime: from the time a customer places an order until he/she receives a satisfactory fulfillment of

order

- Lead time (order cycle)= order transmittal time+ order processing time + order preparation time +order

transport time

+ Order transmittal time: time to sort, arrange the orders, material procurement (direct or via email, fax, …)

+ Order processing time: time for stock checking, payment checking, …

+ Order preparation time: time for final assembling, packing, packaging, preparing for documents, etc

+ Order transport time: time since an order are out for shipment until it reaches the customer

- Production planning is mainly related to manufacturing function

- Production plan also affects logistics function in terms of transportation and inventory

forecast

- Quantity of products, manufacturing time, multiple product lines g collaboration or control

of production planning by logistics

- Locations of materials, components and parts purchased are related to transportation costs

- The quantities purchased should also affect the total logistics cost

For example: materials purchased from Chinag manufactured in the USAg

manufacturing time g inventory level

- The quantities purchased g mode of transportation

3.2.8- Production planning

3.2.9- Procurement

3.2.10- Customer service

- Two dimensions of customer service are related to Logistics operations are:

(1) The process of interacting directly with the customer to influence or take the order (2) The levels of service an organization offers to its customers

- Customer service delivery requires coordination among inventory control, manufacturing, warehousing, and transportation when the order is taken for delivery time and product availability

- Facility location changes g altering the time and place relationships between facilities (eg:

supply point- plant; plant – market)

- These changes also affect transportation costs and service, customer service and inventory

requirements

3.2.11- Facility location

3.2.12- Other activities