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Business Logistics 101

Business Logistics 101. Martin Dresner University of Maryland Robert H. Smith School of Business. Agenda. Logistics Defined New Logistics Strategies Final Remarks. Pipeline View. Transportation. Transportation. Transportation. Suppliers. Manufacturer Distributor Retailer. Consumers.

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Business Logistics 101

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  1. Business Logistics 101 Martin Dresner University of Maryland Robert H. Smith School of Business

  2. Agenda • Logistics Defined • New Logistics Strategies • Final Remarks

  3. Pipeline View Transportation Transportation Transportation Suppliers Manufacturer Distributor Retailer Consumers Warehousing Warehousing

  4. Logistics Activities • Transportation • Warehousing • Inventory Management • Materials Handling • Purchasing • Order Processing

  5. New Paradigm Information Technology Third Party Provider Manufacturer Suppliers Distributor Retailer Consumers Carriers Carriers Carriers

  6. “Alphabet Soup” of Logistics Strategies • JIT - Just-In-Time • ER - Efficient Replenishment • CR - Continuous Replenishment • ECR - Efficient Consumer Response • VMI - Vendor Managed Inventory • SBT - Scan-Based Trading

  7. Just-In-Time Purchasing • Frequent shipments of small quantities • Short time windows for deliveries • Increased traffic on highways and in metropolitan areas • Partially offset by suppliers locating near customers

  8. Vendor Managed Inventory • Vendor determines shipment amounts and timing based on customer needs • Requires tie-in between vendor and customer’s inventory system • Vendor may still deliver on a JIT basis with time windows set by buyer • Traffic impact remains

  9. Scan-Based Trading • Suppliers are paid by retailers when consumer purchases are scanned at check-out • Requires item information (e.g., price paid by retailer) to be included in retailer’s cash register information system • Supplier and retailer need to closely link information systems (e.g., same item codes)

  10. Scan-Based Trading • Big advantage is that retailer no longer needs to check in items when they are delivered by suppliers • Supplier can set delivery times during off-peak hours • Supplier can deliver JIT but with a reduced impact on roadways

  11. Final Remarks • Firms are using information technology to change the way they conduct their logistics operations • New logistics strategies can have dramatic impacts on transportation infrastructure • The better these strategies are understood, the better able we will be to make the appropriate infrastructure decisions

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