Chap 2

• Total logistics concepts (TLC)


  Aims to treat the many different elements that come under the broad category of distribution and logistics as one single integrated system
• Delivery transport and storage need to be considered within the context of the broader supply chain. Thus the total system be considered and not just an individual element or subsystem in isolation.
• Trade off


  A situation that involves losing one quality or aspect of something in return for gaining another quality or aspect
• Four different levels of trade-off

  • Within distribution components
  • Between distribution components
  • Between company functions
  • Between the company and external organization
• Strategic

  A set of procedures for making decisions about the organization's long-term goals and strategies. Involves making decisions about the organization's long-term goals and strategies. Strategic plans have a strong external orientation and cover major portions of the organization.
• Strategic

  • Medium to long-term horizon, 1 to 5 year (plus) time span, overall Structural decisions, trade-offs between company functions, trade-offs with other organizations, corporate financial plans and policies, policy decisions developed into strategic plan
• Tactical

  A set of procedures for translating broad strategic goals and plans into specific goals and plans that are relevant to a distinct portion of the organization, such as a functional area like marketing.
• Tactical

  • Short to medium-term horizon, six-month to 1-year (plus) time-span, subsystem decisions are made- should not impose on other logistics components, Annual budgets provide finance/cost basis, corporate financial plans and policies, the strategic plan detail is made into an operational plan
• Operational

  The process of identifying the specific procedures and processes required at lower levels of the organization.
• Operational

  • Day-to-day decision making, operations controlled against the standards and rules, control via weekly/monthly reports. The implementation of the operational plan.
• Strategic planning for distribution and logistics

  • Customer service
  • Channel of distribution
  • Supply points
  • Production locations
  • Location and size of depots
  • Transport modal choice
  • Third party or own account
  • Direct delivery and stock level
• Tactical planning for distribution and logistics

  • Vehicle types/sizes/numbers
  • Contract hire
  • Delivery schedule
  • Design and layout
  • Space allocation
  • Handling methods
  • Stock location and control
  • Documentation
• Operational planning for distribution and logistics

  • Goods receipts and checking
  • Bulk storage
  • Order picking
  • Stock replenishment
  • Order marshalling
  • Load scheduling
  • Returns
  • Vehicle maintenance
• Integrated logistics


  System-wide management of entire logistics chain as a single entity, instead of separate management of individual logistical functions
• To support the need to develop more integrated operations there have been a number of developments in logistics and distribution systems that have the concept of total logistics as their basis
• First, realization of the importance, cost and complexity of logistics
• Within distribution components


  Trade-offs that occur within single functions
• Between distribution components


  Trade-offs between the different elements in distribution
• Between company functions


  Areas of interface between company functions where trade-offs can be made
• Between the company and external organization


  Where a trade-off may be beneficial for two companies that are associated with each other
• 
  

  Second, is the progress made in the field of information technology, which has enabled the development of sophisticated information systems to support and enhance the planning and management of logistics operations, whereby very detailed data collection and analysis can be undertaken that was previously impossible
• Direct product profitability (DPP)


  A technique of allocating all of the appropriate costs and allowances to a given product, which can identify the costs of specific products to individual customers and so provide invaluable information for effective marketing strategies
• Materials requirements planning (MRP)


  An inventory control technique for determining dependent demand for manufacturing supply
• Distribution requirements planning (DRP)


  Systems that operate by breaking down the flow of material from the source of supply through the distribution network of depots and transportation modes
• MRPII

  manufacturing resource planning developed with the objective of improving productivity through the detailed planning and control of production resources
• Logistic chain


  • The procurement of raw materials and components
  • Supply chain planning and decision making
  • Transportation and distribution
• Supply chain management


  • Viewed as a single entity rather than a series of fragmented elements
  • Includes both suppliers and end users in the planning process, going outside the boundaries of a single organization
  • A strategic planning process with emphasis on strategic decision making rather than on the operational systems
  • Provides a different approach to dealing with inventory, aiming to alter the perspective so that inventory is used as a last resort to balance the integrated flow of product
  • Central to its success is the use of integrated information systems that are part of the whole supply chain rather than merely acting in isolation for each of the separate components
• Logistics is viewed in most forward-looking companies as a single entity rather than a series of fragmented elements
• The real change in supply chain management is that both the suppliers and the end users are included in the planning process, thus going outside the boundaries of a single organization in an attempt to plan for the supply chain as a whole
• Traditionally, inventory has been used as a safety valve between the separate components within the pipeline, leading to large and expensive stocks of products
• Supply chain management aims to alter the perspective so that inventory is used as a last resort to balance the integrated flow of product through the pipeline