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Business Logistics 101
Martin DresnerUniversity of Maryland
Robert H. Smith School of Business
Agenda
Logistics DefinedNew Logistics StrategiesFinal Remarks
Pipeline View
Suppliers ConsumersManufacturer Distributor Retailer
Logistics Activities
TransportationWarehousingInventory ManagementMaterials HandlingPurchasingOrder Processing
New Paradigm
Suppliers
Carriers
Manufacturer
Carriers
ThirdParty
Provider
Distributor Retailer
CarriersConsumers
“Alphabet Soup” of Logistics Strategies
JIT - Just-In-TimeER - Efficient ReplenishmentCR - Continuous ReplenishmentECR - Efficient Consumer ResponseVMI - Vendor Managed InventorySBT - Scan-Based Trading
Just-In-Time Purchasing
Frequent shipments of small quantities
Short time windows for deliveriesIncreased traffic on highways and in
metropolitan areasPartially offset by suppliers locating
near customers
Vendor Managed Inventory
Vendor determines shipment amounts and timing based on customer needs
Requires tie-in between vendor and customer’s inventory system
Vendor may still deliver on a JIT basis with time windows set by buyer
Traffic impact remains
Scan-Based Trading
Suppliers are paid by retailers when consumer purchases are scanned at check-out
Requires item information (e.g., price paid by retailer) to be included in retailer’s cash register information system
Supplier and retailer need to closely link information systems (e.g., same item codes)
Scan-Based Trading
Big advantage is that retailer no longer needs to check in items when they are delivered by suppliers
Supplier can set delivery times during off-peak hours
Supplier can deliver JIT but with a reduced impact on roadways
Final Remarks
Firms are using information technology to change the way they conduct their logistics operations
New logistics strategies can have dramatic impacts on transportation infrastructure
The better these strategies are understood, the better able we will be to make the appropriate infrastructure decisions
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