John Ozment Oren Harris Chair of Transportation University of Arkansas (479) 575-6142 (479) 521-3355...
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Transportation/Logistic Strategy
John OzmentOren Harris Chair of Transportation
University of Arkansas
(479) 575-6142(479) 521-3355
Transportation/Logistic Strategy
Coordination of ActivitiesFlow of GoodsMinimum CostDesired 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).
Transportation/Logistic Strategy
Customer ServiceOrder ProcessingTraffic & TransportationWarehousingMaterials HandlingPackagingInventory ControlPurchasingProduction SchedulingForecastingLocation AnalysisCommunications
Activities To Coordinate
Transportation/Logistic StrategyFlow of Goods
(Purchasing)
Logistics
(Marketing)(Operations)
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Suppliers
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Customers
ProductionProcessing
Repackaging
Firm
Transportation/Logistic Strategy
Consider Total "Relevant" Costs
Take Advantage of Cost Trade-Offs
Avoid Suboptimization
Total Cost Approach
Transportation/Logistic StrategyTraditional Organization Chart
President
VPMarketing
VPOperations
VPFinance
SalesAdvertising
Marketing ResearchEtc.
Machine ShopsWelding ShopsAssembly Lines
Etc.
BookkeepingCapital Budgeting
Financial ManagementEtc.
Transportation/Logistic Strategy
Customer ServicePart of Order Processing
Field WhsingLocation Analyses
TrafficScheduling
Raw Materials WhsingPackaging/Handling
Part of Order ProcessInventory
ForecastingCommunications
Traditional Organization Chart
President
VPMarketing
VPOperations
VPFinance
SalesAdvertising
Marketing ResearchEtc.
Machine ShopsWelding ShopsAssembly Lines
Etc.
BookkeepingCapital Budgeting
Financial ManagementEtc.
Transportation/Logistic StrategyDevelopment of Business Logistics
Military ExperienceDevelopment of the Marketing ConceptProliferation of ProductsRising Transportation CostsTechnological PeakKnowledge of InventoryRecession of 1958Development of the ComputerCreative Uses of the Computer
Transportation/Logistic Strategy
Harvard Air Freight Study (1956)
Bowersox's Textbook (1961)
CLM (1963)
Organizational Name Changes
Supply Chain Management
Educational Focus on Logistics
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
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
Transportation/Logistic StrategyElements 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 %
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
Transportation/Logistic StrategyABC Analysis
Percentof Sales
Percent of Items20 50 100
A B C
100
80
95
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
Transportation/Logistic StrategyFocus on Total Costs/Cost Trade-offs
Savings from Inventory Consolidation
vs
Added Transportation Costs
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
Transportation/Logistic Strategy
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