Coyle Chapter 2 PowerPoint Slides

7/31/2019 Coyle Chapter 2 PowerPoint Slides

1/33

1

Chapter 2: Role of Logistics in Supply Chains

Learning Objectives

After reading this chapter, you should be able to do the following:Understand the role and importance of logistics in private and publicorganizations.

Discuss the impact of logistics on the economy and how effectivelogistics management contributes to the vitality of the economy.

Understand the value-added roles of logistics on both a macro andmicro level.

Explain logistics systems from several perspectives.


2/33

2

Learning Objectives (cont.) After reading this chapter, you should be able to do the following:

Understand the relationship between logistics and other importantfunctional areas in an organization, including manufacturing,marketing, and finance.

Discuss the importance of management activities in the logisticsfunction.

Analyze logistics systems from several different perspectives tomeet different objectives.

Determine the total costs and understand the cost tradeoffs in alogistics system


3/33

3

Source: Center for Supply Chain Research, Penn State University (2008).


4/33

4

What is Logistics?Logistics managementBusiness logistics managementIntegrated logistics managementMaterials managementPhysical distribution managementMarketing logisticsIndustrial logisticsDistribution


5/33

5


6/33

6

Logistics DefinitionsInventory:

Management of materials in motion and at rest

Customer:Getting the right product, to the right customer, in the rightquantity, in the right condition, at the right place, at the right time,and at the right cost (called the dictionary seven Rs of logistics)

International Society of Logistics:The branch of military science having to do with procuring,maintaining, utility/ value and transporting material, personnel,and facilities

Council of Supply Chain ManagementThe art and science of management, engineering, and technicalactivities concerned with requirements, design, and supplyingand maintaining resources to support objectives, plans, andoperations


7/33

7

Logistics DefinitionsComponent support:

Providing time and place utility/value of materials and products in

support of Functional management organization objectivesCommon culture:

That part of the supply chain process that plans, implements,and controls the efficient, effective flow and storage of goods,services, and related information from point of origin to point of consumption in order to meet customer requirements

Supply management for the plant (inbound logistics) anddistribution

Management for the firms customers materials requirements,purchasing, transportation, inventory management,warehousing, materials handling, industrial packaging, facilitylocation analysis, distribution, return goods handling, informationmanagement, customer service, and all other activitiesconcerned with supporting the internal customer (manufacturing)with materials and the external customer (retail stores) withproduct


8/33

8

Four Subdivisions of LogisticsBusiness logistics:

That part of the supply chain process that plans, implements,

and controls the efficient, effective flow and storage of goods,service, and related information from point of use or consumptionin order to meet customer requirements.

Military logistics:The design and integration of all aspects of support for the

operational capability of the military forces (deployed or ingarrison) and their equipment to ensure readiness, reliability,and efficiency.

Event logistics:The network of activities, facilities, and personnel required to

organize, schedule, and deploy the resources for an event totake place and to efficiently withdraw after the event.

Service logistics:The acquisition, scheduling, and management of thefacilities/assets, personnel, and materials to support and sustaina service operation or business.


9/33

9

Value-Added Roles of Logistics

The five principal types of economic utility which add value to a product or service are:

FormTimePlaceQuantityPossession


10/33

10

Source: Center for Supply Chain Research, Penn State University (2008).


11/33

11

Logistics Activities

TransportationWarehousing and storageIndustrial packagingMaterials handlingInventory control

Order fulfillmentDemand forecastingProduction planning/schedulingProcurement

Customer serviceFacility locationReturn goods handlingParts and service supportSalvage and scrap disposal


12/33

12

Logistics Costs as a Percentage of GDP1312111098

76543210

12.3

Figure 2-3

Year

Source: 17th Annual State of Logistics Report, 2006


13/33

13


14/33

14


15/33

15

Logistics in the Firm: The Micro Dimension Another dimension of logistics is the microperspective which examines the relationshipsbetween logistics and other functional areasin an organization

MarketingManufacturing/operations

Finance AccountingOthers


16/33

16

ROA is defined as follows:ROA = Revenue - Expenses/Assets Or ROA = Gross Profit/Assets

The impact that logistics can have upon return on assets(ROA) or return on investment (ROI) is very significant


17/33

17


18/33

18

The General Relationship of the Cost of Lost Sales toInventory Cost

FlowTC = Total cost

INV = Inventory costCOLS = Cost of lost sales

Figure 2-7


19/33

19

Figure 2-8 The General Relationship of the Cost of Lost Sales to Transportation Cost

Improved transportation service

Flow -----------------------------------------------------

TC = Total costTr = Transportation cost COLS = Cost of

lost sales


20/33

20


21/33

21

Weight density of productFlow ----------------------------------------------------------

Tr = Transportation costInv = Inventory cost (includingstorage) Whse = Warehousingcost

Fig 2 -10 The General Relationship of Product Weight Density to Logistics Costs


22/33

22

Susceptibility to loss and damage

Flow ------------------------------------------------------------------Pkg = Packaging costTr = Transportation cost

Whse = Warehousing cost

Figure 2-11 The General Relationship of Product Susceptibility to Loss andDamage to Logistics Cost


23/33

23

Spatial Relationships:

Spatial Relationships are extremely significant to logistics is spatialrelationships, the location of fixed points in the logistics system withrespect to demand and supply points. Spatial relationships are veryimportant to transportation costs, since these costs tend to increasewith distance.


24/33

24

Figure 2-12 Logistics and Spatial Relations


25/33

25


26/33

27

Techniques of Logistics System Analysis

Short-Run/Static Analysis

Long-Run/Dynamic Analysis


27/33

28


28/33

29


29/33

30


30/33

31


31/33

32


32/33

33


33/33

34

Documents

Coyle Chapter 2 PowerPoint Slides