1 Logistics Systems Engineering Introduction to Logistics NTU SY-521-N SMU SYS 7340 Dr. Jerrell T. Stracener, SAE Fellow
Dec 23, 2015
1
Logistics Systems EngineeringIntroduction to Logistics
NTUSY-521-N
SMUSYS 7340
Dr. Jerrell T. Stracener, SAE Fellow
2
• What is Logistics– Logistics is the process that integrates and
coordinates the elements within the supply chain to ensure that best possible flow of materials and information, in order to meet customer requirements in the most efficient manner and at the lowest possible cost.
What is Logistics
3
• Definition:– The art of science and management,
engineering, and technical activities concerned with requirements, design, and supplying and maintaining resources to support objectives, plans, and operations.1
– The branch of military science having to do with procuring, maintaining, and transporting material, personnel, and facilities.2
What is Logistics
4
• Definition:– Logistics is the process of planning,
implementing and controlling the efficient, cost effective flow and storage of raw materials in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.3
What is Logistics
5
• Definition:– Logistics is a support element of the organ-
ization that incorporates elements such as:Transportation StorageSpare & Repair Parts FacilitiesPersonnel and TrainingTechnical PublicationsTest and Support Equipment
– “The process of having the right quantity of the right item in the right place at the right time.4
What is Logistics
6
• What is Logistics– Single Source Information:
What is Logistics
AirConsolidatorDe-consolidatorCustomsCustomerFinancialFreight Forwarder
InformationManufacturingMotorOceanProduct MaterialRail
7
• Evolution of Logistics (Prior to 1950)5:– Prior to the 1950’s, the typical enterprise
treated the process of logistical management on a fragmentary basis.
– Concerns were place on:1. Line-item proliferation2. Selling identical products through a wide
variety of marketing channels3. Widespread offering of product- contained services
What is Logistics
8
• Evolution of Logistics (Prior to 1950)5:– Two reasons why logistics was neglected and
subsequently late in development were:1. Computers were not a commonplace and
quantitative analysis was rarely used2. The volatile economic climate and
profit margins were not typically scrutinized
What is Logistics
9
• Evolution of Logistics (1956 to 1965)5:– During the period of 1956 to 1965, four major
concepts began to materialize:1. Development of total cost analysis2. Application of the system approach3. Increased concern for customer service4. Revised attention to marketing channels
What is Logistics
10
• Evolution of Logistics (1966 to 1970)5:– A time which basic logistics were tested.– For the most part, logistical concepts passed
the test of time.– Managerial emphasis focused on improved
operating performances.– Firms placed a great deal of attention on
finished-goods inventory management and support of customer orders.
What is Logistics
11
• Evolution of Logistics (1966 to 1970)5:– Material management began to develop as an
attempt to integrate the planning and logistical dimensions of purchasing and manufacturing.
– Some draw backs:1. Traffic mangers had a difficult time
embracing that the overall total cost might be reduced by spending
more on a specific activity such as transportation
What is Logistics
12
• Evolution of Logistics (1966 to 1970)5:– Some draw backs (continue):
2. Widespread adoption of either physical distribution or materials management
was the difficulty in presenting a case to support the hard-core return on
investment that would materialize from implementation3. Given the accounting practice of the
times, it was difficult to place a monetary return or value on superior customer service performance
What is Logistics
13
• Evolution of Logistics (1971 to 1979)5:– Energy shortages arose causing companies to
place more emphasis on logistics.1. Transportation2. Inventory
– Overnight, enterprise priorities shifted from servicing demand to maintaining supply.
– Material management matured from the hazards of potential supply discontinuity.
– Just-in-time was adopted.– Long term contra
What is Logistics
14
• Evolution of Logistics (1971 to 1979)5: – Long term contracts were introduced.– Attention began to be directed to third-party
logistical arrangements as an alternative solution to the growing complexity of logistical support.
– The institutionalization of logistics within the organizational structures of countless private and public enterprises.
What is Logistics
15
• Evolution of Logistics (1980 to 1985)5:– The early years of the 1980s experienced
more change in logistical operations than was the case in any previous time period.6
– The most significant changes were:1. Transportation Deregulation2. Microprocessor Technology3. Communication Revolution
What is Logistics
16
• Evolution of Logistics (1986 and beyond)5:– The attainment of strategic goals rests with
the development and implementation of a single overall logic. Integrated logistical management provides such a logic and is becoming increasingly relevant for at least five reasons.7 1. A great deal of interdependence between
all logistical areas which can be exploited to the advantage of the enterprise
What is Logistics
17
• Evolution of Logistics (1986 and beyond)5:2. A narrower or restricted approach creates
the potential for a dysfunctional interface
3. The control requirements for each operation are similar
4. An increasing awareness that many trade- offs exist between manufacturing
economies and marketing requirements that can be reconciled by a wall-designed logistical system
What is Logistics
18
• Evolution of Logistics (1986 and beyond)5:5. The final and perhaps most significant
reason for integrated logistics is that the complexity of contemporary logistics
require innovative solutions
What is Logistics
19
• Mission:– The mission of logistics Is to get the right
goods or services to the right place, at the right time, and in the desired condition, while making the greatest contribution to the firm.
What is Logistics
20
• From Cradle to Grave9
What is LogisticsM
ark
et
Volu
me
TechDev
AppLaunch
AppGrowth
MatureTech
TechObsolescence
Time
21
• 3PL’s – Third party logistics are companies that
specialize in logistics.– Firms hire them out for their knowledge and
expertise.– Allows firms to concentrate on their core
competence.– Complete confidence and trust must take
place between both the 3PL and the firm hiring the 3PL.
What is Logistics
22
• 3PL’s – Examples of 3PL’s
1. EDS2. i2 Technologies3. KPMG4. Manugistics, Inc5. Ryder Logistics6. UPS Logistics
What is Logistics
23
• Cutting Cost• Viewing the Life Cycle Cost• Logistics Management and the Balance Sheet• Technology Infusion Dilemma
Why Logistics
24
• Cutting Cost– Chrysler Corp.’s Drive to Cut Costs10
Saved $2.1 billion this year as part of a drive to cut supply costs, a $900 million increase over last year
“We’re constantly working with our suppliers as teammates to discover new ways to be more efficient”
Suppliers submit proposals aimed at reducing logistics and manufacturing costs
Why Logistics
25
• Cutting Cost– Forward thinking retailers, e.g., Wal-Mart, are
using technology and optimizing transportation to better serve customers and squeeze cost out of the supply chain11
– Dell uses UPS to design a network of distribution models to help improve the time in transit of their products and reduce overall inventory
Why Logistics
26
• Logistics Management and the Balance Sheet14
Why Logistics
Assets
Liabilities
CashReceivables
Inventories
Property, Plan& Equipment
Order Cycle TimeOrder Completion RateInvoice Accuracy
Balance Sheet Logistics Variable
Inventory Policiesand Service Levels
Distribution FacilitiesTransportation Equipment
Cur. Liabilities
DebtEquity
Finance Options forInventory Plant & Equ.
Purchasing Policies
27
Logistics is an Essential Link in the Value Chain
The Seven R’s
Ensuring the availability of the Right product, in theRight quantity, in the Right condition, at the Rightplace, at the Right time, for the Right customer, atthe Right cost.
28
Logistics is a Value Added Service
Good logistics doesn’t mean the cheapest providerGood logistics doesn’t mean the cheapest providerGood logistics doesn’t mean the cheapest providerGood logistics doesn’t mean the cheapest providerGood logistics doesn’t mean the cheapest providerGood logistics doesn’t mean the cheapest provider
29
1 Established in 1974 by the Society of Logistics Engineers (SOLE), Huntsville, Alabama.
2 Guralnik, David B., ed., Webster’s New World Dictionary of the American Language, 2nd college edition (New York: Simon & Schuster, 1980).
3 Council of Logistics Management, Oak Brook, Illinois.4 Norman E. Hutchinson, Florida Institute of Technology.5 Donald J. Bowersox, David J. Closs, and Omar K. Helferich, Logistical
Management, Third Edition (New York: Macmillan Publishing Co, 1986).6 Roy D. Shapiro, “get Leverage from Logistics,” Harvard Business Review
(May-June 1984), pp. 119- 126, and Graham Sharman, “The Rediscovery of Logistics,” Harvard Business Review (September-October, 1984), pp. 71-79.
7 Donald J. Bowersox, David J. Closs, and Omar K. Helferich, Logistical Management, Third Edition (New York: Macmillan Publishing Co, 1986), pp 14-15.
8 Frederick Betz, Managing Technology: “Competing Through New Ventures, Innovation, and Corporate Research,” 1987, pp. 72-74
References
30
9 Frederick Betz, Managing Technology: “Competing Through New Ventures, Innovation, and Corporate Research,” 1987, pp. 72-74
10 Inbound Logistics, August 199811 Inbound Logistics, August 199812 E097922 \ Library \ RMSL-Prod Supt-ILS \ Log - New Frontier.ppt-2113 E097922 \ Library \ RMSL-Prod Supt-ILS \ Log - New Frontier.ppt-2214 E097922 \ Library \ RMSL-Prod Supt-ILS \ Log - New Frontier.ppt-23
References