Chapter 3 Logistics
3 forms of EVA
1. Asset utilization 2. Customer value 3. Cost improvement
What is logistics
1. Business Logistics: Part of supply chain that plants, implements, and controls the flow and storage of good 2. Military logistics: Design and integration of all aspects of support for operational capability of military forces and their equipment 3. Event logistics: Network of activities, facilities and personnel required organization, schedule and deploy the resources for an event to take place and withdraw after the event 4. Service logistics: Acquisition, scheduling, and management of facilities, assets, personnel, and materials to support a service operation and business
Micro dimension of logistics
1. Competitive relationships 2. order life cycle 3.substitutability 4. inventory effect 5. transportation effect 6. spatial relationships
Accounting
1. Cost information for analysis of alternative logistics options 2. Supply chain tradeoff and performance measurement
Product Related factors
1. Dollar value 2. Density 3. Susceptibility to damage 4. Special handling requirements
Finance
1. Inventory 2. Warehouses and transportation fleet owned and/or outsourced 3. Customer service
Manufacturing
1. Length of production run 2. Available quantity of raw materials and component 3. Industrial packaging
Logistics interfaces
1. Manufacturing 2. Marketing 3. Finance 4. Accounting
Marketing
1. Price (purchase quantity discounts) 2. Product (size, shape, weight, packaging) 3. Promotion 4. Place (distribution channel selection)
Transportation effect
Cost of lost sales can be reduced by spending more on transportation service to improve customer service
Competitive relationships
Customer service can be a very important form of competition
Sustainability
Customer service is important for highly substitutable products to reduce lost sales cost
Inventory effect
Increasing inventory costs can reduce the cost of lost sales
Dimensions of logistics
Manufacturing, Marketing, Finance, Accounting
Special handling requirements
Need for special handling (fridge, heating, strapping) usually increase warehousing, transportation, and packaging costs
Order life cycle
Shorter order cycles reduce the inventory required by the customer
Susceptibility to change
The greater the risk of damage to a product, the higher the transportation and warehousing costs
Spatial relationships
The location of fixed points in the logistics system with respect to demand and supply points are very important to transportation costs.
Dollar Value
The products dollar value typically affects warehousing costs, inventory costs, transportation costs, packaging costs, and material handling costs
Density
Weight/space ratio affects transportation and warehousing costs. As density increases for a product, its transportation and warehousing costs tend to decrease