Logistics 1

• Product- marketers find the latent need and develop products that fulfill that 
• Place- determining where it is going to be sold, where it is on the shelf; how to get it there
• Price
• Promotion- promoting and communicating is important because you need to know about the great product

The "art" and "science" of place

• Represents when demand is higher than supply
• Represents a breakdown in logistics
• Not all stock outs are bad-- luxury items stock out and that creates more demand

• Right product to the
• Right customer
• at the right time
• in the right condition
• in the right quantity
• at the right place
• for the right cost

• Represents what we do in logistics management
• Logistics is the mechanism in which the companies provide the seven rights

Sometimes the rights conflict: getting the right product at the right price, but it might not be at the right price

• Possession
• Form
• Time
• Place
• Quantity

Place, Time and Quantity Utility

• Creating desire
• Focused in marketing

• Repackaging, refurbishing
• Focused in production

• Logistics
• Exactly where things are needed

• Logistics
• Right amount- breakbulk and assort

• Logistics
• When needed

• Processes involved in logistic facilities
• Breakbulk example: Walmart ordering Tide from P&G. Walmart will then breakdown the shipments of pallets and then make it into quantities that customers want to buy at.
• --take larger quantities and break them down for the individual stores
• Assort: putting together items that are similar

• Integrating companies to get a product
• It is the relationship of all the companies to get the product
• Logistics is the smaller concept within supply chain management

• That part of supply chain management that plans, implements, and controls the forward and reverses flow of goods and services
• The exchange of the products (shipping, distribution)

• The resources (facilities, people, and infrastructures) used to organize, deliver and execute an event from an initial schedule through teardown and clean up
• Examples: Oktoberfest, Chinese New Year's

• Moving people
• Example: Scheduled or private airplane flights, bus rides, highway travel

• Moving groups of people and supplies, setting up camps, replenshing supplies and people, and breaking camp them down again and moving out
• Example: Australia's regional assistance mission to the Solomon Islands to help provide security

Military Logistics

• All the people, facilities and supplies in place to effectively deliver services to customers.
• Example: Hair salon, hospital operations
• Logistics of materials and supplies needed (supplies for flights)
• Flights are both passenger and service logistics

• Effective panning, flow and storage of goods, information to alleviate the suffering of people
• Example: Red Cross assistance to people of Haiti in the aftermath of the 2010 earthquake

• Movement: transportation
• Storage: warehousing, in-transit
• Processing: flow of information, tracking, visibility

You deliver your promises to your customer

• It is cheaper and greener, but it is a timing issue
• Most countries order things from China very far in advance so they don't need the inventory right away

• Planning is the information from home
• Walmart has a MABD (must arrive by date): they used to receive inventory early which caused them to lose money. Now they have MABD down to the exact hour when they need it
• They will penalize you for arriving early or late. They will also ensure visibility so you can plan better.

The "century of the consumer"

• Getting products from stores to homes
• We used to fulfill the last mile when we would go to the mall and buy the product and take it home.
• Now, companies have to provide us with the final product (delivery)
• However, it is more expensive because it's more expensive to ship one product to a consumer

From a Logistics standpoint, variety complicates things (increase the number of SKUs that you're responsible for managing).

• Coke has variety to reach a larger group of customers. Coke Zero was targeted for men (diet coke was 'feminized')
• The problem with this is coke doesn't get more shelf space just because they have more variety. They now have less number of units for the individual types. This might cause a stock out or make you have to restock more frequently.
• Coke addressed this by doing the freestyle machine. You can pick and choose whatever you want (mass customization/postponement)

• Companies found it necessary to infuse flexibility into their operations
• They started adding agility (the ability to quickly change direction)
• This comes at a cost bc firms feel the need to hold safety stock which is great so you hold extra inventory-- this is a problem bc if there is no extra situation the inventory just sits there and you wasted money

• Different import/export laws, documentation
• Different customs
• Language barrier
• Ocean transportation takes a long time to get product to destination

Infusing online and brick and mortar stores to make one retail experience such as showrooming, buy online and pick-up in-store

• When you go to the store and try them on and buy it online
• 41% of people practice this
• The problem of this is companies have to plan for the product to be at the store, but people aren't buying it, so inventory could potentially sit on shelves longer

Price Matching

• Combating showrooming bc they use iPhone's as the register; they were the first one to implement this
• This way you don't have to wait in line and change your mind

• BOPUS- Buy online and Pick up in-store
• 50% of people expect this

BOSS- Buy online and Ship from store. This allows companies to ship quickly but it isn't perfect

• You can use the app to scan your item you pick it up and then at the end they just scan your phone and all the items pop up on the register
• You can also make a shopping list online and give you the quickest route.
• The shopping list also help companies see true demand

• Costs and customer service.
• Optimal from a cost perspective might not be optimal from a service perspective
• Pharmaceutical products have a high cost
• The products need to be monitored and temperature controlled in transit. If anything happens the products lose its integrity
• The products are also high value= high value of security

• As inventory goes up the costs goes up
• The cost of lost sales goes down as the cost of inventory goes up

• Risk management.
• It makes sense to invest in safety stock
• It also doesn't make sense to have two facilities that close
• Balancing total cost must include risk

Getting ahead and staying ahead

• Significant cost to catch up
• Unique and innovative
• Consistent results
• Leveraging legal protection
• Continuous improvment
• "VRIN": Valuable, Rare, Inimitable, Nonsubstitutable

• It is inimatible
• All companies do the 7 R's but not all companies embrace it as something they use to compete with/
• Amazon uses logistics to compete with the best
• Brand equity is hard to duplicate

• Walmart
• Starbucks
• Apple
• Amazon
• Nike
• H&M

• Disciplined in putting stores within a couple of days from the DC
• Lead time shorter, less safety stock and/or fewer stockouts
• Big cities -> land expensive, lower ROI
• Lower transportation costs

Logistics is vital to the economy

• "The Umbrella Trade-Off"
• Lot size trade-off
• Inventory/trans. trade-off
• Product variety/inventory trade-off
• Lead time/trans. trade off
• (Longer transportation is cheaper but it'll increase your inventory cost)

• Improving service almost always costs money. As you approach 100% perfection, the costs of service improvements rise more quickly. Need more inventory to cover demand uncertainty.
• Determine what service is really important to customers, reduce less important to save money to spend on what matters. Charge differential shipping for differential service.
• Balance cost of inventory with cost of lost sales

• Costs are higher as the value of the items get higher
• Pharmaceuticals have to be transported in temperature controlled trailers
• The packaging is also more expensive (tracking, keeping it cold)

• High value, low density has higher logistics costs
• Low value, dense material generally have lower logistics costs

• We want to provide customers with valuable items, but it comes at a cost.
• Costs get higher if it is more susceptible to loss and damage

• Weight density is beneficial
• For example: plush items are very light, logistics were more expensive because it was almost like you were shipping air
• There is a limited amount of weight and space on a trailer so if you have light items you fill the trailer on a space but not on weight

• Eliminate waste-- i.e, everything that does not add value to meet customers' needs as efficiently and effectively as possible 
• Utilize worker's knowledge
• Follow a continuous cycle of "Plan, Do, Check, Act." 
• Generally sustainable

• Look through the eyes of the customer
• Eliminate process waste
• Eliminate wasted time and space
• Repeat. Continuously revisit these steps

• DOWNTIME
• Defects
• Overproduction (associated w/manufacturing)
• Waiting (Logistics is about moving and we don't want things to sit still creating holding costs)
• Not utilizing staff talent
• Transportation (excessive transportation is a waste) 
• Inventory
• Motion
• Excess Processing

Gatherings of people who are involved in the day-to-day management of the process

• "How can this process be improvised?"
• "If we make this change, how will the rest of the process be affected?"

• Creating an accurate depiction of a process and performance
• Help you identify opportunities for improvement and define implementation plans

• A lean tool to improve the organization of processes
• Can guide Kaizen event 
• Help identify eight wastes
• Reduce waisted time
• Continually improve!

• Sort- eliminate unneeded items rom the area, store things not needed now- organize
• Simplify- have a logical place that everything fits- a place for everything and everything in its place
• Sweep- clean and organize each day as you use things- put them away
• Standardize- have standardized processes and procedures to maintain workplace order, ease training of new people
• Sustain- continuously follow this approach and implement it throughout your company

• Through the seven rights and generating utility
• Logistics must serve the needs of the customer cost competitively
• Logistics provides the essential movement, storage and processing for supply chains