Chapter 02 - Logistics.pdf - CHAPTER 2 Logistics Presented...

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Supply Chain Logistics Management BS Industrial Engineering CHAPTER 2: Logistics Presented by: Engr. Richard A. Abayhon, MSc Assistant Professor, Industrial Engineering
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Supply Chain Logistics Management BS Industrial Engineering Logistics of business is big and important The logistical value proposition The work of logistics Logistical operations Logistics integration objectives Logistical operating arrangements Flexible structure Supply chain synchronization Overview of logistics
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Supply Chain Logistics Management BS Industrial Engineering What is logistics? Logistics is the design and administration of systems to control movement and geographical positioning of raw materials, work-in-process, and finished inventories at the lowest total cost.
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Supply Chain Logistics Management BS Industrial Engineering Postwar U.S. (1945-1995) Global leader in distribution and logistics, as a direct result of World War II Rise of EEC and Asia (1980-2000) Both regions became major exporters and distributors e-Commerce (1998-Present) Global logistics capability almost everywhere Logistics has risen to a key position in the global economy
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Supply Chain Logistics Management BS Industrial Engineering Year Nominal GDP ($T) Inventory Cost Transportation Cost Administrative Cost Total Logistics Cost Logistics % of GDP 1980 2.80 220 214 17 451 16.1 1985 4.22 227 274 20 521 12.3 1990 5.80 283 351 25 659 11.4 1995 7.40 302 441 30 773 10.4 2000 9.82 374 594 39 1007 10.3 2005 12.43 395 739 46 1180 9.5 2010 14.60 396 769 47 1212 8.3 Table 2.1- U.S. logistics cost, 1980-2010 in five year intervals ($B) Source: Adapted from Rosalyn Wilson, 22 nd Annual “State of Logistics Report” Council of Supply Chain Management Professionals and Penske: Oak Brook, IL, 2011.
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Supply Chain Logistics Management BS Industrial Engineering The cost of logistics 0 200 400 600 800 1000 1200 1400 1980 1985 1990 1995 2000 2005 Year $ Billions GDP 0 10 20 % Gross Domestic Product $ Inventory Carrying Cost $ Transport $ Total % GDP
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Supply Chain Logistics Management BS Industrial Engineering Logistics will continue its renaissance in the future Information technologies will automate many of the traditionally manual logistical functions: Automated port and rail operations RFID tagging of materials Advanced technologies for warehousing and inventory operations Removal of trade barriers will continue to expand global trade and logistics
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Supply Chain Logistics Management BS Industrial Engineering To satisfy customer expectations for delivery of products (or services) while minimizing the total cost Managers must support the requirements for procurement, manufacturing and customer accommodation supply chain operations Goal of logistics management
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Supply Chain Logistics Management BS Industrial Engineering Transportation Costs relative to the Total Cost of Logistics have gone up Because of fuel prices and movement of manufacturing to Asia Inventory Costs relative to the Total Cost of Logistics have gone down Adoption of JIT and Lean practices have reduced these Administrative Costs relative to the Total Cost of Logistics have stayed the same Logistics costs trends from Table 2.1
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