CHAPTER 3

The Measures of Logistics

and System Support
 THE MEASURES OF LOGISTICS AND SYSTEM
SUPPORT
 Establish measures of system
effectiveness
 System measures of
 Describe economic and life cycle cost
effectiveness
factors
 Supply chain factors
 Explain the relevance of activity-based
 Purchasing and material flow
costing
factors
 Describe the effects of supply chain,
Measures of  Transportation , packaging
purchasing and material flow,
Logistics and and handling factors
transportation, packaging and handling,
System Support  Warehousing and distribution warehousing and distribution,
factors maintenance factors on the logistics and
 Maintenance factors maintenance support infrastructure.

 System retirement and  Perform calculations on metrics for cost

material recycling/disposal effectiveness, life cycle costs

factors  Describe logistics activities during

system retirement and material recycling.
 1. SYSTEM MEASURES OF EFFECTIVENESS
(MOE’S)
 Measures of Effectiveness (MOE) are measure designed to
correspond to accomplishment of mission objectives and
achievement of desired results. They quantify the results to be
obtained by a system and may be expressed as probabilities that the
system will perform as required.

 Characteristics of Measure of Effectiveness:

 Relates to performance
 Simple to state
 Testable
 Complete
 States any time dependency
 States any environmental conditions
 Can be measured quantitatively (if required, may be measured statistically
or as a probability)
 Easy to measure
1.1. SYSTEM EFFECTIVENESS (SE)
 SE = System Effectiveness - ability of a system to do
the job for which it was intended.
 The system effectiveness can be defined as a
function of performance, availability and
dependability:
 SE = (P)(A)(D)
 P = Performance – constitutes the appropriate combination of
system operational factors e.g. range, accuracy, weight, size,
speed.
 A = Availability – refers to the probability that system will be

operable, when called upon at the start of the mission.

 D = Dependability – refers to the probability that a system will

successfully complete its mission given that the system is

operational at the start of its mission.
 SYSTEM EFFECTIVENESS (SE)
 Another example of the current application of MOE is in the use of the
Total Productive measure (TPM) concept in the commercial manufacturing
plant.
TPM is an approach for improving the overall effectiveness and efficiency of
manufacturing plant
 Objectives
• Maximize the overall effectiveness of manufacturing equipment and process by
maximizing the availability of the production process so that it is ready and
available when required, through improved reliability and maintainability
with the goal of minimizing downtime
• Establish a life cycle approach in the performance of preventive maintenance
(PM), by applying a reliability-centered maintenance approach to determine
and justify the requirements for preventive maintenance based on reliability
information, knowledge of physics of failure characteristics and so forth.
• Involve All operating department within a manufacturing plant organization
in the initial planning and for the subsequent implementation of maintenance
program (i.e. testing, marketing, maintenance quality control etc)
• Initiate a program based on the promotion of maintenance through motivation
management and small groups.
 SYSTEM EFFECTIVENESS (SE)
 The measure of TPM can be expressed in term of
Overall equipment effectiveness (OEE), which is a
function of availability (A), performance rate (P), and
quality rate (Q).
OEE = (availability)(performance rate)(quality rate)

Where

Availability (A) = (Loading time – downtime)/loading time

Performance rate (P) = (output)(actual cycle time/Loading time –

downtime) x (Ideal cycle time/actual cycle time)

Quality rate (Q) = (input – (quality defects + start-up defects + rework)) /

Input
 1.2 ECONOMIC AND LIFE CYCLE COST (LCC)
FACTORS

 LCC includes all system cost and may be broken

down into various categories to include:
 design and development cost,
 construction and/or production cost,
 system operation and maintenance cost,
 system retirement and material recycling or disposal cost.
 Life-cycle cost includes all producer, supplier，
customer (user), maintainer, and related cost. Thus，
the emphasis should relate primarily to those costs
that can be directly attributed to a given system or
product.
 Life cycle costing (LCC) is a method of calculating the
total cost of ownership over the life span of the asset.
ECONOMIC AND LIFE CYCLE COST (LCC).
COST BREAKDOWN
 ECONOMIC AND LIFE CYCLE COST (LCC).
COST BREAKDOWN
 Cost Estimating
Total Product Cost (TC) - This includes all future life-cycle costs
associated :
 Research and Development Cost – CR Includes all costs
associated with product management, product planning, product
research, engineering design, design documentation, product
software, and product test and evaluation. These costs are
basically nonrecurring.
 Production and Construction Cost – CP - This category includes
all recurring and nonrecurring costs associated with industrial
engineering, product manufacturing, construction of new
facilities, and initial logistics support.
 Operation and support cost – CO - This category includes all costs
associated with product distribution, product operational use (by
the consumer), and the sustaining life cycle logistics support of
the product in the field.
 Retirement and Disposal Cost - CD
ECONOMIC AND LIFE CYCLE COST (LCC)
BASIC STEPS IN A LCCA
 1. Define system requirements and TPMs.
 2. Specify the system life-cycle and identify activities by
phase.
 3. Develop a cost breakdown structure.
 4. Identify input data requirements.
 5. Establish costs for each category in the CBS.
 6. Select a cost model for analysis and evaluation.
 7. Develop a cost profile and summary.
 8. Identify high-cost contributors and cause-effect
relationships.
 9. Conduct a sensitivity analysis.
 10. Identify priorities for problem resolution.
 11. Identify additional alternatives.
 12. Evaluate feasible alternatives and select a preferred
approach.
 1.3 COST EFFECTIVENESS (CE)
 CE = Cost Effectiveness - measure of a system in terms
of mission fulfilment (system effectiveness) and total life-
cycle cost. Figure Of Merit (FOM) can include:
 Cost effectiveness FOM = (availability) ÷ (life-cycle cost)
 Cost effectiveness FOM = (performance) ÷ (life-cycle cost)
 Cost effectiveness FOM = (logistics effectiveness) ÷ (life-cycle cost)
 Cost effectiveness FOM = (overall equipment effectiveness) ÷ (life-cycle cost)
 Cost effectiveness FOM = (life-cycle cost) ÷ (facility space)
 2. SUPPLY CHAIN FACTORS
 The supply chain includes functions, associated
primarily with:
• the forward flow of activities,
• involved with the initial acquisition of items from various
sources of supply,
• the flow of materials throughout the production /construction
process,
• the transportation and distribution of products from the
manufacturer to the customer (user),
• the sustaining on site customer service as required, and
all related business oriented process (e.g. accounting, financial
management, information flow, money flow) necessary to ensure
that the entire flow is effective and efficient.
 2. SUPPLY CHAIN FACTORS
 With regards to the metrics pertaining to the supply
chain, there are two sides of the balance to consider,
both technical and economical.

Customer
satisfaction

Cost of Logistics
Responsiveness of
support
Logistics
- Development cost Infrastructure
- Operational Cost - Capability
- Maintenance Cost - Availability
- Retirement Cost - Quality
 3. PURCHASING AND MATERIAL FLOW
FACTORS
 In the area of purchasing, a major objective is perfect order
fulfilment.
 Delivered complete
 Delivered on time
 Complete and accurate
 Delivered in perfect condition and correct configuration to be used
by customer.
 Perfect order is logistically perfect when:
 Perfectly entered – exactly what customer wants
 Perfectly fillable – exact quantity
 Perfectly picked – correct quantities and item
 Perfectly packages – customer designed package
 Perfectly delivered – in the customer designated time window and
location
 Perfectly communicated – with order status report 24 hrs
 Perfectly billed – on time payment
 Perfectly documented – customer specified documentation.
4. TRANSPORTATION, PACKAGING AND
HANDLING FACTORS
Packaging, handling, storage, and transportation (PHS&T)
encompasses the requirements, resources, processes,
procedures, design considerations, and methods to ensure
that all system equipment and support items are preserved,
packaged, handled, stored, and transported properly.

This element includes all special provisions, containers

(reusable and disposable), and supplies necessary to
support packaging, preservation, storage, handling, and/or
transportation of prime mission equipment, test and
support equipment, spares and repair parts, personnel,
technical data, and mobile facilities.

In essence, this element basically covers the initial

distribution of products and the transportation of personnel
and materials for maintenance purposes.
 TRANSPORTATION, PACKAGING AND
HANDLING FACTORS
 The effectiveness of transportation
 Transportation route, both national and international
 Transportation capability or capacity – volumes, weight, model,
regulatory, security etc
 Transportation time – short haul, long haul time
 Transportation cost – cost per shipment, cost of transportation per
Km, cost of packaging and handling.

 Metrics associated with elements of transportation

 The availability of transportation – when required
 The Reliability of transportation – when required. Complete the
mission
 The time that it takes to transport a product (point A to Point B)
 The maintainability of given transportation capability – Failures
 Cost of transportation – cost per trip
 LCC of a given transport capability
TRANSPORTATION, PACKAGING AND HANDLING
THIS INCLUDES 3RD PARTIES
 TRANSPORTATION, PACKAGING AND
HANDLING
 Does the package incorporate the desired strength of material
 Can the package stand rough handling and or long storage without degradation
 Does the package provide adequate protection against various environmental
conditions e.g. rain, temperatures, humidity etc.
 Is the package computable with existing transportation and handling methods
 Has the package been designed for safety and security
 5. WAREHOUSING AND DISTRIBUTION
FACTORS

 Warehousing is the integral part of logistics. Basic

function of warehousing are movement, storage and
information transfer.
 Material flow
 Receiving, transfer, order picking, cross docking, shipping
WAREHOUSING AND DISTRIBUTION
FACTORS

 Metrics associated with warehousing

 Time it take to ship a product
 Cost of each product shipment
 Cost of inventory holding management
 Value of products shipped
 Percentage of space utilization cost per square meter
 Volume of products handled
6. MAINTENANCE FACTORS
 Maintenance and support planning
 Maintenance organization, maintenance personnel
 Supply support (spare/repair parts and associated
inventories).
 Maintenance and support personnel.
 Training and training support.
 Test, measurement, handling, and support
equipment.
 Packaging, handling, storage/warehousing, and
transportation.
 Maintenance Facilities.
 Computer resources (hardware and software).
 Technical data, information systems, and database
structures.
MAINTENANCE AND SUPPORT
This includes all planning and analysis associated
with the establishments for the overall support of
a system throughout its life cycle. Maintenance
planning constitutes ;
 The development of the maintenance concept.
 The accomplishment of supportability analysis
during system design and development.
 The procurement and acquisition of support items.
 In system utilization phase, ongoing maintenance
and support required to sustain operations.
 During the retirement phase, policies for disposal of
material being recycled or phased-out
6.1 ORGANIZATIONAL FACTORS
 Measures associated with organization:
 Direct maintenance labour times for each personnel
category
 Indirect labour time required to support maintenance
activities
 Personnel attrition rate or turnover rate
 Personnel training rate or the worker days of formal
training per year
 Number of maintenance work orders processed per
unit of time
 Average administrative delays time or the avg time
from when am item is initially received from
maintenance to point when active maintenance on
that item actually begins.
6.2 SPARES, REPAIR AND RELATED INVENTORIES
FACTORS

Supply support (spare/repair parts and associated

inventories).
 This includes all spares, repair parts, consumables,
special supplies, and related inventories needed to
maintain the prime mission-related equipment,
computers and software, test and support equipment,
transportation and handling equipment, training
equipment, and facilities.
 Also included are the provisioning and procurement
activities and documentation associated with material
acquisition, handling, distribution, recycling, and
disposal.
6.3 TEST AND SUPPORT EQUIPMENT FACTORS
 This category includes all tools, condition monitoring
equipment, diagnostic and checkout equipment,
special test equipment, metrology and calibration
equipment, maintenance fixtures and stands, and
special handling equipment required to support all
scheduled and unscheduled maintenance actions
associated with the system.
6.4 TRANSPORTATION AND MATERIAL
HANDLING FACTORS

 The effectiveness of transportation

 Transportation route, both national and international
 Transportation capability or capacity – volumes,
weight, model, regulatory, security etc
 Transportation time – short haul, long haul time
 Transportation cost – cost per shipment, cost of
transportation per Km, cost of packaging and
handling.

 See Transportation and Handling slide.

6.5 MAINTENANCE FACILITY FACTORS
 This category includes all facilities required to
support scheduled and unscheduled maintenance
actions at all levels. Physical plant, portable
buildings, mobiles van, housing, intermediate-
level maintenance shops, calibration laboratories,
and special repair shops must be considered.
 6.6 COMPUTER RESOURCE AND MAINTENANCE
SOFTWARE FACTORS

Computer resources (hardware and software).

 This covers all computers, associated software,
interfaces, and the networks necessary to support
scheduled and unscheduled activities at each level of
maintenance.
 6.7 TECHNICAL DATA AND INFORMATION
SYSTEM FACTORS

Technical data, information systems, and

database structures.
 Technical data may include system installation and
checkout procedures, operating and maintenance
instructions, inspection and calibration procedures,
overhaul instructions, facilities data, modification
instructions, engineering design data, supplier data,
and logistics provisioning and procurement data
that are necessary in the performance of system
development, production, operation, maintenance,
and retirements functions.
 7. SYSTEM RETIREMENT AND MATERIAL
RECYCLING/DISPOSAL FACTORS
Product or service disposal and retirement is an important part of
system life management. At some point, any deployed system will
become one of the following: uneconomical to maintain; obsolete; or
unrepairable. A comprehensive systems engineering process includes
an anticipated equipment phase-out period and takes disposal into
account in the design and life cycle cost assessment
Disposability.
 Disposability pertains the degree to which an item can be recycled
for some other use or disposed of without causing any degradation to
the environment ; i.e., the generation of sold waste, toxic substances
(air pollution), water pollution, noise pollution, radiation, and so on.
 Ecological considerations associated with system disposal or
retirement are of prime importance. The most concerning problems
associated with waste management include
 Air Pollution and Control,
 Water Pollution and Control,
 Noise Pollution and Control,
 Radiation, and
 Solid Waste.
 SYSTEM RETIREMENT AND MATERIAL
RECYCLING/DISPOSAL

 South African environmental law describes the legal

rules in South Africa relating to the social, economic,
philosophical and jurisprudential issues raised by attempts
to protect and conserve the environment in South Africa.
South African environmental law encompasses natural
resource conservation and utilization, as well as land-use
planning and development. Issues of enforcement are also
considered, together with the international dimension, which
has shaped much of the direction of environmental law in
South Africa. The role of the country's Constitution, crucial
to any understanding of the application of environmental
law, also is examined. The National Environmental
Management Act[1] (NEMA) provides the underlying
framework for environmental law