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Key Logistics activities:Key Logistics activities:

1.1.Customer service standards:Customer service standards:

customer wants and needs,customer wants and needs,

customer response to service,customer response to service,

setting customer levelsetting customer level

1.2. Logistics planning and service1.2. Logistics planning and service

managementmanagement

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2. Transportation:2. Transportation:

mode and transport service selection,mode and transport service selection,

freight consolidation,freight consolidation,

carrier routing,carrier routing,

vehicle scheduling,vehicle scheduling, equipment selection,equipment selection,

claims processing,claims processing,

rate auditingrate auditing




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3. Inventory management:3. Inventory management:

raw material and finished goodsraw material and finished goodsstocking policies,stocking policies,

shortshort--term sales forecasting,term sales forecasting,

product mix at stocking points,product mix at stocking points,

number, size and location of stockingnumber, size and location of stocking

points,points,

just in time, push and pull strategiesjust in time, push and pull strategies




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Support activities:Support activities:

1.1. Warehousing:Warehousing:

space determination,space determination,

stock layout and dock design,stock layout and dock design, warehouse configurationwarehouse configuration

stock placementstock placement

2. Materials handling:2. Materials handling:

equipment selection,equipment selection,

equipment replacement policies,equipment replacement policies,

order picking policies,order picking policies,

stock storage and retrieval,stock storage and retrieval,



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3. Purchasing:3. Purchasing:

supply source selection,supply source selection,

purchase timing,purchase timing,

purchase quantities,purchase quantities,



4. Protective packaging:4. Protective packaging: design for handling,design for handling,

storage,storage,

protection from loss and damage,protection from loss and damage,1 -18

5. Cooperation with production/operations: specification of aggregate quantities, sequence and time production output,

6. Information maintenance:6. Information maintenance:

information collection, storage, andinformation collection, storage, andmanipulation,manipulation,

data analysis,data analysis,

control procedurescontrol procedures




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Total cost conceptTotal cost concept

RailRail TruckTruck

ServiceServiceAirAir

TotalTotal

costcost

Inventory costInventory cost

TransportationTransportation

costcost

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Setting customer service level (I)Setting customer service level (I)

Improved customerImproved customer

serviceservice

TotalTotal

costcost

Lost sales costLost sales cost

Service costService cost

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Setting customer service level (II)Setting customer service level (II)

Improved customerImproved customerserviceservice

Free cashFree cash

flowflow

Lost sales costLost sales cost RevenueRevenue--costcost

Effectiveness (cost minimization) or efficiencyEffectiveness (cost minimization) or efficiency

(maximizing free cash(maximizing free cash--flow)?flow)?

Demand supply managementDemand supply managementZARA: hot fillZARA: hot fill--insins

[R.H.[R.H. BallouBallou::

RevenueRevenue

estimation forestimation for

logistics consumerlogistics consumer

offerings, Int. Jofferings, Int. J

LogisticsLogistics

Management 17,1,Management 17,1,

2006]2006]

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FedEx is committed to our PeopleFedEx is committed to our People--ServiceService--Profit philosophy.Profit philosophy.

We will produce outstanding financialWe will produce outstanding financial

returns by providing total reliable,returns by providing total reliable,

competitively superior, global aircompetitively superior, global air--groundground

transportation of high priority goods andtransportation of high priority goods and

documents that require rapid, timedocuments that require rapid, time--certaincertain

delivery.delivery. Positive control of each package will bePositive control of each package will be

maintained using real time electronicmaintained using real time electronic

tracking and tracing systems.tracking and tracing systems.



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FedExFedEx

A complete record of each shipment andA complete record of each shipment and

delivery will be presented with our requestdelivery will be presented with our request

for payment.for payment. We will be helpful, courteous, andWe will be helpful, courteous, and

professional to each other and the public.professional to each other and the public.

We will strive to have a completely satisfiedWe will strive to have a completely satisfied

customer at the end of each transaction.customer at the end of each transaction.



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Service SpecsService Specs

at UPSat UPS



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Courteous, butLimited Passenger

Service

StandardizedFleet of Boeing

737 Aircraft

CompetitiveCompetitiveAdvantage:Advantage:Low CostLow Cost

Lean,ProductiveEmployees

Short Haul, Point-to-Point Routes, Often to

Secondary Airports

HighAircraftUtilization

Frequent,ReliableSchedules



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Concept created by Jan Carlzon ofConcept created by Jan Carlzon ofScandinavian AirwaysScandinavian Airways

Critical moments between theCritical moments between thecustomer and the organization thatcustomer and the organization thatdetermine customer satisfactiondetermine customer satisfaction

There may be many of these momentsThere may be many of these moments

These are opportunities to gain or loseThese are opportunities to gain or losebusinessbusiness

Moments of TruthMoments of Truth



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The technician wassincerely concerned andapologetic about myproblem

He asked intelligentquestions that allowed meto feel confident in hisabilities

The technician offeredvarious times to have workdone to suit my schedule

Ways to avoid futureproblems were suggested

Experience Enhancers

Only one local numberneeds to be dialed

I never get a busy signal

I get a human being toanswer my call quicklyand he or she is pleasantand responsive to myproblem

A timely resolution to myproblem is offered

The technician is able toexplain to me what I canexpect to happen next

Standard Expectations

I had to call more thanonce to get through

A recording spoke to merather than a person

While on hold, I getsilence,and wonder if I amdisconnected

The technician soundedlike he was reading a formof routine questions

The technician soundeduninterested

I felt the technician rushedme

Experience Detractors

MomentsMoments--ofof--TruthTruth

Computer CompanyComputer Company

HotlineHotline



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Customer

ServiceGoals

transport

strategy: modes,

routing,scheduling,shipment size

Inventory strategy:inventory level,

deployment ofinventories, control

location strategy: number, size, location,assignments of demand to stocking points

Triangle of Logistics Decision making

1.3. Transport, Inventory and location1.3. Transport, Inventory and location

strategies, decisions and modelsstrategies, decisions and models

Documents

alm_1_3