logistics-scm-intro.pptx

Slide 1

Logistics & Supply Chain ManagementObjectives and Agenda:

1. Basics of logistics and its role in the modern economy

2. Relation of logistics with Supply Chain Management (SCM)

3. The role of inventory management in SCM

4. Deterministic inventory models

5. Stochastic inventory models: the newsvendor problem LogisticsThe process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from point-of-origin to the point-of-consumption in order to meet customers requirements. Council of Logistics Management (1998)

SupplierManufacturerDistributorRetailerCustomers2Logistics overview

3Logistics managementEffective and efficient management of the flow and storage ofGoodsInformationMoneyPeoplealong a supply chain (both forward and reverse)

SupplierManufacturerDistributorRetailerCustomers4Players in the Logistics industryShipper: sends goods for shipmentForwarder (travel agents for cargo): hires carriers to move goodsTerminal handler: provides temporary storage/retrieval/reorganization of goods in containersCarrier: transports goodsConsignee: the person to whom the goods are sentIntegrator: a company that does multiple tasks, e.g., trucking, forwarding, transportConsigneeCarrierIntegratorTerminalHandlerForwarderForwarderTerminalHandlerShipper5Players in the Logistics Industry: examplesShipper: Wal-Mart, Apple etc.Forwarder: Kerry Logistics, Panalpina etc.Terminal handler: Hactl (HK Air Cargo Terminal), HIT (Hong Kong International Terminal) etc.Carrier: Maersk, OOCL, Cathay Pacific Cargo etc.Integrator: UPS, DHL, FedEx, SF Express etc.

6Freight Forwarders business modelFreight forwarders work like wholesalersThey contract shipping space in large quantity and sells to shippers in small quantityTheir profit comes fromPrice differences (between bulk shipping and unit shipping)Consolidation of shipments

7Terminal operatorsOver 50% of all ocean shipments are managed by a small number (~15) of terminal operators

The five largest terminal operatorsPort of Singapore Authority (PSA)Hutchison Port Holdings (PHP)Dubai Ports World (DPW)APM TerminalsCOSCO (China Ocean Shipping)

8Large global terminal operators can often bringexperience and unique capabilities based on their operations elsewhereloyalties of a customer basenetworking possibilitiesaccess to financingbargaining power in the business

9Importance of logistics in HKEmploys over 200,000 peopleInternational airportLarge-capacity container port

#1 Cargo handler in world3rd largest port in world by volume10HK Port

11HK Container Terminals..

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CT9CT8CT7CT6CT4CT3CT2CT1CT513

Container TerminalsGoods waiting to be shipped14WarehousesIn previous slides, we saw several examples of places where goods were stored, waiting to be shipped

Places for storing goods Warehouses

Other examples:

Amazon15Why do we need warehouses?Logistics: Consolidate productFixed cost of transportationMultiple vendors, multiple customers

Manufacturing: Realize economies of scaleIn shippingIn purchasing

Retail: Reduce response timeFluctuate demandUnreliable transportationDefinition: All goods held by a company that will be used for production, or shall be sold at a later date are called the inventory.16A product flow model of inventoryThe fluid model of product flow

If two pipes have the same rates of flow, the narrower pipe holds less fluid. Volume of fluid == inventory Less inventory less inventory costs.

17Product flow in a warehouseProducts flow through warehouse

Some guidelines for warehouse design and operation:Keep products moving smoothly, avoid starts and stops, which mean extra handling and space requirementsAvoid layouts that impede smooth flowIdentify and resolve bottlenecks to flow

An example to speed up the flow: cross docking18Cross DockingFull truck loads from suppliers to cross dockfrom cross dock to storesVery little time in storage at warehouse,