Review Session 10 8 2012 Format Review 50 Multiple choice or True False Even distribution across the chapters covered this term One question from A F and one from Sustainability no other speakers No math No formulas Overview of Logistics Definition of logistics 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 Reasons for increased interest Reduction in Economic Regulation Changes in Consumer Behavior Increasing Competitive Pressures Shift in Channel Power Globalization Development of IT Systems the increasing importance of information Increase Product Proliferation Increase Number of Delivery Points Time When having products available when they are needed by customers Place Where Having products available where they are needed by customers products are moved from points of lesser value to points of greater value Supply Chain Management GSCF definition o View the sum of logistics operations as a system and seek to minimize the total cost of the system rather than the individual functions Look how costs interact All costs are interrelated and affect each other Supply Chain Management the integration of key business processes from end user through original suppliers that provides products services and information that add value for customers and other stakeholders o CRM and SRM critical linkage Form the Links in the Supply Chain Customer Service management Demand Management Order Fulfillment Manufacturing Flow Management Product Development and Commercialization Returns Management Relationship management Customer Relationship Management Process o o Customer relationships are managed by customer teams which negotiate mutually beneficial product service agreements with large strategically significant customers Customer teams develop and implement customer partnering programs Product service agreements are established Key performance evaluation criteria both company performance and customer account profitability are used to measure results Supplier Relationship Management Process o o o o o o o Relationships with major suppliers are corporately managed s partnerships Product service agreements are developed and managed with key suppliers and segments of non key suppliers Teams work with suppliers to reduce costs and improve service Goal is to improve the profitability of both the focus firm and the suppliers Purchase order transactions are integrated with the supply process to improve productivity and all areas of supplier performance o Key processes Relationships with major suppliers are corporately managed as partnerships Product service agreements are developed and managed with key suppliers and segments of non key suppliers Time and Place utility Cost categories Inventory carrying cost 23 Transportation 63 Warehousing 9 Shipper related costs 1 Logistics administration 4 Total cost concept o o o o o Teams work with suppliers to reduce costs and improve service Goal is to improve the profitability of both the focus firm and the suppliers Purchase order transactions are integrated with the supply process to improve productivity and all areas of supplier performance o Internal and external motivations About processes and it s a bigger concept that logistics is a small part of Cross functional teams Internal Realization that systems concept applies to multiple organization channels as well as within the firm Movement toward partnering with choice suppliers and customers This is the way business will dominantly be conducted in the future External Changing consumers Technology Criticality of speed and time Emphasis on asset productivity inventory reduction turnover Customer satisfaction is only the beginning Procurement o Why partner Tailored business relationship based on mutual trust openness shared risk and shared rewards that results in business performance greater than would be achieved by two firms working together in the absence of partnership Gain advantages of vertical integration while still maintaining organizational independence Take advantage of best in class expertise Achieve service improvement Gain operational efficiencies Respond to competition Drivers facilitators components and outcomes Drivers Facilitators Components Outcomes Compelling reasons to partner Supportive environmental factors that enhance partnership growth Joint activities and processes that build and sustain the partnership Uses of the model The extent to which performance meets expectations Not used as a selection tool Evaluate a potential new partnership Analyze a portfolio of relationship Diagnose relationship Increase specific performance aspects of relationship Structured approach to relationship management Used to figure out how the relationship should function o Lessons learned Be willing to look at things differently Most companies have a lot more in common than they think Visibility is key to building trust Mistakes happen the problem is not learning from them A well structured plan that is closely monitored is key for ensuring results Customer Service o o o o o Output of the logistics function and is the place component of the marketing mix Importance of logistics customer service While the other components may attract one time buyers customer service is crucial for a company to keep customers Can be utilized as an important competitive weapon to secure customers Pre Transactional Elements Establish a written customer service policy Should be based on the customer s perspective Define the service standard and how they will be measure how frequently they will be measured and who they should be reported to Communicate give the policy statement to customers Critical to properly align expectations Formally establish the policy Critical for the firm to set believable performance standards and penalties for not meeting such standards Absolutely essential to honor the penalties in order to establish credibility o Transactional Elements Stockout Level Order Information Elements of the order cycle Expedited shipments and transshipments System accuracy Order convenience Substitution o Post Transactional Elements Installation Warranty Alterations Repairs After sales support Product Tracing Customer Claims Complaints and returns Have policies that are used