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1、Unit 1 Introduction to Logistics Contents The concept of logistics in early days The development from “Physical Distribution” to “Logistics” The meaning of logistics The emergence of supply chain management (SCM) Categories of logisticsThe proposal of logistics strategy Decision-making levels in an

2、enterprise Careers in logistics The concept of logistics in early daysArch Shaw “Some Problem in Market Distribution” “Physical Supply” & “Physical Distribution” Paul D. Coverse “The Other Half of Marketing”Japan “Distribution Technology” The development from “Physical Distribution” to “Logistics” B

3、usiness Logistics: “l(fā)ots of business activities including the circulation of raw materials, the distribution of goods, transportation, procurement, control of inventory, stock and customer services.” CLM defined “l(fā)ogistics” as “the process of planning, implementing, and controlling the efficient, ef

4、fective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements”. The meaning of logistics 1. The definition of logistics Logistics has a close relationship with distribution system and productio

5、n system. Logistics is to ensure that the right product, in the right quantity, in the right quality, is delivered to the right customer at the right place, at the right time, at the right cost.The meaning of logistics Definition by CLM: Logistics is that part of the supply chain process that plans,

6、 implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption to meet customers requirements. In a broad sense, logistics includes origin of materials supply-producer-seller-final consumer. In a na

7、rrow one, logistics is delivery-seller-final consumer.It can be called supply chain management (SCM).The meaning of logistics 2. The importance of logisticsHuge impact on the domestic and global economy Important to human survival Impact on the quality of life Impact on activities other than the flo

8、w of industrial and consumer products The emergence of supply chain management (SCM) Differences between logistics and SCMLogistics typically refers to activities that occur within a single organization, while supply chains refer to networks of companies that work together to deliver a product to ma

9、rket.Logistics focuses on activities such as procurement, distribution, maintenance, and inventory management, while SCM includes all traditional logistics and also other activities such as marketing, new product development, finance, and customer service. SCM is a systematic approach that provides

10、the framework in which to best respond to different business requirements.The emergence of supply chain management (SCM)Categories of logistics1. Macro-logistics vs Micro-logisticsMacro-logistics refers to the logistics flow within a region, a country or across national borders. Micro-logistics refe

11、rs to the practical and specific logistics activity which the customers and enterprises carry out. Categories of logistics2. External logistics and internal logisticsExternal logistics refers to the logistics which beyond one family and at a category of the whole society. Internal logistics is viewe

12、d from the angle of enterprise, studying the logistics activity which is relevant to the enterprise. 3. International logistics and regional logisticsThe proposal of logistics strategy Many enterprises carried out logistics activities separately according to their functions instead of regarding them

13、 as an overall concept, let alone from a strategic perspective before the 1980s. In the 1970s, companies adopted integrative logistics strategy and let the key decision-makers lead logistics service.After the 1980s, enterprises realized that a highly efficient logistics system would not only reduce

14、the cost, but also better serve customers and make more profits. Decision-making levels in an enterprise 1. Enterprise mission and objectives Mission is the purpose of a business to exist or “what the business engages in”.It is decided by the nature of the business.Mission can indicate the general d

15、irection for a corporation, as well as set its goals.e.g. Mission statement of IBM is “we strive to lead in the invention, development and manufacture of the industrys most advanced information technologies, including computer systems, software, storage systems and microelectronics”. 2. Corporate an

16、d functional strategiesCorporate strategy is the overall development of the plan and long-term business the enterprise take to meet future changes in the environment, and to seek long-term survival and stable development.Overall strategy studies the whole situation of an enterprise to determine the

17、overall business objectives, provides the general business operations and pursues the overall effect. Functional strategy is the specific strategy that each functional department takes. (e.g. marketing strategy, HR strategy, logistics strategy )3. Logistics strategyLogistics strategy is the enterpri

18、ses guiding theory with the chosen logistics development target to construct its logistics system, under which a series of decision-making and planning are carried out. Three main objectives of logistics strategy: Reduce logistics activities costMinimize investment in the logistics system without lo

19、wering service standards Improve customer service standards and obtain efficient logistics and competitive differentiation advantages4. The relationship between logistics strategy and corporate strategy Logistics strategy is a key element for the corporate strategy to success which can help achieve

20、and develop the goal of corporate strategy, and gain strategic competitive advantages within the business field. Logistics strategy and organization strategy should be consistent instead of conflicting. Careers in logistics Compensation of logistics managersTable 1 Compensation ranges for logistics

21、management positions Careers in logisticsOrganizations in need of logistics managersThank You!Unit 2 Customer Service and Logistics Contents Role of Logistics in Marketing MixThe definition of customer serviceImportance of customer service in logisticsLogistics service quality managementThree levels

22、 of customer service in logistics Issues in improvement of customer service Role of Logistics in Marketing MixMarketing, production, and logistics are collectively managed to achieve customer service objectives. Role of Logistics in Marketing MixThe fundamental utility of a product is created throug

23、h production, marketing and logistics.Production: form utility Marketing: possession utility Logistics: place and time utility Role of Logistics in Marketing MixLogistics / SC interfaces with marketing and production The definition of customer serviceCustomer ServiceElementsMeasuresPre-transactionIn

24、ventory availabilityTarget delivery datesTransactionOrder statusOrder tracingBackorder statusShipment shortagesShipment delaysProduct substitutionsRouting changesEtc.Post-transactionActual delivery datesReturns/adjustments Three components of customer service The definition of customer serviceCustom

25、er service standards Customer ServiceIn-stock percentageProduct or product groupStocking-point locationCustomer or class of customerTime periodOrder completenessTransit timeMode of shipmentStocking-point locationCustomer or class of customerTime periodSize of orderOrder cycle consistencyOn-time deli

26、veryStocking-point locationCustomer or class of customerTime periodSize of orderImportance of customer service in logisticsCustomer service and cost are the two measures used to evaluate logistics system effectiveness. Customer service policies should be developed with the understanding that a criti

27、cal purpose of logistics is to deliver to internal and external customers as agreed upon. Superior customer service is often achieved through a combination of fast response, local presence, and quick, reliable delivery. Logistics service quality management Reliability stable supply of inventory capa

28、ble of providing desired performance rapid supply of accurate information Continuous improvement Three levels of customer service in logisticsThree levels of customer service in logistics 1. Basic customer service: supply and performanceSupply: the ability of providing products and services immediat

29、ely as customers requireSupply can be set up by inventory which includes basic inventory and safety inventory.Supply can be measured by criteria such as stock-out frequency, ratio of supply to demand and order fulfillment rate. Performance can be measured by speed, reliability, flexibility of respon

30、se and recovery of defect.Three levels of customer service in logistics2. The Perfect Order: reaching the targeted service goals every time with zero-defectThe perfect order operation needs to develop a strong partnership with specific customers, and involves a lot of information exchanges. To enjoy

31、 perfect order, customers need to meet requirements such as providing substantial business volume, establishing the collaboration and so on. To carry out perfect order, enterprises need to make efforts on management and operation, to spend a great sum of money, and need outstanding information suppo

32、rt. Three levels of customer service in logistics3. Value-added services: unique programs developed by manufacturers for major customers on the basis of the perfect ordere.g. product packaging, making marks of customers, finding specific bulk package and giving information beneficial to the purchase

33、rValue-added services can be realized through the capacity of specialization and the advantage of scale economy. Issues in improvement of customer service 1. The Pareto principle (the 80/20 rule) Issues in improvement of customer service1. The Pareto principle (the 80/20 rule)ABC-analysis: “A” for v

34、ery popular products, “B” for medium-velocity products, and “C” for the slow movers. Companies often spend 80 percent of their effort on 20 percent of the product line, 15 percent of their effort on the next 40 percent of products and the remaining 5 percent on the last 40 percent of the product lin

35、e. Issues in improvement of customer service2. Service level improvementImprovement of the logistics service level may increase revenues, especially in markets with homogeneous low-price products.The level of logistics service is often expressed through the order-cycle time, which is the elapsed tim

36、e between the instant a purchase order is issued and the time goods are received by the customer.Issues in improvement of customer serviceDetermination of the optimum service level Issues in improvement of customer service3. Logistics tradeoffsTradeoffs among transportation, inventory control, wareh

37、ousing, and customer serviceTransportationInventoryWarehousingCustomer serviceTransportationInventoryWarehousingCustomer serviceIssues in improvement of customer serviceCreative management of logistics can deal with the tradeoffs.Effective traffic management may result in lower total transportation

38、costs, lower inventories, fewer warehouse locations, and improved customer service. Effective management of inventory levels may reduce inventories while maintaining (or improving) transportation costs, warehouse locations, and customer service levels.Effective warehousing management may reduce tota

39、l facility costs while saving on transportation, lowering inventories, and improving customer service.Analysis of customer service needs may help develop tailored customer service programs that meet customer needs, better manage transportation costs, lower inventory levels, and reduce warehousing ne

40、eds. Issues in improvement of customer service3. Logistics tradeoffsThree major challenges in managing logistics tradeoffs Identifying potential improvements in the logistics system Managing tradeoffs among transportation, inventories, warehousing, and customer service Implementing changes so that c

41、ost savings and service potentials can be realizedCustomer Service of Founded in 1994 Large-scale inter-provincial private catering enterpriseSpecializing in Sichuan style hotpot60 chain stores in China One of the top 100 restaurants in ChinaChinese Famous Hotpot, Consumer Satisfaction Unit, Major T

42、axpayer(1)Brief Introduction of HaiDiLaoZhang Yong The founder of HaiDiLao Characteristic personalities: communist, grass-root wisdomOperation philosophy: “service differentiation strategy”; “Service first, customer first”; “Human-based、family-like service”(2)The inside services of HaiDiLao-Treat th

43、e staffs as family membersDecent apartment with air conditioner, heater, TV, telephone and free NetworkRegularly cleaning the room and washing the sheets for the staffs20-minute walk to the workplaceHigh-quality clothes and shoesTraining the staffs both working skills and living skillsOffering one-r

44、oom flat to couplesEstablishing schools for staffs childrenSending money monthly directly to the parents of the excellent staffsRight of free chargeVS -imitation & surpassHaier: Five-star ServiceFree five-star service emotional debt repay by propagandizing strong potential consumer group leader in h

45、ome appliance industryHaiDiLao: Super Five-star ServiceSpecial reception movementWhile waiting: free snakes, tablegames, Internet accessWhile eating: “flying squad” busboy, noodle-stretching showWhile leaving: little gifts sometimes“Creepy” caring service: manicure, shoes-polishingHunger Marketingbe

46、nefit itself, benefit its customers, harm the industry(利人利己不利他)Dangdangs Service ModeFor reference Pre-transaction elements1 written customer service policy2 the written policy accessibility3 organization structure4 system flexibility5 management servicesTransaction elements1 stockout level2 expedit

47、e shipments3 transship4 order cycle time5 system accuracy6 inventory availability7 order fulfillment rate8 order status information9 order convenience10 product substitutionPost-transaction elements 1 availability of spares2 call-out time3 product tracing/warranty4 complaints, claimsComponents of Cu

48、stomer ServiceComponents of Customer ServicePre-transaction elements written customer service policy the written policy accessibilityTransaction elements expedite shipments order cycle time inventory availability order status information order convenience product substitution Post-transaction elemen

49、tsproduct tracing/warrantycomplaints, claims Written customer service policyThe written policy accessibilityExpedite shipment Order cycle timeMOST OF THE ORDERS ARE FULFILLED PROMPTLY.Inventory availabilityOrder status informationorder convenienceProduct substitutionProduct tracing/warrantyComplaint

50、s, claimsThank You!Unit 3 Purchasing and Supplier Management ContentsLogistics ActivitiesImportance of PurchasingOrder ManagementSupplier SelectionSuppliers ClassificationSupplier RelationshipCollaboration Strategies Vendor-Managed Inventory (VMI) Logistics ActivitiesKey Activities Co-operation betw

51、een customer service standards with marketingTransportation Inventory management Information flows and order processing Logistics ActivitiesSupport ActivitiesWarehousing Materials handling Purchasing Protective packaging Co-operation with production/operations Information maintenance Importance of P

52、urchasing Purchasing is of strategic importance now and emphasizes on relationships between buyers and sellers.Potential savings in purchasing is high.IndustryPurchasingManufacturingComputer1%5%Electrical equipment3%11%Automotive1%4%Electronics2%6%Table 3-1 Required cost reduction to achieve 20% inc

53、rease in profitabilityImportance of PurchasingSteps of purchasingEstablish a cross-functional team Identify requirements for qualified service providersRequest purchasing proposals Analyze purchasing proposals (vendor selection, price determination and service selection)Determine purchase agreementI

54、mportance of PurchasingA typical purchasing process Order Management Order management (Order processing)Activities that take place in the period between the time a firm receives an order and the time a warehouse is notified to ship the goods to fill that order It is strictly related to information f

55、lows in the logistics system. Order ManagementSteps in order managementOrder Planning Order Transmittal Order Processing Order Picking, Assembly and Order Delivery Order ManagementFigure 3-2 Flow of order processing system Supplier Selection Steps in supplier management Supplier investigation Resour

56、ce market investigation Supplier development Supplier assessment Supplier selection and collaboration Supplier motivation and control Suppliers Classification Supplier as a partner Supplier as a priority Key commercial supplier Commercial supplier Supplier Relationship Levels of Supplier Relationshi

57、p Transaction relationship Regular contact Short-term cooperation Long-term cooperation Supplier partnership Supplier RelationshipEstablishing partnership with a supplier Formulate supplier classification and choose partnersClarify objectives and evaluation indicators and make plansFollow up plan im

58、plementation and assess supplier performanceIt is more important to maintain, improve, and develop the partnership in the process of the supplier management. Collaboration StrategiesCompression strategiesSupply Chain Management (SCM)Determine which strategy to adoptForge suppliers relationshipsChoos

59、e the proper technology (e.g. ERP, the Internet)Collaboration Strategies Figure 3-3 The Pursuit of the “Perfect Order” Requires All Supply Chain Players to Work Together Collaboration Strategies Advantages Collaboration between buyers and sellers can decrease expenses for both.Collaboration among ve

60、ndors in the logistics end of the supply chain can economize resources.Liaisons are helpful in creating collaboration.Problems Solutions that will benefit all partners are hard to find.Companies are at different technological levels.Vendor-Managed Inventory (VMI) Benefits of VMI Planning and Informa

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