LOGISTICAL OPERATIONS INTEGRATION l When LM is highly integrated and positioned as a core competency, it can serve as a standpoint for gaining a competitive advantage. l To plan and achieve logistical integration : understanding the work of logistics, the operational integration, the operating objectives, basic unit of analysis

THE WORK OF LOGISTICS l Coordinating network design : to determine the number and location of all types of facilities required to perform logistics works as well as the inventory policy. l The network of facilities l The number and type of facilities that incorporate information and transportation capabilities. l Geographical variations : complexity degree. l Selection criteria : changes in the external environment, products, manufacturing requirements.

l The Importance of Information l Forecasting and Order Management Department. l Future issues : forecasting accuracy, trends and events. l Customers’ requirements. l Speed : procedures, the use of EDI, controlling to replace the inaccurate forecasting with faster response to customer requirements. l The combination of forecasting and controlling : JIT, QR and CR approaches. l More efficient = more sensitive to inaccuracies.

l Transportation l Private fleet of equipment, subcontracting, using common carriers. l Fundamental factors : speed, cost and consistency. l Inventory l Availability vs cost plus risk : to achieve maximum turnover while satisfying customer commitments. l Inventory management policy is based on five aspects of selective deployment : customer segmentation, product requirement, transport integration, time-based requirement and competitive performance.

l Confronting a wide range of transaction and customer profitability : purchased products, volume, price, value- added services and supporting activities. l Intending to support core customers (high profitability). l Different strategies are applied to inventories in regard to availability and consistent delivery compared to the profitability of the products. l High level of support for less profitable items. l Type of transportation and facilities.

l Warehousing, material handling and packaging l Loading/unloading, selecting the ‘best’ location, the availability of labor

INTEGRATED LOGISTICS l Inventory flow and information flow. l Procurement. l Manufacturing support. l Physical distribution. l Planning and coordinating flow : strategy, capacity constraints, logistical requirements, inventory deployment, manufacturing requirements, procurement requirements and forecasting.

OPERATING OBJECTIVES l Rapid response. l Minimum variance of unexpected event : disruption in manufacturing, goods arriving damaged, incorrect delivery destination, etc. l Minimum inventory. l Movement consolidation : the larger the overall shipment and the longer the distance transported, the lower transportation cost per unit. l Quality. l Life-cycle support : after sales support and guarantee, recycled packaging materials.

BARRIERS TO INTEGRATION l Organization structure. l Measurement system l Inventory ownership l Information technology l Knowledge transfer capability