LOGISTICS - INTRODUCTION TO THE ISSUE PART 2 . The aim of this lecture is to get acquainted with goals and methods of logistics, types of logistics, its organization and supply chain Šárka Čemerková guarantor and lecturer Logistics - Introduction to the issue, Part 2 . Goals of logistics Logistics methods Classification of logistics Role of logistics in the company Organization of logistics Supply Chain Structure of the lecture GOALS OF LOGISTICS •derived from whole-company goals •basic goal: optimal satisfaction of customer needs: osupplies and other customer services must be performed at the required level with minimal costs •fulfillment of the basic goal can be monitored from two points of view: oPerformance goal: to deliver the required items in the right quantity, type and quality at the right place and at the right time oEconomic goal: to provide the required services at minimal costs •internal logistics goals: oreduction of transportation, handling, storage, production, stock and management costs oreduction on of the amount of capital tied up in stocks and in the technical means of the logistics system •external logistics goals: osustaining or increasing sales volume and market share oshort delivery times ohigh completeness and reliability of supplies osufficient flexibility of the company METHODS OF LOGISTICS •interdisciplinary science •based on system theory, technical cybernetics, stochastics, mathematical programming and decision theory •logistics master knows a number of methods that are commonly referred to as logistics (although they were not developed within logistics and used solely to solve logistics tasks) •Basic methods used in logistics: oanalytical methods: qsystem analysis qABC analysis qvalue analysis qcost-benefit analysis, etc. omathematical methods of operational analysis: qmathematical and especially linear programming (cutting plans, distribution problem, transport problem, etc..) qqueuing theory oMethods of network analysis and graph theory: qCPM qPert qMPM qGantt diagram, etc. oSimulation methods qespecially in the area of stock management oForecasting methods •Special logistics methods: oJust in Time (+ Kanban) ocentralization of warehouses CLASSIFICATION OF LOGISTICS 1.By problem levels: oMacro-logistics oMeta-logistics oMicro-logistics MACRO-LOGISTICS •deals with global aspects of logistics in terms of national economy, regions, but also higher territorial units •high degree of aggregation and macroeconomic aspects of investigation are applied •main areas of interest are the issues of international transport, international and global integration of production capacities, transport, communications, duty, national or international legislation on transport and environmental impact META-LOGISTICS •operates in the area of supplier-customer relations •includes the sphere of raw material suppliers, distributors, customers, transport activities, intermediate warehouses and cooperation of logistics companies within temporary or permanently established logistics companies • MICRO-LOGISTICS •deals with the application of technical, economic, information and decision-making methods in the management of flows of materials, goods and services within the company •if it is interconnected with meta-logistics, the external relations of the company are also taken into account and the company logistics acts as a comprehensive and systemic discipline 2. By activities: oproduction logistics obusiness logistics oprocurement logistics odistribution logistics ostorage logistics otransport logistics ROLE OF LOGISTICS IN ECONOMY AND BUSINESS •Why to introduce logistics into the company: opressure of competition in the market oshortening innovation times olack of raw materials oexplosion of marketing costs olimited finances of economic entities oloss of market share: searching for and entering new markets oinflation, increasing the riskiness of capital •long-term trends stimulating further development of logistics: ofurther growth in individualization of demand ointernationalization and globalization of markets oshortening product life cycles ofurther growth of automation in logistics processes ofurther development of integrated production systems ofurther development of logistics information and management systems oneed to reduce the capital tie in stocks •tendencies in the development of logistics and its organization in the company: opriority of enterprise-level logistics oincreasing importance of JIT philosophy (will be subject of a separate lecture) odeclining number of suppliers odominance of communication systems oproviding transport by forwarders ooutsourcing of handling activities oconstant number of logistics staff omaintaining a high level of logistics costs o ogrowth in demand for services provided by "logistics companies„ ogrowth in demand for complex logistics services ocriterion for selecting a logistics company is reliability of supply, logistics costs and prices, delivery time, density of transport network, possible frequency of transport, number of losses and damage, logistics know-how, fast processing of complaints, minimum size of business, customer care ORGANIZATION OF COMPANY LOGISTICS •there is no universal appropriate solution •link between logistics and marketing is particularly important •establishment of a logistics organizational unit does not automatically assume that the company's prosperity will increase q • •two basic organizational arrangements: oestablishment of the post of logistics director: qworks closely with the Marketing Director, Production and Finance Director qreport directly to the director of the company qisolation of the logistics departament ocreation of permanent working groups: qmembers are managers of individual in-house departments •The following set of questions helps to identify the need to apply logistics knowledge in the company: oAre there problems with the deadline for order fulfillment? oIs a competitive level of service provided to customers? oIs there a constant need to solve conflicts in the management of the material flow of a company? oAre the costs of doing business relatively high? oIs there a lot of capital in stock? SUPPLY CHAIN •Supply Chain Management (SCM): obasic question: What, when, where and how to produce, how to transport etc. so that the requirements of the final customer are met at the required level? qusually only the direct supplier of goods to the end customer knows the answer qother chain links mostly rely on mediated information and on their own predictions qdemand of end customers is becoming more random ocoordination and cooperation among the individual links in the chain: qshortening delivery time qreduction of stock qreducing the total cost of the supply system qachievement of synergies and elimination of the negative effects associated with the lack or complete absence of coordination and cooperation among elements of the system o oplanning and management all activities that require resource search, purchasing, resource transformation and other logistics activities ointegration functions and responsibility for interconnecting business processes oneed to use modern means of communication: qin the exchange of information in the supply system qin the implementation of modern logistics approaches ocoordination with production, marketing, sales, product design, financing and information technology •logistics is the part of supply chain management that plans, implements and manages effectively and efficiently: oforward and backward flows ostorage of goods, services and relevant information from the place of origin to the place of consumption to meet customer requirements o •typical controlled logistics activities: otransport ofleet management ostorage omaterial handling ofulfillment of orders ologistics network design ostocks osupply and demand planning omanagement of logistics service providers •logistics also includes: oresource search and purchase oproduction planning and scheduling opackaging, assembly and customer service •involvement of logistics at all levels of planning and implementation: ostrategic ooperative otactical SUPPLY SYSTEMS WITH LARGE SERIES, RESP. MASS PRODUCTION (CAR FACTORIES) •framework contracts for a longer period of time •changes in deliveries are handled daily at the operational level - usually a change in the order of several pieces SUPPLY SYSTEMS OF RETAIL CHAINS •wholesale organizations usually obtain information about demand from the development of orders of retail, which orders goods mostly in varying quantities and on different ordering dates •planning of the necessary performance increases upstream of the material flow (labeled „bull-whip“ effect, „roller coaster“ effect, supply chain nervousness, chain effect, amplification effect or Forrester effect) • Summary of the lecture You can: •Define logistics goals •Describe the supply chain and management requirements •Classify logistics from different points of view •Explain the role of logistics in the company •Present the possibilities of organization of logistics in the company •Briefly describe methods of logistics •