outline 2 - Logistics should be managed as an integrated...

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Logistics should be managed as an integrated effort to achieve customer satisfaction at the lowest total cost. Logistics performed in this matter creates value. Basic logistics service – level of service a firm provides all established customers Availability Operational performance Service reliability *Framed in terms of customer expectations and requirements Availability – having inventory to consistently meet customer material or product requirements. Greater the desired availability larger the required inventory amount and cost Operational performance - time required to deliver a customer’s order. Can be viewed in terms of its flexibility to accommodate unusual and unexpected customer requests. Another aspect is frequency of malfunction and recovery time. Speed of limited value if inconsistent from one order to the next Consistency typically focus on this first Service reliability – involves the quality attributes of logistics accurate measurement of availability and operational performance Logistics value proposition – unique commitment of a firm to an individual or selected customer groups; match operating competency and commitment to key customer expectations and requirements; providing the essential customer service attributes at the lowest possible total cost 5 areas of logistical work: 1. Order processing 2. Inventory 3. Transportation 4. Warehousing, materials handling and packaging 5. Facility network *Full range of functional work must be integrated, decisions in one functional area will impact cost of all others challenges the successful implementation of integrated logistical management Order processing – the logistics capabilities of a firm can only be as good as its order processing competency, primary importance Inventory – directly linked to the facility network and the desired level of customer service; strategy based on a combination of 5 aspects of selective deployment: 1. Core customer segmentation because highly profitable customers constitute core market of enterprise, inventory strategies need to focus on them (80/20 rule) 2. Product profitability offer high availability and consistent delivery of most profitable products 3. Transportation integration – product stocking plan has a direct impact upon transportation performance, savings in transportation may offset increased cost of holding range of inventory at a warehouse in order to consolidate shipments 4. Time-based performance – while some time-based programs reduce inventory to absolute minimums, the savings must be balanced against other supply chain costs incurred as a result of the time-sensitive logistical process
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This note was uploaded on 11/18/2010 for the course BMGT 367 taught by Professor Fogul during the Fall '08 term at Maryland.

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outline 2 - Logistics should be managed as an integrated...

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