Logistics Management LSM 730 Lecture 4 Dr. Khurrum S. Mughal

Scope of the Supply Chain for Most Firms Physical distribution Physical supply (Materials management) Business logistics Sources of supply Plants/ operations Customers • Transportation Inventory maintenance Order processing Acquisition Protective packaging Warehousing Materials handling Information maintenance Product scheduling Focus firm’s internal supply chain 1-14

Key Activities/Processes Primary Setting Customer service goals Transportation Inventory Management Order Processing and Information Flows Secondary, or supporting Warehousing Materials Handling Acquisition (Purchasing) Protective Packaging Product Scheduling Information Maintenance

Key Activities/Processes Primary Setting Customer service goals (work with marketing) Identify customer needs and wants for logistics customer service Determine customer response to service Set customer service level – directly related to costs Transportation (primary cost absorbing activity which adds place value) Mode and transport service selection Freight consolidation Carrier Routing Vehicle Scheduling Equipment Selection Claims Processing Rate Auditing

Key Activities/Processes Primary Inventory Management (adds time value to the products, bridges the gaps between supply and demand) Raw Materials and finished goods stocking policies Short term sales forecasting Product mix at stocking points Number, size and location of stocking points Just-in-time (low levels), push (forecasting based) and pull (order based) strategies Order Processing and Information Flows (Activity that triggers the whole process) Sales order – inventory interface procedures Order information transmittal methods Ordering Rules

Key Activities/Processes Secondary, or supporting Warehousing Space Determination Stock layout and dock design Warehouse configuration Stock placement Materials Handling Equipment selection Equipment replacement policies Order-picking procedures Stock storage and retrieval

Key Activities/Processes Secondary, or supporting Acquisition (Purchasing) Supply source selection Purchase timing Purchase quantities Protective Packaging Handling Storage Protection from Loss and Damage