Norwegian School of Management, BI Göran Persson Business Logistics - an overview Göran Persson Handelshøyskolen BI 1
Norwegian School of Management, BI Physical Distribution Marketing Logistics Materials Management Logistics Engineering Production Management Operations Management Industrial Logistics Business Logistics Management Integrated Logistics Management Supply Management Logistics pipeline Management Distribution Management Supply Chain Management 2 Göran Persson
Norwegian School of Management, BI Business Logistics • design and management of • the physical flow of goods • and the related managerial processes • from point of origin to end user (or disposal) 3 Göran Persson
Norwegian School of Management, BI Suppliers ² ² ² BUSINESS LOGISTICS - a flow orientation Planning, control and coordination of the flow of materials and products from the sources of supply to the final customers Regional warehouses Raw materials storage Finished goods storage ² ² ² O O O ² Purchasing 4 Göran Persson Production Business logistics ² ² ² Physical distribution Customers * * * * *
Norwegian School of Management, BI Customer Place order Göran Persson The logistics process spans most functions of the business. . . Order processing Transmit order Sales Manufacturing Report order Scedule production Sales Forecasting Distribution Request materials Deliver Funds Invoice Purchasing Check availability and reorder 5 Accounting . . demands cross-functional planning, coordination and control Customer
Norwegian School of Management, BI Göran Persson Logistics efficiency Company stucture and systems Variables which strongly influence the company efficiency and profitability The company organisation Planning- and control systems 6 Revenue which varies with the customer service The costs of running the logistics systems Transport, warehousing and materials handling The inventory costs
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Norwegian School of Management, BI Göran Persson Scope of activities Transportation Storage Packaging Materials Handling Order Processing Forecasting Production Planning Purchasing Customer Service Site Location Other Activities 8
Norwegian School of Management, BI 9 Göran Persson Reoccuring problem areas and perceived inefficiencies • long lead-times • lead-time variations • throughput time long and uncertain • excess inventories • obsolete materials • many slow-movers • poor service levels • communication and coordination among players (functions, organisations) • poor control • poor forecasts • costs too high - order processing/order handling - transportation - warehouse operation • etc.
Norwegian School of Management, BI Major tasks for the logistics manager: • Opportunity assessment - Diagnostic review - Pre-study for identifying inefficiencies and opportunities • Logistics infrastructure design and action plan - Exploring the link between overall strategy and logistics - Creating the strategic logistics vision - Evaluating selected options - Develop a logistics strategy • Operational capability improvement - Logistics Process Redesign and Cont. improvement - Creating faster and more reliable processes - Improve flexibility in production and distribution 10 Göran Persson
Norwegian School of Management, BI • Product flow synchronisation - Synchronised production - Continuous replenishment - Integrated suppliers - Automated ordering - Capacity management - Integrated and coordinated decision making (Acting and reacting as one system) • Organisational issues - Inter-organisational processes - Internal logistics processes - Work processes 11 Göran Persson
Norwegian School of Management, BI Göran Persson “Flow analysis” To understand the physical flow of goods • Where is the capital tied-up • How long - coverage in days or weeks • Why is it there - functions 12
Norwegian School of Management, BI Göran Persson Gj. sn. leveringstid bestillt og ikke levert/ input pr. tidsenh. bestillt og ikke levert/ output pr. tidsenh. input/tidsenh. output/tidsenhet Gj. sn. gjennomløpstid EKS: Prod. område A B C 13 Dekningstid Gj. sn. siste 12 mån Siste mån 3 mån 4 mån 3 mån 5 mån 7 mån Kan gjennomføres på ulike nivåer: totalt hovedgrupper produktgrupper artikkelnr. nivåen Variasjon mellom prod. grupper Gj. sn. siste 12 mån Siste mån 2 - 4 mån 1 - 2 mån 2 - 12 mån 1 - 11 mån 0 - 40 mån 0 - 106 mån
Norwegian School of Management, BI Göran Persson Basic Techniques (1) (2) INVENTORY CONTROL Economic Order Quantity Safety stock ABC-analysis (3) PRODUCTION CONTROL (AND WAREHOUSING) Capacity planning Scheduling Lay-out planning Line balancing techniques (4) 14 DEMAND ANALYSIS Forecasting Forecast error TRANSPORTATION Location models Routing Sceduling
Norwegian School of Management, BI FORECASTING • forecast and forecast error expected demand expected variation • Item, product group, total output - different levels - kr • Two dominating techniques - moving average - exponential smoothing 15 Göran Persson
Norwegian School of Management, BI Göran Persson INVENTORY CONTROL. . . when to order? . . . how much? Order quantity turn-over stock • Stock has different functions meaning: different cost elements involved Safety stock • Average inventory = turn-over stock + safety stock • Inventory turn-over = Demand (yr)/av. inventory • Coverage = actual stock level / output per time unit 16
Norwegian School of Management, BI PRODUCTION PLANNING AND CONTROL • Do I have the right capacity? - where are the bottlenecks? - what can be done about them? • Am I working on the right job right now? - priorities? 17 Göran Persson
Norwegian School of Management, BI Göran Persson TECHNIQUES AND TOOLS (used by logisticians) • SUPPLY CHAIN MAPPING AND MODELLING • PERFORMANCE MEASUREMENT TECHNIQUES • DEMAND FORECASTING AND ANALYSIS • PRODUCTION MANAGEMENT TECHNIQUES AND TOOLS • MAINTENANCE MANAGEMENT TECHNIQUES AND TOOLS • CHANGEOVER REDUCTION PROCESS • STATISTICAL PROCESS CONTROL • SUPPLIER ANALYSIS AND ASSESSMENT TECHNIQUES • SUPPLY MANAGEMENT TECHNIQUES • ACTIVITY BASED COSTING • VALUE CHAIN ANALYSIS • NETWORK ANALYSIS • BENCHMARKING TECHNIQUES AND TOOLS (databases) • CHANGE MANAGEMENT TECHNIQUES AND TOOLS • ORGANISATION DESIGN MODELS • PROCESS ANALYSIS TOOLS (such as cause and effect diagrams and process flow charts) • STATISTICAL ANALYSIS TECHNIQUES AND TOOLS (such as Pareto charts, histograms & control charts) 18
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Norwegian School of Management, BI Göran Persson 60 s Total cost Analytical approach Internal perspective Optimising inventory costs Optimising transportation costs Decision models 20
Norwegian School of Management, BI Göran Persson 70 s Systems Theory Synergy Design and management of Delivery Systems Holistic (the flow of materials) Co-ordination Logistics Management 21
Norwegian School of Management, BI Göran Persson 80 s Systems Theory Just-in-time Economy of Scope vs economy of scale Capital tied-up Zero Defect & Zero Inventory Elimination of waste Order production 22
Norwegian School of Management, BI Göran Persson 90 s Value chains Competitive advantage Time based management Responsiveness, quality, and productivity in the logistics processes 23
Norwegian School of Management, BI Göran Persson 00 s Shareholder value Supply chains Focus on interorganisational co-laboration Networks and relationships Positioning and operational excellence Supply Chain Management 24
THREE PERSPECTIVES CHANNEL Comp Supply Production Industry Logistics Comp Finance Marketing/ /Accounting Sales Company Source: Shapiro/Heskett, 1985
Norwegian School of Management, BI Göran Persson THREE PERSPECTIVES 1. Company * To create an efficient and effective materials flow through an effective internal structure and through an efficient co-ordination of logistics activities * Focus on internal relationships * Delivery service, logistics costs and capital tied-up 26
Norwegian School of Management, BI Göran Persson 2. CHANNEL * To create an effective co-operation and co-ordination in the channel, as well as an effective network structure * Focus on external relations (suppliers of materials, components, services, and customers) 3. Industry * To achieve competitiveness through a logistics strategy * Customer value and shareholder value 27
Norwegian School of Management, BI Fem trender i utviklingen mot "leading edge logistics" Fokus på hele verdiskapningskjeden • konkurranse vs outsourcing • spesialisering vs koordinering Prosessorientering • TQM; TBM; Re-engineering etc. • Prosessorienterte organisasjonsstrukturer Kundedrevet strategi : • "Customer focus" & å skape verdi for kunde • Differensierte leveringsprosesser 28 Videre utvikling av strategiske allianser • Mellom "marked og hierarki" • Samspill i netverk • Leverandørsamarbeide Prosessorienterte målemetoder • Prosessorientert måling av prestasjon og effektivitet • • Benchmarking Göran Persson
Norwegian School of Management, BI Göran Persson Helhet: Logistikkens utvikling i en bedrift Trinn 1: Punktinnsatser i verdikjedens ulike ledd. Fokus på kostnadsreduksjoner i ulike funksjoner, f. eks. innkjøp eller distribusjon. "Funksjonell kostnadseffektivitet". Lev 29 F 1 F 2 F 3 Kunde
Norwegian School of Management, BI Göran Persson Trinn 2: Integrasjon av de interne logistikk-prosessene. Fokus på felles bidrag fra ulike funksjoner for å oppnå en gitt leveringsservice mot kunde. Samordning av ulike interne aktører. "Intern kostnadseffektivitet". Lev 30 F 1 F 2 F 3 Kund
Norwegian School of Management, BI Göran Persson Trinn 3: Synergier gjennom ekstern samordning. Logistikk som nøkkelelement for å skape konkurransefordeler. Fokus på hvordan logistikk skaper verdi for kunde. "Kundetilpasset kostnadseffektiv tillgjenglighet" Leverandør 31 Bedriften Kunde
Norwegian School of Management, BI Göran Persson Outsourcing som strategisk tilnærmning • Konsentrasjon av bedriftens ressurser på et set av “kjernekompetanser”, hvor man har mulighet å oppnå en definerbar fordel fremfor konkurrentene gjennom å skape unik verdi for kunde • Outsource andre aktiviteter, inkludert mange som av tradisjon er blitt betraktet som nødvendige interne aktiviteter og funksjoner • Skape strategiske allianser med et set komplementære levrendører for å redusere risiko eller for å skape konkurransefordeler knyttet til posisjon eller prosess 32
Norwegian School of Management, BI Göran Persson Hvorfor “Outsourcing”? 1. Bedre fokusering på kjernevirksomheten 2. Tilgang til “world-class” produkter/processer/tjenester/teknologi 3. Raskere omstilling 4. Fordele risk 5. Frigjøre ressurser (også ledelsesressurser) for annen (kjerne-) virksomhet 6. Redusere investeringsbehov - konsentrere 7. Bedre Cash-flow 8. Redusere og styre driftskostnader 9. Ressurser ikke tilgjengelige innen egen organisasjon 10. Funksjonen er vanskelig å lede/styre Kilde: Outsourcing Institute, 1996 1200 bedrifter i perioden -91/-96 33
Norwegian School of Management, BI 2. Prosessorientering som strategi: Hvordan skape konkurransefordel. . . 1. Posisjonell fordel - strukturell fordel * Hva og hvor * Produkt- / marked 2. Prestasjonsfordel - prosess kompetanse * Hvordan konkurrere gitt posisjonen * “Operational excellence” * Hvordan bli "best i klassen" 34 Göran Persson
Norwegian School of Management, BI Göran Persson Leveransprocesserna Fokuseringen flyttas från "funktionell kompetens" till "affärsprocess kompetens", där leverantörerna är integrerade i processen. Affärs process 35
Norwegian School of Management, BI Göran Persson Innkjøpets betydelse 1. Stor andel av våra kostnader 2. Andelen av de totala kostnaderna ökar 3. Potential: en minskad inköpskrona (eller bättre kostkrona ytill skillnad från priskrona) är en vinstkrona 4. Leverantören får ökad betydelse för våra leveransprocesser 5. Ökad komplexitet i inköpsarbetet ökar dess betydelse • köpta produkter och komponenter mer sofistikerade • högre teknikinnehåll • andel internationella köp ökar 6. Ny insikt: fördelar med långsiktiga relationer coh allianser • gemensamma satsningar, öppenhet, ömsesidigt förtroende, 36 flexibilitet
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Norwegian School of Management, BI Göran Persson Benchmarking 38 1. En prosess for å sette realistiske og "riktige" målsettninger 2. Oppdage og forstå hvilken praksis som er nødvendig for å nå målene 3. Motivere og oppmuntre organisasjonen til kontinuerlig forbedring av sine ytelser for at den skal bli mer konkurransedyktig 4. Legitimere kort- og langsiktige mål ved å knytte dem til observerte ytelser hos de ledende konkurrentene 5. Konsentrere organisasjonens oppmerksomhet og innsamot de viktigste leveringsprosessene
Norwegian School of Management, BI Göran Persson From. . To. . . Leading to. . . function process Integral management of materials & goods flow profitability Ressource management and asset utilization products customers Focus on markets and customer service transaction relationships Co-makership and co-shipper partnerships inventory information Demand-based replenishment & quick response systems 39
Norwegian School of Management, BI Göran Persson Europeans leaders - prioriterte tiltak Forbedring av kundeservicen gjennom 1. TQM 2. Fokus på kjernen 3. Differensiering av leveranseprosesser Bedre fleksibilitet gjennom 1. Målstyrte teams 2. Strategiske allianser 3. Prosessorient. /TBM Forbedring av logistikken gjennom 40 1. Process reenginerring 2. Effktivisering av distr. struktur 3. Målstyrte grupper 4. Omlokalisering 5. Differensiering av leveranseprosesser
Norwegian School of Management, BI Göran Persson Vinnarna 1. Kundorientering inom hela organisationen. 2. Flexibel och lärande organisation. 3. Arbeta med värdekedjor, ökat värde för kunden (value added, kvalitet). 4. Individen som pådrivare i förändringsprocessen. Individens och arbetsgruppens förmåga att genomföra förändringar och driva processen måste vara stor. 5. Använda information- och kommunikationsfullt ut. 41 teknologin
Norwegian School of Management, BI Göran Persson Vinnarna 6. Tid som konkurrensmedel. 7. En tydlig vision som drivkraft. 8. Globalt perspektiv vid utveckling av strategier. 9. Innovationskraft och entreprenörskap. 10. Platta organisationshierarkier, inga hierarkier alls. 11. Nätverksstrukturer. 42
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