Podcast
Questions and Answers
What is the primary focus of logistics within the broader context of supply chain management?
What is the primary focus of logistics within the broader context of supply chain management?
- The actual movement, storage, and management of goods to ensure efficiency and speed. (correct)
- Overseeing supplier relationships and procurement strategies.
- Financial planning and investment decisions across the supply chain.
- Strategic planning and long-term goal setting for the entire supply network.
How can a company effectively address the trade-off between speed and cost in its logistics strategy?
How can a company effectively address the trade-off between speed and cost in its logistics strategy?
- Assess the specific needs and expectations of different customer segments, tailoring logistics strategies accordingly. (correct)
- Implementing the lowest possible cost strategy while ensuring that transportation times are above average.
- Always prioritize speed, regardless of cost implications, to ensure customer satisfaction.
- Only focus on minimizing costs, accepting longer delivery times as a result.
In the context of logistics, what does the term 'postponement' refer to?
In the context of logistics, what does the term 'postponement' refer to?
- Delaying the shipment of goods to avoid incurring additional storage fees.
- Outsourcing logistical functions to third-party vendors to cut costs.
- Standardizing the final product processing in the distribution channel until the customer order is received. (correct)
- Centralization of all warehouse activities to reduce transportation expenses.
What is the Council of Logistics Management (CLM) definition of logistics?
What is the Council of Logistics Management (CLM) definition of logistics?
What is the primary goal of an 'efficient' logistics strategy?
What is the primary goal of an 'efficient' logistics strategy?
What is a key question to consider when implementing standardization in logistics?
What is a key question to consider when implementing standardization in logistics?
How do shorter product life cycles affect logistics and distribution strategies?
How do shorter product life cycles affect logistics and distribution strategies?
What strategic error did Boeing commit by outsourcing core functions?
What strategic error did Boeing commit by outsourcing core functions?
What impact does technology and online commerce have on the relationships between suppliers and customers?
What impact does technology and online commerce have on the relationships between suppliers and customers?
Which of the following best describes the relationship between logistics and supply chain management?
Which of the following best describes the relationship between logistics and supply chain management?
How did order management and warehouse implementation issues impact Hershey's, a large chocolate manufacturer, in 1999?
How did order management and warehouse implementation issues impact Hershey's, a large chocolate manufacturer, in 1999?
How can a company effectively provide differentiated distribution?
How can a company effectively provide differentiated distribution?
What does the term 'replenishment quantities and timing' fall under in the Level of Decision table?
What does the term 'replenishment quantities and timing' fall under in the Level of Decision table?
What does the term 'Num. of facilities, size and location' fall under in the Level of Decision table?
What does the term 'Num. of facilities, size and location' fall under in the Level of Decision table?
What does the term 'Inventory positioning' fall under in the Level of Decision table?
What does the term 'Inventory positioning' fall under in the Level of Decision table?
Which of the following best describes the role of objectives in logistics strategy?
Which of the following best describes the role of objectives in logistics strategy?
How does increasing energy prices affect logistics practices?
How does increasing energy prices affect logistics practices?
In 2017, Toys R Us had to file for bankruptcy and had to close over 800 stores. What caused this?
In 2017, Toys R Us had to file for bankruptcy and had to close over 800 stores. What caused this?
In the context of strategic, tactical, and operational decisions in logistics, which activity is best categorized as a 'tactical' decision?
In the context of strategic, tactical, and operational decisions in logistics, which activity is best categorized as a 'tactical' decision?
In 2018, KFC UK had trouble when they changed its supply chain provider from Bidvest to DHL. What problem did that cause?
In 2018, KFC UK had trouble when they changed its supply chain provider from Bidvest to DHL. What problem did that cause?
What is the goal of consolidation in logistics?
What is the goal of consolidation in logistics?
Which of the following best exemplifies a logistics strategy focused on 'cost reduction'?
Which of the following best exemplifies a logistics strategy focused on 'cost reduction'?
What is the primary focus of a logistics strategy that prioritizes being a 'Service Leader'?
What is the primary focus of a logistics strategy that prioritizes being a 'Service Leader'?
What logistical opportunity is leveraged through being a ‘Cost/Productivity Advantage’?
What logistical opportunity is leveraged through being a ‘Cost/Productivity Advantage’?
In an efficient supply-chain, how would goods be purchased?
In an efficient supply-chain, how would goods be purchased?
In a responsive supply-chain, how is the product to the consumer?
In a responsive supply-chain, how is the product to the consumer?
A company decides to move warehousing closer/more widespread throughout the supply routes. What will this strategy accomplish?
A company decides to move warehousing closer/more widespread throughout the supply routes. What will this strategy accomplish?
What does the term 'Service Improvement' mean in Logistics Strategy?
What does the term 'Service Improvement' mean in Logistics Strategy?
What does the term ‘Capital Reduction’ mean in Logistics Strategy?
What does the term ‘Capital Reduction’ mean in Logistics Strategy?
What does the term 'Cost Reduction' mean in Logistics Strategy?
What does the term 'Cost Reduction' mean in Logistics Strategy?
A business wants to increase revenues and profit. To do so, they want to have a better product. Which logistics strategy would they want to implement?
A business wants to increase revenues and profit. To do so, they want to have a better product. Which logistics strategy would they want to implement?
Why is logistics important to large industries?
Why is logistics important to large industries?
What is a strategic consideration when determining facility location in logistics?
What is a strategic consideration when determining facility location in logistics?
What does the term ‘feedback’ mean in logistics strategy?
What does the term ‘feedback’ mean in logistics strategy?
In what way does online business affect distribution?
In what way does online business affect distribution?
When looking at customer service, what would be the lowest form of decision that would need to be made?
When looking at customer service, what would be the lowest form of decision that would need to be made?
Why would a company choose to focus on a smaller number of facilities and more centralized storage?
Why would a company choose to focus on a smaller number of facilities and more centralized storage?
What has been known to potentially reduce customer service level in logistics?
What has been known to potentially reduce customer service level in logistics?
Flashcards
What is logistics?
What is logistics?
The process of planning, implementing, and controlling the efficient flow and storage of goods and information from origin to consumption to meet customer needs.
Logistics vs Supply Chain
Logistics vs Supply Chain
Logistics is a subset of supply chain management, focusing on the movement and storage of goods. Supply chain management is broader and can include product development, marketing and other things.
Tactical vs Strategic Planning
Tactical vs Strategic Planning
Tactical planning focuses on short-term plans, whereas strategic planning focuses on long-term goals.
What is strategy?
What is strategy?
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Logistics strategy
Logistics strategy
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Speed vs Cost
Speed vs Cost
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Efficient Strategy
Efficient Strategy
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Responsive Strategy
Responsive Strategy
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Differentiated Distribution
Differentiated Distribution
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Consolidation
Consolidation
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Logistics Postponement
Logistics Postponement
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Standardization
Standardization
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Study Notes
Introduction to Logistics Management
- Logistics is the process of planning, implementing, and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods, and related information from the point of origin to consumption, conforming to customer requirements
Logistics vs Supply Chain
- Logistics is a subset of supply chain management
- Logistics focuses on movement, storage, and management of goods
- Logistics involves planning and controlling the flow of products from one point to another to ensure efficiency, speed, and cost-effectiveness
- Logistics involves tactical planning
- Supply Chain involves strategic planning
- Supply chain management involves choosing a theme, setting up decorations, sending invitations, and buying the cake
- Logistics is the part of the plan where you actually move everything around
- Logistics gets the cake from the bakery to the venue, organizes the party supplies correctly, and ensures everything arrives on time
Key problem areas in Logistics
- Customer service level
- Facility location
- Inventory decision
- Transportation decision
Levels of Decision
- Strategic decisions include location, transportation, order processing, customer service, inventory, purchasing, and warehousing
- Location (strategic): Number of facilities, size, and location
- Transportation (strategic): Mode selection
- Order processing (strategic): Selecting and designing order entry system
- Customer service (strategic): Setting standards
- Inventory (strategic): Location, control policies
- Purchasing (strategic): Development of supplier-buyer relations
- Warehousing (strategic): Layout, size selection
- Tactical decisions include location, transportation, order processing, customer service, inventory, purchasing, and warehousing
- Location (tactical): Inventory positioning
- Transportation (tactical): Seasonal service mix
- Order processing (tactical): Priority rules for customer orders
- Inventory (tactical): Safety stock levels
- Purchasing (tactical): Contracting, forward buying
- Warehousing (tactical): Space utilization
- Operational decisions include location, transportation, order processing, customer service, inventory, purchasing, and warehousing
- Location (operational): Routing, expediting, and dispatching
- Transportation (operational): Replenishment quantities and timing
- Order processing (operational): Expediting orders
- Inventory (operational): Order filling
- Purchasing (operational): Order releasing
- Warehousing (operational): Order picking and restocking
Importance of Logistics
- Logistics represents between 8-12% of GDP worldwide
- Logistics represents more than 20% of GDP in Indonesia
- Supply chain costs account for a large portion of sales revenue, 30-80% in the F&B sector
- Shorter product life cycles require faster and more flexible distribution
- Increasing energy prices affect transport costs
- Technology and online changes affect the relationship between suppliers and customers
Top Logistics fails
- In 1999, Hershey's missed critical Halloween shipments due to order management and warehouse implementation issues, resulting in $150 million in lost revenue, a 19% profit drop, and a stock decrease from 57 to 38
- In 2018, KFC UK changed its supply chain provider from Bidvest (6 warehouses) to DHL (1 warehouse)
- A fatal traffic incident closed the M6 motorway near DHL's warehouse, and only 266 of 870 UK and Ireland restaurants were open by February 18th, 2018
- In 1999, Toys R Us launched its online division and received tens of thousands of orders for Christmas, which they were unable to fulfill, eventually outsourcing fulfillment
- Toys R Us experienced a supply chain failure in 2017, contributing to bankruptcy and the closure of over 800 stores in the United States
- These challenges with inventory management, logistics, and e-commerce capabilities led to lost sales and increased costs
- Boeing outsourced core functions, leading to a full reliance on over 50 suppliers, resulting in quality control issues
- Planes were grounded due to overheating lithium-ion batteries and fires
- The company was supposed to trial the aircraft in 2007 and complete the first delivery in 2008, but it didn't enter commercial service until 2011
Logistics Strategy (TM-2)
- Strategy is a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision-making
- Logistics strategy is related to how logistics actions and decisions are directed toward achieving the company's strategic objectives of increased value and customer service
- Logistics strategy aims for cost reduction, capital reduction, service improvement, right place, right time, and right price
Speed Vs Cost
- A basic foundation of logistics strategy is the tradeoff between speed and cost
Efficient vs Responsive
- Efficient logistics focuses on reducing product price through economical production runs, finished goods inventories, economical buy quantities, large shipment sizes, and batch order processing
- Efficient logistics networks are leaner with fewer facilities and more centralized storage
- Lower inventory and turnover rates are important to control, and service level is normally set lower
- Responsive logistics focuses on getting products faster to customers through excess capacity, quick changeovers, short lead times, flexible processing, premium transportation, and single-order processing
- Responsive logistics networks are more widespread, with a higher number of facilities, and are closer to the customer
- Higher inventory and product availability are critical, and service levels are normally set higher
Service/Value Advantage
- Logistics leverage opportunities include tailored service, distribution channel strategy, reliability, responsiveness, information, flexibility, and environmental credentials
Cost/Productivity Advantage
- Logistics leverage opportunities include capacity utilization, asset turn, low inventory, and low wastage
Differentiated Distribution
- Not all products should be provided with the same level of customer service
- Multiple distribution strategies could be applied to different groups of products, e.g., 7-Eleven Japan
Consolidation
- A customer's order arriving at the warehouse is combined with orders received at a later period
- Increasing the size of the average shipment lowers the average per-unit shipping cost
- This potentially reduces customer service level because of increased delivery time
Logistics Postponement
- The time of shipment and the location of final product processing in the distribution of a product should be delayed until the customer order is received
Standardization
- Providing variety to customers without dramatically increasing logistics costs
- The use of standardization and postponement in combination is often effective
- Interchangeable parts, modularization of products, and labeling of the same products under different brand names can create standardization in production
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