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CONTINUATION FROM LAST TUESDAY

CONTINUATION FROM LAST TUESDAY. LOGISTICS IN FOOD AND AGRIBUSINESS. CHANNEL DESIGN/PHYSICAL NETWORK STRATEGY (LEVEL 2). CD factors: customers demands, channel economics, channel power, channel players roles Physical network strategy How many facilities, where, and mission of each

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CONTINUATION FROM LAST TUESDAY

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  1. CONTINUATION FROM LAST TUESDAY LOGISTICS IN FOOD AND AGRIBUSINESS

  2. CHANNEL DESIGN/PHYSICAL NETWORK STRATEGY (LEVEL 2) • CD factors: customers demands, channel economics, channel power, channel players roles • Physical network strategy • How many facilities, where, and mission of each • Customers/product lines served from each • Inventory levels • What transportation services to use • Mgt of return flows • Any third party logistics services to be used

  3. DESIGN SYSTEM TO • Meet customer requirements while not ignoring • Cost • Risk • Flexibility • Cost/service tradeoff critical

  4. FUNCTIONAL COMPONENTS (LEVEL 3) • Warehousing • Transportation • Materials management

  5. IMPLEMENTATION (LEVEL 4)INFORMATION SYSTEM • Information system enables integrated logistics • Timely and accurate information • Carefully designed • Integrated software with full functionality • Advanced decision support • Network planning models • Optimization tools for scheduling • Order consolidation programs • Transportation routing and scheduling programs

  6. IMPLEMENTATION (LEVEL 4), ORGANIZATION • Organization • Structure • Roles and responsibilities • Performance measures

  7. LOGISTICS STRATEGIC PLANNING PROCESS • Visioning • Analysis • Planning for change • Managing change

  8. LOGISTICS AND THE MARKETING FUNCTIONS: REVIEW • Logistics objective--minimize total costs given the customer service objective. • Logistics interfaces with marketing at Place/customer service. • Marketing--Price, Product, Promotion and Place • Marketing objective--allocate resources to marketing mix to maximize log-run profitability

  9. TOTAL COST = • Transportation cost + Warehousing cost + Order processing cost+ Lot quantity cost + Inventory carrying cost

  10. SUMMARY • This model can be used with any firm or situation • Start with customer service and work down through the triangle • Strategic  Structural  Functional  Implementation

  11. INDUSTRIALIZATION OF AGRICULTURE • Manufacturing Processes • A systems approach • Separation and realignment of stages of production • Negotiated coordination • Risk: Sources and strategies • Power and control • Role of information

  12. MANUFACTURING PROCESSES • Differentiated products in place of commodities • Ask consumers what they want is replacing produce-then-sell mentality (Becoming demand oriented) • May require changes in how the raw material is produced and what it shall not contain • e.g., source verification, animal feed regulation, use of chemicals • Specialization • Facilitates systemization and routinization • increases efficiency and effectiveness

  13. MANUFACTURING PROCESSES, CONT. • Systemization and routinization • Understand and control biological process Tasks more programmable  regular work schedules • More efficient use of facilities and personnel • Less managerial oversight • Scheduling and utilization • Emphasis on facility utilization, flow scheduling and process control • Reduced uncertainty about biological production processes  need less excess capacity • Better prediction and control

  14. A SYSTEMS APPROACH • Focus on the entire food chain • Improved food quality and reduced costs • Improve coordination among stages of the value chain • Input packages for optimum quality and characteristics of the product • e.g. biological and chemical packages to farmers • Total cost approach

  15. SEPARATION AND REALIGN-MENT OF PROD. STAGES • Separation and production specialization • Non-market mechanisms to coordinate stages of the value chain--external integration • Consolidation (provides internal control) • Contract production • New generation coops • Strategic alliances and joint ventures

  16. NEGOTIATED COORDINATION • Replacing or changing the spot market • Marketing products with special qualities • IP grains • livestock quality and delivery timing • Branded products • Open spot markets less able to convey information about quality, timing and other product characteristics • Still: spot, futures and options markets have new uses.

  17. NEGOTIATED COORDINATION, CONT. • More rapid transmission of information • Helps to maintain profit margins • Extract innovator’s profits • Quick adjustment to mistakes help to assure survival and success

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