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