BA 308B and LOM 408B/5330 Business Logistics Systems

1. BA 308B and LOM 408B/5330Business Logistics Systems • Course Home Page: www.umsl.edu/~campbell/308B/308BSYL_W03.htm www.umsl.edu/~campbell/308B/408BSYL_W03.htm • James Campbell’s home page with link to BA 308B and LOM 408B/5330: www.umsl.edu/~campbell

2. Chapter 1: Introduction • Syllabus. • Definitions. • Scope of logistics. • Activities. • Key Trends.

3. Definitions • 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) • Supply Chain Management - the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole. (CLM) • Logistics - Science of managing (controlling) the movement and storage of goods (or people) from acquisition to consumption.

4. Definition • Logistics - Science of managing the movement and storage of goods (or people) from acquisition to consumption. • NOT concerned with Production. • NOT concerned with Military Logistics. • Though many of same techniques and analyses are used for business and military logistics. • Goods: Raw Materials  Final products, and everything in between. • Logistics for services & people similar to goods logistics. • Police, fire, ambulance, passenger airlines, taxi cabs, etc.

5. Definition • Logistics - Science of managing the movement and storage of goods (or people) from acquisition to consumption. • Movement = Transportation (between locations). • Storage = Inventory, Warehousing (at locations). • Difference between acquisition and consumption is a matter of space and time. • Focus: Best way to overcome space and time that separates acquisition and consumption.

6. Why Things Are Where They Are • Why is St. Louis here? • Why are New York, Los Angeles, etc. where they are? • Why are some things produced in certain places - and other things produced everywhere? • See book example with VCRs and software (p. 4) • Why are bananas for the USA grown in Central and South America, but oranges for the USA are grown in Florida and California?

8. Bananas and Oranges • Cost to grow (¢/lb) Bananas Oranges in USA25 20 in Central America10 15 • Logistics cost (¢/lb) to USA to Central America from USA 10 15 from Central America 20 5 Consume Consume in Bananas Total Cost in USA Central America grow in USA 35 = 25 + 10 40 = 25 + 15 grow in Central America 30 = 10 + 20 15 = 10 + 5 Result: Grow bananas only in Central America

9. Bananas and Oranges • Cost to grow (¢/lb) Bananas Oranges in USA 25 20 in Central America 10 15 • Logistics cost (¢/lb) to USA to Central America from USA 10 15 from Central America 20 5 Consume Consume in Oranges Total Cost in USA Central America grow in USA 30 = 20 + 10 35 = 20 + 15 grow in Central America 35 = 15 + 20 20 = 15 + 5 Result: Grow oranges in both USA and Central America

10. Inexpensive Transportation and Inventory • Inexpensive transportation: • Allows specialization in space. • De-couples supply and demand regions. • Increases availability and competition. • Inexpensive inventory/warehousing: • Allows specialization in time. • De-couples supply and demand in time. • Increases availability and competition.

11. Scope of Logistics Transportation Transportation Supply Production Consumption Information Information Materials Management Inbound Physical Distribution Outbound

12. 52 Retail Outlets in USA... Retail Outlets

13. SEA CHI NY LA ATL ...served by 5 Warehouses Single stop and multi-stop routes Retail Outlets Warehouses

14. SEA CHI NY LA ATL 2 Plants, 5 Warehouses P2 P1 Plants Warehouses

15. SEA CHI NY Retail Outlets Plants Warehouses LA ATL Outbound Distribution System 2 Plants, 5 Warehouses, 52 Retail outlets P2 P1

16. Plants Warehouses Plants Supply Points Sub-assembly plants Inbound Distribution System 9 Suppliers, 3 Sub-assembly plants, 2 Plants P2 P1 LA

17. SEA CHI NY Retail Outlets Plants Warehouses Supply Points Sub-assembly plants LA ATL Total Distribution System 9 Suppliers, 3 Sub-assembly plants, 2 Plants, 5 Warehouses, 52 Retail outlets P2 P1

18. Total Distribution System 9 Suppliers, 3 Sub-assembly plants, 2 Plants, 5 Warehouses, 52 Retail outlets SEA P1 CUSTOMERS LA CHI ATL P2 NY

19. Logistics Activities • Transportation - Chapter 6 & 7. • Inventory - Chapter 8, 10, 11, 12. • Location - Chapters 13 & 14. • Support Activities: • Customer service, order processing, packaging, warehousing, purchasing, materials management, information management.

20. Key Trends In Logistics • Supply chain integration. • Information technology. • Global markets and competition. • Quality emphasis. • Service industries. • Product variety. • Quick response. • Disruptions, shortages, inflation, recession. • Regulation. • Security.

21. Importance: $$$ • $1,000,000,000,000 per year • Spent on logistics in U.S. • 10.1% of U.S. GDP • Transportation 40 - 60% • Inventory 30 - 50% • Administration 0 - 5%