Learning Objectives

• Compare the logistics of delivering a product to a local, national or international market

• Describe the key factors that influence the ways in which a company may deliver its product to different world markets

Logistics:

• Consists of the acquisition, transportation and storage of materials from the point of origin to the point of consumption. Logistics is part of the daily routine of manufacturing companies, retail stores, service businesses, homeowners and armies.

• Successful logistics gets the right item to the right place at the right time in the right quantity and at the right price.

Origin of Logistics

• Originally a military term.• The science of planning, organizing, and managing the

movement and maintenance of military forces, including procurement, storage, health-care services and evacuation.

• Napoleon’s invasion of Russia in 1812 is an example of poor logistical planning. He did not plan properly for the winter in Russia. He lost most of his army to the freezing cold winter and not having enough supplies to support his retreat back to France.

• http://www.youtube.com/watch?v=UFecfEH2TQo

Production Logistics:

http://www.youtube.com/watch?v=g8yJ2TZOank• What did you notice about the production of bikes?• The Company has an inventory of frames, seats,

wheels, chains, screws, nuts & bolts and gear assemblies, etc…

• Production logistics makes sure that each workstation has enough parts to keep the manufacturing process running efficiently.

Production Logistics

• Refers to logistic processes within a company, usually a manufacturing business.

• To ensure that each machine and workstation in a plant has the right material in the right quantity and quality at the right point in time.

• Its main goal is to increase efficiency and production rates, maximizing a factory’s output while maintaining product quality.

• The main focus is on inventory (JIT) and quality (KANBAN) control, with little emphasis on transportation.

Business Logistics:

• Responsible for ensuring a steady flow of needed materials and information through a network of computer terminals, transportation links, and storage facilities that move raw and finished materials through all parts of a business.

• Since the 1950’s as Globalization has quickly evolved, so has the complexity and dependency of accurately calculated logistics.

• http://www.youtube.com/watch?v=ay1wC17xzKQ

• Businesses now have to deal with foreign transport companies, foreign suppliers, foreign storage facilities, foreign rules and regulations regarding tariffs and duties, and foreign business laws.

• Typically, just from the U.S. a Canadian company has to think about: time the product takes to cross the border, clearance at customs, duties to pay on border crossing, insurance of receiving the order, number of products necessary to meet demand, and so on…

Supply Chain

• Is the sum total of all activities involved in moving new materials, processed goods, and finished products into an organization, and moving the semi-processed or finished goods out of the organization toward the end consumer.

The main links in a supply chain:

• Inventory management• Storage • Cash flow• Supplier co-ordination• Information processing• Physical distribution

Before modern globalization:

• Many organizations both domestic and international, used to own the whole supply chain, or significant portions of it.

• Some companies would have owned the natural resource as they extracted all the way to the retail stores that sold the finished products. E.g. Weston Foods

• This form of supply chain is called vertical integration.

Horizontal Integration

• Otherwise, a company could sell off some portions of its’ supply chain in order to purchase the competitors that it focuses on the most.

• E.g. Weston Foods sold its fishing division in order to buy bakeries and grocery stores, since this is the area that they were most proficient in controlling in Canada.

Loblaw Companies

Limited

Zehrs Provigo Loblaws Dominion Fortinos Maxi No Frills

• When companies attempt to focus on their core business they become less vertically integrated.

• They tend to sell off many of their peripheral businesses that function as their supply chain.

• Many companies now use third party logistics (3PL’s).

• This means, they outsource supplier co-ordination and distribution functions to logistics companies that can perform these activities better or more cost-effectively.

• Third party logistics, increases the number of links in the supply chain, but reduces management control of everyday logistics operations.

• Less control and more supply chain partners means that managers can spend more time on overall supply chain management in order to anticipate and eliminate any supply chain problems.

• Logistics, then is the process of managing each of the links in the supply chain: inventory, storage, cash, suppliers, information and physical distribution.