University Of Finance & Administration LOGISTICS SYSTEMS [ NA_LS ]

1. University Of Finance & Administration LOGISTICS SYSTEMS [NA_LS] Jiri Amler, M.A. 19447@mail.vsfs.cz

2. LECTURE FRAMEWORK ENGLISH programme (winter term 2013) • Transport logistics – activities related to tangible and intangible operations • Logistic technologies, its selection and exploitability • Supplying • Warehousing • Related information systems • Lean Management principles in logistics Within consultation: practical discussions on topical economical issues INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

3. LITERATURE Alan Rushton, Phil Croucher, Peter Baker The Handbook of Logistics and Distribution Kogan Page Ltd., London 2010 ISBN: 0-74974669-2 Andre Langevin, Diane Riopel Logistics System: Design and Optimization Springer Science+Business Media, New York, 2010 ISBN: 0-38724971-0 Martin Christopher Logistics and Suply Chain Management 3-rd Edition, Pearson education Ltd., London, 2005 ISBN-13: 978-0-273-68176-2 3. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

4. Corporate Logistics Systemic Division: Manufacturing logistics – inbound, procurement, storing, component flow, warehousing, distribution Transport logistics – tangible and intangible operation 4. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

5. Transportation as a Logistics Process Focus: fulfillment of customer´s needs and expectations Requirements: • highest possible flexibility • preference on economical performance Concerns: the above mentioned concerns both, goods and services, especially the transport services 5. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

6. Content of Transport Logistics Content of Transport Logistics is: an application of logistic attitude towards organization and management of the supply (goods or services) movements through the transport network from the sender to the final consumer 6. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

7. Meaning of Transport Logistics • Transport logistics is the second most important part of the corporate logistics, after the manufacturing logistics • Specific segment of the transport logistics is a freight forwarding logistics 7. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

8. Complex Logistic Process in Transport • Activities related to the tangible (material) operations - transportation, storing, selection/sorting, dispatch, consolidation and deconsolidation of loads • Activities related to intangible(non-material) operations – freight forwarding, trading, financial, customs clearance and insurance • Services related to previous – supportive, informational, consulting, social 8. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

9. Requirements to Freight Transporters Logistics put narrow-specified and relatively heavy requirement on transporters: • Capacity flexibility and specialization in services provided • Combination capability among various transport systems • Speed and flexibility of services • Multi-purpose utilization of accessible transport systems and devices 9. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

10. Logistics Implementation • Logistics seem to be the last opportunity for company to acquire the competitive advantage and increase the effectivity. • The competitive advantage could be acquired only through beating the European standard. COST / SERVICE LEADER COST / PRODUCTIVITY ADVANTAGE capacity utilization asset turn low inventory low wastage VALUE ADVANTAGE tailored service distribition chanel strtg reliability responsiveness information flexilbility 10. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

11. Ten Commandments • Focus on customers • Integrate log. system • Tight log. with strategy • Make log. chain flexible • Create information system • Make strategic alliances • Quantificate, measure, count • Use log. controlling • Follow the financial relations • Educate the staff 11. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

12. Tangible Logistic Operations • The goods and materials are transported according to customized logistics technologies • Logistic chains often utilize principles of manipulability (possibility to move and stowe the goods), using always the same type of technical tools. Criteria: amount of supply, volume/weight, size of load unit, regularity of flow, season, demand, product life cycle 12. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

13. Selection of Transport/Storage Tools • The key issue - thorough and relevant choice of manipulation, transport and storage equipment • All mentioned equipment shall be in concert with particular types of loading and manipulation units for operations being carried out throughout the logistic chain. Examples: palets, cage-rollers, big-bags, IBC-containers. 13. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

14. Logistics Technologies Complex: • Just-in-time (vs. Just-in-case) • Hub&Spoke • Kanban • House-to-house • Quick Response (QR) • Efficient Customer Response (EQR) • Intermodal (combined) transport • + classical (group), telematic (EDI, RFID) and virtual (simulation, visualization) 14. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

15. Just-in-Time • Objective: zero inventory, ultimate quality • Way: ultimate cooperation and coordination between supplier and customer • Inventory become obsolete (redundant) Characteristics: • Quality control – TQM, ISO • Regular reliable delivery • Nearshoring • Cooperation on methods of value stream mapping analysis 15. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

16. JIT – Customer Value • Lower purchase price • Elimination of fixed costs in storage, warehouse staff, energy consumption • Lower capital allocation in inventory • Savings from significantly faster reaction of management to eventual drawbacks or errors 16. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

17. JIT – Main Objectives • Compression of non-value adding operations (Ishikawa) • Effectivity and efficiency rise • Decrease of total cost • Shortening of customer´s order cycle time 17. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

18. Customer´s Order Cycle • Time from receipt of order to physical supply dispatch • Consists of time for procurement, production and distribution Procurement Production Distribution Logistic Lead Time Customers order cycle time Lead-Time Gap Order fulfilment 18. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

19. Total Costs & EOQ Total cost = purchase costs + ordering costs + holding costs Q= order quantity Q´= optimal order quantity D= annual demand quantity of the product P= purchase cost per unit S= fixed cost per order (not per unit, typically cost of ordering and shipping and handling. This is not the cost of goods) H= annual holding cost per unit (also carriing or storage cost) Economic Order Quantity 19. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

20. Hub & Spoke Regional economic activities in region are center-bound, where the small loads are consolidated or re-consolidated The delivery of smaller loads is done by the flexible road transport within the inner attraction radius while The key transport between regional hubs is carried out by capacity transport. • Good influence on demography, environmentally positive • Key usage in courrier services 20. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

21. Kanban • Developed by Toyota Motor Co. 1950-1960s • The method of supplying parts and materials into the production in the moment of neccessity – supply timing • KANBAN = card, tag. The production line is devided into separate work places with strictly defined operations – selling / buying points • Mutual sales of tags – the seller is a buyer at the same time • „Sale“ of defined material or semiproducts neccesary for further operation • Byuer sends tag-order to his supplier • Supplier sends required volume of goods in full quality with tag-delivery note • Both are not allowed to create stock, time and quality pressure eliminates failure and enables continual control 21. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

22. Kanban • Kanban system is suitable for repeating and high-volume production of the same products with long life cycle • The method is based on: • design of self-managed regulatory units and sectors • the strategic and operation management is still allocated to the HQ 22. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

23. House to House • The oldest sytem, based on providing the full transport services on one single transport document • In CZ – most often by road or rail, or eventually combination of both • Today, few company have own sidetrack (rail), therefore the load is delivered by combination of vehicles 23. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

24. Quick Response • Used in retail sector for store replenishment • The main subjects – producer and retailer (short chain) • Utilization of combination of EDI and bar-code within all chain links Benefit: • inventory reduction • avioding lack of availability of goods • manipulation operation reduction • lead-time 24-48 hours 24. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

25. Efficient Customer Response • Upgrade of QR, designed for food&drink retail • The main subjects – producer with his supplier and wholesaler & retailer (long chain) • Utilization of full automated product identification, of EDI and bar-code within all chain links + electronic monetary exchange and real-time banking data Benefit: • inventory reduction • avioding lack of availability of goods • manipulation operation reduction • lead-time 24-48 hours 25. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

26. Efficient Customer Response Supportive strategies: • Supply chain management strtg – to stabilize flows of goods with minimum inventory volumes • Product groupage strtg – to stabilize adequate logistic infrastructure and process management • New product introductionstrtg • Sale promotion actions – done exactly where they can target and hit the max. possible auditory 26. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

27. Intermodal Transport Main carriage : • rail • inland waterway • sea (reefer) • local pickup and delivery by road • air cargo – occassional usage due to cost Main device: • containers or interchangable carriage units (trailer) • goods is being transported in one unit while means of transport change in sequence 27. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

28. Intermodal Transport Loading units : • palets • containers • interchangable trailer • conventional trailer on railway carriage • complete truck on railway carriage • combirail - trailer on rail undercarriage Main benefit: • combination of ways without re-loading the goods • globaly unified and standardized ITU (Intl. transport unit) 28. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

29. Accompanied Intermodal Transport Complete truck on railway carriage: • Ro-La • High investment exposure • Economy on 200 – 400 km route • Low noise and emission exposure • Driver rests 29. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

30. Non-Accompanied Intermodal Transport Containers and interchangable trailers: • Easy re-load and trans-shippment • Benefit – broad network of terminals and depots • Economy on > 500 km route, night mode • Any carriage is aplicable • Con: high infrastructure, hardware and organization investments 30. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

31. Warehousing • Important part of logistics system providing storage of the goods in place of origin • Abridging the space between place of origin and place of consumption • Cross over space and time 31. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

32. Functions of Warehousing • Movement of goods/materials • Receiving • Transfer / stowage • Reserve storage • Order picking • Sortation • Collation and added value services • Marshalling and dispatch 32. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

33. Functions of Warehousing 2. Storage of goods • Time definite – reserve storage for replenishment • Mid-term – bumper reserves • peak-season goods • product modification • speculation • specific business terms 33. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

34. Functions of Warehousing 3. Transfer of information • Real-time analysis of volumes • real inventory • in-transit status of goods • inventory allocation • inbound / outbound orders • customer orders • storage size 34. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

35. Electronic Data Interchange • Transfer of related documents (order advise, packing list) between the IT systems of concerned companies • Replacement of mail, fax etc. • Condition: standardized form of docs • Compatibility of IT networks 35. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

36. Intangible Logistics Operations • Freight forwarding (spedition) – core of logistics • Integrating element among supplier, consumer and transport carrier (shipper) • Process of transport operation organization, management and coordination • Ensuring the goods will be delivered OTIF 36. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

37. Spedition • Ruled by legal norms – Commercial Codex, Civil Codex, Trade Licence and Road Traffic Act • International legal system and Interest associations • Basic binding document – forwarding contract 37. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

38. Thank you for your attention LOGISTICS SYSTEMS[NA_LS]