Re Logistics an overview

1
R(e) Logistics - an overview

• Prof. Rommert Dekker
• B2C
• - various products, food, advantages to companies
• B2B
• - various models, info exchange, reverse logistics

2
e-logistics - B2B

• Logistics is a critical success factor for
  e-commerce (Christmas 99)
• Delivery options to customer
• 1. electronically (advice, software, electronic
  cards)
• 2. by mail (tickets, subscriptions, CDs)
• 3. parcel carriers, like TNT(books, toys, etc)
• 4. by delivery services (furniture, TVs, PCs,
  refrigerators)
• 5. by specialised (cooled) transport (food)
• In case of 1,2 customers do not need to be at
  home. In case 3,4,5 he/she does. Time is critical
  in case of 5. Logistics cost decrease if multiple
  customers can be served in one run.
• Alternatives delivery at work, at gasoline
  stations, cooling box at home, works in some
  cases.

3
Delivery of food

• Many failures Webvan, Makro online, Peapod
• Delivery options
• Store - advantages
• no extra infrastructure needed, close to
  customers
• Fulfillment centres - advantages
• easier and paperless picking, no cash-register,
  cheaper locations, larger assortment
• Ahold bought Peapod limit home service to
  densely populated areas, offer several delivery
  windows, combine with drugstore, liquor store in
  fulfillment centres.
• Marginal business consumer does not want to pay
  for his own time!

4
Warehousing - consequences

• Many small parcels to be packed in a limited
  amount of time this requires different material
  handling techniques,
• like pick-to-belt and faster packing (see de
  Koster et al)
• Mail order companies like Wehkamp have
  successfully picked up e-commerce, as they had
  already the right marketing and logistical
  experience!

5
Advantage e-commerce to companies I

• E-commerce allows centralisation of stocks
• e.g. Amazon uses few Distribution centres against
  many individual bookstores of Barnes and Noble
  (or Bruna)
• Inventory centralisation pays off most for
  expensive, slow moving products with high demand
  variability (not for cheap bestsellers!)
• Many more books can be held on stock centrally
  (100.000 vs 10.000 in a store)
• Inventory savings have to be balanced against
  higher transportation costs and less impulse
  buyings.
• Hence model works better for PC manufacturer DELL
  than for Amazon.

6
Advantage e-commerce to companies II

• E-commerce allows product customisation to
  consumer needs.
• E.g. customer composes a PC (harddisk, processor,
  memory, supplies) himself. Then PC manufacturer
  assemblies it from component stocks and
  transports it to customer (DELL case)
• Advantage no obsolete inventories (costs 3 per
  month!)
• react faster to market changes.
• DELL forces suppliers to keep stock at its
  assembly plants (Vendor Managed Inventory), hence
  it has negative stock costs (because customer is
  charged earlier than vendors are paid!)
• Model only possible for easily configurable goods.

7
One main problem for e-commerce returns

• Data (Gentry 1999) on of returns
• - 6 for general products
• - 15 for mass products
• - 35 for catalogue sellers and e-tailers
• Striking example cloths sold through internet
• Issues
• - how to return (by mail, or collect)
• - how to handle returns (in warehouse, return
  centre)
• - administration (refunds, VAT, customs!)
• - what to do with returns (re-use,
  remanufacturing, recycle)
• Return management is needed

8
B2B - logistics - subjects

• portals and market places for transportation
  services
• web platforms for information exchange
• tracking and tracing supply chains
• new organisational forms for logistical services
  (hypermediators)
• new business models for reverse logistics

9
Portals and Market places for transportation
services

• Transportation is often a commodity (airlines,
  shipping, trucking)
• product can be well-defined
• administration cumbersome
• transportation is a perishable good
• large inefficiencies in transportation (many
  truck drive empty or half full)
• Portals and electronic market places make market
  more visible.
• Many were set up, only few survive. Open models
  led to very low prices and bad services. Closed
  market places work.

10
Web platforms for information exchanges

• Document flow connected to container transport is
  enormous (250 messages per container many
  parties involved)
• Large cost for entering info, large cost due to
  bad info, large logistical inefficiences
• In past in Rdam EDI initiatives
• yet EDI is mainly point to point and expensive
• Other ports have set up webplatforms acting like
  information hubs (Portnet Singapore), which store
  info in a central database and on which extra
  applications can be run
• Rdam - behind, by EDI applications and the lack
  of a central director (and too much focus on
  physical aspects)

11
Tracking and tracing supply chains

• Many supply chains involve multiple parties and
  multiple activities. Controlling supply chain is
  very important for providing customer with right
  products at the right time.
• Quite often things go wrong or change and actions
  are needed, which should be based on actual info
  of status of goods
• (e.g. products do not arrive at customer where
  are they)
• Tracking and tracing products / containers in the
  chain and making this info available through web
  is vital
• Courier services like UPS provide this service
  for packages. Will shipping lines, airlines or
  logistic service providers do this in the box /
  container sector?

12
Virtual organisations in supply chains

• Efficient logistics requires coordination of many
  different parties (shipping / airlines, trucking
  companies, rail / barge companies, warehouses,
  customs, banks, insurers, authorities, etc)
• and economies of scale in goods transported.
• Virtual web based companies have been set-up to
  coordinate whole supply chains, buying various
  transportation activities
• Traditionally forwarders bundle small shipments
  in harbours in a manual way.
• Will these virtual companies have the market
  power to survive?

13
New business models in reverse logistics

• Return aggregatorsbring together suppliers and
  customers, automates procurement of returns
  ebay, www.qxl.com, www.metalsite.com
• specialty locatorsvertical portals focused on a
  specific target segmentwww.find-a-part.com,
  www.bigmachines.com
• integrated solution providersuse IT to offer
  matching of demands and returns and other
  target-specific serviceswww.returnlogistics.com,
  www.pharmacyreturns.com
• (see Kokkinaki et al 2001)

14
Properties new business models

• Characteristics
• A inclusion of reverse logistic activities
  (collection, inspection, sorting,
  remanufacturing)
• B level of control (take ownership of products,
  arrange transport, etc)
• C added value
• Return aggregators A low, B low, C medium
• Specialty locators A high B medium C high
• Integrated logistic providers A medium, B high,
  C medium