Logistics
Supply Chain
• Supply chain is a complex logistics system in
which raw materials are converted into
finished products and then distributed to the
final users (consumers or companies)
Ghiani, Laporte and Mussamannoi, Introduction to logistics systems planning and control,
Chapter 1
Distribution Centers
• Central distribution Center
• Regional Distribution Centers
Inventory Management
• Make-to-order
• Make-to-stock
Inventory Management
• Improving service level
• Reducing overall logistics cost (economics of
scale)
• Coping with randomness in customer demand
and lead time
• Making seasonal items available throughout the
year
• Speculating on price patterns
• Overcoming inefficiencies in managing the
logistics system
Distribution strategies
• Direct shipment: Factory to customers
• Warehousing: Factory to warehouse and
customer
• Crossdocking (just-in-time distribution):
– Incoming shipments (possibly from many
manufacturers) sorted, consolidated with other
products and transferred directly to outgoing trailers
without storing them in warehouses.
Transportation Methods
• Private: Own a transportation fleet
• Contract transportation
• Common transportation
Distribution channel
• A path fallowed by a product from
manufacturer to the end-user
Transportation cost saving strategies
• Freight Consolidation
Logistics management
• Capital reduction: Do not invest too much
capital into hardware
• Cost reduction: min the cost
• Service level improvement: Inventory
management and continuous flow
• Cost vs. service level:!!
• Sales vs. Service relationship: Level of logistics
service influences the sale volume
Determining the optimal service level
Sales
Total cost
Decision support systems
•
•
•
•
Benchmarking
Simulation
Optimization
Continuous approximation methods:
– Estimating demand, Estimating variance on
transpiration time; estimating disruptions etc.
Forecasting
• Long-term forecasting
– One to five years
– New items to introduce
– Old items to remove
• Medium-term forecasting
– Months to a year
– Tactical planning
• Production and distribution plan
• Inventory management
• Slot allocations
• Short-term forecasting
– Days to a month
– Resource planning
– Scheduling
Forecasting
• Where, When and quantity estimation
• Globalization: Customers are geographically
dispersed
– Top-down approach in forecasting:
• Estimate the global sale
• Derive the regional sales from the global figures
– Bottom-up approach:
• Estimate the local sales
• Derive the total sales globally
Forecasting techniques
• Qualitative techniques
• Quantitative techniques