introduction to logistics logistical and supply chain issues for lincolnshire food businesses martin...
TRANSCRIPT
Introduction to Logistics
Logistical and Supply Chain issues for Lincolnshire food businesses
Martin HingleyProfessor of Strategic MarketingUniversity of Lincoln Business School
David B. Grant Professor of Logistics and Director, Logistics InstituteHull 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.”
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
IntangibilityPerishability
OwnershipInseparability
Heterogeneity
Grant, D.B. (2012) Logistics Management, Pearson
Logistics activities are services!
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!)
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
– dimension limits
– market capacity
• Consignment, load & transit unit
– intermediate handling
• Accessibility
– terminals
– primary & secondary
• Transit time
– speed
– door-to-door lead time
• Service frequency
– scheduled
• Reliability
– congestion
– weather
– alternative routings
– international regulation
• Environmental costs
– externalities
• Cost structure
– fixed, variable, direct assets, track/terminals
• Price
– regulated
– throughput /distance/time
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…
100
67
5651
44
0
20
40
60
80
100
120
1987 1993 1998 2003 2008
Time Compression and Order Lead Times
Number of Days
One company, still dominates UK retailing (30% market share, Feb 2012)
>>>>>>>
Retail market concentration…
Source: Adapted from IGD, 2001
Store
Store
Store
Supplier
Supplier
Information/feedback
Supplier
Supplier
Dis
trib
uti
on
Cen
tre
Centralized Distribution
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:-
Consumers &
Overseas Markets
ComplementaryCustomers
RetailerPartner
Pri
mary
P
rod
ucers
Competitor Relationship
“SuperMiddlemen”
Overseas Suppliers
Inp
uts
an
d r
aw
mate
rials
Source: Hingley
Innovative/ SpecialistSupplier
…but
What about access for good new, innovative and small-specialist 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/new_delivery_service_for_heart_of_england
SC Issues of Small and Specialist suppliersBenefits:
Flexible, unique, differentiated, local, responsive…
Problems:
Non-standard, volume issues, stock-holding and control issues…
Store
Store
Store
Supplier
Information/feedback
Supplier
Specialist Supplier
Dis
trib
uti
on
Cen
tre
Hub e.g.
Ideal Lincs
Hubbing of specialist/local/specialist product
Case example of a speciality fresh produce grower: The evolution of their SCRs and evolving routes to market
…and finally, a tale of full circle SC ‘back to the future…’
Consumers &
Overseas Markets
Retailerpartner
Wholesalers & Hubs
Innovative /SpecialistSupplier
SuperMiddleman
Source: Hingley
Small retailers
Growers Co-op
Phase 1. Traditional wholesale transactionalPhase 2. Grower owned co-opPhase 3. Super-middleman dedicatedPhase 4. ‘Back to the future’ and spreading the customer base
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4
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