WCOB 2023 Production Delivery of Goods Services Module 1 Logistics the Supply Chain and Competitive Strategy Logistics Network Design Strategy The process of how a firm can go about using a supply chain design to create a competitive advantage 1 Aim at putting your stores close in distance within a couple days from your Distribution Channel 2 Maintain your economies of scope an economic theory that the average total cost of production decreases as a result of increasing the number of different goods produced 3 Maintaining your stores close to your DC distribution channel helps to decrease your lead time safety stock levels and stock outs as well as lower transportation costs and the cost of building another store given that your resources are close 4 While building a store in a big city may seem ideal keep in mind that the land is more expensive leading to a lower rate on return on investment Logistics the management of the flows and storages so that total cost is minimized and customer service targets are achieved Supply Chain Management the business process of integrating and managing the flow of goods It includes the transportation and inventory of materials work in process and finished goods from point of origin to point of consumption Economies of Scope the economical theory that the more you produce in volume the lower your costs will be Process Improvement Redesign An ordered set of activities that end in either process improvement or process redesign Example Your professor communicates with the class about homework being done in the following week activity Input the communication from teacher to student Mechanism class lecture online announcement and the students ability to process and think critically Output student submission of homework final grade and teacher assessment Controls time frame due date Does this process work accordingly If not how can you go about in adding improvement tweeking or completely redesigning complete new look Outsourcing Logistics Activities is a form of process redesign This includes a 3PL third party logistic provider The Four R s of Supply Chain Competition 1 Responsiveness how quickly are you able to respond to the market logistically How flexible are you 2 Reliability are you on time and consistent If sales are variable the challenge to this concept of reliability would be choosing the correct forecast and inventory 3 Resilience can you take the hits Can you manage sales and their possible failure All about how you 4 Relationships it is very important to hold a good relationship with not only your customers but also deal with your disruptions your suppliers Safety Stock the number of units and items on hand in inventory that s expected before the replenishment is received and available and ready for use and for sale Uncertainty in regards to safety stock involves supply and demand these are key concepts that MUST meet up and match in some way Calculating Inventory Turns Periods of Supply This is important because it is the key measure in regards to inventory and its effective performance 1 To calculate inventory investment Sales will be DIVIDED by Inventory sales inventory Ex Sales accounted for 63 worth and inventory cost was 9 so 63 9 7 turns for the year Inventory Holding Costs 1 Space where am I supposed to put these products 2 Risk what disadvantages to the product could happen 3 Obsolete losing value over time 4 Deterioration no product can stay in perfect condition forever 5 Expiration 6 Stolen 7 Opportunity Cost of Capital out of the 8 costs to holding inventory this is the BIGGEST cost It involves decision making on how to spend your money and how you could ve used it one way or another 8 Tradeoffs o Hurdle Rate when determining your return rate on your investments it is important to figure out the minimum rate of investment you are expecting to receive o Inventory Carrying Cost Factor Percentage the percentage of value an item holds in regards to the cost of carrying it in inventory It is the cost of carrying 1 of inventory every year Module 2 Logistics and Customer Value 9 Costs in the Total Cost of Ownership While these are only a few costs of ownership keep in mind there are PLENTY more These are just the main ones to focus your attention to A common problem seen in regards to these costs is that some companies selling products fail to recognize some of the customer count for demand and the true total cost of ownership It is recommended that you put focus on price of the products and your service level take both into account 1 Acquisition Cost the payment to your supplier of choice for your product While this is a big cost there are many costs besides this which many companies fail to recognize 2 Transportation Cost by far the most under rated cost Accounting for a huge percentage of spending in regards to your product this could take up a lot of funds 3 Management Administrative Cost 4 Maintenance Costs how much will you need to spend in the upkeep of this product until sale 5 Operating Cost what machines will you invest in for the creation of these products 6 7 Technical Support Costs dealing mainly with customers and customer service satisfaction Inventory Costs 8 Training Cost in regards to employees what will you spend on training so that they can work 9 Disposal Cost what money will be considered a sunk cost by having to throw out an obsolete effectively deteriorated or expired product Customer Service Components o Pre transaction plays into the role of how the policies organizational structure and culture of the company affect customer service and the satisfaction o Transaction picking up the car deals with the management of being able to keep a certain percentage of items in stock and the percent of time that object sits in stock This can deal with your fill rate and lead time if your products are not readily available when a customer asks for them o Post transaction the services that are provided after the product has been purchased This can deal with customers filling out a post survey to help collect data to improve transactions spare part availability technical support and the overall aspect of how companies handle their customers and how company complaints are dealt While these 3 components used appropriately and effectively can give a company a huge competitive advantage ineffective use of these tools can drastically hurt a company and result in a loss of market share in the business world The Metrics Side to