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Definition
Logistics Management is that part of Supply
Chain Management that plans, implements, and
controls the efficient, effective forward and
reverse flow and storage of goods, services and
related information between the point of origin
and the point of consumption in order to meet
customers' requirements.
Council of Logistics Management (2003)
2
Order processing
Customer service
Demand forecasting
Inventory mgt
Logistics
communications
Purchasing
Transportation
Reverse logistics
Performance-Cycle Uncertainty
Total Performance Cycle
1
Time Range - Days
1/2
10
Customer
Delivery
40
Order
Transmission
1
Time Range - Days
1/2
Order
Transportation
2
Order
Processing
10
Order
Selection
2
Time Range - Days
1
20
2
Time Range - Days
S a le s
s e r v ic e
re v e n u e
-
L o g is tic s
e f f ic ie n c y
C o s ts
P r o f it
In v e n to r y
ROI
+
A sset
A c c o u n ts
C a p ita l
d e p lo y m e n t &
R e c e iv a b le
E m p lo y e d
u tilis a tio n
+
C ash
+
F ix e d
a s s e ts
6
Hi
Lo
Protect
Cost engineer
Build
Danger zone
Lo
Hi
Cost of Service
Total
Customer 2 orders
TOTAL ORDERS
And gets
And gets
And gets
And gets
5,000
6,000
8,000
8,000
27,000
of product
of product
of product
of product
AAAA
BBBB
CCCC
DDDD
EEEE
FFFF
GGGG
IN FULL BY ORDER:
IN FULL BY LINE:
IN FULL BY UNIT:
= 50%
= 71%
= 96%
ON TIME ORDER :
ON TIME LINE
ON TIME UNIT
= 50%
=57%
=61%
units
units
units
units
In full and on time is the in full rate multiplied by the on time rate
IN FULL AND ON TIME BY ORDER: (.5 X .5):
IN FULL AND ON TIME BY LINE: (.71 X .57)
IN FULL AND ON TIME BY UNIT: (.96 X .61)
= 25%
=40%
= 59%
Warehousing (Distribution)
Production/Operation
Machine breakdown per month
Number of reject per batch
10
11
KPI
DIFOT
(in-full x on-time)
----------------------Performance-----------------W
----- <80% CP
90 94 %
>98%
Total
Logistics Cost
>8%
Cash to
Cash Cycle Time
>80 Days
CP
CP
5 - 7%
<4%
45- 55 Days
Customer
Claims
>3%
Stock
Turnover
Disadvantage
Parity
<40 Days
CP
2%
CP
<1%
Comparisons
with Relevant
O Grouping from
R the Database:
L e.g. 73
D Distributors
Including:
C
L
A
S
S
Advantage
12
Service
Leader
Commodity
Market
Lo
Cost &
Service
leader
Cost
Leader
Hi
Productivity Advantage
13
Source: Flextronics
14
15
Document
Within the
scope of a
Quick
Scan
Simplify
Quick hits
Optimise
Understand U
Supply
side
Material flow
Demand
side
Information flow
Product Delivery Process
18
In the end...
The logistics/SC system exhibit best
practice - do nothing but transfer best
practice
The logistics/SC system can be improved
with a few simple actions-implement the
most important Quick Hits
The logistics system/SC needs major reengineering must set up new task force
19
To summarise
Many tools exist to evaluate logistics &
supply chain systems.
Importance is what to do with the data
collected.
National, regional database could be
beneficial to all
20