Week 1 Class Notes
Week 1 Class Notes BUSML 3380
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This 3 page Class Notes was uploaded by Katelyn Motsinger on Sunday August 30, 2015. The Class Notes belongs to BUSML 3380 at Ohio State University taught by in Fall 2015. Since its upload, it has received 74 views. For similar materials see Logistics Management in Business at Ohio State University.
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Date Created: 08/30/15
Logistics Management BUSML 3380 Week 1 Notes 825828 Ch 1 Logistics According to the Council of Supply Chain Management Professionals that part of supply chain management that plans implements and controls the efficient effective forward and reverse ow and storage of goods services and related information between the point of origin and the point of consumption to meet customers requirements Logistic Issues Today 0 Coping with Environmental Uncertainty 0 Increasing focus on risk management 0 Sustainability 0 Increasing consolidation in the transportation amp 3PL sectors 0 Increasing number of userfriendly analytical tools 0 Increasing use of multichannel amp crosschannel order fulfillment What are the reasons Logistics is taking a bigger profile in countries Reasonl Increasing Competitive Pressure 0 PlaceCustomer service is the hardest component for competitors to replicate of the marketing mix components 0 Logistics competency is one way that a company can outcompete others in its industry by providing outstanding customer service 0 Logistics competency provides one way for smaller firms to differentiate themselves from larger competitors with an absolute cost advantage stemming from scales economies Superior service creates a lockin whereby it is harder for the buyer to find a substitute for the supplier Reason 2 Shift in Channel Power 0 The category killer stores such as Walmart Best Buy and Home Depot has resulted in a shift of channel power from manufacturers to retailers Reason 3 Globalization 0 Supply chains becoming increasingly longer due to sourcing materials from throughout the world 0 With the move towards lean operations inventory levels have been consistently reduced Reason 4 Increasing Role of IT amp Information 0 Information and Visibility within and across organizations improves cost performance and operational efficiency 0 One challenge is that companies are now drowning in data but the challenge is to turn this data into useful information 0 A second challenge is that sharing information between firms in the SC requires trust that the partner will not act opportunistically with such information Reason 5 Product Proliferation 0 Lots of choices here try to secure customer s niche 0 SKU Stock keeping unit proliferation greatly increases the challenges of inventory management Reason 6 Increasing number of Delivery Points 0 Retail outlets are expanding their product offerings making the distribution of products more complicated 0 Now the manufacturer may handles smaller orders than before Utility Form what Place where Time when Possession the transactionfinance P9P Logistics is all about time amp place Marketing is about demand realization andor creation TRANSPORTATION is the biggest logistic cost KNOW THIS Takeaways from the 2015 CSCMP State of Logistics Report 0 Trucker shortage 0 Rail infrastructure 0 Warehouse crunch 0 Fixing air freight 0 West coast hangover Total Cost Approach concept that suggests that all relevant activities in moving and storing products should be considered as a whole ie their total cost not individually View the sum of logistics operations as a system and seek to minimize the total cost of the system rather than the individual functions gt All costs amp service elements are interlinked Cost of service level Inventory carrying cost Lot quantity costs Transportation costs Warehousing costs Order processing and information costs Some simples rules about Tradeoffs Increasing the number of warehouses increases inventory costs but decreases transportation costs and often decreases the cost of lost sales Using faster modes of transportation decreases the cost of lost sales Lot quantity costs and inventory carrying costs are inversely related Investments in information technology should decrease the cost or lost sales Takeaways Logistics Management is about understanding the tradeoffs of inventory carrying cost lot quantity costs order processinginformation systems costs warehousing costs transportation cost and the cost of lost sales ie customer service the goal of logistics is to minimize these cost components while providing a specified level of customer service that meets the company s broader strategic objectives Logistics is becoming increasingly important in today s competitive environment as it is more difficult for competitors to replicate an organization s ability to provide customer service than it is to copy other components of the marketing mix
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