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Logistics OPERATIONS

Objectives of Logistic
Rapid response Minimum variance Minimum inventory Movement consolidation Quality Life cycle support

Competitive advantage through logistics

The Transportation System

Intermodal Combinations (according to Deveci et al.)


The movement of goods in one and the same loading unit or vehicle that uses successively several modes of transport without handling of the goods themselves in changing modes.

Combination:
1. rail-road (piggyback) 2. rail-water 3. rail-air 4. rail-pipeline 5. road-air (birdyback) 6. road-water (fishyback) 7. road-pipeline 8. water-air 9. water-pipeline 10.air-pipeline

Other transport options


1. Freight forwarders 2. Shippers associations 3. Intermodal marketing companies 4. Brokers 5. Small package carriers 6. Third-party logistics service providers

Customizing Your Logistics Network to Meet Customer Needs


Companies have traditionally taken a monolithic approach to logistics network design in organizing their inventory, warehouse, and transportation activities to meet a single standard. For some, the logistics network has been designed to meet the average service requirements of all customers; for others, to satisfy the toughest requirements of a single customer segment. Neither approach can achieve superior asset utilization or accommodate the segmentspecific logistics necessary for excellent supply chain management.

The process of logistics design for customization The targets of the distribution processes;
The satisfaction of customer needing;

The total cost to fit these requirements

The factors that can affect decisions of logistics managers;


Organizational and market factors;
characteristics of the company of the network; characteristics of the market where the network acts.

Technological factors; Environmental factors

The Concept of Logistics Costs


Performance indicators of logistics activities measure the performance of a logistics system and evaluate its efficiency level. The major reason for measuring logistics performance is to reduce operating costs. Measuring operating costs helps to identify whether and where to make operational changes to control expenses and identify areas for improved assets.

Evaluation Category of Logistics Performance Indicators


costs indicators - which indicate costs consumed in carrying out logistics activities service indicators - which indicate the results of logistics activities

Logistics costs include the following: cost of transport activities, for each mode; cost of storage or warehousing activities; cost of time value or investment in goods in a logistics system, including the added value of transportation; cost of physical form changes required for effective and/or safe transport, storage, and handling; cost of marking, identifying, recording, analysis, as well as data transfer and handling; cost of stacking/unstacking activities cost of added packaging required cost of material transfer activities cost of consolidation/deconsolidation activities cost of information and telecommunications integration cost of logistics system management cost of unavailability of goods (when required)

THREE KEY COMPONENTS OF LOGISTIC COST


Transportation costs
Types:

Primary transportation Secondary transportation


Kinds:

Road transportation costs Water Transportation costs Air cargo transportation costs Cargo transportation agency costs

Inventory carrying costs

Capital costs Inventory service costs Storage space costs Inventory risk costs

Administration costs

A warehouse management system, or WMS, is a key part of the supply


chain and primarily aims to control the movement and storage of materials within a warehouse and process the associated transactions, including shipping, receiving, put away and picking. The systems also direct and optimize stock put away based on real-time information about the status of bin utilization.

Traffic and transportation Plant and warehouse site location Materials handling Industrial packaging Purchasing Demand forecasting Inventory control Production planning Parts and service support Return goods handling Salvage and scrap disposal Customer service levels

STRATEGY
- originated from the its Greek word strategos (general of the army), but contemporary definition refers to a plan for achieving chosen objectives. - strategies are the human management decisions that are made with partial informationassumptions about conditions, interactions, attitudes, behaviors, and actions and reactions in the environmentby a company in advance.

1.

2.

Corporate strategy: a firm creates the structure of its organization and its business interests, as well as the share of its portfolio in those businesses. Business strategy: This level of strategy determines the type of products or services that the organization wants to offer. Also, business strategy determines what each business unit needs to do and where to do it in order to reach the business objectives at the corporate level.

3.

4.

Operational strategy: This strategy is about how to achieve business objectives set at the corporate and business levels by extensive planning of available resources, processes, products, technologies used, and so on. This strategy also consists of setting certain market policies in order to achieve the organizations long-term competitive strategy. Competitive strategy: These strategies tell a company how to meet its customers desirable demands as defined by cost, quality, reliability, and so on. In a competitive, customer-driven market, an organization cannot ignore necessary competitive strategies.

What is the difference between strategic planning and strategic management? - Planning is important, but if the managers want to move the organization to its desired destination, then managing the plan is equally important and required. According to Rushton, Logistics is . . . the positioning of resource at the right time, in the right place, at the right cost, at the right quality, while optimizing a given performance measure and satisfying a given set of constraints.

- the entire process of planning, implementing, and controlling the efficient flow and storage of materials and products, services, information, energy, people, and other resources that move into, through, and out of a firm (in both the public and private sectors) from the point of origin to the point of consumption and with the purpose of meeting customer requirements. A logistics system based on its definition and nature includes the following: 1. Storage, warehousing, and material handling 2. Packaging and unitization 3. Inventory 4. Transport 5. Information and control

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