Chapter 16 by ee3kYaGM

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									Chapter 16:

       Logistics and Supply Chain
        Challenges for the Future
    Logistics Profile: Creating a State-of-the
    Art VW Beetle Production
    Facility in Mexico
   In 1998, at Volkswagen’s Mexican assembly plant in
    Puebla, Exel implemented the JIT sequencing
    operation.
   Currently, the Mexican plant produces 1,600 vehicles
    daily, including the Beetle and Jetta.
   Parts delivery to a specific place on the line takes
    place within 40 minutes of an order, with one car
    built every 40 minutes, 24/7.
   Exel provides Volkswagen with expert logistics and
    supply chain management ported from a similar VW
    plant in Spain, proving that transfer of technology,
    human resources, and best practices is possible on a
    global basis.
    Chapter 16     Management of Business Logistics, 7th Ed.   2
Introduction
     Logistics and supply chain management are
      changing quickly, and are characterized by:
     1.  Many innovations and improvements
     2.  Movement towards being considered as
         players in strategic, competitive
         advantage
     3.  Prime candidates for application of tried
         and proven approaches to strategic
         planning

Chapter 16      Management of Business Logistics, 7th Ed.   3
Overview of Strategic Planning for
Logistics and Supply Chain Management
   Historical Perspective on Strategy:
      Has become an appropriately meaningful and
       integrated activity in most globally competitive
       firms.
      Evolutionary development phases:

          In the 50s and 60s, was referred to as
           investment planning.
          In the 70s, began to focus on internal growth
           opportunities.
          In the 80s, a combination of outside
           investment and internal growth opportunities
           was used.

Chapter 16       Management of Business Logistics, 7th Ed.   4
Overview of Strategic Planning for
Logistics and Supply Chain Management
                In the 80s, a combination of outside
                 investment and internal growth opportunities
                 was used.
                In the 90s, refocused on gaining strategic
                 advantage in the marketplace and for
                 defending against competitors.
                In the early 2000s, strategic focus clearly
                 moved toward the development of effective,
                 interfirm relationships that would create
                 maximum value for the firm’s products and/or
                 services.

Chapter 16              Management of Business Logistics, 7th Ed.   5
Overview of Strategic Planning for
Logistics and Supply Chain Management

   Definitions:
        Strategy – a course of action, a scheme,
         or a principal idea through which an
         organization hopes to accomplish a specific
         objective or goal. (long term)
        Tactics – refers to the operational aspects
         that are necessary to support strategy.
         (Middle term)

Chapter 16         Management of Business Logistics, 7th Ed.   6
Overview of Strategic Planning for
Logistics and Supply Chain Management
   Strategy Classification
        Porter’s model of basic strategies, namely,
         (1)cost, (2) differentiation, and (3)focus is
         the most popular scheme.

     (1) low cost essentially stress offering a product or
       service in a market at a price or cost lower than
         that of competitors.
        Automobiles and electronic products are two
         examples of this strategy, as are the general
         operations of retail firms such as Wal-Mart,
         Target, and McDonalds.

Chapter 16         Management of Business Logistics, 7th Ed.   7
Figure 16-2
Strategies for Creating Value




Chapter 16   Management of Business Logistics, 7th Ed.   8
Overview of Strategic Planning for
Logistics and Supply Chain Management

     (2) differentiation attempt to make a
       product or service look unique, such that
       consumers are willing to par a premium
       price.
      Perceptions based on better fit, higher

       quality, long product life, better service,
       and other similar attributes are typical of
       strategies based on differentiation.


Chapter 16      Management of Business Logistics, 7th Ed.   9
Overview of Strategic Planning for
Logistics and Supply Chain Management

     (3) focus attempt to make a product or
       service fit a niche or small market segment
       where either cost or differentiation is then
       employed.
        Ex 24/7 Speed delivery between Taiwan and HK
        Stage 1: delivery at a spot
        Stage 2: door to door delivery




Chapter 16        Management of Business Logistics, 7th Ed.   10
Overview of Strategic Planning for
Logistics and Supply Chain Management

   Strategy Classification
        Porter’s value chain suggests that a
         company can be disaggregated into
           five primary activities and

           four support activities.

        Examine Figure 16-3.



Chapter 16        Management of Business Logistics, 7th Ed.   11
Figure 16-3
The Generic Value Chain




Chapter 16   Management of Business Logistics, 7th Ed.   12
Logistics and supply chain
strategies
1.    Time-based
2.    Asset productivity
3.    Technology-based
4.    Relationship-based



Chapter 16   Management of Business Logistics, 7th Ed.   13
1. Time-Based Strategies

     Here we refer to trade off Capitals spent on:
        Transportation
        Inventory, and
        Warehousing cost
     Question needed to address is that how do
      we reduce our operations time and
      inventories such as to:
     1.  max our ROI and ROA
     2.  max our cash flow
Chapter 16      Management of Business Logistics, 7th Ed.   14
Two general aspect to reduce
time in SCM
   (a) Reducing Cycle Time – reduce operations time
   (b) Time-Reduction Logistics Initiatives – flow
    of the products




Chapter 16            Management of Business Logistics, 7th Ed.   15
(a) Reducing Cycle Time
             Logistics activities that shorten the length
              of the order/replenishment cycle by
              reducing:
                cycle time are based on three factors:
                 1.   processes,
                 2.   information, and
                 3.   decision making.
                 How to achieved them?

Chapter 16              Management of Business Logistics, 7th Ed.   16
      2 Ways to achieving them:
       (1) Use of technology for processing and
           Information
                Eg. Use EDI or the Internet for fast order
                 processing
       (2) Level of approval for decision making
                empowering individuals to make decisions can
                 be one of the most important ways to speed
                 cycle time.
            1.   Pre-approvals and other delegated decision
                 making models can lead to making mistakes,
                 but the experience of Proctor & Gamble, among
                 others, is that the risk is justified in terms of
                 time saved and improvement in customer
                 responsiveness.


    Chapter 16            Management of Business Logistics, 7th Ed.   17
    (b) Time-Reduction
    Logistics Initiatives
   Here, we emphasize on flow of products
   Methods adopted include JIT, VMI (vendor-managed inventory,
    and CRP (continuous replenishment)
      Each strategy reduces the order cycle by
       shortening the total time from vendor to
       delivery to customers.
      Push to pull method in SCM

         Push, reactive and wait for customer orders

         Pull, proactive, inventory replenishment fo
          anticipate future demand so that .. each
          warehouse placing orders with the central
          distribution center

    Chapter 16         Management of Business Logistics, 7th Ed.   18
   How to achieve them?
   4 ways:
     1) Anticipate customers’ needs
         Improved ability to anticipate through
          collaborative planning, forecasting, and
          replenishment (CPFR) enables the logistics and
          supply chain processes to make a more
          valuable contribution to corporate objectives.
         The switch from push to pull is a more
          demand-responsive system, but requires
          changes that may be difficult to achieve
          depending on the corporate culture in place.

    Chapter 16      Management of Business Logistics, 7th Ed.   19
2) Manufacturing impacts
    Pull approach requires a fast manufacturing

     system when an order is received!
    Risk of low or no inventory depends on fast

     and frequent replenishment.
3) Responding to demand
    Produced only needed so to reduce storage

     spaces
    Need to special care of “peak” demand

     session!
Chapter 16      Management of Business Logistics, 7th Ed.   20
4. Postponement
    involves not completely finishing a

     product until an order arrives.
    Food processors that can “brights” and

     do not label until an order is received
    Auto manufacturers that pre-wire

     electronic harnesses to take any option,
     not knowing what a particular car order
     will specify.

Chapter 16    Management of Business Logistics, 7th Ed.   21
2. Asset Productivity Strategies


Our focus here is to emphasize on ROA

   How do earn the same level of
    revenues with a reduced investment in
    assets?


Chapter 16    Management of Business Logistics, 7th Ed.   22
4 ways to improve our asset
productivities
1.    Inventory reduction
2.    Facility utilization
3.    Equipment utilization
4.    3PL/Contract logistic services




Chapter 16     Management of Business Logistics, 7th Ed.   23
1) Inventory Reduction
     Much evidence that companies have been
      successful in reducing inventories.
     Time reduction strategies, JIT, QR, VMI, and ECR

2) Facility Utilization
     Strategy to keep the goods moving throughout the
      logistics and supply chain system has contributed
      to effective use of logistics facilities thus
      squeezing more productivity from these assets.
     Eg. Direct shipment of goods to eliminate storage
      facility together

Chapter 16     Management of Business Logistics, 7th Ed.   24
3) Equipment Utilization Strategies
    To improve material-handling systems

     used in warehouse/transportation to
     reduce operations time
    Ex: use of a smarter, more sophisticated

     equipment dispatching software.
    Doing more with less is a result of leaner

     enterprises.

Chapter 16     Management of Business Logistics, 7th Ed.   25
4) Third-Party/Contract Logistics Services
    Use of 3PLs has resulted in dramatic positive

     impact on asset productivity.
    DuPont, Nabisco, Proctor & Gamble, General

     Electric and General Motors and others are users
     of 3PLs, focusing on managing logistics services
     rather than on the assets themselves.
 Examine Figure 16-4 on 4PLs potential impact.




  Chapter 16      Management of Business Logistics, 7th Ed.   26
Figure 16-4
Fourth-Party™ Logistics




Chapter 16   Management of Business Logistics, 7th Ed.   27
3. Technology-Based Strategies
   Disruptive technologies are those will help make
    firms more competitive, but will change the basis of
    competition.
      Examine Table 16-1

      Implications are that logistics and supply chain

       areas of the future will differ significantly from
       those of today.
   E-commerce e-procurement and electronic
    marketplaces will continue to grow in importance.


Chapter 16       Management of Business Logistics, 7th Ed.   28
Table 16-1
Disruptive Information Technologies




Chapter 16   Management of Business Logistics, 7th Ed.   29
Figure 16-5
Shifts in Technology




Chapter 16   Management of Business Logistics, 7th Ed.   30
Figure 16-6
Strategic Sourcing and Procurement




Chapter 16   Management of Business Logistics, 7th Ed.   31
4. Relationship-Based Strategies
Building relations between trading partners.
 Collaboration
    Parties involved dynamically share and
     interchange information.
    Group benefits more than individual benefits.

    All parties modify their business practices.

    All parties conduct business in new and visibly
     different ways.
    All parties provide a mechanism and process
     for collaboration to occur. (see next - Fig 16-7)

Chapter 16     Management of Business Logistics, 7th Ed.   32
Figure 16-7
4 Types of Collaboration




Chapter 16   Management of Business Logistics, 7th Ed.   33
Synthesis and Future
Directions
   Shift from Vertical to Virtual Integration (ERP)
   Collaboration (CPER)
   Knowledge of Core Competencies
      Expertise

      Strategic fit

      Ability to trust

   Technology and Connectivity
   Managing-the-People Skills
   Comprehensive Supply Chain Perspective

Chapter 16        Management of Business Logistics, 7th Ed.   34
          Chapter 16:
  Summary and Review Questions

 Students should review their knowledge of the
chapter by checking out the Summary and Study
           Questions for Chapter 16.
 End of Chapter 16 Slides


Logistics and Supply Chain
 Challenges for the Future

								
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