1. CONTINUATION FROM LAST TUESDAY
LOGISTICS IN FOOD AND AGRIBUSINESS

2. CHANNEL DESIGN/PHYSICAL NETWORK STRATEGY (LEVEL 2)
CD factors: customers demands, channel economics, channel power, channel players roles
Physical network strategy
How many facilities, where, and mission of each
Customers/product lines served from each
Inventory levels
What transportation services to use
Mgt of return flows
Any third party logistics services to be used

3. DESIGN SYSTEM TO Meet customer requirements while not ignoring
Cost
Risk
Flexibility
Cost/service tradeoff critical

4. FUNCTIONAL COMPONENTS (LEVEL 3)
Warehousing
Transportation
Materials management

5. IMPLEMENTATION (LEVEL 4) INFORMATION SYSTEM
Information system enables integrated logistics
Timely and accurate information
Carefully designed
Integrated software with full functionality
Advanced decision support
Network planning models
Optimization tools for scheduling
Order consolidation programs
Transportation routing and scheduling programs

6. IMPLEMENTATION (LEVEL 4), ORGANIZATION
Structure
Roles and responsibilities
Performance measures

7. LOGISTICS STRATEGIC PLANNING PROCESS
Visioning
Analysis
Planning for change
Managing change

8. LOGISTICS AND THE MARKETING FUNCTIONS: REVIEW
Logistics objective--minimize total costs given the customer service objective.
Logistics interfaces with marketing at Place/customer service.
Marketing--Price, Product, Promotion and Place
Marketing objective--allocate resources to marketing mix to maximize log-run profitability

9. TOTAL COST =
Transportation cost + Warehousing cost + Order processing cost+ Lot quantity cost + Inventory carrying cost

10. SUMMARY This model can be used with any firm or situation
Start with customer service and work down through the triangle
Strategic  Structural  Functional  Implementation

11. INDUSTRIALIZATION OF AGRICULTURE
Manufacturing Processes
A systems approach
Separation and realignment of stages of production
Negotiated coordination
Risk: Sources and strategies
Power and control
Role of information

12. MANUFACTURING PROCESSES
Differentiated products in place of commodities
Ask consumers what they want is replacing produce-then-sell mentality (Becoming demand oriented)
May require changes in how the raw material is produced and what it shall not contain
e.g., source verification, animal feed regulation, use of chemicals
Specialization
Facilitates systemization and routinization
increases efficiency and effectiveness

13. MANUFACTURING PROCESSES, CONT.
Systemization and routinization
Understand and control biological process Tasks more programmable  regular work schedules
More efficient use of facilities and personnel
Less managerial oversight
Scheduling and utilization
Emphasis on facility utilization, flow scheduling and process control
Reduced uncertainty about biological production processes  need less excess capacity
Better prediction and control

14. A SYSTEMS APPROACH Focus on the entire food chain
Improved food quality and reduced costs
Improve coordination among stages of the value chain
Input packages for optimum quality and characteristics of the product
e.g. biological and chemical packages to farmers
Total cost approach

15. SEPARATION AND REALIGN-MENT OF PROD. STAGES
Separation and production specialization
Non-market mechanisms to coordinate stages of the value chain--external integration
Consolidation (provides internal control)
Contract production
New generation coops
Strategic alliances and joint ventures

16. NEGOTIATED COORDINATION
Replacing or changing the spot market
Marketing products with special qualities
IP grains
livestock quality and delivery timing
Branded products
Open spot markets less able to convey information about quality, timing and other product characteristics
Still: spot, futures and options markets have new uses.

17. NEGOTIATED COORDINATION, CONT.
More rapid transmission of information
Helps to maintain profit margins
Extract innovator’s profits
Quick adjustment to mistakes help to assure survival and success