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GS 120iGlobalization: Moving The
Things We Buy
Professor: Dr. Jean-Paul Rodrigue
Hofstra Univers i ty, Department o f Global Studies & Geography
Topic 6Logistics and
Supply Chain Management
AThe Role and Function of
Logistics
BValue Chains
C
Distribution Systems
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AThe Role and Function
of Logistics
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Logistics Goals and Operations
Fulfillment(Goals)
Order
Right product
Right quantity
Delivery
Right location
Right time
Quality
Right condition
Cost
Right price
Demand(Operations)
Transportation
Handling
Packaging
StockManagement
Production scheduling
Warehousing
Orders Processing
Sales
Purchase
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Value-Added Functions and Differentiation
of Supply Chains
Value-Added Funct io ns Supp ly Chain Dif ferent iat ion
Production
Costs
Location
Time
Control
Logistics Costs
Transit Time
Reliability
Risk
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Taxonomy of Logistics Decisions
Level Description
Production
structures
Commercial decisions on outsourcing, offshoring and
sub-contracting.
Number, location and capacity of production units.
Transportstructures
Choice of a freight network linking a company and itssuppliers and customers.
Choice of modes and terminals; the transport chain.
Distribution
structures
Choice concerning the number, location and capacity
of distribution centers.
Frequency and timing of distribution (e.g. just-in-time).Logistics
structures
Usage of production, transport and distribution
capabilities to fulfill short, medium and long term
strategies (e.g. lower costs, gain market share,
improve service efficiency, reduce response time,
reduce environmental footprint). Usage of third
party logistics providers.
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Worldwide Logistics Costs, 2002
39%
27%
24%
6%4%
Transportation
Warehousing
Inventory Carrying
Order Processing
Administration
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From Push to Pull Logistics
Suppl ier Suppl ier Suppl ier
Manufacturer
Customer
Distr ibutor
Suppl ier Suppl ier Suppl ier Suppl ier
Suppl ier Suppl ier Suppl ier
Manufacturer
Distr ibutor
Customer
3PL
Returns / Recycl in g
Point-of-sale data
Freight f low
Push Pull
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Layers to Logistics Services
1PL
2PL
3PL
4PL
Manu factur ing, Retai l ing
Transportat ion
Log is t ics
Supply ch ain
management
Cargo owners
Carriers
Logist ics serv ice
providers
Lead logist ics pro viders
& consu l tan ts
Supp ly chain integrat ion
Actors Services
Servic
e
in
tegr
ation
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Logistic Performance Index, 2010
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BValue Chains
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The Commodity Chain (or Value Chain)
Transpo rt Chain
Raw
materials
Manufactur ing
and assemb lyDistr ibut ion
Bulk sh ipp ing Unit sh ipp ing
High volumes
Low frequency
Low vo lumes
High frequency
LTL shipping
Average volum es
High frequency
1- Commod it ies 3- Final Good s2- Intermediate Goods
Attributable to climatic
(agricultural products,
forestry products) or
geological (ores and fossil
fuels) conditions.
Transformation that confers
added value. Metals, textiles,
construction materials and
parts used to make other
goods.
Goods shipped to large
consumption markets. Flow
and inventory management.
Stages
Mark
et
Flows
Market
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Commodity Chains and Added Value
Commodi ty cha in
Adde
d
va
lue
Low
High
Manufactur ing
R&D Fabr icat ion
Dist r ibut ionDesign
Brand ing Market ing
Sales / Servi ce
Concept Log is t ics
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Product Life Cycle
Sa
les
Stage 1 Stage 2 Stage 3
Monopo ly Compet i t ion
Research and
developmentMatur i ty Decline
Firs t compet i to rs Mass product ion
Growth
Stage 4
Promot ionIdea
Obsolescence
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APL Logistics Freight Distribution Center,
Shenzhen, PRC, December 2005
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Container Waiting to be Loaded, APL DC -
Shenzhen
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Extended Distribution Center System of
JVC Belgium
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Palletization of Floor Loaded Shipments,
Belgium
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CDistribution Systems
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Types of Supply Chain Facilities
Fabricat ion
StorageDistr ibut ion
Heavy manufactur ing
L ight
manufactur ingCold Chain
Bulk
warehouse
Rack-supportedwarehouse
Cross-docking
Mult i tenant
Regional warehouse
Air cargo
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Optimal Location and Throughput by
Number of Freight Distribution Centers
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Cross-Docking Distribution Center
Suppl iers
Customers
Receiv ing
Shipp ing
Sort ing
LTL
Suppl iers
Customers
FTL
FTL
Cross-Docking
DC
Distr ibut io n Center Before Cross-Docking
After Cross -Docking
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Retail Logistics and E-commerce
Retailer
(In store inventory)
Suppl iers
E-Retailer
Customers Customers
Suppl iers
RDC
Conventional Retai l Log ist ics
Travel to
store
Online
purchases
Store Deliveries
E-commerce Retai l Log ist ics
Home
Deliveries
Parcel Delivery
Company
RDC
Regional
Dist r ibut ion
Center
Order
RDC
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Order-Delivery Sequence of an Apple iPad
Note: Path is approximate
Order Fulf i l lment (Cycle t ime of 12 days 18hrs 08min)Order placed
online3hrs
34min
Order processed
12 days 15hrs 34min
Shipment notification
Delivery (Lead time o f 48hrs 11min )
2hrs
45min
Shipment notification
Shipment picked up
4hrs
23min
Leaving local DC
7hrs
34min
At Hong Kong hub
17hrs 04min
At Anchorage hub
1hr 57min
Cleared customs
1hr 22min
Left Anchorage hub
6hrs 03min
At Newark hub
4hrs
00min
Left Newark hub
1hr
11min
At local DC
2hrs
48min
Delivered
Cons olidatio n (Shenzhen/HK) Transfer (Anch orage) Decons olidatio n (NY Metro)
L i ti A ti iti d th i G
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Logistic Activities and their Green
Dimensions
Product Design and
ProductionPlanning
Product design
Near sourcing
Sustainable
sourcing
PhysicalDistribution
Certifieddistribution facilities
Certified carriers
Load consolidation Alternative modes
and fuels
MaterialsManagement
Packaging
Recycled inputs
Recyclable outputs
(wastemanagement)
Consume
Producers Dist r ibutors
Col lectorsRecyclers
Reverse Channel
Suppl iers
Forward Channel
Forward and Reverse Distr i
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Packaging with Less Footprint
O ti l C diti f C ld Ch i
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Operational Conditions of Cold Chain
Logistics
Conditional demand
Each product has a specific perishability.
Shelf life and revenue.
Demand conditional to qualitative attributes.
Load integrity
Reefers as the common load unit.
Packing, packaging and preparation.
Empty backhauls.
Transport integrity
Uninterrupted integrity of the transport chain (modes,
terminals and DC).
Specialized modes (speed) and terminals?
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Temperature Standards for the Cold Chain
Deep Freeze
Frozen
Chill
Pharmaceutical
"Banana"
-30 -25 -20 -15 -10 -5 0 5 10 15
Degrees Celcius
Sh lf Lif f S l t d P i h bl F d
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Shelf Life of Selected Perishable Food
Products
Product
Shelf Life (Days)
Optimum Temperature (Celsius)
Apples 90-240 0
Bananas 7-28 13.5
Bell Peppers 21-35 7
Cabbage 14-20 1
Eggs 180 1.1
Onions 30-180 1Lettuce 12-14 0.6
Fresh Meat (beef, lamb, pork,poultry)
14-65 -2
Oranges 21-90 7
Pears 120-180 -0.6
Potatoes 30-50 10Seafood (shrimp, lobster, crab) 120-360 -17.8
Strawberries 5-10 0.6
Tomatoes 7-14 12
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Seaborne Reefer Trade, 2008
20%
7%
10%
3%19%
24%
3%
14%
Bananas
CitrusDeciduous Fruit
Exotics
Fish & Seafood
Meat
Dairy
Other
Reefer Stacking Area Maher Terminal
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Reefer Stacking Area, Maher Terminal,
Newark
Grocery Chain Cold Storage Facility
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Grocery Chain Cold Storage Facility,
Regina
Subtropolis Distribution Center Kansas
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Subtropolis Distribution Center, Kansas
City
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