1. Supply Chain Logistics Management
Chapter 15: Logistics Integration

2. North American Logistics Geography
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

3. Distribution Network Total Cost Dimensions
Expense Components
Handling +
Inbound Transport
DC Handling
Inventory
Customer Transport
____________
Total Cost
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

4. Definition of Systems Analysis
Total integrated effort to accomplish the desired objective
A set of interrelationships designed to achieve the desired objective
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

5. Principles of System Integration
Total system performance is singularly important
Components or parts of system need not have optimum construction
A functional relationship exists between components called trade-offs which may enhance or hinder system performance
Components linked together in a balanced system will produce greater end results than the sum of individual components
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

6. Cost to cost Cost to service Key Trade-Offs
Increase transportation to reduce inventory
Lot-size -- Inventory
Inventory -- Transportation
Cost to service
Increased logistics cost to obtain increased service and the potential for more revenue
Lead time -- Transportation
Product variety -- Inventory
Overall SC cost -- SC service
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

7. Transportation Cost Integration (Spatial)
Basic economies
Economy of size (quantity discount)
Economy of distance (tapering principle)
Activity based cost
Loading and unloading
Movement
Information
Generalized relationship
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

8. Transport Cost as a Function of Distribution Locations
Total Transport
Inbound
Transport Cost
Outbound
Number of Distribution Locations
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

9. Inventory Cost Integration (Temporal)
Basic economies
Single location
Multiple location
Activity based cost
Inventory risk
Inventory management
Storage and handling
Generalized relationship
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

10. Graphical Illustration of Locational Impact of Inventory
Total Inventory
Average Inventory
Safety Stock
Cycle Stock
Stocking Locations
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

11. Total Cost Integration
Threshold service (Least cost assignment)
Sensitivity analysis
Science vs. art
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

12. Logistics Total Cost Curve Number of Distribution Locations
Transportation Cost
Inventory Carrying Cost
Number of Distribution Locations
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

13. Market Strategy Mass marketing Focused marketing One to one marketing
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

14. Launching Supply Chain as a Strategic Resource
Focus service to customer segments
Emphasize flexibility
Leverage through alliances
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.