IS 4839-2 (1992): Maintenance of canals - Code of practice ...
Chapter 13 Global Logistics Becton Dick in Sons Worldwide Sources 4839
Transcript of Chapter 13 Global Logistics Becton Dick in Sons Worldwide Sources 4839
CHAPTER 13Global Logistics
Becton Dickinson’s Worldwide Sources
International Logistics
• Changes to political landscape affect logistics– The end of Soviet rule in Eastern Europe– EU economic integration
• Nontariff barriers-a rule that has the effect of reducing imports
• Restrictions on truck traffic, forcing freight onto rail and water
– NAFTA• Multinational firms
Comparison of Domestic and International Logistics
CostTransport mode
Inventories
Agents
Financial risk
Cargo risk
Government agencies
Administration
Communication
Cultural differences
About 10% of U.S. GDP todayMainly truck and rail
Lower levels, reflecting short-order, lead-time requirements and improved transport capabilities
Modest usage, mostly in rail
Low
Low
Primarily for hazardous materials, weight, safety laws, and some tariff requirements
Minimal documentation involved (e.g., purchase order, bill of lading, invoice)
Voice, paper-based systems adequate, with growing usage of electronic data interchange and InternetRelative homogeneity requires little product modification
Estimated at 16% of world GDP todayMainly ocean and air, with significant intermodal activityHigher levels, reflecting longer lead times and greater demand and transit uncertainty
Heavy reliance on forwarders, consolidators, and customs brokersHigh, owing to differences in currencies, inflation, levels and little recourse for defaultHigh, owing to longer and more difficult transit, frequent cargo handling, and varying levels of infrastructure developmentMany agencies involved (e.g., customs, commerce, agriculture, transportationSignificant paperwork; the U.S. Department of Commerce estimates that paperwork cost for an average shipment is $250Voice and paper costly and often ineffective; movement toward electronic interchange but variations in standards hinder widespread usageCultural differences require significant market and product adaptation
Domestic International
International Market Entry Strategies
• Exporting• Licensing• Joint ventures
• Ownership• Importing• Countertrade
Major Participants in an International Logistics Transaction
Domestic seller
Export facilitators
Inland transportation
carrierDomestic
port or terminalof exit
Foreign portor terminal
of entry
International carrier
(air, water)
Foreign inland transportation
carrier
Foreign buyer
Domestic bank
Domestic government
agencies
Foreigngovernment
agencies
Foreign bank
Information flow
Product movement
The Global Logistics Environment
Logisticsexecutive
Customerservice
Otheractivities
Warehousingand storage
Transportation
Packaging
Inventory
Political and leg
al
Technology
Economic
Geography
Soci
al a
n d c
ultu
r al
Com
petition
Responding to Competition with Logistics
• Increasing the number of cross-national partnerships, alliances, mergers, and/or acquisitions.
• Expansion of many previously domestic-based organizations into international markets.
• Development of global communications networks operating 24 hours a day.
• Establishment of country and regional warehouses in major world markets.
• Identifying and developing relationships with logistics service providers that offer transportation, storage, materials handling, and other services on a global basis.
Exporting Companies
• Export distributor• Customs house broker• International freight forwarder• Trading company• Non-vessel-operating common
carrier (NVOCC)
Documentation
• Country of Origin• Bills of Lading• Packing Lists• Customs• Certified Shippers - C-T PAT
Free Trade Zones
• > 225 in the US• postpone payment of customs or taxes until
item is sold• avoid customs completely if consolidated
and re-exported
Ocean Shipping
• Types of Ocean Cargo– Petroleum– Dry-bulk cargoes-grain, ores, sulfur, sugar,
scrap iron, coal, lumber, logs in vessel loads– Containers
• Shipping conferences and alliances pool resources and extend market coverage
Ocean Shipping
• Types of Vessels– Containerships– Lighter aboard ship (LASH) vessels – Roll On-Roll Off (RO-RO) vessels– Tankers– Specialized vessels
A RO-RO Vessel in Jacksonville Florida
International Trade Inventories
• May vary in small ways from country to country—products may be tailored to fit
• Less is needed (than in U.S.) to serve any one country
• Return items are impossible to accommodate• Import and export quotas affect value of
inventories• Currency and language differences
CHAPTER 15Organizing for
Effective Logistics
Traditional Logistics Management
V P M arke tin g V P P rod u c tion V P F in an c ia l
C E O
•Sales service•Channels of distribution•Product returns and warranties
•Manufacturing•Purchasing/ procurement•Traffic•Warehousing
•Information systems•Budgeting•Inventory•Data processing
Responsibilities
ObjectivesLarge inventories Low inventoriesSmall and frequent production runs
Larger and infrequent production runs
Decentralized warehousing Plant warehousing
Centralized warehousing
Large product assortment
Fewer products
Traditional Logistics Management cont.
•Sales service•Channels of distribution•Product returns and warranties
•Manufacturing•Purchasing/ procurement•Traffic•Warehousing
•Information systems•Budgeting•Inventory•Data processing
Responsibilities
ObjectivesRapid order processing
Inexpensive order processing
Generous returned goods policies
Fast transportation
Expedited shipments
More rigid returned goods policiesLow cost transportation
V P M arke tin g V P P rod u c tion V P F in an c ia l
C E O
Control Exercised By Logistics Executives Over Selected Logistics
Functions
Transportation
Warehousing
Inventory control
Order processing
Packaging
Purchasing and procurement
89% 94% 97% 98% 90%
70 93 95 97 88
55 83 81 79 74
43 76 67 61 55
8 70 37 48 39
15 58 44 51 41
Activities 1966 1976 1985 1990 1999
Percent of Reporting Companies
Organization Design for Logistics as a Function
E n g in eerin g M an u fac tu rin g M arke tin g /S a les F in an c e /A cc ou n tin g
P res id en t
Human Resources Logistics
Organization Design for Logistics as a Program
President
Logistics
ManufacturingEngineering HumanResources
Marketing/Sales
Finance/ Accounting
Components of Corporate and Logistics Mission Statements
• Targeted customers and markets• Principal products/services• Geographic domain• Core technologies
Components of Corporate and Logistics Mission Statements (cont.)
• Survival, growth, and profitability• Company philosophy• Company self-concept• Firm’s desired public image
Ways of Improving Logistics Organizational Effectiveness
• Strategic goal setting• Resource acquisition and utilization• Performance environment• Communication process• Leadership and decision making• Organizational adaptation and
innovation
Logistics/Supply Chain Organization
A good organization structure does not by itself produce good performance--just as a good constitution does not guarantee great presidents, or good laws, or a moral society. But a poor organization structure makes good performance impossible, no matter how good the individual managers may be. To improve organization structure…will therefore always improve performance.
Peter F. Drucker
CR (2004) Prentice Hall, Inc.
Activity Fragmentation in the Supply Chain
President
Marketing Finance Operations
•Distribution channels
•Customer service
•Field inventories
•Revenue
•Cost of capital•ROI•Inventory carrying costs
•Supply alternatives and supply costs
•Warehousing•Purchasing•Transportation
Responsibilities
15-4
CR (2004) Prentice Hall, Inc.
Activity Fragmentation in the Supply Chain (Cont’d)
President
Marketing Finance Operations
•More inventory•Frequent &
short production runs
•Fast order processing
•Fast delivery•Field
warehousing
•Less inventory
•Cheap order processing
•Less warehousing
•Long production runs
•Lowest cost routing•Plant warehousing
Objectives
15-5
Activity Fragmentation in the Supply Chain (Cont’d)
Reasons for fragmentation•Lack of understanding of key cost tradeoffs•Traditions and conventions•Other areas considered to be more important to the firm than logistics•Organization structure can be in an evolutionary state
Benefits of fragmentation elimination•Encourages important cost tradeoffs to be effected•Focuses on an important, defined area by top management•Sets the structure within which control can take place
Organizational Choices•Informal structure
-Persuasion of top management-Coordinating committees-Incentive arrangements-Profit sharing-Cross charges
•Semi-formal structure-Matrix organization
•Formal structure-Line--creates value in products, therefore it has
operating status-Staff--provides assistance to the line organization
CR (2004) Prentice Hall, Inc.
Logistics Matrix Organization
Tra ffic& w areh ou s in g
C u s tom erservice
S a lesforecas itn g
M a rke tin g
In ven torym an ag em en t
A c cou n tin g& in fo rm ation
p rocess in g
F in a n ce
P rod u c tionsch ed u lin g
Q u a lityassu ran ce
P u rch as in g& m ate ria ls
m an ag em en t
P ro d u c tio n
P re s id e n t
Func
tiona
l aut
horit
y
Project authorityLogistics\SC coordinator
Tra ffic& w areh ou s in g
C u s tom erservice
S a lesforecas itn g
M a rke tin g
In ven torym an ag em en t
A c cou n tin g& in fo rm ation
p rocess in g
F in a n ce
P rod u c tionsch ed u lin g
Q u a lityassu ran ce
P u rch as in g& m ate ria ls
m an ag em en t
P ro d u c tio n
P re s id e n t
Func
tiona
l aut
horit
y
Project authorityLogistics\SC coordinator
15-8
What is Systems Analysis?
• Systems analysis refers to the orderly and planned observation of one or more segments in the logistics network or supply chain to determine how well each segment functions.
General Questions
• Why do we perform each task?• What value is added by it?• Why are the tasks performed in the order they are?• Can we alter the sequence of the processing steps to
increase efficiency?• Why are the tasks performed by a particular group
or individual?• Could others perform this task?• Is there a better way for the system to operate?
Problems in Systems Analysis
• Multiple business functions are impacted.• There are trade-offs among conflicting
objectives.• Logistics system impacts are difficult to
precisely evaluate.• There are business issues unique to each
logistics system.
Systems Integration: Logistics Activities Outside the Firm
• Third-party, or contract, logistics• Integrated service providers• Monitoring third-party performance
Reverse Logistics
What Drives Reverse Logistics and Returns?
Wal-Mart Costs = up to 7-8% of costs of goods!
Impacts
Impacts
SCOR and Returns
Deliver
Supplier
Internal or ExternalYour Company
Customer
Internal or External
SourceDeliverMakeDeliverMakeSource Source
Plan
Return ReturnSource DeliverMake
Return
Return
PlanPlan PlanPlan
ReturnReturn Return
Return
Suppliers’suppliers
Customers’ customers
Processes associated with receiving returned products for any reason. These processes extend into post-delivery customer support.
The process includes communication between the customer and last known holder or known return center and the generation of associated documentation.
Impacts of Reverse Logistics
• Forecasting• Carrying costs• Processing costs• Warehousing• Distribution• Transportation• Personnel• Marketing
Reverse Logistics - What is it?The Commercial Perspective
Reverse Logistics is the process of moving products from their typical final destination to another point, for the purpose of capturing value otherwise unavailable, or for the proper disposal of the products.
Typical Reverse Logistics Activities
• Processing returned merchandise - damaged, seasonal, restock, salvage, recall, or excess inventory
• Recycling packaging materials/containers• Reconditioning, refurbishing,
remanufacturing• Disposition of obsolete stuff• Hazmat recovery
Reverse Logistics - New Problem?
• Sherman• Montgomery Ward’s - 1894• Recycling/remanufacturing in 1940s• World War II - 77,000,000 square feet of
storage across Europe with over $6.3 billion in excess stuff
• Salvage and reuse of clothing and shoes in the Pacific Theater World War II
Costs - above the cost of the item
– Merchandise credits to the customers.– The transportation costs of moving the items from
the retail stores to the central returns distribution center.
– The repackaging of the serviceable items for resale.– The cost of warehousing the items awaiting
disposition. – The cost of disposing of items that are
unserviceable, damaged, or obsolete.
Costs
• Process inbound shipment at a major distribution center = 1.1 days
• Process inbound return shipment = 8.5 days• Cost of lost sales• Wal-Mart: Christmas 2003 - returns = 4
Days of Supply for all of Wal-Mart = 2000 Containers
• PalmOne - 25% return rate on PDAs
Is it a problem?
• Estimate of 2004 holiday returns: $13.2 billion• % of estimated 2004/2005 holiday returns: 25%• Wal-Mart: $6 Billion in annual returns = 17,000 truck
loads (>46 trucks a day)• Electronics: $10 Billion annually in returns• Personal Computers: $1.5 Billion annually =
approximately $95 per PC sold• 79% of returned PCs have no defects
Returns: an Operations Perspective
– Emerging industry in infancy stage– Many skill sets involved, deep knowledge of some skills– Person on Warehouse floor –needs tools– No Schooling for Reverse Logistics– No rules or standards– No methods– Few Best Practices– Few comparisons
• How do we know WHAT we should be doing?• How do we know HOW WELL we are doing?• Where are the opportunities to improve PROFITS?
Some Key Operational Challenges Operations people face:
1. So many people, from so many departments, at so many locations, from different companies, needed to process one return
2. For the group managers, returns is a small, annoying part of their group – Most of a Return is someone else’s problem /fault
3. Turn Around Time is often very slow and difficulties often arise that add days to the processing of a Return
Key Operational Challenges - 2
4. Difficulties arise with process Hand-offs between groups, Outsourced providers and multiple data systems – staff is continually reconciling
5. Collect little data about a Returned unit; it often has errors, so it may get handled incorrectly or we have to believe what the customer tells us
6. Often time consuming or difficult to track down the status of a unit
7. Stressful work environment due to frequent issues that need to be resolved ASAP
8. Senior staff spend considerable time solving processing problems or escalated issues
Best Practices
• All Returns under control of ONE GROUP• Very Defined Business Processes• Process Mapping – author of text found that companies
that develop process maps saved up to 40% • Map all processes and add timelines• Automate processes where possible
Why are the number of returns increasing?
Cell Phone Returns
• Nearly 75% of returned phones are determined to have “No Trouble Found”•63% of returned phones are resold “as is”•More than 16 hours of use and phone is no longer “new”•High returns rate impacts Original Equipment Manufacturers for products under warranty•Resold phones are used as scrap or warranty replacements•California legislation – requires retailers to establish system for collection, for reuse, recycling or disposal at no cost to the consumer
Source: DHL Presentation to Reverse Logistics Association, Feb 2007
Source: DHL Presentation to Reverse Logistics Association, Feb 2007
NASA Reverse Logistics
Returns Impact All Operational Facets
MarketingMarketing Product Product Development Development
LogisticsLogistics ProductionProduction PurchasingPurchasing FinanceFinance
Product ReturnsProduct Returns
Processes – all different GroupsProcesses – all different Groups
Authorize, Receive, Ship, Credit, Authorize, Receive, Ship, Credit, Inventory, Inspect, Test, Repair, DispositionInventory, Inspect, Test, Repair, Disposition
Multiple LocationsMultiple LocationsOutsourced PartiesOutsourced Parties
Each with - their own processesEach with - their own processes - their own priority- their own priority
Supply Chain Integrity
• What is it?• Why is it important?
Supply Chain Integrity
• Perfect Order Fulfillment• Information Security• Parts integrity – Boeing 787• Product integrity – Mattel• Shipping Integrity• Inventory Integrity• Cornerstone of supply chain leadership
Questions??
Summary
• Global Logistics – controllable and uncontrollable factors
• Impacts on global inventories• Traditional vs. Non-traditional organizations• Functional vs. Program design• Reverse Logistics – impacts, causes, best
practices• Supply Chain Integrity
Thank you for your time
Best of Luck to You in Your Next Assignment!!!