Logistics Management

Introduction to the Course

Jing Yuan
Feb, 2008

Introduce Yourself
Lets me know who you are.
Whats logistics management?
Supply chain management Vs.
logistics management

Outline
Introduce yourself
Who I am
Course introduction
Course description
Learning objectives
Textbooks
Grading policy
Schedules

Outline
Introduce yourself
Who I am
Course introduction
Course description
Learning objectives
Textbooks
Grading policy
Schedule

Course description
An introductory course in the
analysis, design and operation of
logistics and supply chain
Presented through lectures along with
several case studies and experiments
The lectures consist of nine parts

Learning objectives
Knowledge the strategic role of the
supply chain
An understanding of logistic systems
& their management problems
Ability to devise workable solutions in
business situations

Textbooks
Textbook
Harrison, A. and Hoek, R. V. (2006) Logistics
Management, second edition,

References (not required)

Christopher, M. (2006) Logistics and Supply
Chain Management: Creating Value-adding
Network, third edition,

2006

Lecture Organization
Lecturing
Videos
Group exercises
Case discussion
Case study presentations

Grading Policy
Grading
Assignment and Quiz 10%
Midterm

20%

Final Project

70%

Midterm
Case study
Final presentation

Final project
A closed examination held in the last week of term

Schedule
Lectures
14 weeks

Case study presentations

2 weeks

Experiments
2 weeks

Logistics Management

Logistics and supply chain

logistics and Supply chain

Material and information flow

Competing through logistics

Logistics strategy

Case study
Seven-eleven convenience store
Describe the key logistics processes at 7-11.
What differences between the early reform
and the regional distribution center at 7-11.
What do you think are the main logistics
challenges in running the 7-11 operation.

Case study

First stage

No
distribution
center

Second stage

Centralized
distribution

Third stage

Built its own

distribution
center---joint
distribution

Key issues

What is supply chain,

and how is it
structured?

What is the purpose

of a supply chain?

The Supply Chain Concept

Development of the Concept
Total systems cost - remains an important element
of logistics analysis.
Outbound logistics the warehousing and
distribution of finished goods.
Inbound logistics the receiving and warehousing
of raw materials, and their distribution to
manufacturing as they are required.
Value chain analysis integrated logistics activities.

Business Logistics in a Firm

The Supply Chain management Concept

A supply chain is a group of partners who
collectively convert a basic commodity
(upstream) into a finished product
(downstream) that is valued by end-customers,
and who manage returns at each stage.

Definition

Planning and controlling all of the

processes that link partners in a
supply chain together in order to
serve needs of the end-customer.

Supply chain:
structure and tiering
The process starts with
several external suppliers
that move milk, cardboard,
and plastic to the processing
plant.
After the milk is processed
and packaged, it is delivered
to retailers, who sell it to
customers. The alternative
delivery system is delivery
from a warehouse directly to
customers homes.

Supply chain:
structure and tiering

Supply chain can be fairly

complex. The supply
chain for a car
manufacturer includes
hundreds of suppliers,
dozens of manufacturing
plants (for parts) and
assembly plants (for
cars), dealers, direct
business customers,
wholesalers, customers,
and support functions
such as product
engineering and
purchasing.

Logistics concept

The task of coordinating

Definition material flow and information
flow across the supply chain.

Activity 1
Wheat

Flour

Praline

Printed
materials

Confectionery
manufacturer

Fiberboard

Multiple
retailers

Wafers

Chocolate

Aluminium

Packing

Wholesalers

End
customers

Others
(hospital etc.)
Creamery
(milk)

Cocoa
beans

Sugar

Vegetable
oil

Cocoa
butter

Lecithin

Emulsifiers,
Salt, etc.

logistics and Supply chain

Material and information flow

Competing through logistics

Logistics strategy

Key issue

What is the relationship between

material flow and information
flow?

Case study: Seven-eleven

Case study: Seven-elevens distribution

strategy
Delivery arrives from over 200 plants
Delivery is cross docked at DC (over 80 DCs
for food)
Food DCs store no inventory
Combined delivery system: frozen foods,
chilled foods, room temperature and hot
foods
11 truck visits per store per day (compared
to 70 in 1974)
No supplier (not even coke!) delivers direct

Case study: Seven-elevens

Information Strategy
Quick access to up to date information (as
contrasts with data)
High speed data network linking stores, headquarters,
DCs and suppliers
Store hardware

Store computer
POS registers linked to store computer
Graphic Order Terminals
Scanner terminals for receiving

Integrated Logistics Management

Material and information flow

Material and information flow

Material flow

Information flow

Activity 2
Describe the material and information flow
in the supply network affecting one of the
major products in Activity 1.

logistics and Supply chain

Material and information flow

Competing through logistics

Logistics strategy

Key issues

How do products win

orders in the
marketplace?

How does logistics

contribute to
competitive advantage?

Creating logistics advantage: three

basic ways
time

quality

Logistics advantage

cost

Creating logistics advantage:

controlling variability

Variability undermines the dependability with which a product or

service meets target.

Order winners and order qualifiers

Different logistics
performance
objectives
Order winners
are factors that directly and
significantly help products to
win orders in the
marketplace.
Customers regard such
factors as key reasons for
buying that product or
services.

Order qualifiers
are factors that are regarded
by the market as an entry
ticket.
Unless the product or service
meets basic performance
standards, it will not be taken
seriously.

Activity 3
Compare the details for characteristics of
both household appliance and mobile
phones product lines.
Go on to identify the principal order
winners and qualifiers for each product.

Vs.

logistics and Supply chain

Material and information flow

Competing through logistics

Logistics strategy

The value chain: Linking supply chain

and business strategy
Business Strategy
Supply Chain Strategy
New Product
Strategy

Marketing
Strategy

New
Marketing
New
product
Marketing
Product
and
OperationsDistribution
Operations
Development
sales
Development andSales

Service

Finance, Accounting, Information Technology, Human Resources

How to Achieving Strategic Fit

Understanding the Customer
Lot size
Response time
Service level
Product variety
Price
Innovation

How to measure?

Implied Demand
Uncertainty

Levels of Implied Demand Uncertainty

High Fashion

Detergent

Customer Need
Price

Responsiveness

Low

High

Implied Demand Uncertainty

Understanding the Supply Chain: CostResponsiveness Efficient Frontier

Responsiveness
High

Low

Cost
High

Low

Achieving Strategic Fit

Responsive
supply chain

of it
e
n ic F
o
Z eg
t
ra
t
S

Responsiveness
spectrum

Efficient supply
chain
Certain
demand

Implied
uncertainty
spectrum

Uncertain
demand

Strategic Scope
Suppliers Manufacturer Distributor
Competitive
Strategy
Product Dev.
Strategy
Supply Chain
Strategy
Marketing
Strategy

Retailer

Customer

Drivers of Supply Chain Performance

Competitive strategy
Efficiency

Responsiveness

Supply chain strategy and structure

Inventory

Transportation
Drivers

Facilities

Information

Considerations for Supply Chain Drivers

Driver

Efficiency

Responsiveness

Inventory

Cost of holding

Availability

Transportation

Consolidation

Speed

Facilities

Consolidation /
Proximity /
Dedicated
Flexibility
What information is best suited for
each objective

Information