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WELCOME TO LOGISTICS MANAGEMENT

How to ensure that customers needs are fulfilled

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Logistics Week 1

Agenda
Getting to know each other Purpose of this course Structure of the course What is logistics? Place and function of logistics in an organization
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Introducing
Oliver Ntenje 34 years old IBMS HAN Agricultural University Wageningen

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Introducing
Reinder Pieters University of Groningen Philips SAC Cologne

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Purpose of this course


To make you understand the role and importance logistics and purchasing play in modern day commerce and industry To get rid of the idea that logistics is simply nothing else but

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TRANSPORTATION!

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Structure of this course


6 weeks lecturers Exam 40 till 50 MC questions Scholar

Sheets Test exam (only in week 6)

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Logistics and the supply chain

It seems to be easy!
Take this simple example of a supply chain Take this simple example of a supply chain of the flow of goods of the flow of goods

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But in fact it will need a lot of organization!

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The concept of Logistics


Logistic goal: optimizing Customer service Basic structure Management information Organisation Logistic performance Indicators
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What is meant by logistics?


Many different definitions are available the old definition refers to its role and importance in the military: The branch of military science concerned with troop movements and supplies
The New Lexicon Websters Dictionary of the English language 1990 edition p 582

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Battle of Arnhem 17 sept 1944


Supply Normandy Antwerp Dwight. D. Eisenhower Crusade in Europe 1948

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We will use the definition of APICS:


American Process and Inventory Control Society

Logistics is the process of planning, implementing and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services, and related information from point of origin to point of consumption (including inbound, outbound, and external movements) for the purpose of conforming to customer requirements
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It incorporates:
Control Planning Flows of goods and material Flows of Information In short: An Integral Approach (van zand tot klant) Optimal - efficient and effective
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Lets start with some useful symbols

Production or assembly process Storage or warehouse Physical flow Information flow


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Labour Plastic Machines Coffee cups


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Coffee cups

Coffee cups
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An example: the supply chain of Heineken


barley malting brewing bottling central shop customer

warehouse

All parts of the chain should be Aware of and focused on the Final customer
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Planning
Procurement Production Final Stock Sales

Purchase

Stock

Productionproces

Stock

Sales/ Distribution

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Integral planning of supply chain

Purchase

Stock

Productionproces

Stock

Sales/ Distribution

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FINANCIAL ADMINISTRATION LOGISTICS


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PRODUCT DEVELOPMENT INFORMATION MANAGEMENT STAFF MANAGEMENT

MARKETING

TECHNICAL DEPARTMENT

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Material Management
Material Supplier Production & planning

Physical Distribution
Products Retailers Etc.

Organisation

Final customer

Logistic Management
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Materials Management (MM)


Purchasing/ procurement Production planning and control Materials Management storage materials handling

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Physical Distribution
Storage finished products

Physical Distribution Warehousing transportation

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De liv

Challenge for logistics


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Conflicted interests
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an ge

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We all want to achieve a competitive advantage


If we can make this work: being effective/ efficacious and efficient then well create competitive advantages Added value through logistics

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Quote:
Logistics is the last frontier for a company to make profit
Peter Drucker (Marketing guru)

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Competitive advantage through logistics (1)


Logistics design should provide a strategic fit: 1. Understand the customer

Quantity Response (customer-to-customer) Variety Service level Price Innovation


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Competitive advantage through logistics (2)

2. Understanding the demand pattern


Lumpiness/Quantity Certainty

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Competitive advantage through logistics (3)

Order qualifiers versus order winners


both are specific to individual product/market-combinations

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Order Qualifiers and Winners


Order qualifiers are characteristics that are the ante to enter the market Order winners are characteristics that win the customers purchase

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Logistics performance

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Improving profitability:
Use ROI or DuPont model Shows that a small decrease in costs will have a huge impact in the return on investment Or could mean less ROI if you increase costs!

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ROI with lower costs

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ROI using less stocks

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Summary
Logistics is all about the whole supply chain and To ensure that customers are satisfied And that costs are low

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