电子商务物流Notes02Lean Logistics.doc

Chapter Two Lean LogisticsI. Learning objectives and requirements1. to know the scope, the work, the goal and the importance of logistics2. to know and understand the definition of lean logistics3. to understand the logistical value proposition4. to know the five areas of logistics work5. to understand the logistical operations6. to understand logistical operating arrangementsII. Learning contentsSection I. Introduction to Lean Logistics1. Main contents1) The Scope of LogisticsNo other area of business operations involves the complexity or spans the geography of logistics. All around the globe, 24 hours of every day, 7 days a week, during 52 weeks a year, logistics is concerned with getting products and services where they are needed at the precise time desired.It is difficult to visualize accomplishing any marketing, manufacturing, or international commerce without logistics. Most consumers in highly developed industrial nations take a high level of logistical competency for granted. When they purchase goods-at a retail store, over the telephone, or via the Internet-they expect product delivery will be performed as promised. In fact, their expectation is for timely, error-free logistics every time they order. They have little or no tolerance for failure to perform.Although logistics has been performed since the beginning of civilization, implementing best practice logistics is one of the most exciting and challenging operational areas of supply chain management. Because logistics is both old and new, we choose to characterize the rapid change taking place in best practice as a renaissance.2) The Work of LogisticsLogistics involves the management of order processing, inventory, transportation, and the combination of warehousing, materials handling, and packaging, all integrated throughout a network of facilities. 3) The Goal of Logistics The goal of logistics is to support procurement, manufacturing, and market distribution operational requirements. Within a firm the challenge is to coordinate functional competency into an integrated operation focused on servicing customers. In the broader supply chain context, operational synchronization is essential with customers as well as material and service suppliers to link internal and external operations as one integrated process.4) Definition of Lean LogisticsLean logistics refers to the superior ability to design and administer systems to control movement and geographical positioning of raw materials, work-in-process, and finished inventories at the lowest total cost. To achieve lowest total cost means that financial and human assets committed to logistics must be held to an absolute minimum. It is also necessary to hold direct operational expenditures as low as possible. The combination of resources, skills, and systems required to achieve lean logistics are challenging to integrate, but once achieved, such integrated competency is difficult for competitors to replicate.5) The Logistics of Business Is Big and ImportantIt is through the logistical process that materials flow into the manufacturing capacity of an industrial nation and products are distributed to consumers. The recent growth in global commerce and the introduction of e-commerce have expanded the size and complexity of logistical operations.Logistics adds value to the supply chain process when inventory is strategically positioned to achieve sales. Creating logistics value is costly. Although difficult to measure, most experts agree that the annual expenditure to perform logistics in the United States was approximately 10.1 percent of the $9.96 billion Gross National Product (GNP) or $1 .006 billion. Expenditure for transportation in 2000 was $590 billion, which represented 58.6 percent of total logistics cost. As further illustrated in Table 2-1, the logistics of business is truly big business.Despite the sheer size of logistical expenditure, the excitement of lean logistics is not cost containment or reduction. The excitement generates from understanding how select firms use logistical competency to achieve competitive advantage. Firms that have developed world-class logistical competency enjoy competitive advantage as a result of providing important customers superior service. Leading logistical performers typically implement information technology capable of monitoring global logistical activity on a real time basis. Such technology identifies potential operational breakdowns and facilitates corrective action prior to delivery service failure. In situations where timely corrective action is not possible, customers can be provided advance notification of developing problems, thereby eliminating the surprise of an unavoidable service failure. In many situations, working in collaboration with customers and suppliers, corrective action can be taken to prevent operational shutdowns or costly customer service failures. By performing at above industry average with respect to inventory availability, speed and consistency of delivery, and operational efficiencies, logistically sophisticated firms are ideal supply chain partners.2. Key concepts and pointsThe scope of logistics, the work of logistics, the goal of logistics, lean logistics, raw materials inventory, work-in-process inventory, finished inventory, lowest total cost, direct operational expenditures, integrated supply chain management, competitive advantage3. Issues of applicationStudents shall understand that the principle of lean logistics is to achieve lowest total cost. To achieve lowest means that financial and human assets committed to logistics must be held to an absolute minimum. It is also necessary to hold direct operational expenditures as low as possible. The combination of resources, skills, and systems required to achieve lean logistics are challenging to integrate, but once achieved, such integrated competency is difficult for competitors to replicate. Students are expected to examine the case of Dell and then figure out how Dell Computers has used lean logistics principles to gain competitive advantage.Section II. The Logistical Value Proposition1. Main contents1) Service BenefitsCreation and basic logistical performance is measured in terms of availability, operational performance, and service reliability. The term basic logistics service describes the level of service a firm provides all established customers.a) AvailabilityAvailability involves having inventory to consistently meet customer material or product requirements.b) Operational PerformanceOperational performance deals with the time required to deliver a customers order. Operational performance involves delivery speed and consistency, flexibility, Malfunction, and recovery time.c) Service ReliabilityService reliability involves the quality attributes of logistics. The key to quality is accurate measurement of availability and operational performance. Only through comprehensive performance measurement is it possible to determine if overall logistical operations are achieving desired service goals. To achieve service reliability, it is essential to identify and implement inventory availability and operational performance measurements.2) Cost Minimizationa) Question: the least total cost of logistic is equal to the lowest cost for each individual function of logistics?b) Lowest Total Cost means Lowest Integrated/Balanced Total Cost3) Logistics Value GenerationThe key to achieving logistical leadership is to master the art of matching operating competency and commitment to key customer expectations and requirements. This customer commitment, in an exacting cost framework, is the logistics value proposition. It is a unique commitment of a firm to an individual or selected groups of its customers.Case Study: Ciscos Single Enterprise Strategy Leading firms realize that a well-designed and well-operated logistical system can help achieve competitive advantage. In fact, as a general rule, firms that obtain a strategic advantage based on logistical competency establish the nature of their industrys competition.2. Key concepts and pointsAchieve Customer satisfaction at the Lowest Total Cost, to Create Value, Logistical Value Proposition, Service Benefits, basic logistics service, Availability, Operational Performance, Delivery Speed and Consistency, Flexibility, Malfunction, Recovery Time, Service Reliability3. Issues of applicationThe focus of lean logistics can be traced to relatively recent developments of total costing theory and practice. To understand the concept of total cost applied to logistical operations, students shall focus attention on integrated total cost, but shouldnt take it for granted that to achieve the lowest total cost means to achieve the lowest possible cost of each individual function of logistics.Section III. The Work of Logistics1. Main contents1) Integrated Nature of the Five Areas of Logistical Work For a supply chain torealize the maximum strategic benefit of logistics, the full range of functional work must be integrated. Decisions in one functional area will impact cost of all others. It is this interrelation of functions that challenges the successful implementation of integrated logistical management.Work related to these functional areas combines to create the capabilities needed to achieve logistical value.OrderProcessingFacilityNetworkInventoryWarehousingMaterial HandlingPackagingTransportation2) Order ProcessingIn most supply chains, customer requirements are transmitted in the form of orders. The processing of these orders involves all aspects of managing customer requirements from initial order receipt, delivery, invoicing, and collection. The logistics capabilities of a firm can only be as good as its order processing competency.3) InventoryA sound inventory strategy is based on a combination of five aspects of selective deployment: (1) core customer segmentation, (2)product profitability, (3) transportation integration, (4) time-based performance, and (5) competitive performance.4) TransportationTransportation is the operational area of logistics that geographically moves and positions inventory.a) Basic ways to satisfy the Transportation requirementsi) A private fleet of equipment may be operated,ii) Contracts may be arranged with dedicated transport specialists,iii) The services of a wide variety of carriers that provide different transportation services on a per shipment basis may be engaged.b) Fundamental factors to transportation performancei) CostThe cost of transport is the payment for shipment between two geographical locations and the expenses related to maintaining in-transit inventory.ii) SpeedSpeed of transportation is the time required to complete a specific movement.iii) ConsistencyConsistency of transportation refers to variations in time required to perform a specific movement over a number of shipments.5) Warehousing, Materials Handling, and PackingWarehousing, materials handling, and packaging are an integral part of other logistics areas.When effectively integrated into an enterprises logistical operations, warehousing, materials handling, and packaging facilitate the speed and overall ease of product flow throughout the logistical system. In fact, several firms have engineered devices to move broad product assortments from manufacturing plants directly to retail stores without intermediate handling.6) Facility NetworkNetwork design is concerned with determining the number and location of all types of facilities required to perform logistics work. It is also necessary to determine what inventory and how much to stock at each facility as well as the assignment of customers. The facility network creates a structure from which logistical operations are performed. Thus, the network integrates information and transportation capabilities. Specific work tasks related to processing customer orders, warehousing inventory, and materials handling are all performed within the facility network.The design of a facility network requires careful analysis of geographical variation. The fact that a great deal of difference exists between geographical markets is easy to illustrate. The 50 largest U.S. metropolitan markets in terms of population account for the majority of retail sales. Therefore, an enterprise marketing on a national scale must establish a logistical network capable of servicing prime markets. A similar geographic disparity exists in typical material and component part source locations. When a firm is involved in global logistics, issues related to network design become increasingly complex.2. Key concepts and pointsOrder Processing, Initial Order Receipt, Delivery, Invoicing, Collection, Order Processing Competency, Inventory, Core Customer Segmentation, Product Profitability, Transportation Integration, Time-Based Performance, Competitive Performance, Pareto Principle, Transportation, Private Fleet of Equipment, Dedicated Transport Specialists, Carrier, Cost of Transportation, Speed of Transportation, Consistency of Transportation, Warehousing, Warehouse Specialist, Sorting, Sequencing, Order Selection, Transportation Consolidation, Product Modification and Assembly, Materials Handling, Packing, Master Carton, Facility Network, Manufacturing Plants, Warehouses, Cross-Dock Operations, Retail Stores3. Issues of applicationThe importance of accurate information to logistical performance has historically been underappreciated. While many aspects of information are critical to logistics operations, the processing of order is of primary importance. Students will fail to fully understand this importance if they fail to understand how distortion and dynamics impact logistical operations. Current information technology is capable of handling the most demanding customer requirements. When desired, order information can be obtained on a real time basis. Yet the benefit of fast information flow is directly related to work balancing. It makes little sense for a firm to accumulate orders at a local sales office for a week, mail them to a regional office, process the orders as a batch, assign them to a distribution warehouse, and then ship them via air to achieve fast delivery. Vice versa, students majoring in Electronic Commerce shall know well that data transmission or Web-based communication of orders direct from the customers office combined with slower, less costly surface transportation many have achieved even faster overall delivery service at a lower total cost. The key objective is to balance components of the logistical system.Section IV. Logistical Operations1. Main contents1) the Internal Operational Scope of Integrated Logistics Operations CustomersSuppliersInformation FlowInventory FlowEnterpriseMarketDistributionManufacturingSupportProcurementInformation from and about customers flows through the enterprise in the form of sales activity, forecasts, and orders. Vital information is refined into specific manufacturing, merchandising, and purchasing plans. As products and materials are procured, a value-added inventory flow is initiated which ultimately results in ownership transfer of finished products to customers. Thus, the process is viewed in terms of two interrelated flows: inventory and information.2) Inventory FlowFrom the initial purchase of a material or component, the logistics process adds value by moving inventory when and where needed. Providing all goes well, materials and components gain value at each step of their transformation into finished inventory. In other words, an individual part has greater value after it is incorporated into a machine than it had as a part. Likewise, the machine has greater value once it is delivered to a customer.a) Market DistributionThe movement of finished product to customers is market distribution. In market distribution, the end customer represents the final destination. The availability of product is a vital part of each channel participants marketing effort. Even a manufacturers agent, who typically does not own inventory, must be supported by inventory availability to perform expected marketing responsibilities. Unless a proper assortment of products is efficiently delivered when and where needed, a great deal of the overall marketing effort will be jeopardized. It is through the market distribution process that the timing and geographical placement of inventory become an integral part of marketing. To support the wide variety of marketing systems that exist in a highly commercialized nation, many different market distribution systems are available. All market distribution systems have one common feature: They link manufacturers, wholesalers, and retailers into supply chains to provide product availability.b) Manufacturing SupportThe area of manufacturing support concentrates on managing work-in-process inventory as it flows between stages of manufacturing. The overall concern of manufacturing support is not how production occurs but rather what, when, and where products will be manufactured. From the viewpoint of overall planning, the separation of manufacturing support from outbound market distribution and inbound procurement activities provides opportunities for specialization and improved efficiency.c) ProcurementProcurement is concerned with purchasing and arranging inbound movement of materials, parts, and/or finished inventory from suppliers to manufacturing or assembly plants, warehouses, or retail stores.Depending on the situation, the acquisition process is commonly identified by different names. In manufacturing, the process of acquisition is typically called purchasing. In government circles, acquisition has traditionally been referred to as procurement. In re