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GS 120iGlobalization: Moving The

Things We Buy

Professor: Dr. Jean-Paul Rodrigue

Hofstra Univers i ty, Department o f Global Studies & Geography

Topic 6Logistics and

Supply Chain Management

AThe Role and Function of

Logistics

BValue Chains

C

Distribution Systems

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AThe Role and Function

of Logistics

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Logistics Goals and Operations

Fulfillment(Goals)

Order

Right product

Right quantity

Delivery

Right location

Right time

Quality

Right condition

Cost

Right price

Demand(Operations)

Transportation

Handling

Packaging

StockManagement

Production scheduling

Warehousing

Orders Processing

Sales

Purchase

http://people.hofstra.edu/geotrans/eng/ch3en/conc3en/palletsDCShenzhen.html

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Value-Added Functions and Differentiation

of Supply Chains

Value-Added Funct io ns Supp ly Chain Dif ferent iat ion

Production

Costs

Location

Time

Control

Logistics Costs

Transit Time

Reliability

Risk

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/logisticsaddedvalue.html

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Taxonomy of Logistics Decisions

Level Description

Production

structures

Commercial decisions on outsourcing, offshoring and

sub-contracting.

Number, location and capacity of production units.

Transportstructures

Choice of a freight network linking a company and itssuppliers and customers.

Choice of modes and terminals; the transport chain.

Distribution

structures

Choice concerning the number, location and capacity

of distribution centers.

Frequency and timing of distribution (e.g. just-in-time).Logistics

structures

Usage of production, transport and distribution

capabilities to fulfill short, medium and long term

strategies (e.g. lower costs, gain market share,

improve service efficiency, reduce response time,

reduce environmental footprint). Usage of third

party logistics providers.

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/table_taxonomy_logistics.html

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Worldwide Logistics Costs, 2002

39%

27%

24%

6%4%

Transportation

Warehousing

Inventory Carrying

Order Processing

Administration

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/worldlogisticscosts.html

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From Push to Pull Logistics

Suppl ier Suppl ier Suppl ier

Manufacturer

Customer

Distr ibutor

Suppl ier Suppl ier Suppl ier Suppl ier

Suppl ier Suppl ier Suppl ier

Manufacturer

Distr ibutor

Customer

3PL

Returns / Recycl in g

Point-of-sale data

Freight f low

Push Pull

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/pushpulllogistics.html

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Layers to Logistics Services

1PL

2PL

3PL

4PL

Manu factur ing, Retai l ing

Transportat ion

Log is t ics

Supply ch ain

management

Cargo owners

Carriers

Logist ics serv ice

providers

Lead logist ics pro viders

& consu l tan ts

Supp ly chain integrat ion

Actors Services

Servic

e

in

tegr

ation

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Logistic Performance Index, 2010

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/LPI.html

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BValue Chains

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The Commodity Chain (or Value Chain)

Transpo rt Chain

Raw

materials

Manufactur ing

and assemb lyDistr ibut ion

Bulk sh ipp ing Unit sh ipp ing

High volumes

Low frequency

Low vo lumes

High frequency

LTL shipping

Average volum es

High frequency

1- Commod it ies 3- Final Good s2- Intermediate Goods

Attributable to climatic

(agricultural products,

forestry products) or

geological (ores and fossil

fuels) conditions.

Transformation that confers

added value. Metals, textiles,

construction materials and

parts used to make other

goods.

Goods shipped to large

consumption markets. Flow

and inventory management.

Stages

Mark

et

Flows

Market

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/sequences.htmlhttp://people.hofstra.edu/geotrans/eng/ch5en/conc5en/sequences.html

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Commodity Chains and Added Value

Commodi ty cha in

Adde

d

va

lue

Low

High

Manufactur ing

R&D Fabr icat ion

Dist r ibut ionDesign

Brand ing Market ing

Sales / Servi ce

Concept Log is t ics

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/commoditychainsaddedvalue.html

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Product Life Cycle

Sa

les

Stage 1 Stage 2 Stage 3

Monopo ly Compet i t ion

Research and

developmentMatur i ty Decline

Firs t compet i to rs Mass product ion

Growth

Stage 4

Promot ionIdea

Obsolescence

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/productlifecycle.html

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APL Logistics Freight Distribution Center,

Shenzhen, PRC, December 2005

http://people.hofstra.edu/geotrans/eng/ch3en/conc3en/palletsDCShenzhen.html

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Container Waiting to be Loaded, APL DC -

Shenzhen

http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/DC_container_loaded.html

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Extended Distribution Center System of

JVC Belgium

http://people.hofstra.edu/geotrans/eng/ch4en/appl4en/jvc_dc.html

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Palletization of Floor Loaded Shipments,

Belgium

http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/palletization.html

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CDistribution Systems

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Types of Supply Chain Facilities

Fabricat ion

StorageDistr ibut ion

Heavy manufactur ing

L ight

manufactur ingCold Chain

Bulk

warehouse

Rack-supportedwarehouse

Cross-docking

Mult i tenant

Regional warehouse

Air cargo

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/types_supply_chain_facilities.html

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Optimal Location and Throughput by

Number of Freight Distribution Centers

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/optimal_DC_location.html

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Cross-Docking Distribution Center

Suppl iers

Customers

Receiv ing

Shipp ing

Sort ing

LTL

Suppl iers

Customers

FTL

FTL

Cross-Docking

DC

Distr ibut io n Center Before Cross-Docking

After Cross -Docking

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/crossdocking.html

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Retail Logistics and E-commerce

Retailer

(In store inventory)

Suppl iers

E-Retailer

Customers Customers

Suppl iers

RDC

Conventional Retai l Log ist ics

Travel to

store

Online

purchases

Store Deliveries

E-commerce Retai l Log ist ics

Home

Deliveries

Parcel Delivery

Company

RDC

Regional

Dist r ibut ion

Center

Order

RDC

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/ecommercelog.html

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Order-Delivery Sequence of an Apple iPad

Note: Path is approximate

Order Fulf i l lment (Cycle t ime of 12 days 18hrs 08min)Order placed

online3hrs

34min

Order processed

12 days 15hrs 34min

Shipment notification

Delivery (Lead time o f 48hrs 11min )

2hrs

45min

Shipment notification

Shipment picked up

4hrs

23min

Leaving local DC

7hrs

34min

At Hong Kong hub

17hrs 04min

At Anchorage hub

1hr 57min

Cleared customs

1hr 22min

Left Anchorage hub

6hrs 03min

At Newark hub

4hrs

00min

Left Newark hub

1hr

11min

At local DC

2hrs

48min

Delivered

Cons olidatio n (Shenzhen/HK) Transfer (Anch orage) Decons olidatio n (NY Metro)

L i ti A ti iti d th i G

http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/ipad_fedex_order.htmlhttp://people.hofstra.edu/geotrans/eng/ch5en/appl5en/ipad_fedex_order.html

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Logistic Activities and their Green

Dimensions

Product Design and

ProductionPlanning

Product design

Near sourcing

Sustainable

sourcing

PhysicalDistribution

Certifieddistribution facilities

Certified carriers

Load consolidation Alternative modes

and fuels

MaterialsManagement

Packaging

Recycled inputs

Recyclable outputs

(wastemanagement)

Consume

Producers Dist r ibutors

Col lectorsRecyclers

Reverse Channel

Suppl iers

Forward Channel

Forward and Reverse Distr i

http://people.hofstra.edu/geotrans/eng/ch8en/appl8en/logistic_green_dimensions.html

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Packaging with Less Footprint

O ti l C diti f C ld Ch i

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Operational Conditions of Cold Chain

Logistics

Conditional demand

Each product has a specific perishability.

Shelf life and revenue.

Demand conditional to qualitative attributes.

Load integrity

Reefers as the common load unit.

Packing, packaging and preparation.

Empty backhauls.

Transport integrity

Uninterrupted integrity of the transport chain (modes,

terminals and DC).

Specialized modes (speed) and terminals?

http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/operational_conditions_cold_chain.html

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Temperature Standards for the Cold Chain

Deep Freeze

Frozen

Chill

Pharmaceutical

"Banana"

-30 -25 -20 -15 -10 -5 0 5 10 15

Degrees Celcius

Sh lf Lif f S l t d P i h bl F d

http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/cc_temperature_standards.htmlhttp://people.hofstra.edu/geotrans/eng/ch5en/appl5en/cc_temperature_standards.html

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Shelf Life of Selected Perishable Food

Products

Product

Shelf Life (Days)

Optimum Temperature (Celsius)

Apples 90-240 0

Bananas 7-28 13.5

Bell Peppers 21-35 7

Cabbage 14-20 1

Eggs 180 1.1

Onions 30-180 1Lettuce 12-14 0.6

Fresh Meat (beef, lamb, pork,poultry)

14-65 -2

Oranges 21-90 7

Pears 120-180 -0.6

Potatoes 30-50 10Seafood (shrimp, lobster, crab) 120-360 -17.8

Strawberries 5-10 0.6

Tomatoes 7-14 12

http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/table_shelf_life.html

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Seaborne Reefer Trade, 2008

20%

7%

10%

3%19%

24%

3%

14%

Bananas

CitrusDeciduous Fruit

Exotics

Fish & Seafood

Meat

Dairy

Other

Reefer Stacking Area Maher Terminal

http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/seaborne_reefer_trade.htmlhttp://people.hofstra.edu/geotrans/eng/ch4en/conc4en/reefer_maher_NY.html

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Reefer Stacking Area, Maher Terminal,

Newark

Grocery Chain Cold Storage Facility

http://people.hofstra.edu/geotrans/eng/ch4en/conc4en/reefer_maher_NY.htmlhttp://people.hofstra.edu/geotrans/eng/ch4en/conc4en/reefer_maher_NY.html

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Grocery Chain Cold Storage Facility,

Regina

Subtropolis Distribution Center Kansas

http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/cold_storage_dc_reginal.htmlhttp://people.hofstra.edu/geotrans/eng/ch5en/appl5en/subtropolis.html

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Subtropolis Distribution Center, Kansas

City

http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/subtropolis.htmlhttp://people.hofstra.edu/geotrans/eng/ch5en/appl5en/subtropolis.html