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2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 1 Sessiono2 IntroductiontoLogistics Whatislogistics LogisticselementsUnderstandinglogisticscostsLogisticsperformancemeasurementLogisticsintegration 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 2 Whatislogistics Inreality peoplebuyproductsforarangeoffactorsapartfromtheirtangiblequalitieslogisticsisaboutensuringthatthefactorswhichinfluencecustomers choicearedeliveredcosteffectivelyandinaccordancewithcustomers expectations 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 3 LogisticsDefined theprocessofstrategicallymanagingtheacquisition movementandstorageofmaterials partsandfinishedinventory andrelatedinformationflows throughanorganizationanditsmarketingchannelstofulfillordersmostcosteffectively Source Gattorna J L 1990 HandbookofLogisticsandDistributionManagement 4thed page5 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 4 TheInterfaceofLogistics Itisdifficulttovisualizeaccomplishinganymarketing manufacturing orinternationalcommercewithoutlogistics Whenconsumerspurchasegoods ataretailstore overthetelephone orviatheinternet thyexpectproductdeliverywillbeperformedaspromised Infact theirexpectationisfortimely error freelogisticseverytimetheyorder Production Marketing Finance Logistics 1 2 3 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 5 LogisticsMission 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 6 OperatinginaTurbulentEnvironment Deregulationhasloosenedcontrolsinanumberofareas bothlocallyandinternationallyProductchangesareoccurringmorefrequentlyandtherearemoreproductsonofferTechnologyisevolvingatanincreasinglypaceCustomersarebecomingfarmoredemandingoftheirsuppliers 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 7 OnCopingwithTurbulentTime Theonecertaintyaboutthetimesaheadisthattheywillbeturbulenttimes andinturbulenttimesthefirsttaskofmanagementistomakesureoftheinstitution scapacityforsurvival tomakesureofitscapacitytosurviveablow toadapttosuddenchange andtoavailitselfofnewopportunities Source PeterDrucker ManaginginTurbulentTimes 1980 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 8 LogisticsChallenges Logisticsisconcernedwiththeinter relationshipofallfactorswhichaffecttheflowofinformationandproductsnecessarytofulfillordersThisflowstartswhenacustomerdecidestoplaceanorderandendswhentheorderisdeliveredtothecustomerandthecustomerhaspaidfortheproductsreceived 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 9 TheScopeofLogistics 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 10 LogisticsElements InventoryFacilitiesCommunicationsUnitizationTransportMaterialsManagementProductionScheduling 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 11 Inventory Stockholdingiscentraltoeffectivelogisticsmanagement Keyissuesinclude howmuchinventoryshouldbeheldwhereshoulditbeheldinwhatquantitiesshoulditbeheldhowfrequentlyshoulditbereplenished 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 12 Inventory Inventorydirectlyimpactsanorganization scustomerserviceanditsworkingcapital 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 13 Facilities Facilitiesarerequiredtoholdstock Questionsare howmanyfacilitiesdoweneedwheredowelocatethemhowlargeshouldtheybeshouldtheybemechanisedorautomatedandtowhatdegree 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 14 Communication Moderncommunicationsandcomputertechnologycanprovideuswithinventoryvisibilitybacktooursuppliersandforwardtoourretailcustomers outlets Inthiswayinformationcanbesubstitutedforinventory 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 15 Unitization UnitizationreferstothepackagesinwhichproductsareoriginallypackedandthemeansbywhichthosepackagesareassembledintounitloadsUnitizationandcontainerizationhaverevolutionizedthewayinwhichproductsarestoredandtransported 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 16 Transport Transportdecisionsinvolve whatmodeoftransportshouldweuseshouldweownorhireourtransportfleethowfrequentlyshouldwedelivertodifferentcustomergroupshowshoulddeliveriesbescheduled 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 17 MaterialManagement Itisnotpossibletoconsistentlymanufactureproductstoanappropriatestandardwithouteffectivecoordinationandcontrolofamanufacturer spurchasingfunctionandtheinboundmovementofrawmaterials componentsandpackagingmaterials 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 18 ProductionScheduling Theconceptof Just in Time wouldnotbepossibleifmanufacturingenterpriseswerenotcapableofmanagingproductiveresourcesinaneffectiveyetresponsivemanner Asinventorylevelsshrink thisbecomesevenmoreimportant Theconceptof Just in Time wouldnotbepossibleifmanufacturingenterpriseswerenotcapableofmanagingproductiveresourcesinaneffectiveyetresponsivemanner Asinventorylevelsshrink thisbecomesevenmoreimportant 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 19 UnderstandingLogisticsCosts Alltoofrequently logisticscostsaresummarizedintheenterprise sProfit LossStatementundertwoorthreeheadings typically warehousingdistributionBeforewecanachievetheobjectivestatedabove weneedtounderstandtheelementsthatcomprisethelogisticscostswithinourenterprise 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 20 LogisticsCostsComposition InventoryholdingcostsWarehousingcostsOrderprocessingcostsTransportationcosts bothinboundandoutbound domesticandinternationalCostsoffundsemployed logisticsinfrastructure Communicationsanddataprocessingcosts tonamebutafew 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 21 Withinabroadrangeofdistributionchannelalternativesweneedtodecidewhichchannelsaremostappropriatetoservicedifferentsegments positioning 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 22 Sinceitmaynotbeappropriatetoserviceallpossiblesegments wemustdecidewhichsegmentstotarget Segmentationrevealsthedegreeofheterogeneityinamarket whichleavesthreebroadchoicesofresponse undifferentiatedmarketingdifferentiatedmarketingconcentratedorfocusedmarketingSource Kotler etal 1980 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 23 Targetsegmentsanddesiredmarketresponsewillinfluencechoiceofchannels Sinceitmaynotbeappropriatetoserviceallpossiblesegments wemustdecidewhichsegmentstotarget 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 24 Wecan tbesurethatsegmentswillonlydealwithonechannel butitisimportanttobeablemeasurevolumeofsalesandassociatedcostsforeach 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 25 LogisticsPerformanceMeasurement PeterDruckerremindsusofthedifferencebetweenefficiencyandeffectiveness statingthat efficiencyisallaboutdoingthingsright whilsteffectivenessisallaboutdoingtherightthings 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 26 LogisticsPerformanceMeasurement Soweneedtoensurethatthethingswedoaretherightthings ietheyaddvalue thendothemefficiently 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 27 LogisticsMeasuresCategories PriceperformanceCosteffectivenessQualityTime delivery responsivenessTechnology InnovationPhysicalenvironmentandsafetyAssetandintegratedsupplychainmanagementAdministrationandefficiencyGovernment SocialInternalcustomersatisfaction 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 28 TheMeasurementDilemma Whatyoucan tmeasureyoucan tcontrolifwewanttocontrolthequalityoftheserviceweprovide wemustmeasurethatqualityasseenfromthecustomer sperspectivePeopleperforminlinewithwhatgetsinspectedratherthanwhatisexpectedofthemtheremustbecongruencybetweenhowweexpectourpeopletoperform dutystatements etc andwhatweinspect performancemeasures 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 29 ThePrinciplesofMeasurements LetyourcustomerssaywhatcountsDevelopanumberofcomplementarymeasuresintoasystemthatbalancesprocess productandsatisfactionmeasures 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 30 ThePrinciplesofMeasurements Makethemeasurementsystemmatter ensurethatachievementofthebalancedsystemofmeasuresisadequatelyreflectedintheenterprise scompensationsystem bothpsychicandmonetary 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 31 Supply sideLogistics StrategicsourcingdecisionsPotentialsupplierassessmentandselectionProcurementandpurchasingactivitiesSupplierperformance inboundlogisticsLogisticsassetutilizationandperformance 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 32 Demand sideLogistics OrderacquisitionandprocessingOrderpickingandassemblyOrderdispatchanddeliveryOrdercompletenessandconditionWarehouseproductivityandperformanceCarrierproductivityandperformanceLogisticsassetutilizationandperformance 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 33 PerformanceMeasures YesorNo Measuresofperformanceareessentiallyguidelinesthattellushowwearegoingagainststandardsthatweset Thecriticalthingthenistoknow Whatshouldbemeasured Whatstandardsshouldweuse 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 34 PerformanceMeasurescontd Essentiallytherearethreeareaswhereapositivebenefitcanbegainedfromperformancemeasures theseare Inputstothelogisticssystem Thelogisticsprocessitself andOutputsfromthelogisticssystem 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 35 KeyAreasforMeasurement Inplanningaperformancemeasurementsystem weneedtodecide Whatmeasurementstrulyprovideanindicationofthesystemsoperationalperformance Howcanthedatabegatheredtoensureitistimely accurateandrepresentativeoftheactivityintheareawewishtomonitor Whatotherdataneedstobecapturedtoenablemeaningfulanalysisofvariationoutsideacceptablestandardstobeconducted 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 36 SettingStandards InitiallyderivedfromthemarketplacebymeansofcustomerserviceauditMatchedagainstinternalobjectivesforcongruencyPeriodicallyreviewedtoensuretheycontinuetoreflectmarketdemand 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 37 KeyCustomerServiceVariables Ordercycletime bycomponentFillrate percentageorderedversusdelivered Orderconsistency varianceindeliverytime ResponsecapabilitytocustomerenquiriesAbilitytoadjustorderquantitiesAbilitytochangerequesteddeliverydatesAbilitytointeractwithproductionschedulesAbilitytosubstituteorback orderlineitems 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 38 KeyLogisticsEfficiencyVariables Logisticsefficiency costs relatedtofunctionalactivitiessuchas transportationwarehousinginventorymanagementproductionplanningandschedulingorderprocessing 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 39 KeyAssetUtilizationVariables Typicallythesewouldinclude inventoryperformancebySKU productgroupandinaggregatewarehousingperformanceincludingMHEutilizationdeliveryfleetperformancewhethercompanyownedorthirdparty 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 40 DevelopingtheMonitoringSystem Asystematicprocedureto IdentifyallimportantlogisticscostcategoriesInstitutesystemsandproceduresforthecollectionofcostandutilisationefficiencydataPrepareasetofusefulratiosandmeasuresbywhichlogisticsperformancecanbeevaluatedSetupamechanismforregularpresentationofstatusreports 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 41 InterpretingResults UnderstandwhatisbeingmeasuredUnderstandimpactofvarianceonenterpriseanditscustomersSnapshotmeasurementscanbemisleadingDynamicmeasurementsindicatetrendsAllsystemswillhavevariation itistheamplitudeofthevariationwemustcontrol 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 42 OperationalPerformance Operationalperformancedealswiththetimerequiredtodeliveracustomer sorder Itinvolvesdeliveryspeedandconsistency Fastdeliveryisoflimitedvalueifinconsistentfromoneordertothenext Firmestypicallyfocusondeliveryconsistencyfirstandthenseektoimprovedeliveryspeed Source DonaldJ Bowersox DavidJ Closs M BixbyCooper SupplyChainLogisticsManagement 2e 2007 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 43 LogisticsViewedasaSystem logisticsactivitiescrosstraditionalfunctionalboundarieswithinorganizationstoachieveoptimaloveralloutcomes itmaybenecessaryforsomefunctionalareastooperatesub optimally 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 44 LogisticsViewedasaSystem Byviewinglogisticsasatotalsystemitispossibletoensurethebestpossibleoutcomeforboththeorganizationanditscustomers 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 45 ManagingLogisticsSystemPerformance 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 46 TheObjectivesofaLogisticsSystem Thefundamentalobjectiveofanylogisticssystemmustbetoprovidethenecessarylevelsofcustomerservice soastomaintainandexpandprofitablebusiness attheminimumtotalcostcompatiblewithsuchservicelevels 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 47 MeasuringLogisticsSystems Ifitcan tbemeasured itcan tbecontrolledIdentifyelementswhichcomprisethelogisticssystemIdentifycostsassociatedwitheachelementandhowthosecostsimpactupontotalprofitabilityIdentifytypeandvolumeofactivityassociatedwitheachelementandtheirimpactonproductivityIdentifypointswithineachelementwhereperformancecanbemeaningfulmeasured 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 48 DevelopingaPerformanceMeasurementandEvaluationSystem DeterminewhichperformancecategoriestomeasureDevelopspecificperformancemeasuresEstablishperformanceobjectivesforeachmeasureFinalizesystemdetailsImplementandreviewsystemperformanceandmeasures 2020 3 26 SchoolofLogistics SouthwestJiaotongUniversity 49 Summary Theemphasisofanyperformancemeasurementsystemshouldbeonuseful thatisactionable informationgathering Beforecollectingdata weshouldbeabletoanswerthequestions Whyarethedatauseful and Whatpositiveactionsdoweforeseebeingtakenasaresult 2020

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