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Slide 16-1

Slide 16-1. C HAPTER. INTEGRATING SUPPLY CHAIN AND LOGISTICS MANAGEMENT. Slide 16-2. AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:. Recognize the relationship between marketing channels, logistics, and supply chain management.

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  1. Slide 16-1

  2. CHAPTER INTEGRATING SUPPLY CHAIN AND LOGISTICS MANAGEMENT Slide 16-2

  3. AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: • Recognize the relationship between marketing channels, logistics, and supply chain management. • Describe how a company’s supply chain aligns with its marketing strategy. Slide 16-3

  4. AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: • Identify the major logistics cost and customer service factors that managers consider when making supply chain decisions. • Describe the key logistics functions in a supply chain. Slide 16-4

  5. SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT • Relating Marketing Channels, Logistics, and Supply Chain Management • Logistics • Logistics Management • Supply Chains versus Marketing Channels • Supply Chain • Supply Chain Management Slide 16-7

  6. FIGURE 16-1 Relating logistics management and supply chain management to supplier networks and marketing channels Slide 16-8

  7. SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT • Sourcing, Assembling, and Delivering a New Car: The Automotive Supply Chain Slide 16-9

  8. FIGURE 16-2 The automotive supply chain Slide 16-10

  9. FIGURE 16-APaint industry supply chain Slide 16-11

  10. SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT • Supply Chain Management and Marketing Strategy • Aligning a Supply Chain w/ Marketing Strategy • Understand the Customer • Understand the Supply Chain • Harmonize the Supply Chain with the Marketing Strategy Slide 16-13

  11. Concept Check 1. What is the principal difference between a marketing channel and a supply chain? A: A supply chain also includes suppliers who provide raw materials to a manufacturer as well as the wholesalers and retailers—the marketing channel—who deliver the finished goods to ultimate consumers. Slide 16-16

  12. Concept Check 2. The choice of a supply chain involves what three steps? A: (1) Understand the customer.(2) Understand the supply chain.(3) Harmonize the supply chain with the marketing strategy. Slide 16-17

  13. OBJECTIVE OF INFORMATIONAND LOGISTICS MANAGEMENTIN A SUPPLY CHAIN • Information’s Role in Supply Chain Responsiveness and Efficiency • Electronic Data Interchanges (EDIs) • Extranet Slide 16-18

  14. OBJECTIVE OF INFORMATIONAND LOGISTICS MANAGEMENTIN A SUPPLY CHAIN • Total Logistics Cost Concept • Customer Service Concept • Time • Lead Time (Order Cycle or Replenishment Time) • Quick Response or • Efficient Consumer Response Slide 16-21

  15. FIGURE 16-3 How total logistics cost varies with numbers of warehouses used Slide 16-22

  16. FIGURE 16-4 Supply chain managers balance total logistics cost factors against customer service factors Slide 16-23

  17. OBJECTIVE OF INFORMATIONAND LOGISTICS MANAGEMENTIN A SUPPLY CHAIN • Customer Service Concept • Dependability • Communication • Convenience • Customer Service Standards Slide 16-25

  18. Concept Check 1. The objective of information and logistics management in a supply chain is to_________. minimize logistics costs while deliveringmaximum customer service Slide 16-26

  19. Concept Check 2. How does consumer demand information increase supply chain responsiveness and efficiency? A: Demand information improves supply chain responsiveness because customers will find the products when and where they want them. Demand information improves supply chain efficiency because firms are better able to forecast customer needs and to produce, transport, and store the required amount of inventory. Slide 16-27

  20. Concept Check 3. What is the relationship between the number of warehouses a company operates, its inventory costs, and its transportation costs? A: As the number of warehouses increases, inventory costs rise and transportation costs fall. Because more inventory is warehoused,it is transported in larger volumes closer to customers. The net effect is to minimize the total costs of logistics. Slide 16-28

  21. KEY LOGISTICS FUNCTIONS INA SUPPLY CHAIN • Third-Party Logistics Providers • Transportation Service Criteria • Cost • Dependability • Time • Accessibility • Capability • Frequency Slide 16-29

  22. FIGURE 16-5 Advantages and disadvantages of five modes of transportation Slide 16-30

  23. KEY LOGISTICS FUNCTIONS INA SUPPLY CHAIN • Third-Party Logistics Providers • Transportation • Railroads • Unit Train • Intermodal Transportation • Piggyback or Trailer on Flat-Car (TOFC) • Containers Slide 16-31

  24. KEY LOGISTICS FUNCTIONS INA SUPPLY CHAIN • Transportation • Motor Carriers • Air Carriers and Express Companies • Freight Forwarders Slide 16-35

  25. KEY LOGISTICS FUNCTIONS INA SUPPLY CHAIN • Warehousing and Materials Handling • Storage Warehouses • Distribution Centers • Materials Handling • Order Processing • Back Order Slide 16-36

  26. KEY LOGISTICS FUNCTIONS INA SUPPLY CHAIN • Inventory Management • Reasons for Inventory • Inventory Costs • Capital Costs • Storage Costs • Risk Costs • Inventory Service Costs Slide 16-38

  27. KEY LOGISTICS FUNCTIONS INA SUPPLY CHAIN • Inventory Management • Supply Chain Inventory Strategies • Just-In-Time (JIT) Concept • Vendor-Managed Inventory (VMI) Slide 16-39

  28. CLOSING THE LOOP:REVERSE LOGISTICS • Reverse Logistics Slide 16-41

  29. Concept Check 1. What are the basic trade-offs between the five modes of transportation? A: Each mode of transportation can be evaluated against six service criteria: cost, time, capability, dependability, accessibility, and frequency. Slide 16-43

  30. Concept Check 2. What types of inventory should use storage warehouses and which type should use distribution centers? A: Storage warehouses are best suited for goods that will not be needed for substantial periods of time. Distribution centers are used if inventory needs to be in decentralized locations to facilitate sorting or consolidating products from different plants or suppliers, if different ingredients needs to be blended, or if labeling and repackaging need to be done before the goods are shipped to customers. Slide 16-44

  31. Concept Check 3. What are the strengths and weaknesses of a just-in-time system? A: A JIT system saves money on inventory if demand forecasting is reliable. However, it is not suitable for inventories that are to be stored over significant periods of time. Slide 16-45

  32. TRACKING SUPPLYCHAIN TRENDS GOING ONLINE Slide 16-46

  33. Going Online • 1.Visit the supplychainbrain.com website. Choose a topic (such as vendor-managed inventory) or a company (like IBM or Wal-Mart) featured in the chapter and updatethe text. Slide 16-47

  34. Going Online • 2.Go to the “Case Studies” link and summarize a specific company’s application of one or more concepts described in the chapter. Slide 16-48

  35. DISTRIBUTING IN CHINA: NOT DOUBLE THE FUN! SUPPLEMENTALLECTURE NOTE 16-1 Slide 16-49

  36. VENDOR-MANAGED INVENTORY ON AGLOBAL SCALE: MEN’S SHIRTS AT JCPENNEY SUPPLEMENTALLECTURE NOTE 16-2 Slide 16-50

  37. AMAZON: DELIVERINGTHE GOODS…MILLIONSOF TIMES A DAY VIDEO CASE 16 Slide 16-51

  38. VIDEO CASE 16 Amazon • 1.How do Amazon.com’s logistics and supply chain management activities help the company create value for its customers? Slide 16-53

  39. VIDEO CASE 16 Amazon • 2.What systems did Amazon develop to improve the flow of products from suppliers to Amazon distribution centers? What systems improved the flow of orders from the distribution centers to customers? Slide 16-54

  40. VIDEO CASE 16 Amazon • 3.Why will logistics and supply chain management play an important role in the future success of Amazon.com? Slide 16-55

  41. DELL INC.: A LEADER IN SUPPLY CHAIN MANAGEMENT APPENDIX D CASE D-16 Slide 16-56

  42. APPENDIX D CASE D-16 Dell • 1.Explain how Dell’s approach to supply chain management satisfies the logistical objectives of minimizing logistics costs while maximizing customer service. Slide 16-57

  43. APPENDIX D CASE D-16 Dell • 2.What are the supply chain management implications for Dell’s competitors that primarily utilize an indirect channel strategy? What supply chain and marketing recommendations do you suggest for Dell given the competitive environment? Slide 16-58

  44. APPENDIX D CASE D-16 Dell • 3.How does supply chain management relate to the marketing concept at Dell? Slide 16-59

  45. Logistics Logistics consists of those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost. Slide 16-60

  46. Logistics Management Logistics management is the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements. Slide 16-61

  47. Supply Chain A supply chain is a sequence of firms that perform activities required to create and deliver a good or service to consumers or industrial users. Slide 16-62

  48. Supply Chain Management Supply chain management is the integration and organization of information and logistic activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to consumers. Slide 16-63

  49. Electronic Data Interchanges Electronic data interchanges (EDIs) combine proprietary computer and telecommunication technologies to exchange electronic invoices, payments, and information among suppliers, manufacturers, and retailers. Slide 16-64

  50. Total Logistics Cost Total logistics cost consists of expenses associated with transportation, materials handling and warehousing, inventory, stockouts (being out of inventory), order processing, and return goods handling. Slide 16-65

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