e-Logistics Services
From Warehouse to Logistics Service Center
64157 電子商務模式設計與應用
國立中山大學企管所
2002 Spring, Week 4-2
太世科
Info@taskco.com
886-2-8772-2583
TASKCo Corporation
黃光彩 博士
太世科公司
2002/04/13
1
CONFIDENTIAL
Complexity of a Typical Global Supply Chain
Ocean
Freight
Customs
Agent
Forwarder
Supplier
Plant
Roadways
liner
Port
Airways
Roadways
Road
+
Rail
Home
Consumer
Customer
(Retailer)
Customer’s
Warehouse Roadways
Supercharging Supply Chains
Ernst & Young LLP
2
RDC
CONFIDENTIAL
The Evolution of Enterprise Applications
% Penetration
100%
ERP
Supply
Chain
Execution
Time
3
CONFIDENTIAL
What is Logistics?
Logistics is defined as the process of movement of
materials and products into, through and out of a firm.
The Logistics Flow Chart
SUPPLIERS
SALES
FUNCTION
TRANSPORTATION
(SUPPLIER)
PURCHASING
FUNCTION
PURCHASING
FUNCTION
(DISTRIBUTOR)
SALES
FUNCTION
TRANSPORTATION
(DISTRIBUTOR)
(CUSTOMER)
4
WAREHOUSING
CONFIDENTIAL
The Logistics Channel
Suppliers
Sales
(Supplier)
Transportation
Purchasing
(Distributor)
Warehousing
Sales
(Distributor)
Transportation
Purchasing
(Customer)
5
CONFIDENTIAL
Cross Functional Nature of Logistics
Front
end - Distributor Purchasing and
Supplier Marketing Interface
Middle - Warehousing and Transportation
Back end - Customer Contact (Marketing)
FRONT END
MIDDLE
BACK END
Functions of Logistics
6
CONFIDENTIAL
Key Logistics Activities
Customer
Service Levels - Set by Marketing based
on Operations Capabilities


Transportation
 Routing and Vehicle
Scheduling
Inventory
 R.M. and F.G. stocking policies
 Break Bulk
 Consolidation
7
CONFIDENTIAL
Support Activities
Warehousing



How many?
What configuration?
Where to hold inventory?

Materials Handling - ASRS, RF, Bar Coding, Etc.

Purchasing - Supplier selection, Purchase timing,
Quantity, and Quality

Scheduling - Interface marketing and production

Information Maintenance
 Data Collection
 Data Integrity
8
CONFIDENTIAL
Objectives of Logistics Strategy
Process
Reduction - Cycle time, Lead time,
Automation

Capital Reduction - Inventory investment, number
of warehouses

Service Improvement - the antithesis of the foregoing
9
CONFIDENTIAL
Industry Specific Logistics Services
New Logistics Center
Segments Market by
Traditional WMS Providers
Customers’ Vertical
Segment Market by Customer
Market
Size
Traditional:
CPG
Opportunity:
Apparel
Healthcare
Grocery
L
Electronics
Food Service
Automotive
3PL
M
S
Industry
Industry
10
CONFIDENTIAL
Logistics Goal: Close Gaps in the Supply Chain
Retailer Requirements

Speed to
compliance

Lower inventory

Cross-docking


Value-added
services
Supplier Requirements
Imperfect
Information
Higher number of
SKUs

Direct-to-consumer

Configure-to-order
11

Customer / retailer
satisfaction

Operational
productivity

Transportation
efficiency

Improved in-stock
positions

Lower inventory

Flexible business
practices
CONFIDENTIAL
Traditional Distribution Systems Used
Multi-Tiered Warehousing
Bulk
Finished
Goods
Manufacturer’s
Distribution
Center
Manufacturer
Bulk
Shipments
Retail Outlet
Local
Retail
Distribution
Center
Store
Distributions
12

Hold inventory

Value added services
CONFIDENTIAL
Traditional Distribution Center Process
1 Inbound receipt
of goods
2 Storage of
3 Bulk outbound
goods
shipments
2
1
3
13
CONFIDENTIAL
Quick Response Initiatives
Streamline Distribution Process
Manufacturer’s
Distribution
Center
Manufacturer






Retail Outlet




Lower inventory
Greater availability
Very high
volume
Mass
personalization
Integrated TMS
requirements


14
Advanced shipping notice
Bulk or discrete shipments
Store specific pricing
Aisle specific palletizing
High velocity
Local
Retail
Distribution
Center
Cross-docking
Flow-through
CONFIDENTIAL
Value-added Logistics Center Process
1 Inbound shipment 4 Storage of goods
tracking
5 Order picking
2 Yard management 6 Value-added
3 Inbound receipt
services
7 Order packing
8 Pack and hold
9 Outbound customer
compliant shipments
of goods
4
2
8
3
5
1
9
6
7
15
CONFIDENTIAL
Continuously Changing Demands of Retailers
K-MART
Western Publishing
Old Practice
# Orders
New Practice
6
17,000
Destination
Warehouse
Individual Stores
Frequency
Monthly
Weekly
Telephone/Paper
Electronic
Advanced Ship
Notice
IT Requirement
16
CONFIDENTIAL
From Warehouse to Distribution Center
“In order to enable greater customer
responsiveness, the traditional role of the
warehouse (WMS) is moving toward distribution
center. This is a major force in driving the
demand for e-Logistics applications.”
17
CONFIDENTIAL
Global Operations & Logistics Framework
Geographical
Integration
Functional
Integration
Sectorial
Integration
18
CONFIDENTIAL
Geographical Integration
Impact of Distribution and Transportation greater
due to ‘Globalilty’
 Borders becoming more porous in terms of trade
 Production on global scale --- no longer country-specific
 International Sourcing
 Selling in Multiple Markets
 Data Processing and Communication technology help
with the geographical integration.

19
CONFIDENTIAL
Functional Integration
Logistics - cross-functional in nature. Cuts across activities
and creates interfaces to optimize overall performance.
 Flow management in Global Logistics difficult
 Internationalized Markets
 Competitive products in the Market
 Adaptation of new technology
 Government Regulations

20
CONFIDENTIAL
Sectorial Integration


Companies are handling logistics issues together beyond
corporate boundaries.
Efficient Consumer Response (ECR)
Collaborate
Manufacturer
Distributor
Final aim to reach
customer
21
Consumer
CONFIDENTIAL
Freight Forwarders
Freight providers have the earliest instance of
hub and spoke systems
 Tenders for freight services made worldwide
 Development of Intermodal freight provision
 Mergers between freight providers -- e.g. Airplane
companies
 Globalization brings up several issues in order to
satisfy proximity service

 Use of manufacturer’s sales network



Setting up Proximity Distribution Centers (PDC)
Developing central hub for express services and dispatch orders
Setting up inventory of class A products with storage
operator, distributor or agent
22
CONFIDENTIAL
International Trading Operators







International Freight Forwarders
Nonvessel-operating Common Carriers (NVOCC)
Customs House Brokers
Export Management companies
Export Trading Companies
Shippers Associations
Export Packers
23
CONFIDENTIAL
Dynamic Forces of Global Logistics
The firms adopt different orientations with varying intensities
due to the dynamic behavior of the global business environment.
RESOURCES
24
CONFIDENTIAL
Global Logistics’ Orientation

Resource Oriented Logistics
 Emphasis towards optimal use of resources -- capital,
materials and people
 Focuses on the relationship between the functional
and the geographical
Optimize
Functional
Geographical
Resources
25
CONFIDENTIAL
Global Logistics’ Orientation

Information Oriented Logistics
 Emphasis towards optimal use of information.
 Focuses on the relationship between the sectorial
and the geographical dimensions
Sectorial
Geographical
Optimal
Performance
26
CONFIDENTIAL
Global Logistics’ Orientation

User Oriented Logistics
 Emphasis on the final customer.
 Using all the supply chain partners to bring their
expertise in order to best service the customer
 User oriented focus brings about flexibility in the
logistics channel
Customer
27
CONFIDENTIAL
Factors Pushing Global Logistics
Technological
Advances
Emergence of
Global Markets
Political & Macroeconomic factors
Global Cost
Forces
28
CONFIDENTIAL
Factors Pushing Global Logistics

Global Markets
Competition from foreign firms in local markets.
 Incredible growth of demand in foreign markets.
 Global presence used as competitive threat.
 Change of priorities
 Global markets growing faster due to technological
advances
 Products need to be introduced in all markets
together.
 State of the Art markets driven by customer
preferences
 Firms have to set up production in these areas to
maintain their competitive profiles. E.g. Japan - M/c
tools

29
CONFIDENTIAL
Factors Pushing Global Logistics

Improvements in Technology
Communication faster, easier and cheaper.
 Markets characterized by fewer producers and greater
diversity in products
 Shorter product life cycles
 Technology advancement become global phenomenon
 Firms have to start looking at international sources to
tap technological services
 Global competition forcing companies to locate more
R&D and production units closer to the suppliers.
 Joint ventures between firms to share technological info.

30
CONFIDENTIAL
Factors Pushing Global Logistics

Global Costs Forces -- Shift in Logistics costs
Shift in focus from direct labor costs
 Global environment forcing companies to consider
a trade off between labor costs, cost of start-up,
fluctuation
of currency, inventory costs, cost of quality
management
and training the local workers leading to island hopping
strategy.
 New Competitive priorities like speed,
quality,customization,
delivery reliability.
 Production facilities are becoming more capital
intensive
 high technology industries
 R & D costs
CONFIDENTIAL

31
Factors Pushing Global Logistics

Political and Macroeconomic factors



Exchange rate fluctuations
Regional trade agreements --- NAFTA
Trade protection mechanisms
 Tariff and non-tariff barriers
 Technical Standards
 Health regulations
 Procurement policies
32
CONFIDENTIAL
How is Global Logistics creating Change?

The management has to consider the Global economy

Service in the Industry becoming more important than
Cost Saving

Logistics operations perceived more as Service Provider
for cost minimization

Logistics activities no longer limited to moving products
through the Supply Chain but as an Information Provider
for the SC.

Companies moving away from Vertical Integration
and towards Supply Chain Integration, with Logistics
activities provided externally.
33
CONFIDENTIAL
New concepts in Global Logistics
Delocalization - practice of adding value to the product at
different locations closer to the consumer.
Modularization - practice of assembling a product using modules
purchased from different sources
Delayed Differentiation & postponement - Customization
of the order after demand has been identified
e.g: Labeling the products in the language of the countries
that they have to be shipped to
34
CONFIDENTIAL
Benefits due to Globalization of Logistics

Globalization is necessary for long-term survival

Diversity of markets increasing giving rise to
 Standardization across international markets
 Product diversity

Ability to access multiple sources of technology

Ability to set up strategic alliances and R & D
35
CONFIDENTIAL
Global Supply Chain – HP Example
HP DESKJET PRINTER SUPPLY CHAIN:

Printers made in Vancouver in two stages
 Printed Circuit Assembly & Test (PCAT)
 Final Assembly & Testing (FAT)

Components needed for PCAT & FAT taken from suppliers
worldwide & from HP divisions


Printer power supplies custom made for each country
with manuals written in that language packed
From Vancouver sent to Distribution Centers worldwide
36
CONFIDENTIAL
Global Supply Chain – HP Example
IC
MANUF.
PRINTED
CIRCUIT
ASSM. &
TEST
VANCOUVER
FINAL
TEST
&
ASSM.
VANCOUVER
CUSTOMER
PRINT
MECH.
MANUF.
SUPPLIERS
DISTRIBUTION
CENTRES
SUPPLIER
ACCESSORIES
WORLDWIDE
WORLDWIDE
37
CONFIDENTIAL
Logistics Flows
Direct Flow
From companies to markets
Reverse Flow
From markets to companies
38
CONFIDENTIAL
Logistics’ Flows
Internal Logistics
External Logistics


(supply of materials & components)
Interplants
Direct
Flows
With customers


With suppliers
(products, spare parts, promotional &
advertising materials)
Plant/warehouse

With suppliers
(packaging, repairs)
Reverse
Flows

Warehouse/Warehouse

With manufacturers
(elimination, recycling)

With customers
(overstocks, repairs)
39
CONFIDENTIAL
Strategy for Global Logistics

Consolidation points
VIETNAM
IMPORT
MALAYSIA
JAPAN
CHINA
USA/EUROPE
TAIWAN
MAKE-BULK OPERATION

Break bulk
 Capacity issues - whether to add processing capability or not
VIETNAM
USA/
EUROPE
MALAYSIA
TAIWAN
EXPORT
JAPAN
CHINA
BREAK-BULK OPERATION

Postponement
40
CONFIDENTIAL
e-Logistics — A Modular Approach
Alert Monitor
Industry Standards
Inbound
ASN
Snap-on Modules
Outbound
 Receipt
 Wave
 Put-away
management
 Movement  Shipping
and slotting
 Snap-on module
architecture
 Easily configurable and
upgradeable
 Product is easily
customizable to fit
customer requirements
Third-Party Logistics
Billing
Optimization Suite
41
CONFIDENTIAL
Future Solution Strategy...
Productized logistics execution solution
• Fast implementation
• Extremely high price / value
• Win high market share
Synchronize logistics in our core vertical markets
• Expand deep industry knowledge
• Integrate industry content databases
• Architect for continuous upgradeability
Expand compliance guarantee to all supply chain
requirements
Guaranteed compliance with top 100 retailers
Develop additional high value, information-intensive
supply chain solutions
... Can lead to increasing returns solutions
42
CONFIDENTIAL
Integrated Logistics Services
Integrated Logistics is the fusion of information, logistics
and transportation technologies to provide rapid response
to track and shift assets even while in reroute, and to
deliver tailored logistics packages and sustainment directly
at the strategic, operational and tactical level of operation
Logistics functions will incorporate information
technologies and will work jointly and integrate with other
sectors to take advantage of advanced business practices,
knowledge economy, and global networks
Information technologies will enhance aircraft, sea liners,
and pre-positioning capabilities to lighten deployment loads
43
CONFIDENTIAL
Third Party Logistics Provider

Services provided are both physical and management.

Service levels improve due to improvement in flexibility
and inventory management

Cost reduced as compared to in-house logistics provider

In global logistics, versatile markets and products need
expert services which can be provided by several 3PL
44
CONFIDENTIAL
Third Party Logistics Provider

Use of 3PL allows the firm to penetrate new markets .

Access new technologies

Reduce inherent financial investment risks

Risks of using 3PL
 The same 3PL might be providing services for
competing firms
 Manufacturer with a good image in the market might
get tied down and their image linked with the 3PL
45
CONFIDENTIAL
Complexity & Customization
Range of Services provided by 3PL
Physical Contract
Logistics Services
High
• Dedicated contract carrier
• Dedicated warehousing
Physical
Services
Basic Services
• Common Carriage
• Public Warehousing
Integrated Contract Logistics
• Integrated warehousing &
transportation
• Integrated carrier
management & transportation
Management contract
logistics Services
• Traffic Management
• Warehouse Management
• Import/export Management
Low
Low
Management
Services
Complexity & Customization
High
Source: J.M. Africk & C.S. Calkins ( Transportation
& Distribution, 1994) CONFIDENTIAL
46
Emergence of Fourth Party Logistics Providers

‘Globality’ and Supply Chain Integration are increasing the
functions of Logistics providers. This has lead to the
emergence of consulting firms as fourth party logistics
providers

3PL have a larger, more efficient network of transportation &
networking, but the 4PL have optimal combination of
warehouse capabilities, transportation services and technology

Consultants as 4PLs are used to review bids made by 3PLs,
and to align the business processes with the supply chain
-- especially critical in case of Global Logistics.

4PLs have the advantage of being in sync with the rapid,
enormous changes in Information Technology.
47
CONFIDENTIAL
Development & Role of 4PL
•
•
Greater Functional Integration
Broader Operational Autonomy
Client
Business Process
Management
Client
Client
3PL
4PL
1990s-2000
Outsourcing
1980s-1990s
Insourcing
1970s-1980s
4PL
Client
Client
IT Service
Providers
3PL
Internal Logistics
Operations
CONFIDENTIAL
Source: Andersen Consulting http://www.ac.com/services/scm/scm_who_4pl_paper2_b.html
48
Performance Criteria in Global Logistics
Looking beyond Financial indicators

Cost



Initial Cost
Lifecycle Cost
Quality

Design Quality

Conformance to set production standards
49
CONFIDENTIAL
Performance Criteria in Global Logistics

Service
 Delivery Speed
 Delivery Reliability

Flexibility
 New-Product Flexibility-- Ability to introduce a new
product fast
 Customization --- highly segmented markets
 Product Mix Flexibility --- adjust production mix for demand
fluctuations
 Product Ramp-up Flexibility -- expansion to mass production
for uncertain markets
50
CONFIDENTIAL
International Freight Forwarders
Buy space wholesale and sell it retail
 International Freight Forwarders handle more
functions than the domestic freight forwarders:
 Serve as consultant in export matters
 Advise on acceptance of letters of credit.
 Booking space on carriers -- Most of the movement
is done via vessel or air.
 Arrange for insurance
 Prepare documents like export declarations and
consular documents
 Prepare Bill of Lading -- Forwarders experience
needed

51
CONFIDENTIAL
Other International Trading Operators

NOVCCs
 Perform most but not all of the functions of an
international freight forwarder.
 Specific functionality is trade agreements with carriers
 NOVCCs affiliate with forwarders to offer the entire
range of services

Customs House Brokers
 Take care of paperwork and movement of goods
through customs

Export Management Companies
 Provides the US firm with information about the
overseas buyer
 Advises the US supplier on requirements of the foreign
market in issues like foreign labeling and other specialized
functions
52
CONFIDENTIAL
Other International Trading Operators

Export Trading Companies
 Attempt to combine all facets of international business
 Used extensively by the Japanese

Shippers Associations
 Trade groups representing shippers of similar cargo
that bargain with ocean steamship conferences as a single
entity

Export Packers
 Expertise is specifically in packaging for the exporter.
 To allow goods to move through customs easily.
E.g taking into consideration weight restrictions etc
 To prevent the decay/damage of products.
53
CONFIDENTIAL
Nature of the Product
Value-add
Product processing
 Services
 Technical Support
 Inventory Management
 Financial
 Commodities vs. specialty items
 Delivery
 Speed
 Dependability
 Flexibility

54
CONFIDENTIAL
Product Life Cycle and Distribution
GROWTH
 Projected growth
 Current network capabilities
 Changes
MATURITY
 Optimization
INTRODUCTION
 Low Distribution
 Public Warehouse
DECLINE
 Projected cost decreases
 Needed network scale backs
55
CONFIDENTIAL
Pricing
FOB

pricing
FOB factory - customer picks up freight
HIGH PRICE LARGE VOLUME ITEMS

FOB destination - seller picks up freight
LOWER PRICE HIGH VOLUME ITEMS

Title exchange implications
 insurance
 obsolescence
56
CONFIDENTIAL
Pricing
Zoning
ZONE 2
ZONE 1
DISTANCE AND NUMBER OF CUSTOMERS IMPACTS COST OF DELIVERY

Quantity discounts

Legal implications - must prove price difference is justified by
lowered logistical costs to deflect
discrimination charges from small buyers
57
CONFIDENTIAL