650 ProfGoldsby Logistics Presentation

7/31/2019 650 ProfGoldsby Logistics Presentation

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Logistics

BUS M&L 650: Professor Blackwell

May 24, 2004

Thomas Goldsby, Ph.D.Asst. Professor of Marketing and Logistics


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Session Objectives

To understand the basics of logistics;

To review the interrelationship betweenmarketing and logistics;

To examine logistics role in supply chainmanagement;

To gain insight into the work of the logistician(logistics professional); and

To review the learning opportunities available inTransportation and Logistics at OSU.


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Logistics Management: Defined

That part of supply chain management thatplans, implements, and controls the efficient,

effective forward and reverse flow and storageof goods, services, and related information fromthe point of origin to the point of consumption inorder to meet customers requirements.

-- Council of Logistics Management


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Simply put, what is Logistics?

Production

MaterialsManagement

PhysicalDistribution

Logistics is the movement and storage of inventories(raw materials, work-in-process, finished goods, and

consumed/scrap materials) throughout the supply chain


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A Bill of Rights

Logistics embodies the effort to deliver:

the right product

in the right quantity

in the right condition

to the right place

at the right time

for the rightcustomer

at the right cost

SERVICE(effectiveness)

COST (efficiency)


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What is the role of Logistics incorporate strategy?

To provide time (when) and place (where)utilities at a level consistent with customerservice and cost objectives

Logistics also finds its way into:

supply chain strategy customer relations

supplier relations new product development

international marketing strategy

environmental strategy

Logistics is the primary

boundary-spanning activity


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The Marketing/Logistics Relationship

DEMAND REALIZATIONand/or CREATION

DEMAND SATISFACTION


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Keep the promise or else!!!


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Marketing Objective:

Logistics Objective:

Allocate resources to the marketing mix in such a manner as to maximize the long-term profitability of the firm.

Minimize Total Costs given the customer service objective where total costs = Transportation Costs +

Warehousing Costs + Order Processing and Information Costs + Lot Quantity Costs + Inventory Carrying Costs

Logistics

MarketingProduct

Place

Customer ServiceLevels

Price

Procurement

InventoryManagement

Order Processingand

Information

TransportationManagement

Promotion

WarehousingManagement

Douglas M. Lambert

Logistics Role in Marketing Strategy


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Place/customer service levels Customer service (lost sales) Parts & service support Returns goods handling

Inventory carrying cost Opportunity cost of inventory Insurance and taxes Obsolescence and loss

Procurement costs Lot quantities Material handling

Order processing andinformation costs

Order processing Information exchange

Demand forecasting/planning

Transportation costs Inbound and outboundtransportation

Warehousing costs Warehousing andstorage

Plant and warehouse

site selection

Copyright 2001, Thomas J. Goldsby, all rights reserved

Within eachfunction:

activities and

costs


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Logistics Cost (Warehouses)

Cost of lost sales

Total cost

Inventory cost

Warehousing cost

Transportation cost

$

Number of Warehouses (anticipated service)

Note: Cost curves are not to scale

Lot quantity cost

Order processing cost


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The Systems Concept

View the the sum of logistics operations as asystem and seek to minimize the total cost of thesystem rather than the individual functions.

Its like a stereo system: Tuner vs. Media Player vs. Speakers


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Where does the workof logistics occur?

Answer: At the sources of raw materialssupply and within and between each supplychain entity right up to consumption .... and

beyond!

Raw Materials [Materials Procurement]

Work-in-Process [Manufacturing Support]

Finished Goods [Physical Distribution] Returns & recyclables [Reverse Logistics]

Supporting Information


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Columbus: At the heart of of it all!

Location: Within 500 miles of Greater Columbus:

58% of U.S. population & 50% of Canadian population

61% of U.S. Manufacturing Capacity

80% of U.S. Corporate Headquarters

Logistics Assets

2 International Airports

3 Intermodal rail yards

40 Freight forwarders and customs brokers

140 Trucking Companies - 40 National Carriers Over 150 million square feet of warehouse space

Foreign Trade Zone #138 and 24-hour customs


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Some Basic Facts

The field of logistics is the nations

second largest employer (#1: healthcare)

Almost $1 trillion was spent on logisticsin the U.S. in 2003 (about 10% of GDP)

Transportation accounts for $571 billion

Logistics costs represent 5 - 40% of thetotal (landed) cost of typical products


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Logistics is not new!

It is part of everyday life

Personal vs. Business vs. Military applications

Its focus has shifted

(from cost reduction to competitive services)

Being good at it is new (competitive advantage)

Implications:

The need for expertise

Solid prospects for career advancement


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Logistics in the Modern Environment

Examples of the new emphasis on logistics:

Electronic commerce/Virtual storefronts

There is no such thing as virtual logistics!

Lean manufacturing systems Greater reliance on perfect, JIT logistics

performance

Product attributes can be easily duplicated

The service component of product offerings(logistics) is difficult to duplicate

Excellent logistics execution can lend significantlyto customer loyalty


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Supply Chain Management

Supply Chain Management: the integration ofkey business processes from end user

through original suppliers that providesproducts, services, and information that addvalue for customers and other stakeholders.

-- The Global Supply Chain Forum, OSU


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SCM Processes

Customer

SupplyCh

ainBusinessProcesses

Tier 1Supplier

Tier 2Supplier

Information Flow

ConsumerLogisticsPurchasing Marketing & Sales

R&D

PRODUCT FLOWProduction Finance

RETURNS MANAGEMENT

PRODUCT DEVELOPMENT AND COMMERCIALIZATION

SUPPLIER RELATIONSHP MANAGEMENT

MANUFACTURING FLOW MANAGEMENT

ORDER FULFILLMENT

DEMAND MANAGEMENT

CUSTOMER SERVICE MANAGEMENT

CUSTOMER RELATIONSHIP MANAGEMENT

Source: Adapted from Keely L. Croxton, Sebastin J. Garca-Dastugue, Douglas M. Lambert and Dale S. Rogers, "Supply Chain Management Processes,The International Journal of Lo istics Mana ement Vol. 12 No. 2 2001 . 14.


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Supply Chain Network Structure

Members of the Focal Companys Supply Chain

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2

3

1

2

1

1

n

2

1

3

n

1

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n

2

n

1

2

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Consumers/End-customers

n

InitialSuppliers

Focal Company

Tier 1Customers

Tier 2Customers

Tier 3 toConsumers/End-Customers

Tier 2Suppliers

Tier 1Suppliers

Tier 3 toInitialsuppliers

n

1

n


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Motivation forSupply Chain Management

Realization that systems concept applies tomultiple-organization channels (as well as withinthe firm)

Movement toward partnering with choicesuppliers and customers

This is the way business will dominantly beconducted in the future

Supply chain competition, perhaps?

Firms are seeking to partner with other supply chainentities now before competitor approaches


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The Elevating Status of Logistics andSCM Professionals

Logistics has become a strategic weapon

No longer viewed as a necessary cost of doingbusiness

Logistics professionals are gainingunprecedented stature in their organizations

No longer uncommon for a logistician tobecome chief executive particularly by wayof leadership in supply chain management


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Supply Chain Vice President - Worldwide

The Company

The world's fourth largest company, well respected in its industry. A Brand name.

Revenues under $5 billion and extremely successful.

Increasing the number of OEM agreements, outsourcing initiatives and more direct shipments.

Needs to optimize their global transportation network.

Intensifying exports which requires tight control of US export regulations. The Supply Chain Management Group focuses on the strategic aspects of global supply chain.

The operation responsibility lies within many Business Units and other Countries.

The Responsibilities/Requirements - Self Analysis Profile

These are the areas in which the company requires experience and proven success. How do you rate yourself in each?Please complete the Self Analysis Profile below rating yourself on each letter (A-S) from 1 to 5 with 5 being the highest in your skills,strengths and desires. Give a brief description as to why that rating. This will benefit you in order to determine compatibility.

G) Integrating a new Manufacturing application. H) Set up and lead strategic outsourcing organization.

I) Provide a major role in SAP implementation from a supply chain perspective.

J) Build modern supply chain skills in the organization. Work across five independent business units.

Base salary in the high six-figures rangeplus a bonus.

L) 15 years experience in supply chain techniques.

M) Time sensitive to the customer's needs (currently providing above 90% customer service satisfaction).

N) Familiar with modern Supply Chain techniques (rapid replenishment, ship direct, etc.) and Global.

O) MBA or equivalent.

P) Handling both high and low volume products.

Q) Information technology, success in establishing solid procedures which currently does not exist.

R) Politically able to successfully deal within a large, complex worldwide organization.

S) Travel worldwide.

A) Visionary and skilled in working across multiple business units and customer needs (matrix mgmt.).

B) Lead and refine supply chain strategy implementation and "change areas".

C) Proven record of overcoming "turf" issues with a recently merged, multi location company.

D) Building relationships in addition to extensive interpersonal skills (hiring training, team building).


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Other Suppliers: Rival Institutions

Arizona State University

Iowa State University

University of Maryland Michigan State University

Penn State University

University of Tennessee


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Potential Employers

Manufacturing firms

Retailers, Wholesalers & Distributors

Service institutions (restaurants, hospitals, etc.) Passenger & Freight transportation companies

Third-party logistics organizations

Consulting firms Government


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The T&L Major at OSU

M&L 780: Introduction to Logistics

M&L 781: Analysis and Design of Logistics

Systems

M&L 784: Principles of Transportation

Plus two more from a set of approved

electives


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The Transportation and LogisticsAssociation (TLA) at OSU

Meeting information:

Tuesday evenings (resuming next quarter)

Pizza at 7:00pm

Guest speaker at: 7:30pm Location: Schoenbaum Hall (2nd floor)

Need not be a T&L major nor TLA member toattend meetings

TLA website:

www.osutla.com

650 ProfGoldsby Logistics Presentation

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