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AGRIBUSINESS LOGISTICS AGEC 632

AGRIBUSINESS LOGISTICS AGEC 632. INTRODUCTION TO AGRIBUSINESS LOGISTICS AUGUST 29, 2002. BUSINESS LOGISTICS DEFINED.

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AGRIBUSINESS LOGISTICS AGEC 632

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  1. AGRIBUSINESS LOGISTICSAGEC 632 INTRODUCTION TO AGRIBUSINESS LOGISTICS AUGUST 29, 2002

  2. BUSINESS LOGISTICS DEFINED • Business logistics is the process of planning, implementing and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements. • Note: customer requirements = customer service =customer satisfaction

  3. BUSINESS LOGISTICS IS planning, implementing and controlling flow and storage of efficient, cost effective raw materials, in-process inventory finished goods and related information Where? Why? from point of origin to point of consumption to conform to customer requirements

  4. WHY THE RISE OF LOGISTICS? • Centralized production separated from either input supply or consumer demand • Economies of scale and scope • Labor specialization, core competency • Rise of capital and information as inputs • Fixed Cost higher portion of total cost • Reduced cost of logistics functions • Transport • Warehousing • Communications • Information technology • Modern management techniques and optimization

  5. PROGRESSION OF BUSINESS LOGISTICS • Physical distribution 1920s • Functional management 1960s • Added materials management • Internal integration 1980s • Linking inflow of materials and outflow of goods and services—internal flow • External integration 1990s • Supply chain management • E-Commerce at “bricks and mortar firms”

  6. MARKETING Allocate resources to the marketing mix to maximize long-run profitability Four Ps of marketing Product Price Promotion Place LOGISTICS Minimize total cost given customer service objective Concern is the infrastructure and policies to realize the marketing objective Provide value to the customer strategic value to firm MARKETING AND LOGISTICS

  7. THREE CONCEPTS OF LOGISTICS • Total system concept

  8. SUPPLY CHAIN • All activities necessary to provide a product or service to the customer • Supply chain goes beyond the firm to encompass all value-adding activities involved. • One can think of a supply chain as a value chain with all the activities involved--no longer confined to the activities of a firm

  9. Raw Materials Up Stream Information Flow Supply Chain Down Stream Consumer

  10. THREE CONCEPTS OF LOGISTICS • Total system concept • Total cost concept

  11. TOTAL COST APPROACH:total optimization • Transportation cost • Warehousing cost • Order processing cost • Lot quantity cost • Inventory carrying cost Minimizing total cost!

  12. THREE CONCEPTS OF LOGISTICS • Total system concept • Total cost concept • Cost trade-offs

  13. COST TRADE-OFF EXAMPLE

  14. LOGISTICS IN FOOD AND AGRIBUSINESS • Grain merchandising • IP grain handling • Supply chain management in poultry, livestock and meat • IT in food and agriculture • New business arrangements • Consolidation • Strategic alliances • New generation cooperatives • Food safety and Quality

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