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Information Drivers in Logistics Systems
LOGISTICS SYSTEMS
Important Issues:
• Complex relationships between agents at different levels
Cooperation• A variety of mechanisms for: Coordination
Control
• Many Products and Many Locations
• Uncertainty in Demand (Over Time and Space)
{
SOURCES OF UNCERTAINTY
Time
Quantity
Supply Demand
Vendor LT
CustomersChange
Due Dates
Yield Forecast
* For Demand Uncertainty Freeze Periods
* For Yield Uncertainty Quality Improvement
* For Vendor Unreliability Vendor Management
* For Cycle Time Variability Lead Time Analysis
* For Human Error Education/Discipline
GLOBAL System Approach
DEPOT
DEALER
DEALER
FINAL FINAL CUSTOMERCUSTOMER
DEPOT
DEALER
FINALFINALCUSTOMERCUSTOMER
Amplification of Orders Placed on Suppliers
ActualConsumer
Consumption
ConsumerOrders onRetailer
RetailerOrders onDistributor
DistributorOrders onBarilla DC
Barilla DCOrders on
Barilla Plant
RetailerDistributorBarilla
DCBarilla Plant
Consumer
DRIVERS OF VARIATION in DRIVERS OF VARIATION in DISTRIBUTION SYSTEMSDISTRIBUTION SYSTEMS
Transportation Discounts Volume Discounts Promotional Activity No Minimum or Maximum Order Quantities Product Proliferation Long Order Fulfillment Lead Times Poor Customer Service Sales Compensation System Poor Communication
Dealing with Demand Peaks
TACTICALTACTICAL:
Inventory
Back Orders
Overtime/Second Shift
Subcontracting
Hiring/ Lay Off
Bargaining with Suppliers and Customers
STRATEGIC:STRATEGIC:
Product Mix
Temporary Labor Arrangements
Inventory Targets
Influence Demand by Pricing or Promotions
INTER-FIRM INTEGRATION
EFFICIENT CONSUMER RESPONSE:
Program searching for a close Coordination and Cooperation among participants of the Supply Chain
The final Objective is the satisfaction of the CONSUMER
Cooperation is obtained through:
* Optimization of flows (e.g., sharing data, transport, packaging)
* Effective coordination of promotions and negotiations * Effective selection of existing products
* Effective introduction of new products
Margin 12.1
18.1
5.08.1
4.1
9.7
42.7
StoresOperating Cost
Administration
LogisticsSales/Purchases
Marketing
ProductionCost
ACTUAL TARGET
9.8
16.4
4.8
6.23.08.2
40.8
100 100 = Average Retail Price
89.2
Source: Food Marketing Institute and Andersen Consulting (1992)
COST STRUCTURE IN THE SUPPLY CHAIN
Product Architecture
Shared Platforms
Modularity
Common Components
Ease of Assembly
Postponement
Critical for mass customization and Supply Chain Efficiency.