Business Logistics Management

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Business Logistics Management

• What is logistics management?
• Goals of the course
• Course logistics
• Topics to be covered

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What is logistics?

• Logistics is the process of planning,
  implementing, and controlling the efficient and
  cost-effective flow and storage of raw materials,
  in-process inventory, finished goods and related
  information from the point of origin to the point
  of consumption, for the purpose of meeting
  customers requirements.

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Hong Kong The Vision

• 2 November, 2001 (Friday)
• Newly-established Steering Committee on Logistics
  Development (LOGSCOM) Meets for the First Time
• "The LOGSCOM meeting today represents a major
  step taken by the Government to take forward the
  "Logistics Hong Kong" initiative, Mr Leung said.
• "As stated by the Chief Executive in his Policy
  Address this year, the Government is fully
  committed to providing a conducive environment
  and the necessary infrastructure to facilitate
  the development and promotion of Hong Kong as the
  preferred international and regional
  transportation and logistics hub, as well as a
  base for coordinating and integrating service
  providers for the global and regional demand and
  supply chain," Mr Leung added.
• The LOGSCOM is one of the two new institutional
  structures created to support Hong Kong's
  logistics development as announced in this year's
  Policy Address. The other new structure is the
  Hong Kong Logistics Development Council
  (LOGSCOUNCIL), which is created to support the
  work of LOGSCOM..
• The LOGSCOM has also started its discussions on
  the development of an integrated operational plan
  which defines the architecture to support Hong
  Kong's logistics development. The plan will
  provide the overarching operational concept and
  road map. It will cover the key projects to be
  undertaken, the critical success factors for each
  of the projects, and the implementation agents
  and the required organizational structure.

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Hong Kong The Reality

• Container port (2000)
• Busiest in the world
• 18.1 million TEUs
• 110 million tonnes
• served by over 80 shipping lines
• 380 weekly service to over 500 destinations
• Road Crossing (2000)
• 30 721 cross-boundary vehicles per day
• 2,700 freight forwarders in HK

• Air Cargo (2001)
• 20 thousand landings
• 2,077 thousand tonnes handled
• 65 airlines
• 3,800 flights weekly to 130 destinations
• Re-exports valued at 1,391.7 billion dollars
• Mainland
• USA

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The Supply Chain
Vendors
Information Flow Monetary Flow
Factory
Distribution Centers
Customers

• Transportation
• Warehousing

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Key Components and Activities of a Logistics
System

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Customer service

• determine customer needs and wants
• determine customer response to service
• demand forecasting
• set customer service levels
• Co-ordination with Marketing

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Inventory control

• sales forecasting
• supplies and finished goods stocking policies
• product mix at stocking points
• number, size and location of stocking points
• stocking strategies (JIT, push, pull)

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Transportation

• mode and transport service selection
• freight consolidation
• lot-sizing
• carrier routing
• vehicle scheduling
• equipment selection

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Order processing

• Order information transmittal methods
• ordering rules
• sales and inventory co-ordination

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Plant and Warehouse location

• Space determination
• Location choices and network configuration
• warehouse layout and dock design
• stock placement

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Materials handling

• equipment selection
• equipment replacement policies
• order-picking policies
• stock storage and retrieval policies

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Purchasing

• Supply source selection
• purchase timing and order size
• Packaging
• design for handing and storage
• protection from loss and damage

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Reverse Logistics

• return goods handling
• parts and services support
• salvage and scrap disposal

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Information maintenance

• Information collection and analysis
• control policies
• Co-ordination with production/operations

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Why is logistics important?

• Logistics costs are significant
• IMF logistics expenditure is 12 of GDP
  worldwide
• supply chains are lengthening
• globalization of companies
• (Toyota 35 plants in 25 countries outside of
  Japan)
• logistics offer a strategic competitive advantage
• e.g. Benetton, Amazon books
• increased customers expectations
• mass customization

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Logistics Management

• Planning
• organizing
• controlling
• vision
• concepts and principles
• tools

• System design
• operating strategies
• tracking and review policies

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Logistics Hong Kong

• Goals
• attract cargo flow through Hong Kong
• facilitate HK companies providing logistics
  services in or through Hong Kong
• Cornerstones
• Connectivity Collaboration
• Regulation (customs)
• Information Technologies
• Human Resources
• Inter-modal co-ordination

Reliability Efficiency Hassle Free Value
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Logistics Strategy

• Cost reduction
• operating costs reduction gt profit maximization
• capital reduction
• maximize return on investment
• service improvement
• competitive advantage
• new business opportunities

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Importance of Logistics Customer Service

• Service effect on sales
• service failure gt
• penalizing action
• by customers
• Service effect on customer patronage
• 65 of business from existing customers
• developing a new customer is 6 times more
  expensive than keeping an existing one

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location
Customer service needs
inventory
transportation
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Logistics Planning areas

• Customer service goals
• facility location strategies
• inventory decisions
• transportation plans
• network design
• product flow
• information flow
• Differentiated distribution