O'Brien MIS, 6th Ed.
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1
Prof. Anatoly Sachenko -Kontakt
Zakład Informatyki i Ekonometrii
Budynek A, pokój 414
Instytut
Ekonomii i Informatyki
Wydział Organizacji i Zarządzania
http://dydaktyka.polsl.pl/roz6/asachenko/default.a
spx
[email protected] or
[email protected]
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Informatics in Logistics
Management
Lecture 1. Logistics Origin and
Basics
Lecturer:
Prof. Anatoly Sachenko
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Lecture Overview
Definition
and Origins
System Approach
Logistics Management
Logistics Perspective
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Definition of Logistics
- “Planning implementing and controlling the
physical flow of material and finished goods from point of
origin to point of use to meet customer`s need at a profit”
Philip Kotler
Logistics is the management of the flow of goods between
the point of origin and the point of destination in order to
meet the requirements of customers or corporations.
Logistics involves the integration of information,
transportation, inventory, warehousing, material
handling, and packaging, and often security
Logistics is one of the main functions within a company
Logistics
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Origin of Logistics
The
term logistics comes from the Greek logos
(λόγος), meaning "speech, reason, ratio, rationality,
language, phrase", and
more specifically from the Greek word logistiki
(λογιστική), meaning accounting and financial
organization
The word logistics has its origin in the French verb
loger to lodge or to quarter
Its original use was to describe the science of
movement, supplying & maintenance of military
forces in the field
Later on it was used to describe the management of
materials flow through an organization
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Main Logistics Targets and Fields
Its
main targets are divided into performance related and
cost related
They are high due date reliability, short delivery times, low
inventory level and high capacity utilization
But when decisions need to be made, there is always a trade
off between these targets
It’s making a logistician challenging and interesting
Main Logistics fields:
Procurement Logistics
Production Logistics
Distribution Logistics
After sales Logistics
Disposal Logistics
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Logistics Viewpoints
Inbound
logistics is one of the primary processes and
it concentrates on purchasing and arranging
inbound movement of materials, parts and/or
finished inventory from suppliers to:
manufacturing or assembly plants, warehouses
or retail stores
Outbound logistics is the process related to the storage
and movement of the final product and the related
information flows from
the end of the production line to the end user
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Scope of Logistic
It
is a critical importance for organization how it
delivers tangible or intangible products & services to
the customer
Effective physical movement of the tangible product
will speak of intangible services associated with the
product and the delivered organization
In Case of intangible product, the delivery of
tangibles at the right place & right time will speak
about its quality
On the macro level infrastructure it’s contributing to
a large extent in the physical movement of produced
goods
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Scope of Logistic
This
speed & reliability in distribution of products &
services contribute to a great extent in the growth of a
country`s domestic & international trade
Logistic cost as a percentage of GDP across the world is
shown in the following table
Country
Logistic cost as a percentage of GDP
Korea
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China
15
Japan
14
India
13
France
12
UK
11
USA
10
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Logistics –A system approach
Logistics
recognizes that all the activities of material
movement across the business process are interdependent
and needs close coordination and these are to be
maintained as a system
Logistics System is an adaptive system including following
functional Areas:
Order Processing
Information Flow
Warehousing
Inventory control
Packaging
Transportation
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Order Processing
Order
checking for any deviation in agreed on
negotiated term
Technical details; price; delivery period; payment
terms; taxes etc.
Checking the availability of material in stock
(material requisition)
Production & material scheduling for shortage.
Acknowledging the order, indicating deviation if any
It is routine operation but require great deal of
planning training of people involved and investment
to bring about efficiency & accuracy
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Information Flow
It
is basically info based activity of inventory
movement across the supply chain
Hence role of info system plays a vital role in
delivering superior customer service
This function is required to facilitate the following
info needs
Order registration
Order checking & editing
Order processing
Coordination - means to integrate the total supply
chain of the company with info needs as to time,
quantity, value
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Warehousing
A
storage place wherein finished goods are stored till
they are sold.
Effectiveness of an organization`s marketing strategy
depends on making the right decision regarding
warehouse
Warehouse are treated as switching facilities rather
than storage place
Major decision of warehouse are as follows:
Location ,Size & Number of warehousing facilities
Warehouse layout
Design of building
Ownership of the warehouse
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Modern Warehouse
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Packaging
It
is also a critical element in physical distribution of
the product,
which influences the efficiency of the logistic
system this is done with the view of following:
For handling and damage prevention
For communications
For inter modal transportation
Storage space economy
Thus to reduce packaging cost
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Transportation
For goods movement of a transportation is the most
fundamental and important component of logistic
E.g. for low unit value products the transportation
cost component is 20% of the product cost
In logistic cost its share varies up to 65-70%
There are the few decision involved in transportation
Mode of transportation ( Cost & time factor)
Own fleet or Outsourcing
Route Planning
Vehicle scheduling
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Logistics Management
Logistics
Management is that part of Supply Chain
Management
that plans, implements, and controls the efficient,
effective, forward, and reverse flow and storage of
goods, services, and
related information between the point of origin
and the point of consumption
in order to meet customers’ requirements
From a traditional point of a view a goal of any firm
is to produce competitive products and increase its
volume
In this case management can boil down to a
General Manager + minor staff-see next slide
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Logistics Management – Traditional
Structure
Person’s Decision Making
Process
(Chief Manager)
Supplier
Production
Material flow
Information flow
Customer
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Logistics Management – Traditional
Structure
Both
terms Flaw and Inventory are the main categories
of Logistics
In Logistics Management are diffeation Flows- see
previous and next slides
Material Flow red the Material and Informis the
description of the transportation of raw materials, prefabricates, parts, components, integrated objects and
finally products as a flow of entities
Logistics operations with Information Flow include
acquisition, storing, processing and transfer of info
In next slide is shown a contemporary structure of
Logistics Management
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Logistics Management – Contemporary Structure
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Logistics' perspective: Three Forces
Three
Forces which have change the perspective of
logistics:
Globalization
Focus on Supply Chain Management
Outsourcing of Non Core Competency Functional
Area
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Globalization
The
entire world has become a global village for
marketers because of the liberalization of
economics of most countries, and
the emergence of World Trade Organization
which is forcing business organizations to
supply products beyond the national
boundaries wherever there is a market
opportunity
However in such conditions the role of
LOGISTICS will be
to provide time and place time and place utility
of the product to the customer
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Focus on Supply Chain Management
Business
the world over are striving for
competitiveness
In their struggle for survival their focus has
shifted to the supply chain i.e.
Integrating the process of Procurement ,
processing & distributing to deliver value for
money to the customer
Two key roles logistics planning & support are
Value delivery process
Success of Supply Chain Management
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Outsourcing of Non Core Competency Functional
Area
Outsourcing
is a acceptable trend in business
Corporation have realized that doing everything by
themselves does not result in effective & efficient use of
scare resources available to them
It is better to outsource functional area to experts who
can do job at the lowest cost and that to efficiently &
Effectively
LOGISTICS is one such area where most of business
org. do not have enough expertise thus needs to be
outsourced
Thus Logistics have shaped into different service
industry offering complete & customized logistics
solutions