Supply Chain Logistics Management Chapter 15: Logistics Integration

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<ul><li> Slide 1 </li> <li> Supply Chain Logistics Management Chapter 15: Logistics Integration </li> <li> Slide 2 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. North American Logistics Geography </li> <li> Slide 3 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Distribution Network Total Cost Dimensions Expense Components Handling + Inbound Transport + DC Handling + Inventory + Customer Transport ____________ Total Cost </li> <li> Slide 4 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Definition of Systems Analysis Total integrated effort to accomplish the desired objective A set of interrelationships designed to achieve the desired objective </li> <li> Slide 5 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Principles of System Integration Total system performance is singularly important Components or parts of system need not have optimum construction A functional relationship exists between components called trade-offs which may enhance or hinder system performance Components linked together in a balanced system will produce greater end results than the sum of individual components </li> <li> Slide 6 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Key Trade-Offs Cost to cost Increase transportation to reduce inventory Lot-size -- Inventory Inventory -- Transportation Cost to service Increased logistics cost to obtain increased service and the potential for more revenue Lead time -- Transportation Product variety -- Inventory Overall SC cost -- SC service </li> <li> Slide 7 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Transportation Cost Integration (Spatial) Basic economies Economy of size (quantity discount) Economy of distance (tapering principle) Activity based cost Loading and unloading Movement Information Generalized relationship </li> <li> Slide 8 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Transport Cost Number of Distribution Locations Outbound Inbound Total Transport Transport Cost as a Function of Distribution Locations </li> <li> Slide 9 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Inventory Cost Integration (Temporal) Basic economies Single location Multiple location Activity based cost Inventory risk Inventory management Storage and handling Generalized relationship </li> <li> Slide 10 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Graphical Illustration of Locational Impact of Inventory Cycle Stock Safety Stock Total Inventory Average Inventory Stocking Locations </li> <li> Slide 11 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Total Cost Integration Threshold service (Least cost assignment) Sensitivity analysis Science vs. art </li> <li> Slide 12 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Logistics Total Cost Curve Total Cost Number of Distribution Locations Inventory Carrying Cost Transportation Cost Total Cost </li> <li> Slide 13 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Market Strategy Mass marketing Focused marketing One to one marketing </li> <li> Slide 14 </li> <li> Supply Chain Logistics Management, First Edition, Bowersox, Closs, and Cooper Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Launching Supply Chain as a Strategic Resource Focus service to customer segments Emphasize flexibility Leverage through alliances </li> </ul>