Logistics Operation

7/31/2019 Logistics Operation

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LogisticsOPERATIONS



Objectives of Logistic

• Rapid response

• Minimum variance

• Minimum inventory

• Movement consolidation

• Quality

• Life cycle support



Competitive advantage through

logistics



The Transportation System

Intermodal Combinations (according to Deveci et al.)

“The movement of goods in one and the same loading unit

or vehicle that uses successively several modes of transportwithout handling of the goods themselves in changing

modes.”



Combination:

1. rail-road (“piggyback”)

2. rail-water

3. rail-air

4. rail-pipeline

5. road-air (“birdyback”)

6. road-water (“fishyback”)

7. road-pipeline

8. water-air

9. water-pipeline

10.air-pipeline





Other transport options 1. Freight forwarders

2. Shippers’ associations

3. Intermodal marketing companies

4. Brokers

5. Small package carriers

6. Third-party logistics service providers



Customizing Your Logistics Network to Meet

Customer Needs

“Companies have traditionally taken a monolithicapproach to logistics network design in organizing theirinventory, warehouse, and transportation activities to meet asingle standard. For some, the logistics network has beendesigned to meet the average service requirements of all

customers; for others, to satisfy the toughest requirements of a single customer segment. Neither approach can achievesuperior asset utilization or accommodate the segment-specific logistics necessary for excellent supply chainmanagement.”



The process of logistics design for customization

• The targets of the distribution processes;

• The satisfaction of customer needing;

• The total cost to fit these requirements

• The factors that can affect decisions of logistics managers;

• Organizational and market factors;• characteristics of the company of the network;

• characteristics of the market where the network acts.

• Technological factors;

• Environmental factors



The Concept of Logistics CostsPerformance indicators of logistics activities measure the

performance of a logistics system and evaluate its efficiencylevel. The major reason for measuring logistics performance is to

reduce operating costs. Measuring operating costs helps to

identify whether and where to make operational changes to

control expenses and identify areas for improved assets.

Evaluation Category of Logistics Performance Indicators• costs indicators - which indicate costs consumed in carrying

out logistics activities

• service indicators - which indicate the results of logistics

activities



Logistics costs include the following:

•cost of transport activities, for each mode;

•cost of storage or warehousing activities;

•cost of time value or investment in goods in a logistics

system, including the added value of transportation;

•cost of physical form changes required for effective

and/or safe transport, storage, and handling;

•cost of marking, identifying, recording, analysis, as

well as data transfer and handling;

•cost of stacking/unstacking activities

•cost of added packaging required

•cost of material transfer activities

•cost of consolidation/deconsolidation activities

•cost of information and telecommunications integration

•cost of logistics system management

•cost of unavailability of goods (when required)



THREE KEY COMPONENTS OF LOGISTIC COST

• Transportation costsTypes:

• Primary transportation • Secondary transportation

Kinds:

• Road transportation costs

• Water Transportation costs

• Air cargo transportation costs

• Cargo transportation agency costs

• Inventory carrying costs

• Capital costs

• Inventory service costs• Storage space costs

• Inventory risk costs

• Administration costs





A warehouse management system, or WMS, is a key part of the supply

chain and primarily aims to control the movement and storage of materials

within a warehouse and process the associated transactions, including shipping,

receiving, put away and picking. The systems also direct and optimize stock put

away based on real-time information about the status of bin utilization.

• Traffic and transportation

• Plant and warehouse site location

• Materials handling

• Industrial packaging

• Purchasing

• Demand forecasting

• Inventory control

• Production planning

• Parts and service support

• Return goods handling

• Salvage and scrap disposal

• Customer service levels





STRATEGY

- originated from the its Greek wordstrategos (“general” of the army), but

contemporary definition refers to a plan for

achieving chosen objectives.

- strategies are the human management

decisions that are made with partial

information—assumptions about conditions,

interactions, attitudes, behaviors, and actionsand reactions in the environment—by a

company in advance.



1. Corporate strategy: a firm creates the structure

of its organization and its business interests, aswell as the share of its portfolio in those

businesses.

2. Business strategy: This level of strategy

determines the type of products or services

that the organization wants to offer. Also,

business strategy determines what each

business unit needs to do and where to do it inorder to reach the business objectives at the

corporate level.



3. Operational strategy: This strategy is about how to

achieve business objectives set at the corporate and

business levels by extensive planning of available

resources, processes, products, technologies used, and soon. This strategy also consists of setting certain market

policies in order to achieve the organization’s long-term

competitive strategy.

4. Competitive strategy: These strategies tell a company

how to meet its customers’ desirable demands as defined

by cost, quality, reliability, and so on. In a competitive,

customer-driven market, an organization cannot ignore

necessary competitive strategies.



What is the difference between strategic

planning and strategic management?

- Planning is important, but if the managers

want to move the organization to its desired

destination, then managing the plan is equallyimportant and required.

According to Rushton,

“Logistics is . . . the positioning of resource at

the right time, in the right place, at the right cost, at

the right quality, while optimizing a given performance

measure and satisfying a given set of constraints”.



- the entire process of planning, implementing,and controlling the efficient flow and storage of materials and products, services, information, energy,people, and other resources that move into, through,and out of a firm (in both the public and privatesectors) from the point of origin to the point of

consumption and with the purpose of meetingcustomer requirements.

A logistics system based on its definition and natureincludes the following:

1. Storage, warehousing, and material handling2. Packaging and unitization

3. Inventory

4. Transport

5. Information and control



End

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Logistics Operation