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Topic 6 – Logistics and Supply Chain Management

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					           GS 120 – Global Transport and Logistics
           Professor: Dr. Jean-Paul Rodrigue




                              Topic 6 – Logistics and Supply
                              Chain Management

                                         A – The Role and Function of
                                         Logistics
                                         B – Commodity Chains
                                         C – Distribution Systems




Hofstra University, Department of Global Studies & Geography
A – The Role and Function of
Logistics
Logistics Goals and Operations


  Fulfillment               Demand
   (Goals)                (Operations)
  Order
  • Right product
                           Transportation
  • Right quantity         • Handling
                           • Packaging
  Delivery
  • Right location
  • Right time             Stock Management
                           • Production scheduling
  Quality
                           • Warehousing
  • Right condition


                           Orders Processing
  Cost
  • Right price            • Sales
                           • Purchase
                Logistical Improvements, Manufacturing Sector,
                1960s to 2000s

           20                                                              40
                                          Logistics Costs (% GDP)
           18                             Inventory Costs (% GDP)          35
                   35
           16                             Cycle Time Requirements (days)
                                                                           30
           14
                                                                           25
           12
% of GDP




                           25




                                                                                Days
           10                                                              20

           8
                                                                           15
           6
                                                                           10
           4
                                    7                                      5
           2
                                                 4
                                                                    3
           0                                                               0
                  1960s   1970s   1980s        1990s            2000s
           Commodity Chains and Added Value



High

               R&D                   Globalization          Sales / Service
 Added value




                     Branding                              Marketing


                          Design                     Distribution
               Concept               Manufacturing          Logistics
Low

                                   Commodity chain
            From Push to Pull Logistics



                                          Supplier         Supplier         Supplier        Supplier

 Supplier        Supplier     Supplier

                                                Supplier         Supplier              Supplier
Freight flow

               Manufacturer
                                                              Manufacturer
                                                                                 3PL
                Distributor
                                                                Distributor

                Customer                    Returns / Recycling          Point-of-sale data

                                                                Customer
Push                                     Pull
Logistic Performance Index, 2010
B – Commodity Chains
    Commodity Chains


■ Function
  • Integrated network of production, trade and service
    activities.
  • Make products available to consumers.
  • Covers all the stages in a supply chain:
     •   Gathering of resources.
     •   Transformation of raw materials.
     •   Intermediate manufacturing stages.
     •   Delivery of a finished good to a market.
  • Each sequence is unique:
     •   Product types.
     •   Nature of production systems.
     •   Markets requirements.
     •   Stage of the product life cycle.
  • Adaptability to changing conditions.
        Commodity Chain


        1- Commodities          2- Intermediate Goods                 3- Final Goods
Stage




                                                                                           Market
             Raw                      Manufacturing
                                                                       Distribution
            materials                 and assembly


Attributable to climatic      Transformation that confers      Goods shipped to large
(agricultural products) or    added value. Metals, textiles,   consumption markets. Flow
geological (ores and fossil   construction materials and       and inventory management.
fuels) conditions.            parts used to make other
                              goods.

         Bulk shipping                Unit shipping                  LTL shipping




                                                                                           Market
Flows




                                  Transport Chain

         High volumes               Average volumes                   Low volumes
         Low frequency               High frequency                  High frequency
    Product Life Cycle


        Monopoly                                 Competition
Sales




                                                                    Decline of
 Idea            Promotion   First competitors    Mass production   production

        Research and
                                 Growth              Maturity        Decline
        development
         Stage 1               Stage 2             Stage 3          Stage 4
       The Agri-food Supply Chain


                  INPUTS                                Stages and Actors in Europe

Chemical companies          Seed companies             Farmers /
                                                                                        3,200,000
                                                       producers

                                                      Second tier
                                                                                  160,000
                                                       suppliers
                PRODUCTION                     First tier suppliers               80,000

            Agricultural production
                                                  Manufacturers                 8,600


                                                   Buying desks           110

                PROCESSING                          Supermarket
                                                                            600
                                                      chains
                             Manufacturing /
Fresh food processing
                              processing            Retail outlets                170,000


                                                      Customers                             89,000,000

                 DELIVERY                             Consumers                             160,000,000

       Retail                    Catering                             1         1,000      1,000,000 1,000,000,000
     The Automobile Supply Chain



Supplying                         Bodies
industries     Manufacture and
                                              Body assembling
                 stamping of
                                                and painting
 Steel and      body panels
other metals

  Rubber                         Components
                   Manufacture of mechanical and electrical          Final    Consumer
 Electronics      components (wheels, tires, seats, breaking       Assembly    market
                    systems, windshields, exhausts, etc.)
   Plastic

   Glass
                      Engines and transmissions
                Forging and casting of          Machining and
  Textiles     engine and transmission       assembly of engines
                     components               and transmissions
APL Logistics Freight Distribution Center,
Shenzhen, PRC, December 2005
Box Label at the APL Distribution Center


                     Kenneth Cole Productions (designer)



                  Largest apparel store chain in the US




                                       Spring 2006 fashion
Container Waiting to be Loaded, APL DC -
Shenzhen
Container Assembly Yard, Yantian Port
Loading a Post-Panamax Containership
        TJ Maxx Main Distribution Centers



Seattle / Tacoma

                                                       Worcester


                                                    Pittston

 Oakland Las Vegas
                                  Evansville

                                               Charlotte
      LA / LB
Palletization of “Floor Loaded” Shipments,
Belgium
C – Distribution Systems
    Distribution Systems


■ Context
   • Changes in distribution because of logistics.
   • Supporting fragmentation of production.
   • Emergence of a specialized branch of the industry:
      • 3rd Party Logistics Providers (3PL).
   • E-commerce offers new opportunities.
■ Distribution centers
   • Perform consolidation, warehousing, packaging,
     decomposition.
   • Provide value-added services to freight.
   • Often in proximity to major transport routes or
     terminals.
   • Can also perform light manufacturing activities such as
     assembly and labeling.
Optimal Location and Throughput by Number of
Freight Distribution Centers
          Cross-Docking Distribution Center


Distribution Center                 Before Cross-Docking

                      Suppliers
                                    Suppliers


                                           LTL


                                    Customers
                      Receiving

                       Sorting
                                    After Cross-Docking
                      Shipping

                                                TL
                                                           Cross-Docking
                                                                DC
                                                     TL


                      Customers
Forward and Reverse Distribution




             Producers          Distributors




                                               Consumers
 Suppliers




             Recyclers           Collectors

                     Forward Channel
                     Reverse Channel
                        Logistics and E-commerce

                            Supply chain           Supply chain

                                DC
Traditional Logistics




                                              E-Retailer     DC




                                                                  E-Logistics
                              Retailer




                             Customers               Customers
    Green Logistics


■ Definition
   • Supply chain management practices and strategies
     that reduce the environmental and energy footprint of
     freight distribution.
   • Material handling.
   • Waste management
   • Packaging.
   • Transport.
   • Sustainability of logistics through a full consideration
     of material flows.
   Material Flows Cycle



                                  Forward Logistics

   Resource                        Production and
                                   manufacturing
                                                                Consumption
    supply


                Waste or losses                  Post-consumer discards

                                     Recycling               Reverse Logistics
      Recycled flow

                                                       Landfills, impoundments,
                                                       deep wells and ocean
Renewable and                                          disposal
nonrenewable                                           Releases to air, land and
resources                                              water
                   Source                 Sink
     Logistic Activities and their Green Dimensions




Product Design and         Physical              Materials
Production Planning       Distribution          Management
• Product design      • Certified            • Packaging
• Near sourcing         distribution         • Recycled inputs
• Sustainable           facilities           • Recyclable
  sourcing            • Certified carriers     outputs (waste
                      • Load                   management)
                        consolidation
                      • Alternative modes
                        and fuels
    The Cold Chain


■ Definition
   • Transportation of temperature sensitive products
     along a supply chain.
   • Thermal and refrigerated packaging methods.
   • Logistical planning to protect the integrity of these
     shipments.
■ Scales
   • Global. Specialization of agricultural functions.
     Distribution of vaccines from single large facilities.
   • Regional. Specialization of production and economies
     of scale in distribution (large cold storage facilities).
   • Local. Timely distribution to the final consumer of
     perishables, namely grocery stores and restaurants.
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?
      Temperature Requirements for the Cold Chain
      Transport of Some Commodities

                                           Potatoes                        Potatoes


                                                Coffee                         Coffee


                                           Bananas                                    Bananas


                                           Oranges                     Oranges


                                            Lettuce          Lettuce


        Frozen Fish                     Frozen Fish


              Frozen Meat               Frozen Meat

-30     -25        -20      -15   -10      -5            0             5         10        15   20
                                   Degrees Celcius
           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              1
Lettuce                           12-14               0.6
Fresh Meat (beef, lamb, pork,
                                  14-65               -2
poultry)
Oranges                           21-90               7
Pears                             120-180             -0.6
Potatoes                          30-50               10
Seafood (shrimp, lobster, crab)   120-360             -17.8
Strawberries                      5-10                0.6
Tomatoes                          7-14                12
                         Lettuce Shelf Life by Storage Temperature

                    14

                    12

                    10
Shelf Life (Days)




                     8

                     6

                     4

                     2

                     0
                         0        5        10            15      20   25
                                         Temperature (Celsius)
Seaborne Reefer Trade, 2008



        14%
                    20%
 3%
                                    Bananas
                                    Citrus
                                    Deciduous
                               7%   Exotics
                                    Fish & Seafood
 24%                                Meat
                          10%       Dairy
                                    Other

                          3%
              19%
Reefer Stacking Area, Maher Terminal, Newark
         Fresh Flowers Cold Chain, Ecuador-United States

              Process                    Time         Quality Deterioration
Post-harvest on farm, Ecuador         4 - 8 hours            Medium
Storage on farm                     12 - 72 hours        Low - Medium
Transportation to cargo agencies      1 - 6 hours            Medium
Storage at cargo agency                 4 hours               Low
Palletizing, Quito                      6 hours          Medium - High
Customs clearance, Quito               0.5 hour               Low
Loading to aircraft, Quito            1 - 2 hours       Medium – High
Flight UIO-MIA nonstop                  4 hours               High
Customs clearance, Miami             4 - 12 hours             Low
De-palletizing, Miami                 2 - 4 hours             High
Storage at cargo agency, Miami       4 - 72 hours        Low - Medium
Transportation to U.S. retailer    2 hours - 5 days          Medium
Grocery Chain Cold Storage Facility, Regina
Subtropolis Distribution Center, Kansas City
    City Logistics


■ Definition
   • Insuring the adequate circulation of freight related to
     urban activities.
   • Cities generate freight (manufacturing, waste
     disposal).
   • Cities consume freight (manufacturing, retailing, food,
     energy).
   • Cities transit freight (port cities).
Components of City Logistics

                               Modes

                                       Alternative
                                          modes


                                           Trucks




                                City
               Terminals      Logistics
    Distributions                               Scheduling
       centers
                                                         Parking
                                      Routing
                           Roads


                      Alternative           Loading /
                     infrastructure         Unloading
         Main Urban Freight Transport Systems

Sector                    Characteristics
Independent retailing     Small scale retailing activities. High frequency of deliveries (3 to 10 times per
                          week). Use of own-account delivery vehicles; mostly small to medium sized.
                          Limited freight reception facilities (the street as the delivery platform).
Chain retailing           Large stores and shopping centers. Provision of parking space and loading
                          bays. Consolidated deliveries (large trucks). Reliance of third-party logistics
                          services providers (urban distribution and outsourcing).
Food deliveries           Specialized supply chains with goods that are often perishable. Cold chain
                          logistics; used heavily by fast food chains. Outdoor (central) markets (mostly
                          in developing countries).
Parcel and home           Specialized parcel companies also involved in home deliveries. Large freight
deliveries                integrators (consolidation and deconsolidation of shipments) with a network of
                          distribution centers. Fleet of delivery vehicles (small and medium-sized).
Construction sites        Construction and renewal of urban infrastructure. Different suppliers
                          according to the construction phase. Large volumes and heavy trucks.
Garbage collection and Collection and disposal of wastes generated by daily urban activities. Reverse
disposal               logistics and recycling.
Industrial and terminal   Convergence towards transport terminals (ports, airports, railyards) and
haulage                   industrial and logistics zones. Significant transit traffic for gateway cities.
SOGARIS Urban Logistic Zone, Marseille

				
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