INTERMODAL → Material handling, company isn’t responsible, customer is responsible to the
goods, more than 1 contract (separate contract for each journey).
MULTIMODAL → No material handling, company is responsible and customer is not, only 1
contract.
In multimodal transportation one contracts covers the entire journey. Ensures door-to-door
delivery is completed.
LOGISTICS
The process of planning and executing the efficient transportation and storage of goods from the
point of consumption in order to meet customers’ requirements.
Logistics Mix Variables:
-
Information technology management
Inventory management
Transportation management
Warehouse management
Production management
Planning management
Packing management
Distribution management
Production management
Customer relation management
Manufacturing
Differences between supply chain management and logistics: scm is responsible for the overall
sourcing, processing and delivery of goods. On the other hand, logistics specifically focuses on
moving and storing goods between different supply organizations.
3 flow of scm
1. Money/cash/funds
2. Material product
3. Information
Risks of SC
External: weather, war, accident, natural disaster
Internal: poor planning, staff mistakes, capital problems
AS/RS Systems → replaces large areas of shelving to save floor space, improve safety and
productivity.
Globalization
Globalization problems: custom problems, international laws, exchange problems, cultural
differences etc.
Improving customer service level
1. Loyalty
2. Eliminate target market (integrity)
3. Improve your distribution channel (commitment)
7 RIGHTS
1.
2.
3.
4.
5.
6.
7.
8.
Product
Location
Time
Quality
Promotion
Quantity
Cost
Customer
Lead time → destination time (delivery time)
Cycle time → from production to procurement (recycling)
LOGISTICS CUSTOMER SERVICE
Quality customer services in logistics can produce long-term transportation savings, on-time
delivery, peace of mind, happy customers and more time to focus on other areas of your
business. In contrast poor customer service in logistics can end in costly fees or damaged
relationships with customers.
Customer service is a process which takes place between the buyer, seller, and third party. It is a
process for providing significant value is created when the customers perceived cost to purchase.
Elements of Logistics Customer Service
Pre-order / Pre-Transaction
→
Order service and quality / transaction →
Post-Transaction
→
Marketing Mix: includes multiple areas of focus as part of a comprehensive marketing plan
Approaches to Logistics Customer Service Strategy
Identify key components of logistics customer service and determine their relative importance
to customers. (Target market)
↓
Identify firms’ ability to provide those components of logistics customer service to customers
↓
Design logistics customer service package appropriate for each key customer segment
↓
Establish a logistics customer service management and control system to ensure quality service
provision
Collaboration between supplier and manufacturer
Suppliers are the ones who supply the products and services
Manufacturers are the ones who produce and manufacture the product or services
A
→
B
→
C
PURCHASING AND PROCUREMENT
Procurement: obtain the raw materials before the selling products. It mostly related to strategic
decisions, it means directly and strategic decisions for business.
Its about make selection (negotiation).
Procurement involved every activity involved in obtaining the goods and services a company
needs to support its daily operations, receiving and inspecting goods as necessary, and keeping
records of all the steps in process.
Purchasing: defined as the function associated with buying the goods and services required by
the firm. Its individual event, no planning, examining, determining.
Procurement and Customer Service Relationship
Procurement involves buying goods and services that keep an organization operating; it ensures
warehouses are well-stocked with the proper supplies at all times. Both common goals satisfy
the customers. Procurement shaped its decision for the customer and customer service ensuring
customer satisfaction with a product or service.
For the new role firms mostly supplier strategies and relationship. In traditional role they focus
their competitive not product or supplier. in traditional role they focus on price negotiation so
they only getting things and services at lower than asking price. In new role firms also haggling
about anything in the product or service.
Purchasing Process
Recognize needs → define specification → pre-quality suppliers → solicit quotations → Select
Suppliers → Negotiate contract → place order → expedite order → receive order → evaluate
order → make payment → need fulfilled
ADVANTAGES AND DISADVANTAGES OF CLOSER - BUYER - SUPPLIER RELATIONSHIP
Buyer’s Advantages:
-
Reduced manufacturing and labor
cost
Improved quality
Reduced complexity and cost of
assembly and buying
Supplier insurance
Cooperative relationship with
supplier
Contract predictability
Fair pricing assurance / open books
Negotiated price reductions during
contract life
Avoidance of load press caused by
reduction in personnel
Supplier Advantages:
-
Contract predictability
Workforce and production more
stable
Increased R&D effectiveness
Buyer
with supporting firm’s
status
Buyer assistance
Influence on buyer’s future
decision making
Insider information on buying
decisions
Firms become gatekeeper for
competitors’ innovations
Information of competition
Buyer’s Disadvantages
-
Increased dependence on supplies
New negotiating style
Less supplies competition
Decreased management style
Reduced personality mobility
Increased communication and
coordination costs
Increased support for supplier
New reward structures
Loss of direct contracts with
secondary suppliers
Supplier Disadvantages:
-
-
Cost information shared
Pressures to assume burden of all
phases from design to warranty
while improving quality and
reducing cost
Decreased autonomy
Increased communication and
coordination costs
Reduced personal mobility
Potential pendulum reversal
GLOBAL SOURCING BENEFITS






Lower labor and material costs
Ensuring availability and improved
delivery performance
High-quality posts
Worldwide technologies
New markets
Competitive advantage
GLOBAL SOURCING RISKS







Longer lead time, delays and
supply shortages
Poor quality control
Political turbulence and instability
Quotes, tariffs, duties, and taxes
Fluctuation of currency exchange
rates
Higher shipping risks
Protection of intellectual property
Products that are suitable for Global Sourcing

 High proportion of labor cost
 High procurement volumes
 Average technological and qualitative requirements
 Low complexity of materials
 Low import duties
Small proportion of transportation costs relative to total cost
 High shelf life and transportability
ROAD TRANSPORTATION
Advantages:







Disadvantages:
Flexible for short distance
Faster for loading / unloading
(Handling → loading + unloading
Suitable for small businesses
! door to door delivery
Cheaper for packing cost
Less infrastructure cost
Easy to carry perishable goods
Good for economic scale





Accident
Restricted for dangerous goods
Inflexible for delays
Inflexible for carbon emissions
! needs capital costs, requires
capital investment
Sensitive weather conditions
RAILWAY TRANSPORTATION
Advantages:
 Safety
 Cost effective
 Large capacity
 Flexible weather conditions
 Flexible bulky goods
 Easy for monitor the product
 No restriction
 Flexible long distance
 Provides employment
 Low takes
 No risk for damaging goods
 Well organized goods
Disadvantages:






Inflexible
for
geographic
conditions
High infrastructure costs
Air pollution
Not door-to door delivery
Slow
Maintaining cost
AIR TRANSPORTATION
Advantages
Disadvantages














Faster
No physical barrier
Easier custom transaction
High frequency
High standard of security
Flexible timetables
Appropriate for special cargo
Cost efficient for light goods
Expensive
Low transport capacity
Sensitive for weather conditions
Non-environment friendly
Limited carrying product
High infrastructure cost
MARITIME TRANSPORTATION
Advantages
Disadvantages
















Flexible for amount of freight
Cheapest
Nature friendly
Safer
Long distance
Best way to carry bulky goods
Good for danger materials
Containerization facilitates materials
handling
Slow
Port duties and taxes
Not good for perishable products
Sensitive for weather conditions
Timetables usually inflexible
Infrastructure costs are high
High capital cost
Inflexible due to lead time