1. Supply Chain Logistics Management
Chapter 2: Lean Logistics

2. United States Logistics Costs
1980
GDP $2.88 trillion
Logistics Cost $451 billion
15.7% of GDP
Trans. Cost $214 billion
47.5 % of Logistics Cost
$ Billions
100
200
300
400
500
600
700
800
900
1980
1999
1000
Year
$ billion
1999
GDP $9.26 trillion
Logistics Cost $921 billion
9.9% of GDP
Trans. Cost $554 billion
60.2 % of Logistics Cost
Logistics
Transportation
Source: Robert V. Delaney, 11th Annual “State Of Logistics Report” © June 5, 2000
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

3. Integrated Logistics Order Processing Facility Inventory Network
Warehousing
Material Handling
Packaging
Transportation
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

4. Logistical Integration
Customers
Enterprise
Market
Distribution
Manufacturing
Support
Procurement
Suppliers
Information Flow
Inventory Flow
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

5. Market Distribution Operating Concerns
Activities related to providing customer service. Requires performing order receipt and processing, deploying inventories, storage and handling, and outbound transportation within a supply chain. Includes the responsibility to coordinate with marketing planning in such areas as pricing, promotional support, customer service levels, delivery standards, handling return merchandise, and life-cycle support. The primary market distribution objective is to assist in revenue generation by providing strategically desired customer service levels at the lowest total cost.
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

6. Manufacturing Support Operating Concerns
Activities related to planning, scheduling, and supporting manufacturing operations. Requires master schedule planning and performing work-in-process storage, handling, transportation, and time phasing of components. Includes the responsibility for storage of inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement between manufacturing and market distribution operations.
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

7. Procurement Operating Concerns
Activities related to obtaining products and materials from outside suppliers. Requires performing resource planning, supply sourcing, negotiation, order placement, inbound transportation, receiving and inspection, storage and handling, and quality assurance. Includes the responsibility to coordinate with suppliers in such areas as scheduling, supply continuity, hedging, and speculation, as well as research leading to new sources or programs. The primary procurement objective is to support manufacturing or resale organizations by providing timely purchasing at the lowest total cost.
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

8. Logistics Information Requirements
Strategic
Objectives
Capacity
Constraints
Logistics
Requirements
Manufacturing
Procurement
Order
Processing
Assignment
Distribution
Operations
Transportation
and Shipping
Inventory
Deployment
Management
PLANNING - COORDINATION
OPERATIONS
Forecasting
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

9. Echeloned Structured Logistics
Supplier
Industrial
Distribution or
Consolidation
Warehouse
Manufacturer
Wholesaler or
Distribution
Center
Retailer
Customer
INFORMATION FLOWS
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

10. Echeloned Structured Logistics
Supplier
Industrial
Distribution or
Consolidation
Warehouse
Manufacturer
Wholesaler or
Distribution
Center
Retailer
Customer
Support for
Direct Delivery
INFORMATION FLOWS
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

11. Flexible Echeloned Structured Logistics
Supplier
Industrial
Distribution or
Consolidation
Warehouse
Manufacturer
Wholesaler or
Distribution
Center
Retailer
Customer
Support for
Direct Delivery
Flow Through
Service Supplier Arrangements
INFORMATION FLOWS
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

12. Logistical Performance Cycles
Node
Transportation
Links
Communication
Material
Source
Lead Supplier
(Tier 1)
Manufacturing
Plant
Distributors
Customer
Purchasing
Cycle
Support
Physical
Distribution
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

13. Multi-Echeloned Flexible Network
Material
Source
Manufacturing
Plant
Warehouse
Distribution
Customer 1 2 3
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

14. Basic Market Distribution Performance-Cycle Activities
Order
Processing
Transmission
Customer
Selection
Transportation
Delivery
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

15. Procurement-Cycle Activities
Sourcing
Order Placement
and Expediting
Receiving
Transportation
Supplier
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

16. Performance-Cycle Uncertainty
Order
Transmission
Time Range - Days
1/2 3 1
Customer
Delivery
Transportation 2 10 4
Selection 20
Processing
Total Performance Cycle 5 40
Delivery Cycle
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.