1. Transportation/Logistic Strategy John Ozment Oren Harris Chair of Transportation University of Arkansas (479) 575-6142 (479) 521-3355 jozment@walton.uark.edu

2. Transportation/Logistic Strategy Coordination of Activities Flow of Goods Minimum Cost Desired Level of Service Definition of Business Logistics Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements (CLM).

3. Transportation/Logistic Strategy Customer Service Order Processing Traffic & Transportation Warehousing Materials Handling Packaging Inventory Control Purchasing Production Scheduling Forecasting Location Analysis Communications Activities To Coordinate

4. Transportation/Logistic Strategy Flow of Goods (Purchasing) Logistics (Marketing)(Operations) SSSSSSSSSS Suppliers CCCCCCCCCC Customers Production Processing Repackaging Firm

5. Transportation/Logistic Strategy Consider Total "Relevant" Costs Take Advantage of Cost Trade-Offs Avoid Suboptimization Total Cost Approach

6. Transportation/Logistic Strategy Traditional Organization Chart President VP Marketing VP Operations VP Finance Sales Advertising Marketing Research Etc. Machine Shops Welding Shops Assembly Lines Etc. Bookkeeping Capital Budgeting Financial Management Etc.

7. Transportation/Logistic Strategy Customer Service Part of Order Processing Field Whsing Location Analyses Traffic Scheduling Raw Materials Whsing Packaging/Handling Part of Order Process Inventory Forecasting Communications Traditional Organization Chart President VP Marketing VP Operations VP Finance Sales Advertising Marketing Research Etc. Machine Shops Welding Shops Assembly Lines Etc. Bookkeeping Capital Budgeting Financial Management Etc.

8. Transportation/Logistic Strategy Development of Business Logistics Military Experience Development of the Marketing Concept Proliferation of Products Rising Transportation Costs Technological Peak Knowledge of Inventory Recession of 1958 Development of the Computer Creative Uses of the Computer

9. Transportation/Logistic Strategy Harvard Air Freight Study (1956) Bowersox's Textbook (1961) CLM (1963) Organizational Name Changes Supply Chain Management Educational Focus on Logistics

10. Transportation/Logistic Strategy Knowledge of Inventory Carrying Costs Application of Pareto’s Law Focus on Total Costs/Cost Trade-offs Use of Premium Transportation Harvard Air Freight Study

11. Transportation/Logistic Strategy Knowledge of Inventory Carrying Costs Application of Pareto’s Law Focus on Total Costs/Cost Trade-offs Use of Premium Transportation Harvard Air Freight Study

12. Transportation/Logistic Strategy Elements of Inventory Carrying Costs Interest and Opportunity Cost 10-20 % Storage and Handling 8-14 % Depreciation and Obsolescence 6-12 % Insurance and Taxes 2 -3 % Total 25-50 %

13. Transportation/Logistic Strategy Knowledge of Inventory Carrying Costs Application of Pareto’s Law Focus on Total Costs/Cost Trade-offs Use of Premium Transportation Harvard Air Freight Study

14. Transportation/Logistic Strategy ABC Analysis Percent of Sales Percent of Items 20 50 100 ABC 80 95

15. Transportation/Logistic Strategy Knowledge of Inventory Carrying Costs Application of Pareto’s Law Focus on Total Costs/Cost Trade-offs Use of Premium Transportation Harvard Air Freight Study

16. Transportation/Logistic Strategy Focus on Total Costs/Cost Trade-offs Savings from Inventory Consolidation vs Added Transportation Costs

17. Transportation/Logistic Strategy Knowledge of Inventory Carrying Costs Application of Pareto’s Law Focus on Total Costs/Cost Trade-offs Use of Premium Transportation Harvard Air Freight Study

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19. Transportation/Logistic Strategy c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c cc c c c c c c DC P c c