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) • Integrated logistics • Logistics chains in manufacturing • Suply chain, decoupling points • Logistics in new product development • Production systems and their support • Logistics in innovation, Gemba Kaizen 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. INTEGRATED LOGISTICS • Internal integration – integration of procurement and supply with the production sequences and final product distribution • External integration – subsequent linkage with suppliers and distribution network up to the final customer =Horizontal dimension of integration 4. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS] INTERNATIONAL

5. INTEGRATED LOGISTICS • Integration and logistic harmonization of production with development (R&D), strategy making and marketing • Interlinkage of enterprize functions from operational to strategic level =Vertical dimension of integration Successfull accord of both levels with effect of time, quality and cost improvement = World Class Logistics 5. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS] INTERNATIONAL

6. INTEGRATED LOGISTICS CHAIN Main objective: • ultimate utilization of synergic effects that could be possibly acquired within integrated management • leads to even more linked vertical and horizontal integration of material flow management 6. INTERNATIONAL BUSINESS [B_IB] LOGIOSTICS SYSTEMS [NA_LS]

7. INTEGRATED LOGISTICS CHAIN • = Development & evolutional stages of integrated logistics Traditional with discontinual flow – „push“ Conventional with continual flow – „pull“ Conventional with synchronised flow – „balanced“ 7. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

8. INTEGRATED LOGISTICS - PUSH • Traditional principle with discontinual flows of material – PUSH principle – the demand is satisfied from the FG warehouse, through the serial flow of information • Large order quantity of RM and materials – savings through price volatility or quantity rabate • Large lots production • The sending party provides the quantity it made in time that suites itself =Pushes the whole lot 8. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS] INTERNATIONAL

9. INTEGRATED LOGISTICS - PULL • Principle with continual flows of material – PULL principle – flexibility is secured by the production itself, through serial flow of information • Lack of FG warehouse, the warehouse just replenishes the immediate demand (JIT or JIC) • The sending party is supplying only after the receiving party indicates its readiness to use the supply =Pulls only the needed quantity Neccessity to insert the consolidation and sortation in order to make transport effective. 9. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS] INTERNATIONAL

10. INTEGRATED LOGISTICS - SYNCRO • Principle enabling the syncronization of flows through external balancing element – balanced – the synchronizing element perceives the real-time information of the material and FG • Simulation methods of prediction • The output of production is managed through the paralel flow of information 10. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS] INTERNATIONAL

11. SUPLY CHAIN MANAGEMENT - definition • What is Suply Chain Management? = integration of corporate value adding processes from end user to the initial supplier • Integrated follow-up of material flows, logistics and acquisition information, financial means and legal rights in entire adding value chain • Search for those relationships in horizontal dimension that provide highest possible values with lowest possible costs 11. MEZINÁRODNÍ OBCHODNÍ VZTAHY [MOV] LOGISTICS SYSTEMS [NA_LS]

12. Logistics – strategic management of integrated chainsSCM – process management of logistics and value-creating chains SUPPLY CHAIN MNGMNT – interfunctional process SC configuration – strtg planning, optimization SC planning – supl.mngm, prod. plan, dispon. SC operating – procuremnt, prod. transp. mngm 12. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

13. SCM – „Planning Rope“ • Chain effects may cause excesses – long lead time require sales predictions – more frequent predictions drag time and become less accurate – appearance of chaotic occurances = longer lead time • Solution – shorten time between demand indication and order fulfillment – speed-up of all parts of chain • Or speed-up of turn-over, assuming the faster payments, improved cash flow 13. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

14. SCM – „Bull Whip“ • Enforcement effect – sales increase by 10% = production capacity increase by 40% and subsequent 30% reduction = mid-term volatility • Reason? chain delay in information provision on each echelon - retail, wholesale, distribution center etc. • Seasonal sales disproportions • Solution – speed-up of all informational flows, max simplification, max reduction of assets and reserves, complex management and goal orientation 14. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

15. SCM – Support Systems • Material requirements planning (MRP) and Manufacturing resources planning (MRPII) - push principle • MRP – master production schedule, bill of reqirements, opening stock • MRPII – extention by maintanance, cost account, stock and sales orders, procurement and personal level • DRP and DRPII – analogic counterpart on distribution part • ERP – Enterprise Resources Planning – SAP R/3 15. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

16. SCM – Software requirements • SCM system – mid / long term planning, decision simulation, on horizontal structure • Supply Chain Collaboration – full enclosure of supplier and sub-suppliers processes, from predictions to delivery • Suply Chain Event Management – management of unpredictable factors, based on tracing and tracking, databasis of price change factors etc. virtual stock creation • In general – SW with realistic view in real-time 16. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

17. DECOUPLING POINTS • Ideal: logistics chain managed as one unit • More often: chain is managed acc. to specifics and rules of particular sectors • Usual division to inbound (procurement and production) and outbound (distribution) sectors • Decoupling point is located on the frontier of the two sectors 17. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

18. DECOUPLING POINTS • Division: according to the type of management – ruled by the orders or by the plans and predictions • Place where the inventory necessary for order fulfilment is located – keypoint of flexibilty and customization of service • Movement of the point changes the immediate risk • Place where independent demand turns dependent 18. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

19. DECOUPLING POINTS - Location • Distribution center, FG stock: on-stock production • Production, assembly stock: individualon-demand production or assembly • Supplier echelon: individualon-demand procurement and production • General – the stronger customer pressure and the shorter product life cycle, the deeper into chain decoupling point moves – the phases of „question marks, stars, milking cows and barking dogs“ 19. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

20. MAKE or BUY STRATEGY • Decision whether fulfil order from own capacity or using external supplier • Make: price is higher than costs, lack of transport feature, low risk in delivery, spare capacity, better quality, lack of offer • Buy: price is lower than costs, exhausted capacity, lack of rights and patents, lack of know-how, own production risks 20. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

21. PURCHASING / PROCUREMENT • Logistics function are integrated in purchasing market survey, dealing with suppliers and tangible operations • Creation of strategic alliance with supplier – long term stable relation, pro-active orientation of both, integration of key functions, clear price framework, mutual profit efficiency • Method: Collaborative planning, forecastind and replenishment (CPFR) 21. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

22. SUPPLIER TYPOLOGY • Rescuer • Solver • The one that knows better • Copycat • Statist • Allrounder • Diver • Lean 22. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

23. PURCHASE STRATEGY • Matching the company power with the supplier power (market strenght) • acc. to material classification (strategic, shortcoming, substitutional, conventional) • acc. to market analysis • acc. to portfolio matrix – active game, alernative search, consideration 23. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

24. PURCHASE STRATEGY continue • Synchronizing – pure direct JIT • Emancipative – JIT carried out through warehouse or DC on direct call • Consignment stock - at the buyer´s premises 24. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

25. LOGISTICS AND PRODUCTION Production typology • Continual – bulk producrion of one single or similar product, without stock • Linear – divided on product groups • Custom-made - individual low series 25. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

26. PRODUCTION SYSTEM • Factors determining the typology of units within the production system • arrangement of units • organization of their activity • complexity of the procedures • extent of production • level of mechanization and automation 26. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

27. PRODUCTION SYSTEM LAYOUT • Physical movement of materials is given by technological procedure and layout of particularproduction units • direction of movement • intensity of movement • frequency of movement 27. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

28. SANKEY DIAGRAM Inventory stock Wastes stock Finished goods stock Assembly 1 Assembly4 Assembly 3 Assembly 2 28. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

29. PRODUCTION MODEL • Workplace – cell – basic organizational unit • Production sector – set of cells, producing defined part of final product • Production unit – set of sectors, assembly line Workplace layout • Technological – group – similar technological character of equipment • Subject – concentration of all technologies needed to finish the product 29. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

30. LOGISTICS IN PRODUCT DEVELOPMENT Time compression, system adjustment along with product development • Concurrent Engineering • Sequential Engineering 30. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

31. SEQUENTIAL ENGINEERING • Main focus on individual performance • Each phase is planned and projected separately • Oneway dosage of information – heuristic attitude • Failure visible in phase of prototype • Time consuming preparation 31. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

32. CONCURRENT ENGINEERING • Multilayer paralel arrangement of activities • Overlaping sequences of planning • Multichannel communication • Failure elimination in preparatory phase • Many changes = risk • Time efficiency and time compression 32. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

33. INNOVATION & LOGISTICS • Innovation – any change in existing production system, product itself or equipment • Stages: rationalization, qualitative innovation, technological break-through – 9 grades with variable impact on the nature of product 33. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

34. INNOVATION & NEW PRODUCT • Material – the limiting factor in product development and enhancement • Aprox 100 000 materials of any nature – metals, glass & ceramics, polymers & elastomers, composites • Newly developed or invented material generates new product line almost automatically • Substitution of material in existing product – technological consideration, price, ecology, systemization of choice 34. INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

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