Logistics Information Systems o Decision support tools o Shortening customer lead times Assortment warehousing a wide array of goods is held close to the source of demand in order to assure short customer lead times Spot stock warehousing attempts to position seasonal goods close to the marketplace At the end of each season the goods are either liquidated or moved back to a more centralized location Both are attractive options when distances between the originating source and the customers are long and when customers emphasize a high availability or quick delivery o Lowering Inventory Related Costs Warehouses can dramatically lower overall inventory levels and related costs throughout the supply chain Logistic managers often use these to design and fine tune their logistic systems These tools help managers choose locations for their warehouses determine the number of containers or vessels they need and estimate costs and travel times o Planning systems Help managers with specific activities such as selecting a carrier for an outgoing shipment or developing a weekly schedule of deliveries o Execution systems The most detailed level of a logistics information system They take care of the hundreds of small details associates with logistics activities ensuring that planned activities take place as expected They oversee order and shipment management warehouse management shipper receiver management satellite and bar code tracking and automates payment and billing systems Can also help managers monitor the logistics system and identify problems before they get out of hand RFID radio frequency identification use small electronic tags to track the position and movement if items o A system that includes the equipment and procedures needed to move goods within a facility between a facility and a transportation mode and between different transportation modes Forklifts cranes conveyor belts and computer controlled automates storage and retrieval systems are just a few examples Material Handling and Packaging o Packaging the way goods and materials are packed in order to facilitate physical informational and monetary flows through the supply chain Inventory Management o Using slower and cheaper transportation modes will cause inventory levels within the supply chain to rise while using faster and more expensive methods will enable firms to lower inventory levels Logistics Strategy A functional strategy which ensures that an organization s logistics choices transportation warehousing information systems and even form of ownership are consistent with its overall business strategy and support the performance dimensions that targeted customers most value Owning vs Outsourcing o Should a firm maintain its own trucks warehouses and information systems or outsource these services o The best choice depends on many factors Does the firm have the volume needed to justify a private logistics system Firms with low volumes or sporadic shipping needs ex seasonal produce are probably better off contracting for these services Would owning the logistics system limit the firm s ability to respond to changes in the marketplace or the supply chain Investing ties up capital and commits a firm to managing those systems This can present a problem for firms whose markets or supply chain partners are changing rapidly Is logistics a core competency for the firm Common Carriers also known as public carriers a transportation service provider that handles shipments on a case by case basis without the need for long term agreements or contracts Contract carriers a transportation service provider that handles shipments for other firms based on long term agreements or contracts Third party logistics provider 3PL a service firm that handles all the logistics requirements for other companies Using 3PL allows companies to focus on their core competencies yet still enjoy access to the state of the art logistics capabilities Measuring logistics performance o Many companies evaluate their logistics performance based on two measures the perfect order and landing costs o Perfect Order Measures how effectively logistics serves the customer A term used to refer to the timely error free provision of a product or service in good condition A company might define the perfect order as one that is Delivered on time according to the buyer s requested delivery date Shipped complete Invoiced correctly Undamaged in transit Performance can be measured as the percentage of order that meet these criteria o Landed costs Measures how efficiently logistics provides a service The cost of a product plus all costs driven by logistics activities such as transportation warehousing handling customs fees and the like Freight forwarder an agent who serves as an intermediary between an organization shipping a product and the actual carrier typically on international shipments Customs broker an agent who handles customs requirements on behalf of another firm In the United States customs brokers must be licensed by the customs service Reverse logistics systems o A complete supply chain dedicates to the reverse flow of products and materials for the purpose of returns repair remanufacture and or recycling o From downstream to upstream o Some reasons firms are interested in this Returns and repairs firms are interested in determining overall customer satisfaction Recycling o Challenges firms can face when incorporating a reverse logistics system into the overall logistics strategy Firms have less control over the timing transportation modes used and packaging for goods flowing back up the supply chain Thus return logistics systems have to be designed to be more flexible and cost efficient that forward based systems Goods can flow back up the supply chain for a variety of reasons Some might for service and repair and other for remanufacturing or recycling and others might simply represent excess goods that need to be deployed somewhere else Forward systems are not typically equipped to handle reverse Weighted Center of Gravity Method systems o A logistics decision modeling technique that attempts to identify the best locations for a single warehouse or plant given multiple demand points that differ in location and importance Module 10 Chapter 12 LIT Lean Production Introduction o Just in time JIT a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity In a broad sense it applies to all forms of