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Choosing the Right Supply Chain Strategy

Functional Innovative
Products-- Products--
Low margin Predictable Unpredictable
demand demand
Efficient supply Staple food
chain products

Responsive Electronic
supply chain equipment
High margin
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The objectives of Logistics Strategy

• Minimize cost
• Minimize investment
• Maximize customer service

Use
ROLA

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An important objective in Logistics
Strategy
Maximize return on logistics
assets (ROLA) Costs of
Logistics’ logistics
contribution operations
to sales

ROLA RevenueCosts
Assets
Investment in
logistics
assets
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Logistics Planning
• Levels of logistics planning;
• Strategic
• Tactical
• Operational
• What to Plan;
• Customer service levels
• Facility location
• Inventory decisions
• Transportation Decisions

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Strategic, Tactical, and Operational Decisions
Decision area Strategic Tactical Operational
Seasonal equip- Dispatching
Transportation Mode selection ment leasing

Inventories Location, Control policies Safety stock levels Order filling

Order Order entry, transmittal, Processing


processing and processing system orders, Filling
design back orders

Purchasing Development of supplier- Contracting, Expediting


buyer relations Forward buying

Warehousing Handling equipment Space utilization Order picking


selection, Layout design and restocking

Facility Number, size, and


location location of warehouses
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Flow of Logistics Planning

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The total logistics concept
• System-wide management of entire logistics chain as a single
entity instead of separate management of individual
logistical functions.
• Integrated Logistics a process of planning, coordinating and
arranging the potential operational activities so as to optimize
the productivity to ensure success.
• With businesses today looking for better connectivity and
collaboration in real-time, the concept of integrated and
smarter logistics have shaped up in the recent times.
The financial impact of
logistics
Challenges of Global Logistics
• extended supply lead times;
• production postponement with local added value;
• complicated node management;
• multiple freight transport options;
• extended and unreliable transit times; and
• the need for greater visibility in the supply chain.