1. CMP0394 e-Logistics Systems
Instructor: Timothy Kf Au
URL: cmp0394

2. Chapter 4 Combination with Other Information Technology-based Processes
Material Requirements Planning (MRP)
Enterprise Resource Planning (ERP)
Distribution Resource Planning (DRP)
Response Management Systems (ERMS)
Customer Relationship Management (CRM) and Electronic Customer Relationship Management (e-CRM)
Amalgamation of SCM and CRM

3. Material Requirements Planning (MRP)
What does Supply Chain Mean to Manufacturing?
From the perspective of a manufacturing company, the supply chain includes not only the steps involved in buying and bringing raw materials to the factory,
but also those involved in manufacturing the finished goods, storing them and delivering them to the end user.

4. Material Requirements Planning (MRP)
Resource Requirements Planning
In the chapter 3, we have discussed that e-Logistics also improves the delivery of goods and services at reduced cost through development of methods for supply chain management including advances in data management and increasingly sophisticated planning and scheduling systems.
Planners take forecasts of demand for logistics and plan the supply to meet this demand. Such forecasts are often unreliable.

5. Material Requirements Planning (MRP)
The way to get around the supply-demand problems is to match (best-fit) the supply of logistics to actual demand.
Based on the known, in some ways we could find out, we want the actual demand rather than using unreliable forecasts – this might seems be rather optimistic at the first sight.

6. Material Requirements Planning (MRP)
Uses the master schedule, along with other relevant information, to plan the supply of materials.
It is used for dependent demands.

7. Material Requirements Planning (MRP)
The MRP functions
Three main sources of information for MRP:
Order planning and control: when to release orders and for what quantity;
Priority planning and control: how the expected date of availability compares to the need date of each item;
Capacity Planning requirements and development of broad business plans.

8. Material Requirements Planning (MRP)
The MRP approach
Three main sources of information for MRP:
Master production schedule (MPS): provides the number of every stock item to be made every period / cycle / season;
Bills of material (BOM): is a list of materials needed for every stock item;
Inventory Status File (ISF): is a record showing the materials available.

9. Material Requirements Planning (MRP)
Material Requirements Planning (MRP) system
A MRP system is a manufacturing planning tools; computer-based production and inventory control system;
to minimize the inventory while ensuring adequate materials available for productions;
automation tools for order entry, sales and marketing, manufacturing, production scheduling and control, accounting, finance, human resources.

10. Manufacturing Resources Planning (MRP II)
Moving to MRP II
Materials are only one of the resources; organisations have to schedule others resources such as people, equipment, facilities, finances, transportation.
The natural extension of MRP led to Manufacturing Resources Planning (MRP II).

11. Manufacturing Resources Planning (MRP II)
While MRP or MRP I (we wouldn't’t refer PS as PS1 before the emerging of the PS2) address the issues of inbound logistics flow of the inventory; MRP II adds finance, marketing and somewhat integrated logistics;
Increase customer satisfaction, improve delivery, better response, reduce inventory levels and costs and allow more flexibility.

12. Manufacturing Resources Planning (MRP II)
MRP II provides an integrated system for synchronizing all related functions within an organisation in the aspects of manufacturing.
It links up all the schedules for all related functions and resources back to the master schedule.

13. Manufacturing Resources Planning (MRP II)
MRP II  linking up logistics activities
Linking up all activities to master schedule could give a very efficient logistics;
During the moving up from MRP to MRP II, many companies see the difficulties. Many companies prefer to implement a partial systems where the MRP approach is still used to plan logistics activities;
The partial system is ‘retitled’ as distribution resource planning (DRP) or logistics resource planning (LRP).

14. Manufacturing Resources Planning (MRP II)
The emergence: MRP  MRP II  ERP
The emergence of the MRP (material requirements planning) to MRP II (manufacturing resources planning) and the next move of the MRP evolution would possibly embracing the processing, manufacturing and distribution.

15. The ERP/MRP Integration
This integration it embodied naturally made it attractive to other functional components of the business – finance, human resources and project management.
MRP II was found to be a more and more misleading term as it covered more and more extensive domains and it was therefore better ‘renamed’ ERP.

16. Enterprise Resource Planning (ERP)
ERP is the backbone of e-business
Market leaders turbocharged their business to run a breakneck speed on a transactional backbone called Enterprise Resource Planning (ERP).
ERP works like an information lubricant, facilitating the exchange data among corporate division through the unification of key processes.
The first step in back-office transforming.

17. Enterprise Resource Planning (ERP)
Elements of ERP
EPR is not a single system but a framework of administrative applications (accounting and finance, human resources), manufacturing applications (production scheduling, planning), sales distribution (order entry) and integrated logistics.
ERP unites core business processes – from order processing, production and delivery.

18. Enterprise Resource Planning (ERP)
The first step: effective service delivery require integrated back-office system
Second wave: e-Commerce drives more ERP demand.
ERP decision = enterprise architecture planning

19. Enterprise Resource Planning (ERP)
ERP in real world
Phase 1:
Structural functionalities
Reliability
Best practice functionalities
Phase 2
Extension of core vertical functions
Ease of implementation and rollouts
Enhance processes functionalities
Phase 3
Ease of use
Value to customer through supply chain integration
Low TCO (total cost of ownership)

20. Distribution Resource Planning (DRP)
DRP applies MRP II principles to the flow of finished goods to field warehouses and customers.
Although MRP was improved by MRP II by catering for both materials management and production scheduling; it does not cater for outbound movement of the logistics flow.

21. Distribution Resource Planning (DRP)
acts as a buffer or automatic synchronous control
by adjusting the order patterns
if inventory needs vary, respond more readily to system-wide inventory needs and better deal with product availability and timeliness.
DRP II further enhance the system by planning for the entire storage and movement of inventory by combining MRP II and DRP and you may call this DRP II.

22. Distribution Resource Planning (DRP)
The relationship between MRP II and DRP
Market 1 Customer Focus
Market 2 Customer Focus
Market 3 Customer Focus
Market 4 Customer Focus
DRP
Master production schedule
MRPI I
ERP

23. Just-in-time (JIT) Just-in-time manufacturing can be defined as:
Produce and deliver finished goods just in time to be sold, sub-assemblies just-in-time to be assembled into finished goods, fabricated parts just in time to go into sub-assemblies; and purchased materials just in time transformed into fabricated parts.
JIT is a disciplined approach to improve manufacturing quality, flexibility and productivity through the elimination of waste and the total involvement of people.

24. Emerging Integrated Logistics Concepts
There are five concepts come to the forefront recently:
Service Response Logistics (SRL);
Quick Response Logistics (QRL);
Response Logistics Recovery (RLR);
Efficient Consumer Response (ECR) and
Reverse Logistics.

25. Service Response Logistics (SRL)
While traditional logistics focus on the product movement;
Service response logistics addresses the coordination of non-material activities to fulfill the service efficiently and effectively.
Physical logistics and Service response logistics are dependent on each others;
Integrated Logistics Process Fig. 4.1 [BOM2002]

26. Service Response Logistics (SRL)
Service Response Logistics (SRL) functions
Service request for sales forecasting
Partnership development
Staff, equipment, facilities scheduling and capacity planning
Distribution channel selection
Data collection, pickup customer/parts/repair items
Data and physical storage, retrieval and management
Quality customer service, quality assurance, expediting, billing
Interfacing with trading partners
Information infrastructure planning
System administration and network administration
Personnel/customer movement, data/information movement
Customer reporting, service engineering, routing and scheduling to customer transportation sites.

27. Service Response Logistics (SRL)
Service Response Logistics (SRL) Model
Establish discussions with the customer;
Determine what the customer really needs;
Determine if the firm can deliver customer needs;
Commit to customer;
Evaluate the customer’s response;
Schedule the customer’s service delivery;
Inform delivery partners concerning the schedule;
Monitor the service delivery process;
Counsel partners;

28. Service Response Logistics (SRL)
Intermediaries in Service Response Logistics (SRL)
Agents
Retailers
Wholesalers
Franchises
Electronic channels

29. Quick Response Logistics (QRL)
Some QRL system are the EDI version of JIT.
QRL means reducing the order cycle.
Many retailers adopt QRL, products purchased with the bar codes scanned, recording the inventory level.
Purchase orders are automatically generated and electronically through e-PO to the suppliers.
with the exact department code, style, color and size.

30. Quick Response Logistics (QRL)
The supplier then picks up the order for the reorder items to refill the stock requirements;
and transported to the retails almost immediately.
Obviously, QRL reduces the order cycle. In addition, it reduces costs and transcription errors.
Implementing QRL has positive impact to inventory management. How?

31. Quick Response Logistics (QRL)
To achieve the benefits of QRL, company must establish partnerships and alliances – must be forged to trust and mutual dependency.
In essence, alliances become a part of the horizontal pipelines where products flow seamlessly from suppliers to customers.
Of course, powerful retailers may invert or tilt the pipeline.
In any case, QRL system must be built with long term relationship between suppliers and retailers.

32. Quick Response Logistics (QRL)
Approaches to Quick Response Logistics (QRL)
QRL model based on trust and mutual dependency
customer
supplier
retailer
customer
retailer
supplier
QRL model based on fear and power
Power and Fear relationship
Trust and dependency relationship

33. Response Logistics Recovery (RLR)
The term Response Logistics Recovery (RLR) relates to integrated logistics and customer service interface.
RLR can be defined how quick integrated logistics reacts to service error and turn a mistake into a customer service advantages.

34. Response Logistics Recovery (RLR)
Example 1: How would you handle your customer for a a delay shipment by the carrier while you won’t want to let your customer unhappy?
Example 2: What would you suggest if a customer returns a broken parts for replacing?

35. Response Logistics Recovery (RLR)
This does not count into downtimes, it demonstrates the responsiveness to customer needs.
Customer generally understand that mistakes happen – as long as it not too often, it will be okay.
What really concerns them is how a supplier reacts to the problem.

36. Efficient Consumer Response (ECR)
ECR was initially introduced in the grocery industry.
Like QRL, the goal of ECR is to reduce order cycle time.
In ECR, the suppliers and retailers work closely together to capture to point-of-sale information and then send back to the distribution channel.
Partnerships and alliances are required to realise this benefits to reduce consumer price.

37. Reverse Logistics Reverse Logistics
Deals with products that flows in the opposite direction from the standard logistics channel – the products and services flow back to the manufacturer.

38. Email Response Management Systems(ERMS)
are automatic routing and response tools that allow you to assign and match the most appropriate agent or workforce based on the expertise and skills availability.

39. Email Response Management Systems(ERMS)
Components of ERMS
Smart Parsing and Processing
Automatic acknowledgement
Intelligent scripting response
processing workflow engine
Natural language processor
Intelligent Routing and Queuing
Auto-routing to define queues based on priority, service request, department and etc.
Workload or skill-based routing assignment
Workflow-driven (or rule-based) logical routing
Effective Request Handling
Dynamic response template
Knowledge base
Support SLA

40. Customer Satisfaction and Integrated Logistics
Customer Relationship Management (CRM) and Electronic Customer Relationship Management (e-CRM)
Customer Satisfaction and Integrated Logistics
The goals of this business framework are:
Use existing relationships to grow revenue;
Use integrated information for excellent services;
Introduce more repeatable sales processes and procedures;
Create new value and loyalty;
Implement more proactive solutions strategy.

41. Customer Satisfaction and Integrated Logistics
Customer Relationship Management (CRM) and Electronic Customer Relationship Management (e-CRM)
Customer Satisfaction and Integrated Logistics
The three phases of CRM:
Acquisition
Enhancement
Retention

42. The amalgamation of supply chain management and customer relationship management (CRM)
The amalgamation of supply chain management and customer relationship management (CRM) can radically improve competitiveness.
Cost reductions and customer service enhancements – exlucded form old economy strategic thinking.
The objective of the right product in the right place at the right time and cost is accommodated to a greater extent than previously possible.

43. The amalgamation of supply chain management and customer relationship management (CRM)
eLogistics enables organisations to see the big picture by capturing and sifting data for procurement and fulfilment. Ultimately management of the entire supply chain is e-enabled and logistics generated data can feed back into strategic and tactical decisions made by other parts of the organisation. The Internet ultimately provides access to true rather than forecast supply and demand information.
ELogistics also permits a closer integration of a company’s internal business systems with collaborative information from partners and web-based functions and information.

44. The amalgamation of supply chain management and customer relationship management (CRM)
eLogistics represents
improved business processes, allowing for real-time visibility, seamless channel linkage and collaborative solutions in the supply chain.
with more companies seeking success through the efficiency of their supply chains, logistics is now an issue for owners / senior managers as well as the shipping supervisor.
a key competitive weapon.

45. Amalgamation of SCM and CRM
The amalgamation of SCM and CRM
Improve competitiveness;
Cost reduction;
Enhance customer satisfaction
It is not mutually exclusive as in the ‘old economy’.
E-logistics enables organizations to see the big picture:
Capture and sift procurement and fulfillment;
and the ultimate management of supply chain is e-enabled
The Internet provides the access.
E-logistics provides a ‘closer’ integration of internal business system with external information thru collaboration

46. Amalgamation of SCM and CRM
E-logistics represents the foundation for improved business processes: visibility, seamless channel and collaborative solutions;
E-logistics is in fact a key competitive weapon.

47. 58CMP0394A e-Logistics Systems Autumn 2004 Coursework
Assessment
30% Coursework
70% Final Examination
To be submitted on the 10th Lecture 10.January.2005
* This coursework subjects to be final confirmation by HKBU SCE.

48. 58CMP0394A e-Logistics Systems Autumn 2004 Coursework
You are a SCM manager of a company having logistics requirement to achieve its competitiveness in the market. Based on the business requirement your company plays in the supply chain, devise your logistics strategy and implementation. You are required to produce a short report in a few pages as described in Part (A) to (D) of the question paper (or Lecture 4 Slides):

49. 58CMP0394A e-Logistics Systems Autumn 2004 Coursework
Coursework Guidelines
The objective to your express your own ideas and to demonstrate your understanding on the topic.
There is no limit in number pages and number of words. A short report in a few pages could be around 2 or 3 pages or around 500 words. Lengthy report document is not encouraged; your report should not more than 1000 words.

50. 58CMP0394A e-Logistics Systems Autumn 2004 Coursework
Suggested Document Outline
You can design your presentation document style. The following is a suggested report presentation format for your reference.
Cover Page
Executive Summary
Background/Overview
Report Body Part (A)-(D)
Recommendation/Conclusion
Reference and acknowledge any work from published or unpublished material

51. 58CMP0394A e-Logistics Systems Autumn 2004 Coursework
Coursework Guidelines (continued)
You are required to write-up a half-page summary on the whole document – from the senior and top executive perspective.
Block diagrams and figures are useful to describe your design and implementation.
No plagiarism is allowed and no need.
You may reference to academic papers, journals, periodicals, magazine, reference book, web site and URL.

52. Thank you! Any Question? Instructor: Timothy Kf Au
URL: cmp0394