University Of Finance & Administration LOGISTICS SYSTEMS [NA_LS] Jiri Amler, M.A. [email protected]

University Of Finance & Administration

LOGISTICS SYSTEMS[NA_LS]

Jiri Amler, [email protected]

2.

LECTURE FRAMEWORK

ENGLISH programme (winter term 2013) 1. Introduction into the logistics - key terms, history, application, subjects of logistics, philosophy.2. Contemporary trends in logistics - logistic service providers´ view on further development.3. Mission and strategy of company’s logistical system - product or service value share, additional client services. 4. Establishing the logistic system - modalities and methods, support. 5. Logistic technologies – review of available technologies, propriate choice. 6. Logistics of international trade, intl. Commercial terms, transport usages, risks and risk management.

Within consultation: practical discussions on topical issues

INTERNATIONAL BUSINESS [B_IB] LOGIOSTICS SYSTEMS [NA_LS]

3.

LECTURE FRAMEWORK

ENGLISH programme (winter term 2013) 7. Transnational and global logistics – infrastructure, air and sea transport, Port of Hamburg.8. Logistic technologies in forwarding business. 9. Supply Chain Management.10. Inventory management / Warehouse management. 11. Outsourcing of logistic services, Insourcing – service suppliers, strategic alliances.12. Czech logistic market – summary.

Within consultation: practical discussions on topical issues


4.

LITERATURE

Alan Rushton, Phil Croucher, Peter BakerThe Handbook of Logistics and DistributionKogan Page Ltd., London 2010ISBN: 0-74974669-2

Andre Langevin, Diane RiopelLogistics System: Design and OptimizationSpringer Science+Business Media, New York, 2010ISBN: 0-38724971-0

Martin ChristopherLogistics and Suply Chain Management3-rd Edition, Pearson education Ltd., London, 2005ISBN-13: 978-0-273-68176-2


5.

Definition of Logistics (general)

Logistics is:

a scientific discipline studying the physical flow of goods or inventory from the supplier to the consumerand a flow of related information in oral, written or electronic form

Flows consist of: goods (FG & RM) money information


6.

Definition of Logistics (CSCMP)

Logistics (management) is:

the planning, implementation and control of the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consuption in order to meet customer requirements.


7.

Definition of Logistics (ELA&ChartInstLogTransp)

Logistics is:

the positioning of resource on the right time, in the right place, with the right cost, in the right quality


Storage, warehousing, handling

Information and control Packaging and unitization

Transport Inventory

8.

Say it Clear!

Logistics is a complex of operations that shall secure:

right goodsat right timein right quantityin right qualityon right placeat right costs


9.

HISTORY of LOGISTICS

Excellent beginning: already the ancient Greeks....! Development during the Napoleonic invasions - lodge New history: WWII., transatlantic convoys, Overlord, AirLift Berlin International conflicts – middle East Contemporary Iraq, Afghanistan, USFE, USFK Globalisation


10.

BASIC TYPOLOGY

Military logistics: neccessity to prepare, equip and arm the troops, provide food and shelter, supply ammo and material-functions: supply, maintanance and repair, service, transport, medicare, contractual, budgeting and financial

Enterprise–related logistics: the core of military logistics systems were gradually addopted by the private sector in 2-nd half of 20-th century.

Hospital logistics

Special logistics

Reverse Logistics


11.

HISTORICAL PERSPECTIVE

1950s -1960sdirect distribution, own-account fleet

1960s – early 1970sconcept of physical distribution – linking activities under effective mngmnt

1970sdecline of power of manufacturers, retail gains

1980scost increase needs true professionalism, planning, development of HW, implementation of IT

1990semphasis on information flow, on outside boundaries of org. = supply chain management


12.

HISTORICAL PERSPECTIVE

2000 - 2010redefinition of business goals, re-engineering of logistics systems in companies, supply chain recognized as a enabler of business improvement

2010 and beyond concept of 3PL and 4PLimpact of emerging marketsenvionmental issuesrestricted availability of management and laborvulnerability of supply chains global sourcingfreight exchanges


13.

TODAY LOGISTICS

a tool for competitiveness customer-oriented attitude growth of logistic market (8 – 20% GDP) 3PL value-adding function


Flexi = quick

Choice = diferent

Costs = cheaper

Quality = better

14.

BASIC TERMS

Logistic functions: basic activities that enable desired transformation of logistic objects (goods, money, information) in time and space

Subjects of logistics: strategy makers and participants of logistic chains


Distribution& tradingfirms

Log. enterpriseforwardersoperators

Logistic infrastructure operators & procurement HW &

technology suppliers

Publicprocurement

ConsultingEngineering

Interest groupsUnions

Producers & service

providers

SL

15.

BASIC TERMS

Prime logistic functions: the material flows are related to prime functions – transportation, packaging, warehousing, transferring, measuring, counting etc.

Secondary logistic functions: the non-material flows are related to secondary functions – acquiring, transfer, processing, storage and control of related data, and transfer, utilisation and accumulation of energy


16.

INTEGRATING ROLE OF LOGISTICS

Logistic functions are applicable to all segments of enterprise management.

Importance is still growing along with the integrational process. The regional markets become global.

Cost reduction function is becoming significant as the state-of-art or reengineered logistics system can bring 5 – 10% cost reduction from total production costs.


17.

COSTS and SEGMENTATION


%

Transport cost

Warehouse/depot cost

Inventory/ investment holding

AdminTotal logistic cost

Main Business Cost as per Turnover

Office equip 3,20 10,70 0,87 14,77

Health supp. 1,36 9,77 0,66 0,19 11,98

Soft drinks 2,53 2,71 0,44 5,68

Food&drink 8,16 2,82 0,56 2,19 13,74

Automotive 2,07 6,35 1,53 0,10 9,96

Cement 25,20 9,10 7,10 4,60 46,00

Dialog Consultants Ltd.

Category - Log. Market Segmentation

Global % share (2007)

European % share (2007)

Asia-Pacific % share (2007)

Retail 63,90 56,80 72,30

Automotive 13,20 13,20 14,50

Consumer 12,60 22,50 2,90

Hi-Tech 6,90 4,20 7,60

Pharmaceuticals 3,50 3,30 2,70

Total 100,00 100,00 100,00

18.

PHILOSOPHY of LOGISTICS

systemic attitude as a way of thinking that enables complex understanding of particular phenomena in their internal and external context, resulting in system of trade-offs:

Within distribution components Between distribution components Between company functions Between the company and external organizations


19.

PHILOSOPHY of LOGISTICS

Gradient theory – idea of two asymetric systems, constant breaking and re-gaining the equilibrium, things are changing – nothing lasts for ever Theory of deterministic chaos – idea of evergoing change and randomness, difficult to forsee any firm system, nor set a firm goal, orientation to immediate solution, balancing the strategy Theory of „farmer´s sense“


20.

LOGISTICS SYSTEMS

represent an optimal layout of all technical instruments, equipment, buildings, roads and workers that faciliate the operations within the logistics chains

ensure the logistics functions are working for optimal transformation of logistics objects in order to overcome the space and time in accord with the aims and goals set by the company management – economic and performance goals


21.

LOGISTICS MULTI-SYSTEMS

consist of basic elements:

technical / technological system – mixed stationary system with material, energetic and informational inlets and outlets – inventory, personel, equipment, buildings and transport facilities

managing system – mixed dymanic system carrying out the logistics management process, i.e.influencing the technological system towards final effect at lowest possible time consumption and capital alocation

information system – providing the real-time data effective management and control


22.

LOGISTICS MULTI-SYSTEMS

could be defined as follows:

dynamic – its shape is changing in time

self-organizing – has an ability to enhance its structure and organization for the sake of higher quality achievement

self-adjusting – can replace its out-dated segments

opened – able to receive outer signals and provide feedback

goal-oriented


23.

MAIN OBJECTIVE of LOGISTICS SYSTEM

enhance the company´s market position

achieve larger market stake of the company

facilitate a long-term survival of the company

The logistic system is customer oriented


24.

BASIC FEATURES of LOGISTICS SYSTEM

value-adding feature – logistics is understood as a management of material and goods flows, beginning at the point of raw material acquire and ending with finished goods supply to the customer

informational – logistics provide complex information about customer´s perceptions and expectations through own forecasts or real orders


25.

TRENDS of LOGISTICS


Socio-economic environment

• Rise of legal and illegal migration• Ever smaller space for national society to rule own fate – deformation of democracy_ search for ballance among wellbeing, solidarity and personal freedom • Expected shocks and tackles in social sphere• „third wave“ – based on free flow of goods, services and information, based on new ethics and is global • Recepy for survival: tarnsform into the 3-wave with the least possible destabilization• Strategy: stem for active creation of the future

26.

TRENDS of LOGISTICS


Logistic Analysis

Sémiotics – widely recognised as a set of:semantics, dealing with the meaning of log. particles syntactics, syntax, dealing the mutual relations between partics pragmatics, mutualities between particles and its users

A – complexity, systemicsB – relation to good practiceC – concept of subject dynamicsD – attitude towars time-space and economic dichotomyE – relation to the market

http://cs.wikipedia.org/wiki/Syntax

27.

TRENDS of LOGISTICS


Sign of logistic attitude

• Focused on final production – processes connected with order fulfillment• Coordination and optimization of tangible and intangible processes before the delivery of final product (time and economical)• Concerns manipulation, transport, storage and packaging • Getting involved all parts of chain that faciliate movements • Customers is the decisive factor in solution

28.

TRENDS of LOGISTICS


EUROPE

Turnover rise 5% annually, 2011 stabilization at 3%

German market EUR 30 bln.

Business formed by mid-sized - 98% entities with ann. turnover below EUR 10 mil. – 44 % stake on total turnover

Advantage: focus and specialization

29.

TRENDS of LOGISTICS


Chances and limitations

• Global developments offer some 3% annual growth in transport volumes and services • Fuel price growth / volatility • Introduction and growth of road toll system • Growth of labor costs and shortage of trained staff • Environmental concerns• Concerns and measures over the anti-terrorist war• Equal chances within the framework• Competition with corporations through price and added value; innovations; revision of skills; cooperative network; customization over customer or region

30.

TRENDS of LOGISTICS

Western EuropeStabilization of marketAccess to main log. knotsGeography and access to HR prevail over developed infrastructureLimitation on new infrastructure building

Newcomers (EU) Transfer of production still dynamical Labor cost can not compete Asia Benefit of nearshoring – geografic proximity, standardization, safetyInvestmentsLower quality of infrastructure and inmaturity of marketNeed for small range DC + large capacity for imports (restr. on China)


31.

TRENDS of LOGISTICS


ASIA – PACIFIC

• No more suspicious to outsourcing – growth of logistic services up to 2012 – USD 80 bln. USD – 15% annually• Unprecedented growth of consumption inside the region• Globalization impact, obsolete capacity and customer orientation lead to neccessity for optimization

32.

TRENDS of LOGISTICS


ASIA - PACIFIC

1. Geographic shift – HK and Malaisia - 1/3 intra asian export

2. From splitted to integrated attitude – decline of traditional model „spedition – broker – warehouse – local cartage“ – not transparent, slow, costly, confusing and unreliable

3. Shift to shared distribution – mostly SME, without capital for own DC, „all under one roof“, cost effectivity prevail over „open cards“

4. Distribution center bypass – goods constantly on the way, lower costs, instant response, compensation of maritime demurages

5. Demand for transparency of logistics – need for tracking, evaluation of in-transit goods – realized relative competitive advantage

33.

MISSION AND STRATEGY

of corporate logistics system


34.

LOGISTICS CHAIN

Core term: set of mutually interrelated algorytms of logistics activities, execution of which is a main precondition for achievement of desired synergic effects

RM are being obtained from different suppliers and may come thru several distributors

production is a multi-level set of operations with complicated flow of semi-products and materials

FG is not distributed directly, it is usually distributed thru variety of distribution chanels


35.

CONTENT of LOGISTICS CHAIN

Set of activities and operations:

identification of places among which the materials are moved

physical movement of materials – transport processes

non-transport processes connected with 1) movement of materials and 2) supplier / consumer relationship

i.e.


36.

CONTENT of LOGISTICS CHAIN

Non-transport operations:

warehousing incl. inventory optimizing (DPP, MRP, DRP) for further phase of production or distribution

material and FG manipulation inside the production process or outside for storage, picking and consolidation

external technical adjustment neccesary for its physical movement – transport/manipulation packaging

flow of information neccessary for integrated system management


37.

SUPPLY CHAIN

Main objective:

ultimate utilization of synergic effects that could be possibly acquired within integrated management

leads to even more linked vertical and horizontal integration of material flow management


38.

GOALS of LOGISTICS

Basic goal: optimal fulfillment of customer´s expectations, collection of his needs and implementation into company´s strategy

Performance goal: provision of expected level of services, so that the goods is delivered in right time, quantity, quality on time at right place

Economic goal: retainment of optimal costs – higher level of services is attractive to the customer, though its cost is acting oposit. The art of logistics is to „hit the sweet point“.

INTERNATIONAL BUSINESS [B_IB] LOGISTICS SYSTEMS [NA_LS]

39.

STRATEGY of LOGISTICS SYSTEM

Objective of company strategy: create and add the value

Company shall enhance and cultivate the society trough the market, provide new products and services

Survival of the company is one of the basic instinct of enterpreneurship.

Reproduction of wealth and sustainable employment is the moral duty of the enterprize


Internal environmment

analysis

Closeenvironment

analysis

Marketing

Trade

Finance

Production

Inovation

Personal

STRTG

OPER

STRATEGIC MNGMT – traditional/enhanced

LOGISTICS SYSTEMS [NA_LS]

VISION

FEASIBILITY

Company Strategy

Goals

Economic Goals

Performance Goals

External goal of logistics

system Company´s Strategy

of Logistics System

Process Adjustment

Ways of Achievement,

Feasibilty, Implementation

Logistics Controlling

ROI Analysis(logistic)

STRATEGY INTERRELATION of LOG. SYSTEM


42.

SENSE of STRATEGY

is to make things different way, i.e. individual attitude to customer focused on benefits for customer, customized offer of products and services incl. individualized speed of supply and price.


43.

Planning for Logistics


44.

CUSTOMER SERVICE

• Responsive managerial activity• Direction to certain range of acceptable performances • Information is a decisive factor• Changes of logistics systems arise from the activity of buyers• Contractual orientation prevail over transactional orientation • Significant diferences between service attitude and perceived performance = pressure on performance, strategy polarization


45.

SERVICE POLARIZATION


HOT NEWS

WIDE ASSORTMENT

COMPLEX SERVICE

LOW PRICE

46.

RANGE of CONSUMER´s PREFERENCIES


FE

AT

UR

ES

QU

ALI

TY

SERVICE QUALITY

PRICE PRICE

SERVICE QUALITY

FE

AT

UR

ES

QU

ALI

TY

FINAL CONSUMPTION

PRODUCTIONAL CONSUMPTION

47.

LEVEL of SERVICES


Level of logistics services related to the profit margin

PROFIT MARGIN

LOGISTICS COSTS

Optimum

CZK

48.

TOTAL LOG COSTS

Total cost = purchase costs + ordering costs + holding costs

Q= order quantity D= annual demand quantity of the product P= purchase cost per unit S= fixed cost per order (not per unit, typically cost of ordering and shipping and handling. This is not the cost of goods) H= annual holding cost per unit (also carriing or storage cost)


49.

LEVEL of SERVICES


CZK

Level of Logistic Services

SupplyLoss from failed

supply

Storage

Totalcosts

Interrelation of Service level and logistics costs

50.

PRODUCT CHARACTERISTICS

Volume to weight ratio

Value to weight ratio

Substitutabilty

High-risk products – hazardous, fragile, perishable, time-constrained


51.

PRODUCT LIFE CYCLE

Introductory stage Growth stage Maturity stage Decline stage


• Providing services is a process with long-term tendency to quality growth

• Neccessity to diferentiate services according to particular products and life cycle of each

52.

LOGISTICS PROCESSES

Order fulfilment New product introduction New product development Product returns Aftermarket or service parts logistics Information management


53.

SYSTEMIC APPROACH


Initial Analysis - Logistic audit, benchmarking

- Prognostic methods

- Mapping current situation

- Derivation of future system, setting variants, borders, ties to the customer

Feasibility study System-oriented methods (systemic modelling)

Models of structures and behavior of related variants, selection of the best variant

Detailed solution Partial methods of layout, determination of capacity, amount of technical instr. and staff, calcultion of time and cost consumption

Detailed combination of chain particles

Realization Methods of activity accordance

Physical implementation of selected variant

Routine Controlling methods On-going maintanance of system in acceptable framework with possibility of itsreproduction

FORM METHOD OUTCOME

54.

FEASIBILITY STUDY


1. Identification of problem 8. Acquiring data for quantification

2. Object diagnosis 9. Model experiments – with models

3. System mapping within the object 10. Model experiments – on models

4. Identifying the sub-systems 11. Variant evaluation

5. Identification / construction of sub-system variant

12. Interpretation

6. Setting criteria for variant evaluation

13. Implementation

7. Construction of variant model, quantification and djustment of model

14. Realization

55.

CONCLUSION

Adaptability is the only virtue of survival in 21-st century!

Active creation or co-creation of the future shall be the only strategy of the company!

Focus on the future becomes an essential of new managerial concept


56.

Thank you for your attention


Documents

University Of Finance & Administration LOGISTICS SYSTEMS [NA_LS] Jiri Amler, M.A. [email protected]