School Stuff (2014)
What is logistics?
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.
Warehousing / Location
Logistics information systems
Logistics service providers
Why the interest in logistics?
Government policy and deregulation of transportation industries
Globalization (shrinking world)
Financial and Performance impacts
• Highway (truck) – most widely use
• Water – international trade (81%)
• Rail – carries wide variety of products
• Air – highest rates/fastest/flexible
• Pipeline – limited use
Any operation that stores, repackages, stages, sorts, or centralizes goods or materials.
A functional strategy ensures that an organization’s logistics choices are consistent with its overall business strategy.
A complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling (take-back)
What is Capacity?
Capacity is a measure of a worker, machine, work center, plant, or organization to produce goods and services in a given time period.
Jiffy Lube… Oil changes per hour
Law firm…Billable hours available each month
Machine…Units per minute
Automobile factory…Cars per day
Factors that affect capacity
Numbers of shifts run, production lines, temporary workers available, on-call subcontractors, etc.
• Product complexity, mix, and design stability
– More Engineering Change Notices (ECNs) = more disruptions = lower capacity
• Component and assembly conformance quality
– Lower quality = more disruptions = lower capacity
• Supplier capacity and delivery reliability
• Process and equipment reliability
– More breakdowns = more disruptions = lower capacity
The maximum output capability, allowing for no adjustments for preventative maintenance, unplanned downtime, etc. 3 shifts / 7 days a week for short period of time.
The long-term expected output capability of a resource or system.
Supply chain considerations of capacity
A firm’s ability to use its own capacity is often directly dependent on capacity up and down the supply chain.
Workforce, inventory, subcontracting decisions
“Bricks & mortar” decisions
Three capacity strategies
Lead Capacity Strategy (May lose money due to excess): A capacity strategy in which capacity is added in anticipation of demand.
Lag Capacity Strategy (Lose customers due to demand): A capacity strategy in which capacity is added only after demand has materialized.
Match Capacity Strategy (Capacity very close to actual demand): A capacity strategy that strikes a balance between the lead and lag capacity strategies by avoiding periods of high under or overutilization.
Improve process efficiency
Improve product producibility
Add equipment and personnel
Turn away business
Idle equipment and/or personnel
Make product changes to attract the market
Build to stock
Evaluating capacity alternatives through BEP
Definition of supply management:
The broad set of activities carried out by organizations to analyze sourcing opportunities, develop sourcing strategies, select suppliers, and carry out all the activities required to procure goods and services.
Why it is critical?
The Changing Global Competitive Landscape
Purpose of spend analysis:
It is the application of quantitative techniques to purchasing data in an effort to better understand spending patterns and identify opportunities for improvement.
Insourcing / Outsourcing decision
• Insourcing – The use of resources within the firm to provide products or services
• Outsourcing – The use of supply chain partners to provide products or services
Planning and Control:
A set of tactical and execution level business activities that includes master scheduling, material requirements planning and some form of production activity control and vendor order management.
Material Requirements Planning
• List of components & quantities needed to make product
• Provides product structure (tree)
• Shows low-level coding
The definition of inventory and examples
Safety inventory and Cycle stock
What is EOQ?
The order quantity that minimizes annual holding and ordering cost for an item.