Strategic Logistics Management: James R. Stock [PDF]

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JAMES R. STOCK







STRATEGIC LOGISTICS MANAGEMENT



DOUGLAS M. LAMBERT



FOURTH EDITION



McGraw-Hill/Irwin



Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.



CHAPTER 1 Logistics’ Role in the Economy and the Organization



Logistics Management Defined



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That part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers’ requirements. Council of Logistics Management



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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.



Components of Logistics Management Inputs into logistics Natural resources



Human resources Suppliers Financial resources Information resources



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Outputs of logistics



Management actions Planning



Implementation



Logistics management Raw In-process materials inventory



Finished goods



Control



Competitive advantage



Time and Customers place utility



Logistics activities Customer service Demand forecasting Inventory management Logistics communications Material handling Order processing Parts and service support



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Plant & warehouse site selection Procurement Packaging Reverse logistics Traffic and transportation Warehousing and storage



Efficient movement to customer Proprietary asset Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.



Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.



Marketing/Logistics Management Concept



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Customer satisfaction •Suppliers •Intermediate customers •Final customers



Integrated effort •Product •Price •Promotion •Place (distribution)



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Company profit



•Maximize long-term profitability •Lowest total costs given an acceptable level of customer service



Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.



Cost Trade-offs in Marketing and Logistics



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Order processing and information costs



Price



MARKETING



Product



Place/customer service levels Inventory carrying costs



Transportation costs



Lot quantity costs



Warehousing costs Order processing and information costs



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Relationship of Logistics Activities to Logistics Costs • • • • • •



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Customer service levels Transportation costs Warehousing costs Order processing/information systems costs Lot quantity costs Inventory carrying costs



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Key Logistics Activities • Customer service • Demand forecasting • Inventory management • Logistics communications • Material handling • Order processing • Packaging



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• Parts and service support • Plant and warehouse site selection • Procurement • Reverse logistics • Traffic and transportation • Warehousing and storage Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.



Flow through the Supply Chain



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Customer



Carrier Distribution center Supplier



Customer



Carrier



Customer Carrier Supplier



Carrier Manufacturing site



Customer



Carrier Supplier



Carrier



Customer



Distribution center Customer



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Strategic Profit Model Gross margin Net profit Net profit margin



+



Financial leverage



=



Return on assets



x



%



Net profit Total assets x Net profit = Net worth Net worth Total assets



Net profit Net sales



Sales



Total expenses



x Asset turnover



Sales



Income taxes



$ Current assets



$



$ Fixed expenses



$



+



Accounts receivable



$ +



Fixed assets



$ McGraw-Hill/Irwin



Variable expenses



$



Total assets



$



Cost of goods sold



Inventory



$ +



Net sales Total assets



-



+



$



$



$



$



$



% Return on net worth



$



Sales 1-10



+



Other current assets



$



Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.



Future Challenges and Areas for Performance Improvement • • • • • • •



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Supply Chain Management Strategic Planning Total Quality Management Just-in-Time Quick Response Efficient Consumer Response Logistics as a Competitive Weapon



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Future Challenges and Areas for Performance Improvement (cont.)



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• • • • • •



Accounting for logistics costs Logistics as a boundary-spanning activity Global logistics Increasing skill requirements Logistics information systems Strategic alliances, partnerships, and outsourcing • Green marketing and reverse logistics McGraw-Hill/Irwin



Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.