Prof. Dr.-Ing. Bernd Noche Fakultät für Ingenieurwissenschaften Abteilung Maschinenbau Transportsysteme und -logistik Keetmanstr. 3-9 47058 Duisburg Telefon: 0203 379-2785 Telefax: 0203 379-3048 E-Mail: [email protected]Knowledge module logistic strategies
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Prof. Dr.-Ing. Bernd Noche
Fakultät für Ingenieurwissenschaften Abteilung Maschinenbau
Transportsysteme und -logistik Keetmanstr. 3-9 47058 Duisburg
Definitions of logistics Historical development of logistics Logistics performance and logistics costs Logistic guiding principles Logistic questionnaire Competition strategies Strategic logistic projects Examples for the strategic logistics planning
• Food industry
• Textile industry
• Production plant
• Wholesale
Summary
Inhaltsverzeichnis
If you stand in front of an empty supermarket shelf…
If the book you have ordered doesn’t come…
If the delivery of your compact car is delaying…
If important medicine for your therapy is missing…
…then logistics has failed
Quelle: Prof. Straube
Terms and definitions • What is logistics? • What do you think of when you hear the word logistics?
Shipping company
Ware- house
Turnover
Logistics service providers
Congestion
Forwarding
Master plan logistic
Globalization
Environment
Material flow technologies
Means of transport
Means of transport
Knowledge module logistic strategies
Terms and definitions
Definitions of logistics
o The term logistics means the total material flow of an enterprise including external logistics partners and the appropriate information flow (VDI 2520) o Logistics deals with the optimal planning, management and control of all material and goods movements from the source to the sink including the information flows releasing the physical movements cross-companies (Baumgarten, 1988) o Logistics is the process of planning, realization and control of the efficient, cost effective flowing of raw materials, semi-finished goods and finished goods and the information related to that of the point of delivery and receipt corresponding to the requirements of the customer (Pfohl, 1994) o Logistics is a special leading approach for the development, design, control and realizsation of effective and efficient flows of objects (goods, information, persons) in company-wide and cross- company value added systems (Göpfert, 1999).
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Knowledge module logistic strategies
Quelle: In Anlehnung an Christof Schulte: Logistik; Prof. Fortmann
Terms and definitions Definitions of logistics
Logistics is the integrated planning, desing, processing and control of
all transport and storing processes as well as the corresponding information flows:
Material flow
Informa- tion flow
• from the company to the customer, • from the supplier to the company,
T Sup-plier
Ware-house
Fabri-cation
Ware-house
Cus-tomer
T=Transport
T T T
I=Information
Order Demand planning
Production planning
Volume planning Order I I I I
• within the company, • as well as along the disposal procedure
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Challenge: Customized products
Quelle: Prof. Straube
Yesterday Today
Online configurator
Online configurator
Calcuative: 32.000 variants of door linings (Audi A8) 35.000 variants of center arm rests (BMW 5er) 1032 variants of the vehicle
Knowledge module logistic strategies
Terms and definitions
Roots and development of the term „logistics“
Are on the one hand in the Greek word logos (mind, numeration) and on the other hand in the French-Germanic root word loger (to provide, to support). Was first affected by military.
The French general Jomini (1779 – 1869) created with the „marechal de logis“ a position of essential meaning within the Napoleonic army system. At the beginning: Sufficient supply of troups (baggage) Later: Planning of the transport and traffic system of the military units 1956 in Stanford: Logistics becomes a subject -> Similarity between „military logistics“ and „logistical problems in business“
For about 40 years the term „logistics“ is used to describe complex goods and information flows.
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Knowledge module logistic strategies
Terms and definitions
Historical development of „civil“ logistics
Source: Gudehus
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AGV (1970) High bay racking (1962) DP (1950) Forklift (1940) Air transport (1920)
Boats
Road building Sailers Caravans Bikes, trolleys Rollers, lifting tools
Postal services World trade Discoveries Hansa (from 1100)
Vehicles (1890) Electric motor (1870) Rail (1825) Steamboats (1800)
Local transports
Coastal shipping
Continental transports
Continental trading
networks
Global transports
Logistic networks
Time
Knowledge module logistic strategies
Terms and definitions
Historical development of „civil“ logistics
Approx. 2700 before Christ: Material transport
techniques in pyramid construction.
Bricks weighting tons were transported to the
construction site and erected there
Approx. 300 before Christ:
Revolutionary Greek rowing boats - the
newly created basis for intercontinental
commercial activities.
Quelle: DHL
11
Knowledge module logistic strategies
Terms and definitions
Historical development of „civil“ logistics
Approx. 700: Procurement logistics in
the construction of the Mezquita
Mosque.
Colums were transported to Spain from
the whole islamic world empire.
Approx. 1200: The international company
networt „the Hanseatics“ - the cooperation for
bundeling of transports and international
maritime traffic.
Quelle: DHL
12
Knowledge module logistic strategies
Terms and definitions
Historical development of „civil“ logistics
Approx. 1500: Progressive postal operations in
Europe - the first postage with an exactly
defined runtime .
Approx. 1800: Invention of vehicles and
rail – Expansion of logistic tasks by
new technologies and means of
transport.
Quelle: DHL
13
Knowledge module logistic strategies
Terms and definitions
Historical development of „civil“ logistics
Approx. 1940: Militariy logistics in the
world wars – Transfer of military
logistics concepts to economy.
1956: Invention of the maritime
container - structural change in world
trade and boom of the international
flows of goods.
Source: DHL
14
Knowledge module logistic strategies
Terms and definitions
Historical development of „civil“ logistics
Approx. 1970 - 1980: Kanban and Just-
in-time concepts – Logistic conceptions
with particular consideration of
procurement.
Approx. 1990: QR and ECR
technologies - Logistic conceptions
with particular consideration of
distribution.
Quelle: DHL
15
Knowledge module logistic strategies
Terms and definitions
Historical development of „civil“ logistics
Present: Supply Chain Management -
the consideration of the total logistics
chain from the presupplier to the end
customer.
Presence: Advancing globalization -
efficient logistics as competitive
advantage in globalization.
Source: DHL
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Knowledge module logistic strategies
Terms and definitions
Logistic objects
Real assets (material) Trading goods, food, consumer goods, Raw materials, pre- or semi-finished goods, finished goods Production and operating materials Waste materials
Persons (material) Passengers
Information (Immaterial)
Orders, information
Depending on the logistic objects one distinguishes (Material)goods logistics Passenger transportation logistics I&K logistics
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Knowledge module logistic strategies
Terms and definitions
Logistic processes
Logistic processes or performances in the narrower sense Transport (internal and external) Turnover (storing and removal, loading and unloading) Storage (chaotic or fixed location storage) Order picking (combination of orders)
cCan be characterized as Distance bridging (transport) Time bridging (storage) Change of arrangement (picking) of objects.
Logistic processes or performances in the broader sense
Production (often also in the narrower sense), procurement, service.
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Knowledge module logistic strategies
Quelle: In Anlehnung an Arnold: Beschaffungsmanagement; Prof. Fortmann
Bridging of distance and
time
Warehouse Transport Traffic Material flow Information systems Order processing
Supply system
Relation to object
functional, relation to market
Provision management as a summing up element for the systems of logistics, materials handling and procurement
Materials handling
Logistics Procure-
ment
Information Real assets Rights Personnel Capital Energy
Material planning Inventory control Material provision Material disposal Recycling
Terms and definitions
19
Knowledge module logistic strategies
Quelle: In Anlehnung an H.-Chr.Pfohl, Marketinglogistik, Berlin Heidelberg 1972, S.28;H.-Chr.Pfohl, Logistiksysteme, Berlin Heidelberg 1996, S.19; Prof. Fortmann
Main objective of logistics: Optimization of logistics efficiency
• the right product at • the right location in • the right quantity at • the right time in • the right quality at • the right costs
The 6 "R‘s" of Logistics
System output:
Logistics efficiency = Relation of system output to system input
• Carrying costs • Storage cost • Handling costs • Costs of control • System costs • Transport costs
System input: Evaluated use of factors
Logistics system: Enterprise logistics
• Procurement logistics • Production logistics • Distribution logistics • Disposal logistics
Personnel and facilities in the areas of
Terms and definitions
Objectives of logistics
20
Knowledge module logistic strategies
Quelle: In Anlehnung an Christof Schulte: Logistik, S.6; Prof. Fortmann
Definition of the Logistics performance Logistics efficiency
Logistics costs Logistics service
Delivery reliability Anz. Lief.
Zeit
S C
Flexibility Anz. Lief.
Zeit
Solltermin Isttermin
S C
Coverage Anz. Artik.
Zeit
S C
Handling/Transport Umsatz Kosten
Zeit
S C
U
Storage costs Umsatz Kosten
Zeit
S C
U
Elements of the Logistics service
• Delivery time • Delivery reliability • Delivery flexibility • Delivery character • Readiness for delivery
Legend: S = Own company C = Competition
Delivery time
Zeit
S C Anz. Artik.
Logistics performance
21
Knowledge module logistic strategies
Quelle: In Anlehnung an Christof Schulte: Logistik, 2.Aufl., München 1995, S. 6; Prof. Fortmann
Definition of the logistics service components
Delivery time = Time between placing of orders and availability at the customer
Delivery reliability (supplier‘s reliability, adherence to schedules) = Probability that the promised delivery time is kept
Delivery flexiblity = Ability to respond to particular customer wishes
Delivery character = Correctness of delivery according to type and quantity and condition of delivery
Willingness to supply = Percentage of articles deliverable from stock
22
Knowledge module logistic strategies
Quelle: In Anlehnung an Christof Schulte: Logistik; Prof. Fortmann
Carrying costs = Interest on tied capital, insurance, devaluation, loss due to shrinkage
Logistics cost are on average 15-20% of the total costs. So they take a considerable influence on the company's results!
System costs = Design, planning and control of the material flow
Costs of control = Production program planning, scheduling, order processing, manufacturing control etc.
Costs of transport = Costs of the internal and external goods traffic
Handling costs = Order picking, handling, packing
Storage costs = Fixed costs of facility, storing and removal effort, provision of storing capacity
Important types of logistics costs
23
Knowledge module logistic strategies
loingb06.ppt
Recycling industry
Pur-chasing
Manu-factu-ring
Selling
Selling
Purcha-sing
Sto-ring
Selling
Logistik- Kreislauf
Basic material industry
Processing industry
Trade
End consumer Basic
materials
For-ming
Selling
Produ-cing
Recyc-ling
Collec-ting
Areas of influence of logistics
Quelle: Prof. Fortmann
24
Knowledge module logistic strategies
The path from the manufacturer to the end customer is connected by interfaces.
Those represent limits, which hinder the logistic flow.
Objective of the logistic chains is:
to transform interfaces in junctions, to adjust them continuously and
to control processes cross-system!
The logistics chain has the following advanteges:
o The combination of the main process chains avoids the repetition of logistic processes
o Transport units are coordinated, thereby, the turnover and
Knowledge module logistic strategies Holistic consideration of logistics
Source: Andreas Beck
28
Logistics system
Objective: Optimization of the total system
Systems thinking
Competing objecitves
optimal, trans-sectoral decisions
Organizational structuring of interface tasks Cross-section thinking
Cross-section thinking
Flow thinking
Assembly, packing
Supplier
Raw material store
Production of parts
Storage
Obj
ectiv
e: c
ontin
uous
flow
of g
oods
: C
onsi
sten
cy, c
oher
ence
, spe
ed, l
ittle
tu
bule
nces
(in
terru
ptio
n =>
inve
ntor
y)
Finished goods store
Dispatch/Distribution store
End customer
Knowledge module logistic strategies Magic objective-square of logistics
Quelle: Prof. Ullmann
29
High adherence to delivery dates
Short lead time
High utilization
Low inventories
Former weighting
Today‘s weighting Low inventories
Knowledge module logistic strategies Conflict of objectives in logistics
Logistic measure
Reductions of costs in a logistics area
by
Increases of costs in another Logistics
area by
Reduction of stock levels
Reduction of inventories Increase of transport roadways
Use of thinner wrappings
Reduction of packing material demands
Increase of damages in transit
Reduction of batch sizes Reduction of inventories Increase of the number of set up times
Increase of purchase quantities
Reduction of the number of Anzahl order
transactions
Increase of inventories
Increase of availability Recution of shortages Increase of inventories
Quelle: Vermast
30
Knowledge module logistic strategies
Source: In Anlehnung an Christof Schulte: Logistik, 1995, S. 10.; Prof. Fortmann
Strategy alternatives
Costs of delivery service
Shortage costs
Target As-is Total costs
Optimal delivery service
Costs
Delivery service 100 %
Required delivery service
As-is Target
Costs
Delivery service 100 %
31
Knowledge module logistic strategies 32
Horizontal structure of business logistics
Procurement logistics Production logistics Distribution logistics
Supplier 1
Supplier 2
Supplier n
• • •
Procurement market
Customer 1
Customer 2
Customer
• • •
Sales market
Information flow Material flow
Knowledge module logistic strategies 33
Organizatorial split-up of logistics tasks
Management
Production planning
Inventory management
Internal transport
Package
EDV
Operations Research
Vehicle fleet
Order processing
Inventory management
External transport
Sales department Production Administration
Knowledge module logistic strategies 34
• Cost leadership Striving for the goal to become the cheapest producer of the branch Differentiation Differentiated products and services, which distinguish advantageously from the competitors
• Focus on priorities Focus on special market segments, i.e. production and sale of special delivery of specific products and markets
Basic types of competitive strategies (according to Porter)
Orientation of logistics strategies in the company
Knowledge module logistic strategies 36
Logistic as a Productivity factor
Logistics strategy
Logistics as a decisive benefit
factor for the purchase decision
Logistics as a differentiation factor
Increase in throughputs
Reduction of material flow, transport and handling costs
Capital release by reduction of inventory or measures for the improvement of transparency
Structural, technical and organizatorial redesign of the logistics oriented value chain
Strategic relevance of logistics
Cost list Niche specialization Service differentiation
High Service level Flexibility Appropriate delivery speed
Knowledge module logistic strategies 37
Crucial questions of strategical logistics projects
Which significance has logistic in the enterprise?
How can the logistic factors of success and targets be derived from the
business strategy?
How can an effective and efficient logistics strategy be expressed?
How can logistics strategy concepts be implemented and institutionalized?
How can these strategy concepts be operationalized and managed?
How is it possible to early identify developements which eventually effectuate
a correction or reorientation of the pursued logistics strategy?
Knowledge module logistic strategies 38
Instruments for the strategic optimization of the logistics chain
Layout Production Marketing/ distribution
Quality
Product structure
Production structure
Technology
Vertical integration
Organisation
Logistics structure
Assortment structure
Strategy supporting principles
Logistics chain
Logistics strategy
Knowledge module logistic strategies 39
Integrated market actors in a logistics chain
Suppliers Forwarding
agents/ logistic
Service providers
Forwarding agents/logistic Service providers
Purchasers Company
Depth of added value
Forward cooperation resepectively integration
Revers cooperation respectively integration
Added value
system as A basis
Distribution channel
Added value systems of
the purchasers
Added value systems of
the suppliers
Procure- ment channel
System partners
Lateral cooperation respectively. integration
Knowledge module logistic strategies 40
Differentiation stages of the order generation in the logistics chain
Layout Partial production Assembly Marketing/ distribution
Production 1 Production 2
Plant engineering
Spare parts from consign- ment stock
• customer specific product design and manufactu-ring
• Production according to receipt of order
• Assembly of pre-assembled components and modules
• Sale of standard products
• Customer –oriented delivery service
Consumer goods Specific performance for gear drive, Car from European production Ship‘s and
diesel engines
Knowledge module logistic strategies 41
Comparison of push and pull principle
Order
Order
Order control pulse
Material flow Direction of added value
Operation order control
Consumption control
Push principle
Pull principle
Pushing of Material flows"
„Pulling of Material flows" Information flow
Knowledge module logistic strategies 42
Parts classification for the program and stock production
Type
A parts
Activation of production Characterization
deterministic • Date and batch size are fix • Low fluctiations in demand
B parts Order-driven • Date and batch sizes depend on current, deterministically identified demands
C parts Consumption-driven • Batch size is fix • Dates comply with parts consumption
Knowledge module logistic strategies 43
Logistic oriented operation sector of a production system
Cycle time
Leistung
Limiting performance of the Production system
High productive capacity with reserve capacities for order flexibility
• low cycle times • low inventories
Logistic oriented operation sector of a production system
Pro
duct
ive
capa
city
Average inventory (work-in process)
Knowledge module logistic strategies 44
Basic tools of the strategic logistics planning
Productivity analysis Process analysis Structural analysis
Product analysis
Structural analysis Structural analysis
Value-added process Resources Process reliability
Resource needs Performances Costs
Logistics chain Organization Make-or-buy
Produktstrukur Komplexität
Service requirements Delivery times Distribution structure
Costs/achievement potentials of the competitors Differentiation factors Strengths/weaknesses
Logistic as Produktivity factor
Logistics strategy
Logistics as decisive benefit factor for the purchase decision
Logistics as Differentiation factor
Knowledge module logistic strategies 45
Domino Pizza
Company data: • Biggest pizzeria chain with
customer supply • Market share of outside pizza:
approx. 53%
• Total revenue: $ 1,98 bn. • 4800 selling points for pizza in the
USA and 12 countries • Annually more than 200 Mio pizza • No restaurant operation in selling
points for pizza
Production spectrum: • 2 sizes of pizza in special keeping
fresh boxes • 10 variants for toppings • Coke, iced
Strategic targets: • Delivery time from order: 30 min • Service level: 98 % within 30 min
2 % within 40 min, $ 3 refund 100 % under 40 min
• Price for a pizza on average: $ 9,90
Strategic questions: • Location and number of pizza centers • Distribution technology • Structure of chains / Logistics structure • Information technology
Knowledge module logistic strategies 46
Basic structure of logistics chain Domino Pizza
Customer request
Fulfillment of customer request
Logistics chain
Order acceptance
Distribution of oders
Baking Packing
Delivery
2 min 3 min 10 min 15 min
30 min
Knowledge module logistic strategies 47
Structural variation of the logistics chain Domino pizza
Order acceptance
Order distribution
Baking Packing
Delivery
1. Complete local logistics chain
2. Combination of central order acceptance and local pizza production and delivery
Centrale order acceptance • • •
1
2
4.800
local selling point for pizza
Knowledge module logistic strategies 48
Refining alternatives of the logistics chain
Order acceptance
Order distribution
Baking Packing
Delivery
10 min
Preparing dough
Rolling out dough
Topping pizza
Baking Packing
Toppings, ingredients
1 min 1 min 2 min 6 min
Baking Packing
Topped pizza (purchase)
Knowledge module logistic strategies 49
Strategic differentiation of the logistics chain
Conventional Textile manufacturer
Designen Inking of wool
and fibers
Knitting and tailoring Selling
Designing Inking of wool
fibersFasern
Knitting and tailoring Selling
own Designer
generally complete In-house production
Sale via textile trade
Collaboration with industrial
designers
20% Vertical integration
Own outlets,
franchise
Competetive advantages: higher variety of products strategic flexibility with faster change of fashion integrated information system enables an efficient
coordination between production and stock movement Consideration of short-term trends of deman akceptable price level
Knowledge module logistic strategies 50
Alternative provision structures
centrale storage in the plant
central storage outside the plant decentral storage in the plant