1. Business Logistics 101 Martin Dresner University of Maryland Robert H. Smith School of Business

2. Agenda • Logistics Defined • New Logistics Strategies • Final Remarks

3. Pipeline View Transportation Transportation Transportation Suppliers Manufacturer Distributor Retailer Consumers Warehousing Warehousing

4. Logistics Activities • Transportation • Warehousing • Inventory Management • Materials Handling • Purchasing • Order Processing

5. New Paradigm Information Technology Third Party Provider Manufacturer Suppliers Distributor Retailer Consumers Carriers Carriers Carriers

6. “Alphabet Soup” of Logistics Strategies • JIT - Just-In-Time • ER - Efficient Replenishment • CR - Continuous Replenishment • ECR - Efficient Consumer Response • VMI - Vendor Managed Inventory • SBT - Scan-Based Trading

7. Just-In-Time Purchasing • Frequent shipments of small quantities • Short time windows for deliveries • Increased traffic on highways and in metropolitan areas • Partially offset by suppliers locating near customers

8. Vendor Managed Inventory • Vendor determines shipment amounts and timing based on customer needs • Requires tie-in between vendor and customer’s inventory system • Vendor may still deliver on a JIT basis with time windows set by buyer • Traffic impact remains

9. Scan-Based Trading • Suppliers are paid by retailers when consumer purchases are scanned at check-out • Requires item information (e.g., price paid by retailer) to be included in retailer’s cash register information system • Supplier and retailer need to closely link information systems (e.g., same item codes)

10. Scan-Based Trading • Big advantage is that retailer no longer needs to check in items when they are delivered by suppliers • Supplier can set delivery times during off-peak hours • Supplier can deliver JIT but with a reduced impact on roadways

11. Final Remarks • Firms are using information technology to change the way they conduct their logistics operations • New logistics strategies can have dramatic impacts on transportation infrastructure • The better these strategies are understood, the better able we will be to make the appropriate infrastructure decisions