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1 JNB225 - Logistics - Lecture 4
1 JNB225 - Logistics - Lecture 4
1 JNB225 - Logistics - Lecture 4
Module 4
MLM survey
You have recently received an e-mail from the Head of the Department of Maritime and Logistics Management, Dr. Stephen Cahoon, inviting you to participate in a small survey on your views about the programs offered by MLM.
The survey contains only 12 questions and responses are sought by 8 August.
Module 4 Topics
Environmental scanning
Forecasting CPFR The bullwhip effect Order cycle Communicating with customers Demand side logistics management
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Reading 4.1 provides information about environmental scanning. Reading 4.2 provides example of how environmental scanning created new opportunities for companies by combining their traditional product offerings with trends displayed by global consumers.
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Environmental scanning
Environmental scanning
Sources of information for environmental scanning:
External: Personal business contacts; journals; books; newspapers; conferences; radio and television news and documentaries; customers; commercial data bases. Internal: Personal contacts; internal documents (reports, research papers, memoranda); development proposals; internal databases
Source: Bowersox, Closs & Cooper 2010, p. 136. JNB225 - Logistics - Lecture 4 7
Forecasting
Forecasting provides a picture of the future and is the driving force behind forward planning activities. It provides guidance on:
Demand, sales or requirements Cost of inputs and prices for outputs Replenishment and delivery times Demand for transport, from where to where and when
The time horizon for forecasts may be:
Long term more than 3 years Mid term one to three years Short term less than a year
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Forecasting
There are a very large number of forecasting techniques available which fit broadly into three categories. They are:
Qualitative methods: Use of judgement, intuition, surveys or comparative techniques to provide quantitative estimates about the future. Historical projection methods: Future estimates based on historical trends, seasonal variations and time cycles Causal methods: Forecast is derived from relationship to related variables. Come in various forms e.g. Statistical regression models or Descriptive input/output, life cycle or simulation models.
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Demand behavior Trend gradual, long-term up or down movement Cycle up and down movement repeating over long time frame Seasonal periodic oscillation in demand which repeats Random movements follow no pattern
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Demand
Time
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Source: Coyle, Langley, Gibson, Novack & Bardi 2009, p. 253 JNB225 - Logistics - Lecture 4
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Order Cycle
Order cycle time (Lead time) Total time from customer initiation of order to receipt of the goods. Order cycle time consists of: Order preparation and transmittal Order receipt and entry Order processing Warehouse picking and packing (or manufacture) Transportation Unloading and delivery to customer Order processing is a significant part of order cycle time and may be up to 70% of order cycle time in some industries. Reading 4.3 provides information on the components of order processing.
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Order processing
Order processing is not a settled term and varies in scope in different texts and articles.
Some texts describe it as the time from the sellers receipt of an order until authorisation is given to the fill the order. Others, such as Ballou (2004) (Reading 4.3) suggest it commences at the start of preparation of an order and ends when the order is packed ready for shipping .
Order processing is administrative in nature and can involve many activities which typically include: Checking the order for completeness and accuracy Checking the buyers creditworthiness and past performance Determine stock status - inventory or back order Prepare picking list Determine shipping mode and prepare shipping documents Prepare invoice
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Order Entry Stock checking Accuracy checking Credit checking Back ordering/ order canceling Transcription Billing
Order Status Reporting Tracing and tracking Communicating with customer on order status
(Ballou 2004, p. 132)
Order Filling Product retrieval, production, or purchase Packing for shipment Scheduling for delivery Shipping document preparation
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Order filling
Order filling is a set of physical activities. It involves:
Acquisition through production, purchasing or retrieval from inventory Packing and labelling Verification of completeness of the order Shipment scheduling and despatch Expeditious order fill time is important in achieving customer service Technology such as bar coding can reduce errors and expedite order fill time
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Metrics:
- Item fill rate - Order fill rate
Have different implications and can create additional processes for order filling due to split shipments
Order fill rate is lower than item fill rate FR = nPi where n = number of items on order Pi = in stock probability of item i.
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Answer
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E-commerce
E-commerce was covered for supply side logistics in module 3. Similar considerations apply in the demand side except that it is considered from the point of view of a supplier rather a customer.
For many products and services e-commerce provides alternative procurement and distribution channels to the traditional system. It by-passes intermediaries and allows supplier and consumer to deal directly with each other. Example: online travel bookings; buying on Amazon; bidding for items on e-bay.
E-Commerce does not facilitate integrity checking nor the development of strategic relationships between the parties. An on-line order management system must be capable of handling a high volume of small orders. The transport system associated with e-commerce requires extensive delivery networks and expertise in small parcel handling. Fleets of small vans engaged in the this type of activity are common in cities.
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Suppliers
( Ballou 2004, p. 139)
Products
Customers
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As the availability of online markets expand the probability of the use of online procurement increases. Complexity of item specifications has no influence on the use of either online or offline procurement.
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The main disadvantages are installation, maintenance and personnel training costs.
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WMS Stock level management Order picking Picker routing Picker assignments and work loading Product availability estimating
JNB225 - Logistics - Lecture 4
TMS Shipment consolidation Vehicle routing Mode selection Claims Tracking Bill payment Freight bill auditing
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Assignment 1
Assignment 1 is due on 8 August 2011 and you should now be well advanced with your preparation. It is very important that your assignment is presented in the correct manner and that you follow the referencing standard used by AMC which is detailed in the MLM Toolbox. You are urged to review the Preparing for an assignment section of the MLM Toolbox. The tool box can be found on line by going to the AMC home page. Ports and Shipping / MLM / MLM Student Toolbox. You are also urged to review the Writing assignments notes posted on MyLO. Steves Automotive is the model for presentation of assignments and it should be closely followed, including the information on the cover page.
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