Chapter 1 - An overview of logistics (1)

The historical development of logistics 11 1950 1960 1970 1980 1990 2000 Workplace logistics Workplace logistics Facility logistics Facility logistics Corporate logistics Corporate log

IBS3002 Logistics & International Trade

Introduction to the course

1

Contemporary logistics, Murphy (2015) & International logistics, David (2011)

Introduction to the course

Course overview:

Provide fundamental knowledge on international logistics in the global context

Analyze activities of logistics in international trade

Understand the impacts of environment on international logistics and

international logistics security

Understand issues occurring in logistics enterprises in international trade

Introduction to the course

Learning materials:

Contemporary Logistics; 11th Edition; Paul R Murphy, Jr., A Michael

Knemeyer; Prentice Hall (2015)

International Logistics: The Management of International Trade

Operations; 3rd Edition ; Pierre David and Richard Stewart, Cengage

Learning (2011)

3

Introduction to the course

Introduction to the course

Introduction to the course

6

Wee

k

Content

1 Introduction to the course

Chapter 1 – An overview of logistics

2 Chapter 1 – (cont)

3 Chapter 2 – Logistics & information technology

4 Chapter 3 – Demand management, order management &

Introduction to the course

7

IBS3002 Logistics & International Trade

Chapter 1

An overview of logistics

Topic areas

 Logistics & international logistics

 Logistics & supply chain

 Logistics adds value

 Logistical relationships with the firm

 Logistics activities

 Infrastructure of international logistics

9

The historical development of logistics

11

1950 1960 1970 1980 1990 2000

Workplace logistics

Workplace logistics

Facility logistics

Facility logistics

Corporate logistics

Corporate logistics

Supply chain logistics

Supply chain logistics

Global logistics

Global logistics

The historical development of logistics

1 Workplace logistics

- The flow of materials within a single workstation

- Objective: to streamline the movements of an individual working at a machine or along an

assembly line

- The principles and theory of workplace logistics were developed by the founders of industrial

engineering workers in WWII ad post WWII factory operations

2 Facility logistics

- The flow of materials between workstations within a facility (factory, terminal, warehouse,

distribution center) -> inter workstation, intra-facility

- The roots of facility logistics was in the mass production and assembly lines that distinguished the

1950s and 1960s Many organizations maintained material-handling departments (1970s)

Hậu cần nơi làm việc - Dòng vật liệu trong một trạm làm việc - Mục tiêu: sắp xếp hợp lý các

chuyển động của một cá nhân làm việc tại máy hoặc dọc theo dây chuyền lắp ráp - Các nguyên tắc và lý thuyết về hậu cần tại nơi làm việc được phát triển bởi những người sáng lập của công nhân kỹ thuật công nghiệp trong Thế chiến II quảng cáo sau Thế chiến II hoạt động của nhà máy 2 Hậu cần cơ sở - Luồng nguyên vật liệu giữa các máy trạm trong một cơ

sở (nhà máy, nhà ga, nhà kho, trung tâm phân phối) -> giữa các trạm làm việc, nội bộ cơ sở - Nguồn gốc của hậu cần cơ sở là trong dây chuyền sản xuất và lắp ráp hàng loạt, phân biệt những năm 1950 và 1960 Nhiều tổ chức duy trì các bộ phận xử lý vật liệu (những năm

12

The historical development of logistics

3 Corporate logistics

- The flow of materials and information between the facilities and

processes of a corporation (inter workstation, inter-facility, intra-corporate)

- Corporate logistics is sometimes associated with the phrase physical distribution that was popular in the 1970s

4 Supply chain logistics

- The flow of materials, information and money between corporations

(inter workstation, inter-facility, inter-corporate and intra chain)

5 Global logistics

- The flow of materials, information and money between countries

- Global logistics connects our suppliers’ suppliers with our customers’

The historical development of logistics

5 Global logistics

The increased importance of logistics

 A reduction in economic regulation

- Deregulation relaxed government control of carriers’ rates and fares, entry and exit, mergers and acquisitions… in 1970s, 1980s -> competitive price and flexibility in service in logistics

 Changes in consumer behavior

- Customized customer, changing family roles, rising customer expectations… -> logistical implications

 Technological advances

- Technological advances improve the productivity of channel design, order picking process, shipment tracking -> impact logistics management

15

The increased importance of logistics

 The growing power of retailers

- Appearing Big-box retailers - stores both floor space and products for

sale (Walmart, Costco…) -> growing power of retailers

- Powerful retailers such as Wal-Mart, Home Depot, Best Buy have large market share and low costs and they have superior logistics Applying CPFR (Collaborative Planning, forecasting, replenishment) initiatives – trading partners share planning, forecasting data to better match up supply & demand For this reason they are considered as “trend-setters” of logistics

 Globalization of trade

- Growth in world trade

The system & total cost approaches to logistics

17

The system & total cost approaches to logistics

The system & total cost approaches to logistics

- System approach: indicates that a company’s objectives can be realized by recognizing the mutual interdependence of the major functional areas (marketing, production, finance and logistics) of the firms

- Implications of the system approach:

+ One logistics system does not fit all companies

+ Stock-keeping units (SKUs): each different type or package size of a good is a different SKU -> the proliferation of SKUs means more items to identify, store, and track.

- Intrafunctional logistics – coordinating inbound logistics, materials management, and physical distribution in a cost-efficient manner that supports an organization’s customer service objectives.

- Inbound Logistics: Movement and storage of materials into the firm.

Phương pháp tiếp cận hệ thống: chỉ ra rằng các mục tiêu của công ty có thể được thực hiện bằng cách thừa nhận sự phụ thuộc lẫn nhau của các lĩnh vực chức năng chính (tiếp thị, sản xuất, tài chính và hậu cần) của công ty

-Hàm ý của phương pháp tiếp cận hệ thống: + Một hệ thống hậu cần không phù hợp với tất cả các công ty

+ Đơn vị lưu giữ hàng hóa (SKU): mỗi loại hoặc kích thước gói hàng khác nhau là một SKU khác nhau -> sự gia tăng của SKU đồng nghĩa với việc có nhiều mặt hàng hơn để xác định, lưu trữ và theo dõi - Hậu cần nội bộ - điều phối hậu cần trong nước, quản lý nguyên vật liệu và phân phối vật chất theo cách hiệu quả về chi phí để hỗ trợ các mục tiêu dịch vụ khách hàng của tổ chức - Inbound Logistics: Di chuyển và lưu trữ nguyên vật liệu vào công ty

The system & total cost approaches to logistics

- Materials management: movement and storage of materials within a firm

- Physical distribution: storage of finished product and movement to the customer

- Total cost approach: coordinate materials management and physical distribution in a efficient manner -> all relevant activities in moving and storing products should be considered

cost-as a whole, not individually

- Cost trade-offs: changes to one logistics activity cause some costs to increase and others to decrease

- All relevant logistics cost items are considered simultaneously when making decision

 Quản lý nguyên vật liệu: di chuyển và lưu trữ nguyên vật liệu trong một công ty

 Phân phối vật chất: lưu kho thành phẩm và chuyển đến khách hàng

 Cách tiếp cận tổng chi phí: phối hợp quản lý nguyên vật liệu và phân phối vật chất theo cách hiệu quả về chi phí -> tất

cả các hoạt động liên quan trong việc di chuyển và lưu trữ sản phẩm nên được xem xét một cách tổng thể, không riêng lẻ

 Đánh đổi chi phí: những thay đổi đối với một hoạt động hậu cần khiến một số chi phí tăng lên và các hoạt động khác giảm

 Tất cả các khoản mục chi phí hậu cần liên quan được xem xét đồng thời khi đưa ra quyết định

Supply chain

very beginning stage of sourcing the raw materials to the final delivery of the product or service to end-users An extended enterprise that crosses the boundaries of individual firms to span the related activities of all the companies involved in the total supply chain in satisfying the ultimate consumer

services, information and financials) within and between firms in the supply chain to fulfil the final customer’s demands through the most efficient use of resources

21

Logistics & supply chain

Supply Supply base rationalization, supplier alliances, SRM, global sourcing, ethics and sustainability

Operations Demand management, CPFR, MRP, ERP, inventory visibility, lean systems, Six Sigma quality systems

Logistics Logistics management, customer relationship management, network design, RFID, global supply

chains, sustainability, service response logistics

Integration Risk and security management, performance measurement, green supply chains

ALL ELEMENTS DRIVEN BY DEMAND

Foundation of

SCM

Logistics adds value

23

Logistics adds value

Economic utility – the value or usefulness of a product in fulfilling

customer needs or wants

•Possession utility – the value or usefulness that comes from a customer

being able to take possession of a product

•Form utility – product’s being in a form that (1) can be used by the

customer and (2) is of value to the customer

•Place utility – having products available where they are needed by the

customers; products are moved from points of lesser value to points of greater value

•Time utility – having products available when they are needed by

customers

Logistics adds value

The five principal types of economic utility which add value to

a product or service are:

Logistical relationships within the firm

Logistics

Logistical relationships within the firm

 Predicting future cash flows that depend on logistics

 Approving capital budgeting decisions affecting logistics

 Inventory (asset valuation, inventory cost vs inventory units)

 The length of production runs

 Postponement: the delay of value-added activities such as assembly, production, and packaging until the latest possible time

Mối quan hệ logic với tài chính

 Dự đoán dòng tiền trong tương lai phụ thuộc vào hậu cần; Phê duyệt các quyết định ngân sách vốn ảnh hưởng đến hậu cần; Hàng tồn kho (định giá tài sản, chi phí hàng tồn kho so với đơn vị hàng tồn kho)

Mối quan hệ logic với sản xuất :Thời gian chạy sản xuất; Trì hoãn: sự trì hoãn của các hoạt động giá trị gia tăng như lắp ráp, sản xuất và đóng gói cho đến thời điểm muộn nhất có thể 27

Logistical relationships within the firm

 Place decisions: logistics & marketing channel, new strategies for reaching new customers

 Price decisions: how a product’s transportation costs should be reflected in its selling price -> higher logistics costs to customers lead

to an increase in product price

 Product decisions: the amount of SKUs to hold, stockouts, identification, storage, tracking, packaging -> higher quantities of inventory necessitate additional storage space & increase inventory carrying costs

 Promotion decisions: must be coordination between marketing and

Logistics activities

person receives the right product at the right place at the right time in the right condition and at the right cost”

time period

location of the relevant warehousing and production facilities

variety of purpose

the confines of a facility (plant, warehouse)

29

Logistics activities

between the time a customer places an order and the time it is received

by the customer

from outside organizations to support a company’s operations

or people from one place to another

a particular period of time

International logistics Infrastructure

Infrastructure: a collective term that refers to all of the elements in place

(publicly or privately owned goods) to facilitate transportation, communication, and business exchanges

Infrastructure of International logistics

 The Transportation Infrastructure allows goods to move efficiently

within a country and between countries This requires well-maintained seaports, airports, railways, and roads

 The Communication Infrastructure allows businesses to communicate

clearly and quickly This requires reliable phone lines, cell phone networks, internet service, and mail delivery

 The Utilities Infrastructure allows businesses to sustain their daily

operations This requires reliable electricity, energy (natural gas), water, and sewer services

Infrastructure of International logistics

 The Business Services Infrastructure allows businesses to find

additional competent logistics help quickly This includes freight forwarders, couriers, carriers, delivery services, packing services, and so on

 The Distribution Infrastructure allows businesses to find agents and

distributors, to develop wholesale and retail channels, and promote their products

 The Banking Infrastructure allows businesses to move funds and

documents quickly and reliably, both within a country and between countries This requires a network of bank branches and well-trained bank employees

33

Infrastructure of International logistics

 The Court Infrastructure allows businesses to settle disputes quickly

and fairly This includes not only an efficient court system, but also a network of mediators and arbitrators, and the existence of clear jurisprudence

 The Intellectual Property Infrastructure allows businesses to protect

their intellectual property (copyrights, patents, and trademarks) with law enforcement services intent on enforcing intellectual property laws

 The Standard Infrastructure allows businesses to determine the

requirements that their products and operations must meet This includes safety, design, and performance standards

Port Infrastructure (I)

Port Infrastructure (II)

• Space Limitations

The location of most ports limit their ability to expand.

• Warehouse Space

Availability of reliable storage space for goods in transit.

• Connection to land-based Transportation

Ports need to have reliable access to roads and/or rail lines to keep cargo moving.

-Giới hạn không gian

Vị trí của hầu hết các cảng hạn chế khả năng mở rộng của chúng

-Không gian nhà kho Có không gian lưu trữ đáng tin cậy cho hàng hóa đang vận chuyển

-Kết nối với Giao thông vận tải trên bộ Các cảng cần có lối tiếp cận đáng tin cậy với đường bộ và / hoặc đường sắt để giữ hàng hóa di chuyển.