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Chapter Fourteen

Chapter Fourteen. Supply Chain and Logistics Management. Unlike real estate, location is becoming progressively less relevant. The three critical factors for the Internet age are logistics, logistics, logistics. - William B. Lipsin, CEO, Ironside Technologies. Objectives.

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Chapter Fourteen

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  1. Chapter Fourteen Supply Chain and Logistics Management

  2. Unlike real estate, location is becoming progressively less relevant. The three critical factors for the Internet age are logistics, logistics, logistics. - William B. Lipsin, CEO, Ironside Technologies

  3. Objectives • Describe key supply chain & logistical issues • Examine tradeoff between customer satisfaction & costs in distribution • Understand a total cost approach to distribution • Examine varied transportation modes • Identity elements of logistics management • Understand pervasive nature of materials management activities

  4. In-process inventory Component parts & Raw material Finished goods Definitions Logistics Supply Chain

  5. Logistics • Manage incoming parts & materials • Monitor stock, materials, inventory • Dispose of waste & by-products • Handle finished goods • Monitor distribution channel

  6. Maximize Customer Service Minimize Costs Physical Distribution Objectives

  7. Competitive Advantage inPhysical Distribution • Reliable/faster delivery • Zero error order processing • Zero damage delivery • Technology based • Automated

  8. Physical Distribution Activities • Inventory management • Order processing • Warehousing and storage • Materials handling • Protective packaging & containerization • Transportation

  9. Handling Costs Shipping Costs Transportation Costs Total Cost: A Systems Approach

  10. @$#*&!*&% Total Cost: A Systems Approach

  11. Improving Physical Distribution Systems • Automation & Robotics • Warehouse consolidation • Process efficiency • Transportation mode • Re-location • Cost shifting

  12. Rail Motor Water Air Pipeline Modes of Transportation

  13. Modes of Transportation • Motor carrier • Medium reliability • Good speed • Good flexibility • Above average damage • Now more competitive and unregulated

  14. Modes of Transportation • Air transport • Expensive • Very fast • Above average reliability • Average flexibility • Average reputation for undamaged goods HUB-AND-SPOKE APPROACH

  15. Modes of Transportation • Water transportation • Low cost • Low reliability • Limited flexibility • Limited damage

  16. Modes of Transportation • Railroads • Medium cost and speed • Low reliability • Many damaged goods • Good Geographic flexibility

  17. Modes of Transportation • Pipeline • Mostly gas and petroleum • Low cost • High reliability • Limited flexibility Texas Kansas

  18. Modes of Transportation • Intermodal transportation • Ship + Truck (fishyback) • Rail + Truck (piggyback) • Air + Truck (birdyback)

  19. Breaking Bulk Storage Warehousing

  20. Warehousing • Inventory Control • Acquisition costs • Holding costs • Out-of-stock losses • Economic Order Quantity (EOQ) • = Forecasting! Balancing act

  21. Order processing • Packaging Physical Distribution:Other Components • Materials handling

  22. Vendor Analysis 1. Delivery time 2. Delivery reliability 3. Order accuracy 4. Databased process 5. Damage history 6. Ease of doing business

  23. Review • Describe key supply chain & logistical issues • Examine tradeoff between customer satisfaction & costs in distribution • Understand a total cost approach to distribution • Examine varied transportation modes • Identity elements of logistics management • Understand pervasive nature of materials management activities

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