Transcript Linear Programming: Basic Concepts

Introduction to
Logistics
Logistical and Supply Chain issues for
Lincolnshire food businesses
Martin Hingley
Professor of Strategic Marketing
University of Lincoln Business School
David B. Grant
Professor of Logistics and Director, Logistics Institute
Hull University Business School
Agenda:
• What are Logistics and Supply Chain Management?
• Their Relationship to Marketing
• Functional Activities of Logistics
•
•
•
•
Inventory
Warehousing
Transportation
Information Systems and Technology
• Current Issues in Logistics and SCM
• Issues of retailer-led centralized food supply?
• Access for the small and specialist food supplier?
Definitions of SCM and Logistics
Supply Chain Management (SCM):
“...the planning and management of all activities involved in
sourcing and procurement, conversion, and all Logistics
Management activities. Importantly, it also includes
coordination and collaboration with channel partners, which
can be suppliers, intermediaries, third-party service providers,
and customers. In essence, Supply Chain Management
integrates supply and demand management within and across
companies.”
Logistics Management:
“...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.”
A simplified supply chain...
Grant, D.B. (2012) Logistics Management, Pearson
The Emerging Importance of Logistics and SCM
• Intensification of competition
– Liberalisation of trade
– Deregulation of transportation
– Shortened expectation of time
• Move beyond product to ‘product and service’
– Mass customisation, service & product based
– Product variety, market segmentation
– Consumer expectation service delivery, price efficiency
• Change in channel power
– Global brands
– Retailers v manufacturers
– Global manufacturing economies
• IT improvements
– Power, functionality & cost
– Planning, execution and control
• Profit Leverage
– Cost minimisation with service excellence
– Business process re-engineering
Logistics/Marketing Interface
Grant, D.B. (2012) Logistics Management, Pearson
Logistics activities are services!
Perishability
Intangibility
Heterogeneity
Inseparability
Ownership
Grant, D.B. (2012) Logistics Management, Pearson
Inventory and Inventory Management
Stocks “are stores of all goods and materials that are stored by an
organization until needed for future use”
Inventory “is a list of all the items held in stock”
Inventory Management “is the function responsible for all decisions and
aspects of stock control in an organization”
BUT...
“It is surprising how many blue chip companies do not have stock policies
in place and rely on local management knowledge and skill to maintain
the levels of stock necessary often to poorly defined service level
requirements...”
“Inventory management is a mixture of economically sound theory,
accepted industrial practices, tested personalized approaches and
outright fallacies.”
Why Hold Stocks?
“Stocks are expensive, why hold them…?”
There are several answers that all have the same basic requirement: Stocks
provide a Buffer between Supply and Demand!!
TIME: reduces customer waiting time (time and possession utility!)
DISCONTINUITY: allows inter-related functions to be disconnected and
operated more efficiently (place utility!)
UNCERTAINTY: offers protection against unanticipated and unplanned
events
ECONOMY: permits bulk purchases at discounted rates (beware “false”
economies though!)
Model of Inventory Carrying Costs
What Warehouse Activities Take Place?
Grant, D.B. (2012) Logistics Management, Pearson
Handling Units and Terms
Grant, D.B. (2012) Logistics Management, Pearson
What is Freight Transport?
A simple definition could be:
“The planning and undertaking the movement of goods
between two points in a cost effective manner and
which also achieves the times and condition specified.”
Parameters of Freight
• Geographic scale
– length of haul
• Volume/weight/value
• Service frequency
– scheduled
• Reliability
– dimension limits
– congestion
– market capacity
– weather
• Consignment, load & transit
unit
– intermediate handling
• Accessibility
– terminals
– primary & secondary
• Transit time
– speed
– door-to-door lead time
– alternative routings
– international regulation
• Environmental costs
– externalities
• Cost structure
– fixed, variable, direct assets,
track/terminals
• Price
– regulated
– throughput /distance/time
Freight Mode Characteristics
Grant, D.B. (2012) Logistics Management, Pearson
Current Issues in Logistics and SCM
• Costs
• Globalisation of supply and markets
• Supply chain structures
• Time compression
• Product range and life cycles
• Quality of service
• Risk and disruption
• Environmental impact
Let’s look at three a little more deeply…
Time Compression and Order Lead Times
120
100
100
80
Number
of Days
67
56
60
51
44
40
20
0
1987
1993
1998
2003
2008
Product Complexity and Range
The Boeing 787 ‘Dreamliner’
Environmental Impact of Logistics and SCM
Food Miles
Greenhouse Gases
/Global Warming
Road Congestion
Retail market concentration…
One company, still dominates UK retailing
(30% market share, Feb 2012)
>>>>>>>
Centralized Distribution
Information/feedback
Supplier
Supplier
Supplier
Distribution Centre
Supplier
Store
Store
Store
Source: Adapted from IGD, 2001
Reduced sourcing and preferred supply
Reduced source model &
‘preferred’/Supply Chain Relationships
(Hingley, 2005)
Competition is not between firms, but
entire value chains (Horvath, 2001).
As networks of competing supply chains
rather than through inter-firm
competition:-
Primary Producers
Inputs and raw materials
Overseas
Suppliers
Complementary
Customers
Retailer
Partner
“Super
Middlemen”
Competitor
Relationship
Consumers
&
Overseas
Markets
Innovative/ Specialist
Supplier
Source: Hingley
....but are the big guys the most creative and
innovative?
It can also be
boring for the
customer…
Doesn’t have to be boring…
…but
What about access for good new, innovative and smallspecialist suppliers?
Multiple led ‘hubs’ : e.g. Asda, Lincs Co-op, Ideal Lincs?
www.asdasupplier.com/about-us/local-sourcing
http://www.specialityfoodmagazine.com/content/news/n
ew_delivery_service_for_heart_of_england
SC Issues of Small and Specialist suppliers
Benefits:
Flexible, unique, differentiated, local, responsive…
Problems:
Non-standard, volume issues, stock-holding and control
issues…
Hubbing of specialist/local/specialist product
Supplier
Supplier
Distribution Centre
Information/feedback
Specialist
Supplier
Hub e.g.
Ideal
Lincs
Store
Store
Store
…and finally, a tale of full circle SC
‘back to the future…’
Case example of a speciality
fresh produce grower: The
evolution of their SCRs and
evolving routes to market
Phase 1. Traditional wholesale transactional
Phase 2. Grower owned co-op
Phase 3. Super-middleman dedicated
Phase 4. ‘Back to the future’ and
spreading the customer base
Source: Hingley
Retailer
partner
Super
Middleman
Growers Co-op
Consumers
&
Overseas
Markets
Wholesalers
& Hubs
2
3
1
4
Innovative /Specialist
Supplier
Small
retailers
Thank you; any questions…?