Logistics Tran Van Hoai Faculty of Computer Science & Engineering HCMC University of Technology Tran Van Hoai

Outline What is logistics ? – As a part of supply-chain Systems and total cost approaches Logistical relationships with a firm Activities in the logistical channel Tran Van Hoai2

Economic impacts YearInventory carrying costs Transporta tion costs Administrativ e costs Total US logistics costs Logistics as a percentage of GDP Tran Van Hoai3 12 th Annual State of Logistics Report, 2001 Strong macro-level economic impacts mainly contributes to explosive growth - (60% GDP increase) of Ireland’s economy in mid- and late- 1990s % GDP of Vietnam (~12billions USD 2010, source: Vietstock.vn) mainly contributes to explosive growth - (60% GDP increase) of Ireland’s economy in mid- and late- 1990s % GDP of Vietnam (~12billions USD 2010, source: Vietstock.vn)

Impacts to individual customer Tran Van Hoai4 Economic utility Possession utility Form utility Place utility Time utility A student uses online service to order Valentine’s Day flowers for his out-of-country girlfriend – Possession utility: service provides secured payment by credit card – Form utility: service provides correct bouquet – Place utility: bouquet arrives at girlfriend’s residence – Time utility: on Valentine’s Day A student uses online service to order Valentine’s Day flowers for his out-of-country girlfriend – Possession utility: service provides secured payment by credit card – Form utility: service provides correct bouquet – Place utility: bouquet arrives at girlfriend’s residence – Time utility: on Valentine’s Day

What is logistics ? It has been referred by many terms – Business logistics – Distribution – Industrial distribution – Logistics – Logistics management – Materials management – Supply chain management – … It has been referred by many terms – Business logistics – Distribution – Industrial distribution – Logistics – Logistics management – Materials management – Supply chain management –…–… Tran Van Hoai5 Different organizations may have different definition of logistics 1 st organization: transportation & inventory management 2 nd organization: transportation, inventory management & warehousing Different organizations may have different definition of logistics 1 st organization: transportation & inventory management 2 nd organization: transportation, inventory management & warehousing Logistics is a part of supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between point of origin and point of consumption in order to meet customers’ requirements (Council of Logistics Management) Logistics is a part of supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between point of origin and point of consumption in order to meet customers’ requirements (Council of Logistics Management)

Supply chain configurations (1) Tran Van Hoai6 Supplier Organization Customer Direct Supply Chain

Supply chain configurations (2) Tran Van Hoai7 Supplier’s supplier Organization Customer Extended Supply Chain Supplier’s supplier Customer’s customer

Supply chain configurations (3) Tran Van Hoai8 Supplier’s supplier Organization Customer Ultimate Supply Chain Ultimate supplier Ultimate customer Financial provider Market research firm 3 rd party logistics supplier

Supply chain management Tran Van Hoai9 A supply chain management is as systemic, strategic coordination of traditional business functions and tactics across these business functions within a particular and across businesses in the supply chain, for the purposes of improving long-term performance of individual companies and supply chain as a whole (Mentzer et al, 2001) A supply chain management is as systemic, strategic coordination of traditional business functions and tactics across these business functions within a particular and across businesses in the supply chain, for the purposes of improving long-term performance of individual companies and supply chain as a whole (Mentzer et al, 2001)

Supply-Chain Operations Reference (SCOR) SCOR process Definition PlanBalancing demand & supply to develop actions which best meets requirements SourceProcuring goods & services to meet planned or actual demand MakeTransforming product to finished state to meet planned or actual demand DeliverProviding finished goods & services to meet planned or actual demand ReturnReturning & receiving returned products for any reason Tran Van Hoai10

Increased importance of logistics A reduction in economic regulation – Tailored logistics approach to meet different specific service levels Technological advances – Computer – Internet Growing power of retailers Globalization of trade – $200billions in > $7.7trililions in Tran Van Hoai11

Logistical relationships within firm Tran Van Hoai12 FINANCE PRODUCTION MARKETING LOGISTICS Systems approach and total cost approach should be applied to logistics

Activities in logistical channel Customer service Facility location decisions Inventory management Order management Production scheduling Returned products Transportation management Demand forecasting Industrial packaging Materials handling Parts and service support Procurement Salvage and scrap disposal Warehousing management Tran Van Hoai13