PART I. INTRODUCTION.
I.2 Logistics Strategy and Planning
“The mission of logistics is to get the right goods or service to the right place,
at the right time, and in the desire condition, while making the greatest
contribution to the firm”
KEY ACTIVITIES.
1. Customer services standard.
a) Determine customer needs and wants.
b) Set customer service levels.
2.Transportation.
a) Freight Consolidation.
b)Vehicle scheduling.
3.Inventory Management.
a) Short-term sales forecasting.
b) Number, size, and location of stocking
point.
c)Jus-in-time, push, and pull strategy.
4.Information flow and order processing.
a)Ordering Rules.
b) Order information transmittal methods.
SUPPORT ACTIVITIES.
1. Warehousing.
a) Warehouse configuration.
b) Stock layout and dock design.
2.Material Handling.
a)Equipment selection.
b)Stock storage and retrieval.
3.Purchasing.
a)Purchase timing.
4.Protective package.
a) Design for Handling and Storage.
5. Cooperate with Production/Operations.
a)Sequence and time production outputs.
6. Information Maintenance.
a)Information
manipulation.
collection,
storage,
and
PART I. INTRODUCTION.
It has been suggested that a logistics strategy has three objectives:
(1) Cost reduction is strategy directed toward minimizing the variable costs
associated with the movement and storage. The best strategy is usually
formulated by evaluating alternative courses of action, such as choosing
among different warehouse location or selecting among alternative transport
modes.
(2) Capital reduction is strategy directed toward minimizing the level of investment
in the logistic system. Shipping direct to customer to avoid warehousing,
choosing, public warehouses over privately owned warehouse, selecting a justin-time supply approach than stocking inventory, or using third-party-logistics.
(3) Service improvement strategies usually recognize that revenue depend on the
level of logistics customer service, the increased revenues may more than
offset the higher costs.
PART I. INTRODUCTION.
The figure three illustrates specific logistics questions. At One level companies must choose
smart logistics strategies, implying specific logistics questions to answer.
As an Example, a common strategy is to ship all products to a customer from a single
distribution center; another common strategy is to ship to a customer from a multiple DC`s
PART I. INTRODUCTION.
Logistics Strategy includes the business goal, requirements, allowable decisions, tactics, and vision for
designing and operating a logistics systems.
• Supply Chain Planning includes the location, sizing and configuration of plants and distribution
distribution centers, the
configuration of shipping lanes and sourcing assignment, the aggregate
aggregate allocation of production resource, and
customer profitability and service issues.
•Shipment Planning is the routing and scheduling of shipment through the supply chain,
chain, including freight
consolidation and transportation mode selection.
•Transportation Systems Planning includes the location, sizing, and configuration of the transportation
transportation
infrastructure, including fleet size and network alignment.
•Vehicle Routing & Scheduling includes the routing and scheduling of drivers, vehicles, trailers,
trailers, etc. Other
applications include dynamic dispatching, customer zone alignment,
alignment, and frequency of delivery questions.
•Warehousing includes the layout design and storage\
storage\picking operations of distribution centers
PART I. INTRODUCTION.
Analyzing the various logistics strategies requires modeling views of a logistics supply chain.
Strategic, tactical, and operational model are three fundamentals classes of modeling views, with
general properties shown in the next figure:
Strategic
• supply chain design
• resource acquisition
• broad scope, highly aggregated data
• long-term planning horizons (1 year +)
Tactical
•production/distribution planning
•resource allocation
•medium-term planning horizons (monthly, quarterly)
Operational
•shipment routing & scheduling
•resource routing & scheduling
•narrow scope, detailed data
•short-term planning horizon (daily, real-time)
PART I. INTRODUCTION.
The logistics applications areas can be organized into modeling views as shown in the table
Supply chain
planning
Transportation
problem
Shipment
planning
Vehicle
routing
Warehousing
Strategy
Site location
Capacity sizing
Sourcing
Site location
Fleet size
Outsourcing
Bid analysis
Fleet sizing
Fleet sizing
Warehouse
layout
Material
Handling
system
Tactical
Production
planning
Sourcing
Routing
strategy
Network
alignment
Consolidation
strategy
Mode strategy
Routing
strategy
Zone alignment
Storage
allocation
Order picking
strategy
Operational
MRP, ERP
Load matching
Shipment
dispatching
Vehicle
dispatching
Order picking
PART I. INTRODUCTION.
Contemporary Logistics Strategies.
JUST-IN-TIME LOGISTICS
If we knew precisely where, when, and how much material is needed at each stage of a
logistics supply chain, good could be move through the supply chain just-in-time (JIT) for use
by the next process, without need to build up inventories.
FREIGHT CONSOLIDATION
Strategies for consolidating freight are fundamental to shipment planning decision. Shipments
in the logistics systems can be routed and scheduled independently of each other or can be
combined to try and achieve transportation economies-of-scale. There are many ways to
consolidate freight, including:
PART I. INTRODUCTION.
1. Vehicle Routing. This type of combined consolidation is called multi-stop vehicle
routing.
2. Pooling. Individual shipments can be brought to a central location or pooled,
creating large shipment suitable for economies-of-scale transportation modes such
as truckloads or rail carloads
PART I. INTRODUCTION.
INTEGRATION OF INBOUND AND DISTRIBUTION LOGISTICS
This strategy particularly impacts shipment planning and vehicle routing and scheduling. For example, la
figure below illustrates separate delivery and pickup routes (left),
(left), and integrated delivery(D)\
delivery(D)\pickup(P) routes
(right).
FIXED/MASTER ROUTES & VARIABLE/DYNAMIC ROUTES
Fixed and master routes are regular vehicles route sequence and schedules developed using average
demand forecasts. Fixed routes are regular run each period without
without considering actual customer demand,
while master routes are adjusted slightly on actual demand. In contrast,
contrast, variable or irregular routes are
tailored to actual customer demand information. The extreme case of variable route is dynamic routes, which
are adjusted dynamically as the rout run.
PART I. INTRODUCTION.
DISTRIBUTION CENTER CONSOLIDATION vs. DECENTRALIZATION
Fundamental decision in Supply Chain design include the number, location, sizing, an product configuration
of distribution center. The next figure illustrates two basic strategies:
strategies: consolidated distribution (fewer but
larger distribution centers) and decentralized distribution (more
(more but smaller distribution centers).
PRIVATE FLEET vs. FOR-HIRE FLEET
Private Fleet gives more control over transportation cost and service,
service, but forces the firm into operations
secondary to business; They are becoming less attractive as competition
competition from transportation deregulation.
ThirdThird-Party Logistics.
PART I. INTRODUCTION.
TRANSPORTATION MODE SELECTION.
Transportation mode impacts inventory costs in three different ways:
ways:
1. Slower transportation modes create more inin-transit inventory.
2. Large shipment sizes may create order quantity inventory, which arises if the batch shipment size is
more than the amount of current demand.
3. Slower transportation modes may rise safety stock inventories needed
needed to protect uncertainties in supply
and demand.
PART I. INTRODUCTION.
CONTINOUS MOVE ROUTING.
Some trucking companies offer discount for continuous move routes,
routes, where drivers and tractors are kept
highly utilized by coordinating the dropoff of and inbound trailer with the pick up of an outbound trailer. This
route reduces costs if the continuous move discount is more than the deadhead cost ti travel to the origin of
the second shipment.
SINGLE SOURCING.
Single sourcing simplifies the LSC which can reduce management and
and operational cost. Single sourcing also
creates larger volume shipment along lanes, which may reduce transportations
transportations cost.
PART I. INTRODUCTION.
THE TRIANGLE OF LOGISTICS DECISION MAKING.
Inventory Strategy.
Transport Strategy.
•Forecasting.
•Transport Fundamentals.
•Storage fundamentals.
•Transport decisions.
•Inventory decisions.
Customer
•Purchasing and supply
scheduling decisions.
Services Goals.
•Storage decision
•The Product.
•Logistics service.
•Information Systems.
Location Strategy.
•Location decisions.
•The network planning process.
MIXED STRATEGY. A mixed distribution strategy will have lower costs than a pure, or
single, strategy.
DIFFERETED DISTRIBUTION. Not all products should be provided the same level of
costumer service. This is a fundamental principle for logistics planning.