Presentation on theme: "INTEGRATING SUPPLY CHAIN AND LOGISTICS MANAGEMENT"— Presentation transcript:
1 INTEGRATING SUPPLY CHAIN AND LOGISTICS MANAGEMENT CHAPTER16
2 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:Explain what supply chain and logistics management are and how they relate to marketing strategy.Understand the distinction between supply chain responsiveness and efficiency.
3 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:Explain how managers trade off different “logistics costs” relative to customer service in order to make a supply chain decision.Recognize how customer service in logistics decisions contributes to customer value and successful marketing programs.
4 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:Describe the key logistics functions of transportation, warehousing and materials handling, order processing, and inventory management and the role of third-party logistics providers.
5 INTEGRATING SUPPLY CHAIN AND LOGISTICS MANAGEMENT SNAP! CRACK! POP! EVEN WORLD-CLASS COMPANIES CAN FEEL THE BULLWHIP’S STING
6 SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT Relating marketing Channels, Logistics, and Supply Chain ManagementLogisticsLogistics managementSupply chainSupply chain management
11 SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT Supply Chain Management and Marketing StrategyAligning a Supply Chain with Marketing StrategyUnderstand the customerUnderstand the supply chainHarmonize the supply chain with the marketing strategy
12 SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT Supply Chain Management and Marketing Strategy (cont)Dell Computer Corporation: A Responsive Supply ChainWal-Mart, Inc.: An Efficient Supply ChainCross docking
13 Dell Computer Corporation Emphasizes responsiveness in its supply chain
14 Emphasizes efficiency in its supply chain Wal-Mart, Inc.Emphasizes efficiency in its supply chain
15 Concept Check1. What is the principal difference between a marketing channel and a supply chain?A: The supply chain differs in membership because it includes suppliers of raw materials as well as those suppliers which deliver finished products to a company.
16 2. The choice of a supply chain involves what three steps? Concept Check2. The choice of a supply chain involves what three steps?A: 1. Understand the customer2. Understand the supply chain3. Harmonize the supply chain with the marketing strategy
17 INFORMATION AND LOGISTICS MANAGEMENT OBJECTIVE IN A SUPPLY CHAIN Information’s Role in Supply Chain Responsiveness and EfficiencyElectronic data interchangesTotal Logistics Cost Concept
18 FIGURE 16-3 How total logistics cost varies with number of warehouses used
19 INFORMATION AND LOGISTICS MANAGEMENT OBJECTIVE IN A SUPPLY CHAIN Customer Service Concept
20 FIGURE Supply chain managers balance total logistics cost factors against customer service factors
21 INFORMATION AND LOGISTICS MANAGEMENT OBJECTIVE IN A SUPPLY CHAIN Customer Service Concept (cont)Lead TimeQuick responseEfficient consumer responseDependabilityCommunicationConvenienceCustomer Service Standards
22 Concept Check1. The objective of information and logistics management in a supply chain is to ___________________ ____________________________ _______________minimize logistics cost while delivering maximum customer service.
23 Concept Check2. How does consumer demand information increase supply chain responsiveness and efficiency?A: Because firms are better able to forecast customer needs and produce, transport, and store the required amount of inventory.
24 Concept Check3. What is the relationship between the number of warehouses a company operates, its inventory costs, and its transportation costs?A: As the number of warehouse increases, its inventory costs increase and its transportation costs decrease.
25 KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN Third-party logistics providersTransportation
26 FIGURE 16-5 Advantages and disadvantages of five modes of transportation
27 Full service logistics provider FedEx AdFull service logistics provider
28 Focus on supply chain and logistics management UPS TV AdFocus on supply chain and logistics managementUPS TV ad in its “What Can Brown Do For You” campaign, focusing on supply chain and logistics management. (TRT: 0:30)
29 Focus on supply chain management UPS TV AdFocus on supply chain managementUPS TV ad in its “What Can Brown Do For You” campaign, focusing on supply chain management. (TRT: 0:30)
30 UPS Print Ad NASCAR sponsorship UPS print ad in the “What Can Brown Do For You” campaign. This ad identifies UPS’s sponsorship of NASCAR.
31 KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN Transportation (cont)RailroadsIntermodal transportation
32 KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN Transportation (cont)Motor CarriersAir Carriers and Express CompaniesFreight ForwardersWarehousing and Materials HandlingOrder Processing
33 KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN Inventory ManagementReasons for InventoryInventory CostsSupply Chain Inventory StrategiesJust-in-time (JIT) conceptVendor-managed inventoryCLOSING THE LOOP: REVERSE LOGISTICS
34 Key to Saturn’s JIT System A key-shaped floppy disk from Ryder
36 CLOSING THE LOOP: REVERSE LOGISTICS Estee Lauder Companies: Reverse logistics and green marketing go together
37 1. What are the basic trade-offs between the modes of transportation? Concept Check1. What are the basic trade-offs between the modes of transportation?A: A comprehensive comparison is shown in Figure A general trade-off is cost versus time and dependability.
38 Concept Check2. What types of inventory should use storage warehouses and which type should use distribution centers?A: Goods which will not be needed for substantial periods of time, such as excess or seasonal inventory, are best suited for storage warehouses which hold goods for substantial periods of time. Distribution centers are used when products need to keep moving toward the consumer.
39 3. What are the strengths and weaknesses of a just-in-time system? Concept Check3. What are the strengths and weaknesses of a just-in-time system?A: Strengths: Save money on inventory; forces better planning of vendor selection, transportation selection, forecasting, scheduling, etc.Weaknesses: Can cause stockouts, production disruptions, and higher costs if weak links appear.
40 Internet Exercise1 Visit Learn more about the bullwhip effect. What are the principal contributors to the bullwhip effect?
41 Internet Exercise2 How have companies reduced the sting of the bullwhip?
42 VIDEO CASE 16-1 Amazon: Delivering the Goods Millions of Times Each Day 1 How do Amazon.com’s logistics and supply chain management activities help the company create value for its customers?
43 VIDEO CASE 16-1 Amazon: Delivering the Goods Millions of Times Each Day 2 What systems did Amazon develop to improve the flow of products from suppliers to Amazon distribution centers? What systems improved the flow of orders from the distribution centers to customers?
44 VIDEO CASE 16-1 Amazon: Delivering the Goods Millions of Times Each Day 3 Why will logistics and supply chain management play an important role in the future success of Amazon.com?
45 LogisticsThose activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible price.
46 Logistics ManagementThe practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.
47 Supply ChainA sequence of firms that perform activities required to create and deliver a good or service to consumers or industrial users.
48 Supply Chain Management The integration and organization of information and logistic activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to customers.
49 Cross DockingPractice of unloading products from suppliers, sorting products for individual stores, and quickly reloading products onto trucks for a particular store.
50 Electronic Data Interchange (EDI) Combine proprietary computer and telecommunication technologies to exchange electronic invoices, payments, and information among suppliers, manufacturers, and retailers.
51 Total Logistics CostExpenses associated with transportation, materials handling and warehousing, inventory, stockouts, order processing, and return goods handling.
52 Customer ServiceThe ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience.
53 Lead TimeLag from ordering an item until it is received and ready for use or sale. Also called order cycle time or replenishment time.
54 Quick ResponseAn inventory management system designed to reduce the retailer’s lead time, thereby lowering its inventory investment, improving customer service levels, and reducing logistics expense.
55 Third-Party Logistics Providers Firms that perform most or all of the logistics functions that manufacturers, suppliers, and distributors would normally perform themselves.
56 Vendor-Managed Inventory An inventory management system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items.
57 Reverse LogisticsA process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or sue for repair, remanufacturing, redistribution, or disposal.
58 Intermodal Transportation Combining different transportation modes to get the best features from each.
59 Freight ForwardersFirms that accumulate small shipments into larger lots and then hire a carrier to move them, usually at reduced rates.
60 Materials HandlingMoving goods over short distances into, within, and out of warehouses and manufacturing plants.
61 Just-In-Time ConceptAn inventory supply system that operates with very low inventories and requires fast, on-time delivery.