1. Strategic Logistics Management

2. Transportation Functionality & Role Functionality – Product Movement – Product Storage – Vein and Arteries of the Supply Chain Principles – Economy of Scale – Larger / Fuller the better – Economy of Distance – Telescopic or Tapering

3. Role of Warehousing Balancing Product Supply and Customer Demand “Necessary Evils” prior to and during World War II Large Warehouses order of the day Free Markets ushered the change from large and nation-wide warehouses to strategically located warehouse Warehouses have become a part of Business Strategy Warehousing Inbound (JIT / VMI Perspective) Warehouse Outbound (part of mktg strategy) From a Static Storage Location to an active and bustling and functional replenishment and value-added facility

4. Warehouse Functionality 5 basic economic benefits Consolidation and Break-bulk Assortment Postponement Stockpiling Reverse Logistics

5. Warehouse Functionality Service Benefits Spot-Stocking Full Line Stocking Production Support Market Presence

6. Warehousing – Other Points Handling – Receiving, In-Storage Handling, Shipping Storage – Inventory Velocity, Active & Extended Storage Private Public Contract

7. Evaluation of Logistics Performance Measurement System Objectives – Monitoring – Control – Directing – Improving Shareholder Value Operational Excellence – Increased Customer Accommodation n Lower Cost of Service Asset Utilization – 2 types of logistics assets – Working Capital / Investments

8. Performance Measurement Functional Perspective Cost Total Cost, Cost/Unit, Cost of Damage, Cost of Back Order Customer Service Fill Rate, Stockouts, Complete Orders, Delivery Consistency Quality Damage Frequency, No of Credit Claims, No of Customer Returns Productivity Unit shipped/employee, equipment downtime, Orders per Sales Representative Asset Management Inventory Turns, Return on Investment, ABC (Inv Classification) Comprehensive Metrics Cash-to-Cash Cycle, Inventory No of Days, Dwell Time, Total SCM Cost, On-Time In Shelf Present

9. Drawbacks of Traditional Accounting Systems More is better Very broad idea of Logistics Costs in Profitability Reports Segmental Profitability are based on allocation than capturing actual cost incurred Fixed Costs are allocated based on “Full Cost” basis

10. Drawback of Traditional Accouting Systems Accounting Systems are designed to report aggregate effects of firms’ operations to its stockholders, creditors and government Accounting Costs are computed to provide a historical record of company’s operations All of the firms costs are allocated to company’s business segments Accounting systems record marketing and logistics costs in an aggregated manner and seldom segment them in terms of the process owner Profitability does not reveal a segment’s profitability but in an aggregate manner – CEOs fear that accurate cost info may reveal the Company’s variable cost structure to the market/competition/customers In most Standard Cost Systems, Fixed Costs are treated on par with Variable Costs and this masks the behaviour of fixed costs

11. Activity Based Cost Identification First Trace Costs to Activities Performed Activities related to a Specific Product or Customer Segments Allocation of Sales Order Processing Expense example to different Customers Use ABC to determine Customer Profitability and more effectively manage operations

12. Perfect Order Perfect Order is that Customer Order where all activities from Order Entry to Receipt at Customer Site has been done to perfection or “First Time Right”. No or % of Perfect Orders to the total number of Orders is a measure of Quality. Typically very sophisticated firms achieve between 60 to 70% Score on this index.

13. Unit 5 Integration of Supply Chain Activities Stages of Functional Integration Storehouse Operation and Control Objectives of Stores Function Location and Layout Classification and Codification of Inventory Methods of Store-keeping Stores Accounting