Developing Logistics Strategies

1. Developing Logistics Strategies Logistics Network Design (LND)

2. Strategie della logistica In un mondo globalizzato aumentano competizione e opportunità. Restare fermi significa non reagire alla competizione e non cogliere le opportunità. Le principali opportunità sono nuovi fornitori e nuovi mercati. L’obiettivo della strategia è di intervenire sulle variabili del sistema logistico per minimizzare i costi, aumentare le prestazioni e cogliere le opportunità.

3. The Need for Long-Range Planning Logistics systems have become strategically important in today’s highly competitive business environment. In the short run, the logistics managers must work with the current logistics system. However, in the long run, the firms can consider variable many elements, and these can be changed.

4. The importance of LND Considering the rate at which the business environment is changing, logistics systems are under pressure to keep current. In many companies, change has happened recently or is scheduled for the near future. With capital being both scarce and expensive, LND become more important.

5. Drivers in logistics change • Changing Customer Service Requirements • Shifting Locations of Customer and/or Supply Markets • Change in Corporate Ownership • Cost Pressures • Competitive Capabilities • Corporate Organizational Change

6. Customer Service Requirements A customer’s business has changed and the company may need to change some aspect(s) of its service to those customers. Some customers will be looking for new supply chain partners and the company needs to be responsive to these potential new business partners.

7. Shifting Locations Geographic locations of markets often shift over time and the company needs to position its logistics network to be responsive to these shifts. Similarly, global competition often results in geographic shifts for not only new customers, but also new markets. Companies tuned to these changes have a head start in establishing new business.

8. Corporate Ownership Mergers, consolidations and divestiture may mean new logistics and market patterns for the surviving entity. Once again, companies tuned to these changes have a head start in establishing new business.

9. Cost Pressures As competition increases, firms must seek ways to continue growth. One such way is to find areas where the costs of key business processes can be reduced. Often the pressure to reduce costs can be applied to areas for which the logistics department has responsibility. Inventory and transport can be such sources.

10. Competitive Capabilities Obsolete facilities signal the company that a logistics examination is necessary. Companies that have not analyzed the changes in their environment are risking both profitability and solvency. Many firms locate distribution facilities near hub operations of FedEx, UPS, and DHL so that access to time-critical, express transport services is facilitated.

11. Corporate Organizational Change Downsizing and re-engineering cause the firm to reexamine its logistics division for potential savings. Many logistics facilities have faced various levels of change because of re-engineering efforts in the organization. Logistics functions can be provided by third party vendors (3PLs) where the firm cannot accommodate the necessary changes.

12. Le principali variabili del LND • I fornitori (numero, prodotti e localizzazione) • Il ciclo di produzione (acquisti, dimensione lotti) • La delocalizzazione • le modalità di produzione (logistica push e pull, postponement e Built to Order) • I magazzini (numero, dimensione e posizione) • I centri di distribuzione (numero, dimensione e localizzazione) • I trasporti (modi, dimensione carico, tempi e frequenza) • Le applicazioni di ICT • La terziarizzazione (outsourcing) • La collaborazione lungo la supply chain e tra produttori

13. AM AM è un’azienda manifatturiera che produce 2 prodotti finiti A e B e ha 3 magazzini : • il magazzino M1 contiene le forniture (materie prime e componenti); • il magazzino M2 contiene il prodotto intermedio semilavorato C della linea di produzione 1; • il magazzino M3 contiene i prodotti A e B provenienti dalla linea a e dalla linea b.

14. Mercati e clienti di AM AM ha 3 aree di mercato con 3 depositi dei prodotti A e B. I depositi ricevono dai clienti di ciascuna area ordinativi dei prodotti A e dei prodotti B. Per rifornire i 3 depositi l’azienda utilizza un trasporto multimodale strada – ferrovia – strada. I clienti sono riforniti dai depositi con percorsi diretti di veicoli stradali.

15. Fornitori di AM inbound logistics F Azienda AM F M1 M2 M3 F Linea di produzione Percorso e direzione Fornitore Magazzino F M

16. C CD1 C AM T CD2 T C CD3 C Strada Ferrovia Centro Distribuzione Terminale Cliente CD C T C Flussi e centri di distribuzione outbound logistics

17. Analisi per il cambiamento strategico • SWOT • Lead time LT vs Desired Delivery Time DDT • Costi, tempi e regolarità della supply chain • Costi del magazzino vs costi del trasporto • Sistema informativo • Costi propri e costi dell’outsourcing • Accuratezza delle previsioni • Variabilità della domanda e dell’offerta • Reverse logistics • Livello di servizio

18. SWOT Analysis Strengths Weaknesses Opportunities Threats

19. The purpose of SWOT Analysis It is an easy-to-use tool for developing an overview of a company’s strategic situation. It forms a basis for matching your company’s strategy to its situation. It provides the “raw material” to do more extensive internal and external analysis.

20. Strengths A strength is something a company is good at doing or a characteristic that gives it an important capability. Possible Strengths: • Name recognition • Proprietary technology • Cost advantages • Skilled employees • Loyal Customers

21. Weaknesses A weakness is something a company lacks or does poorly (in comparison to others) or a condition that places it at a disadvantage. Possible Weaknesses: • Poor market image • Obsolete facilities • Internal operating problems • Poor marketing skills

22. Internal analysis Strengths and Weaknesses form a basis for the internal analysis. By examining strengths, you can discover untapped potential or identify distinct competencies that helped you succeed in the past. By examining weaknesses, you can identify gaps in performance, vulnerabilities, and erroneous assumptions about existing strategies.

23. Opportunities An opportunity is a chance for firm growth or progress due to a favorable juncture of circumstances in the business environment. Possible Opportunities: • Emerging customer needs • Quality Improvements • Expanding global markets

24. Threats A threat is a factor in your company’s external environment that poses a danger to its well-being. Possible Threats: • New entry by competitors • Changing/shifting demand • Emergence of cheaper technologies • Regulatory requirements

25. External analysis Opportunities and Threats form a basis for the external analysis By examining opportunities, you can discover untapped markets, and new products or technologies, or identify potential avenues for diversification. By examining threats, you can identify unfavorable market shifts or changes in technology, and create a defensive posture aimed at preserving your competitive position.

26. The SWOT analysis diagram

27. Key strengths/weakness questions

28. Key opportunities/threats questions • THREATS • Are weakness likely to make us critical vulnerable? • What external roadblock prevents progress toward our goals • Are economic conditions affecting our financial viability? • Competition is growing? • Product recalls is a growing?

29. Ex: Nanning Logistics Base The plan is to build a Free Trade Area (FTA) by 2015 which will be the third largest in the world. Trade is growing at an annual rate of 20% between China and the ASEAN 9% of China’s trade. Logistics parks and zones are popping up all over China and competition among local governments is intense. In general there appears to be a lack of coordinated planning and duplication of efforts between zones. Many argue that Nanning has little potential due to the relatively weak economic status of the region. Build it and they will come approach will work for Nanning? What are the key factors in support of locating a distribution hub in Nanning?

30. Strengths Location advantages: ASEAN, western China, distribution for south and west including rail, water, roads. Excellent transportation infrastructure. Significant land resources. Industrial development zones: Including sectors such as building materials, machinery, pharmaceuticals, etc. Basic logistics synergies have already been formed: Steel processing logistics center, pharmaceuticals distribution center, and other processing and distribution areas currently exist. Favorable government policies for logistics and manufacturing activities.

31. Weaknesses Positioned with less developed countries: Long distance from the economic power centers of China. Logistics market not developed. Far distance from rail: 8 km to the Yongdong Station and 20 km to the Western Rail Station. Protected farm land limits logistics infrastructure development. Lack of complete infrastructure: Construction has only just begun and transportation planning is yet to be clearly defined.

32. Opportunities National Development of Western China: Nanning is one of the three cities placed as priority, the others being Guiyang and Kunming. Favorable development policies, including the logistics industry development. Establishment of China-ASEAN Free Trade Zone: Nanning is strategically positioned as an axis for ASEAN. Pearl River Delta Regional Cooperative Development: Nanning is at the axis of the economically developed Hong Kong, Macao and Pearl River Delta. Economic growth in Nanning: Service sector is particularly strong, including transportation and warehousing. Development planning in Nanning city progressing.

33. Threats Duplication and redundancy in functions with other logistics zones in China. Lack of logistics talent. Competition from other logistics zones and local governments.

34. Lead Time LT vs Desired Delivery Time DDT LT = t0 + Sti LT ≤ DDT C AM T CD T F t4 t1 t3 t5 t2 t6 t8 t9 t7 LT con prodotto disponibile in M3 DDT1 Benefits of segmenting demand according to LT sensitivity of customers with different DDT DDT2 DDT3

35. M1 M2 M3 t22 t1 t21 t23 t24 t25 t3 DDT Posizione del DDT nella supply chain interna AM

36. F Azienda AM F M1 M2 M3 F Terziarizzazione di M1 • Il magazzino M1 viene dato in gestione ai fornitori. • Il sistema informativo consente la visibilità della supply chain di AM ai fornitori.

37. Eliminazione di M1 F Azienda AM F M2 M3 F • Il magazzino rimonta dai fornitori. • I fornitori riforniscono direttamente le linee con la tecnica del JIT (just in time). • Il sistema informativo consente la visibilità della supply chain di AM ai fornitori.

38. M2 M2 M3 M3 Eliminazione di M2 F Azienda AM F F AM produce con la tecnica del JIT (Just-in-Time) o della Lean manufacturing.

39. F Azienda AM F M1 M2 F Trasferimento di parte della produzione e eliminazione di M3 AM decide di trasferire la produzione dei prodotti A e B nei centri di distribuzione.

40. Percorso ottimizzato per CD3 C CD1 C AM T CD2 T C C CD3 C C

41. C C AM T CD T C C C Eliminazione dei CD regionali, CD nel terminale e percorso ottimizzato Variante: CD immagazzina il prodotto intermedio C e produce all’ordine i prodotti A e B

42. C C AM T CD T C C C Riduzione dei tempi di trasporto a lunga distanza, eliminazione dei CD regionali, CD nel terminale e percorso ottimizzato

43. C C AM CD C C C Riduzione dei tempi di trasporto della lunga distanza, eliminazione dei CD regionali, localizzazione CD e percorso ottimizzato

44. C C AM C C C Eliminazione dei CD regionali e percorso ottimizzato

45. F C F T T C C F Eliminazione di tutti i magazzini di AM e dei centri di distribuzione

46. Applicazioni dell’ICT Visibilità della supply chain (SCV) è la capacità di seguire parti, componenti o prodotti in transito dal fornitore al cliente e di rendere i dati immediatamente disponibili a tutti gli interessati della supply chain. SCV promuove rapida risposta ai cambiamenti sul lato domanda e offerta. Radio Frequency Identification(RFID) assegna un identificatore a ogni singolo oggetto che apparati a radiofrequenza, in modo simultaneo e senza visibilità, diretta acquisiscono automaticamente. Il Global Positioning System (GPS) è un sistema mondiale di radio-navigazione satellitare sviluppato dal DOD US, utilizzato anche nei servizi civili basati sulla localizzazione. General Packet Radio Service (GPRS) è un sistema basato sulla commutazione di pacchetto tramite onde radio,standard per la trasmissione dati nella rete telefonica cellulare attraverso la commutazione di pacchetto.

47. Radio Frequency Identification (RFID) Overview

48. What is RFID? RFID, is a broad term referring to a great number of technologies that can track assets and capture associated data automatically Similar to an electronic bar code, RFID enables the electronic labeling and identification of objects through wireless radio frequency communications Tags containing a unique identifier are placed on individual parts, bags, paperwork, pallets, or other containers. Readers communicate with the tags through radio frequency (RF) waves. Software applications manage the collection, and communication of the data with the logistics system.

49. RFID consists of 4 major components

50. Radio Frequency Tags Transponder (tag) is programmed with information. Reader has an antenna which sends radio signals to activate tag. Noncontact, non line-of-sight.