Klaus-Michael Fortmann-Fundamentals of Logistics

halotit.ppt

Slides for the course

Fachhochschule GelsenkirchenFachbereich WirtschaftStandort Gelsenkirchen

Prof. Dr. Klaus-Michael Fortmann

Fundamentals of Logistics

Special thanks for my colleagues Mrs. Dipl. Kauffrau Angela Kallweit and Miss Dipl.Betr.wirt. Angela Büttner, who helped me developing parts of the german version!

Fundamentals of Logistics

2 Weekly Semester HourLecturer: Prof. Dr. Klaus-Michael FortmannAim of unit and content:Logistics is the process of planning, implementing, and controlling the efficient, cost-effective of raw materials, in-process inventory, finished goods, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. Theobjectives of this course are to provide the student with:• the basic-terms, concepts and principles of logistics,• the information, how components of logistics interrelate and interface with other

functions of the firm,• the traditional logistics functions such as customer service, transportation, warehousing, and

inventory management,• analytical tools for solving logistics problems and• the most important key data (key performance indicators KPI) which are used to ensure the

efficiency and effectiveness of logistics processes.Method: A combination of lecture, class discussions, logistics-videos and excursions to firms.Literature:Schulte, Christof: Logistik, München, 1999 ; Fortmann/Kallweit: Logistik, Stuttgart 2000Douglas M. Lambert, James R. Stock, Lisa M. Ellram, Fundamentals of Logistics Management, Boston etc. 1998, ISBN 0-07-115752-2; Richard J. Tersine, Principals of Inventory and Materials Management, London 1994, ISBN 0-13-126484-2

" Fundamentals of Logistics "- Definition of Terms -

Definition of Logistics

LogisticsLogistics definedefine thethe integratedintegrated planningplanning, , realisingrealising, , usageusage and and controlcontrol ofof•• all all kindskinds of of transporttransport processesprocesses, , •• thethe storagestorage of of goodsgoods andand•• thethe correspondingcorresponding informationinformation processesprocesseswithinwithin companiescompanies and and betweenbetween companiescompanies..

Informationflow

I = Information

Order I III

Materials flow TClient

T = Transport

TTT

Require-ments

planning

Produc-tion

planning

Purchaseorder

Purchaseorder

quantityplanning

SupplierWare-house

Produc-tion

Ware-house

A system contains subsystems. An integrated system is characterized by thefact, that the subsystems are connected by adapted interfaces (physically, byinformation technology or both). With reference to logistics this means: Entiresystem = company logisticsSubsystems: procurement logistics, in-house logistics resp. productionlogistics, distribution logistics, reverse logisticsIntegrated planning: Logistics must be planned in context to all subsystems, i.e. all interfaces shall work well together.Realisation: building of logistic facilities (warehouses, materials flow systems), organisation of logistic processes, design and programming of logistic IT-Systems (PPC production planning and control system, MPC merchandise...); Materials flow: In a broader sense all processes of transportation are subjectof logistic concepts, i.e. as well the transportation of men (train, ship, plane)


Definition of Logistics: Explanations

Relations between flow of information and materials flow: examples

Opposite flow of information against the material flow

Concurrent flow of information: reference manual, invoice, delivery order, consignment note (way bill), freight list

Advance flow of information:lists of announced deliveries (package numbers) (Packstücknummern), order confirmation (oracknowledgement)

Onward flow of information: invoice with separate mail


Definition of Logistics: Explanations

loingb06.ppt

Sphere of Influenceof Logistics


Recycling Industry

Purcha-sing

Produc-tion Selling

Cycle of Logistics

Primary Industry

Converting Industry/Manufacturing Industry

Commerce

FinalConsumer

RawMaterials

Trans-forming

Mining

Recycling Collecting

Purcha-sing

Storage

Selling

Selling

Selling

Priority:

• Avoiding of waste is better than

• Recycling of waste is better than

• Elimination of waste

Therefore the law says that in the year 2010 all rests of consumptiom must be returned into a closed loop of materials.The logistics in this context has a lot of tasks.


Hints on the german law of closed loop materials economy(Kreislaufwirtschaftsgesetz KrWG)

loingb01a.ppt Source: Associated with: H.-Chr.Pfohl, Marketing Logistik, Berlin Heidelberg 1972p.28;H.-Chr.Pfohl, Logistikssysteme, Berlin Heidelberg 1996, p.19

Main Aim of Logistics: Optimisation the Efficiency of Logistics

" Fundamentals of Logistics "- Aims -

• Right Product• Right Place• Right Quantity• Right Time• Right Quality• Right Costs

The 6 "R" ofLogistics

System Output:

Efficiency of Logistics = Output/Input Ratio of the Logistics System

• Costs of Inventory• Costs of Storage• Costs of Handling• Costs of Control• Costs of System• Costs of Transp.

System Input:Valued

Factor Input

Logistics System:Logistics ofCompany

• Procurement Logist.• Production Logistics• Distribution Logist.• Reverse Logistics

Personnel and Equip-ment in the Areas

loingz03.ppt Source: Associated with Christof Schulte: Logistik, 2.Edition, München 1995, p. 6

Components of Logistics Service


Delivery Time = Time between issue of order and availability forthe client

Delivery Reliability (on-time delivery performance) = Percentageof keeping the guaranteed delivery time

Flexibility of Delivery = Possibility of consideration of special wishesof the clients concerning delivery time or delivery quantity

Quality of Delivery = Accuracy of delivery concerning type, quantity and quality of the delivered articles

Delivery Service Level = Percentage of articles directly deliverablefrom warehouse

Source: Associated with Christof Schulte: Logistik, 1995, p. 10.loingz01.ppt

Costs of DeliveryService

Costs of Shortfalls

TargetActual

TotalCosts

Optimal Delivery Service

Costs

Delivery Service 100 %


Postulated Delivery Service

ActualTarget

Costs

Delivery Service 100 %

Costs of D

elive

ry Serv

ice

Alternative Strategies

loingz05.ppt

Example of a statistic Evaluation of Delivery Reliability

Weeks of delay

Quantity of deliverd Orders within the first Quarter

Comparision between the guaranteed dateand the real delivery date: Negative values indicate too-early-dates. Positive values point out on dates too late.


020406080

100120

-8 -6 -4 -2 0 2 4 6 8 10 12 14

loingz04.ppt Source: Associated with Christof Schulte: Logistik

Important Types of Logistics Costs

Costs of Inventory = Interest rate of the bounded capital, insurance,depreciation, loss by theft


The costs of logistics can reach between 15 and 20 percent of the total costs, therefore they have considerable influence to the company profit!

Costs of System = Planning, realisation and control of the material flow

Costs of Control = Planning of production programm, production planningand control, order processing, shop-floor scheduling ...

Costs of Tansport = Costs of internal and external transportation

Costs of Handling = Picking, Handling, Packing

Costs of Storage = Fix costs of the warehouse equipment, efforts fortransfer to and release from stock

Source: http://www.marketingteacher.com/Lessons/lesson_boston_%20matrix.htmGroup)loinge03.ppt

Selling Conditions and Requirements of the Market

" Fundamentals of Logistics "- Influencing Factors -

Stars

Cash CowsPoorDogs

MarketGrowth

Market Share

high

low

highlow

??QuestionMarks

?

The Boston Matrix

The Boston Matrix is a Classification ofproducts for buildingnorm strategies.

Source: Associated with Christof Schulte: Logistikloinge02.ppt

Selling Conditions and Requirements of the Market


Logistic Consequences:

: Optimisation of: material flow, production and planning control systems,shop-floor scheduling, delivery service, customer service, purchasingmanagement, distribution system, order processing

: Search for a suitable production location, increasing or decreasing of thedistribution system, improvement of the delivery service, orientation of the logistics to special market segments

: Hold up of the delivery and customer service, rationalise of logistics,rigorous realisation of inventory management and valuation policy

?

: Stock minimisation, hold up of delivery service only in selected marketsegments, minimisation of distribution costs

Source: Associated with Christof Schulte: Logistik loinge05.ppt

Influences of the Production Program

Consistency and type (Size, weight,

sensibility, deterioration) of products, value

Storage,packing,transport

Range of goods,variety of goods,

frequency ofselling

Inventory,inventoryturnover

Life cycle ofproducts, changes in

demand

demands on delivery service,

warehouselocations

Product

Logistics


" Fundamentals of Logistics "- Company Organisation Structure -

Source: Associated with Christof Schulte: Logistikloinga02.ppt

Questions before fixing the Company Organisation Structure

Which functions should be part of the logistics organisation ?Level of centralisation resp. decentralisation?What kind of organisation should be used within thelogistics departement?Amount of costs of the above mentioned logistic functions?Desired delivery service?Complexity of product structure and vertical range of manufacture?Typology of operation: Production of individual ordersor large-scale production? Order-oriented manufacturing / anonymous market?Structure of suppliers (Quantity, geographical distribution)?Structure of customers (Quantity, geographical distribution)?



Staffs Logistics

PlantLogistics

Research andDevelopement

ProductionManagement

Sales

Finance andAccounting

Plant I

PlantLogistics



Sales


Plant II

PlantLogistics



Sales


Plant III

PlantLogistics



Sales


Plant IV

BoardStaff-Line-Organisation


Source: Associated with Christof Schulte: Logistik, 2.Edition, München 1995, p. 6loinga07.ppt

Grading within the HierarchyDefinition of levels

• Executive board

• Area management

• Sector management

• Department Department 1

Department 2

Department 3

Department 4

Sector 1

Department 1

Department 2

Department 3

Department 4

Sector 2

Area 1

Department 1

Department 2

Department 3

Department 4

Sector1

Department 1

Department 2

Department 3

Department 4

Sector 2

Area 2

Board

Positioning of Logistics within thelevel of executive board isrecommended, when the costs of logistics are relatively high and theflow of material and information isvery complex.



Effects of an integrated Organisation of Logistics

• Avoiding redundancies

• Higher transparency

• Reduction of logistic costs

• Reduction of stock

• Optimal use of central und decentral information

Processes within the company

Thinking restricted to area

Order process

Process 1

Thinking in processes

Develop-ment

Offer Orderprocess

TREND

" Fundamentals of Logistics "- Process Organisation -

loingg02.ppt

Process 2 Process 3

Client

Order center

Materials managementConstruction/Work scheduling

Production

Finance and accounting

Supplier

Order

Order receiptprocessing

Procurement oflong deliverytime material

Materialprovision Shipping

ProductionProductionorder

Preparinginvoice

Product Invoice

Datecheck

Procurement ofRemainingmaterial

Construction

Confirmorder

Order confirmation

Purchaseorder

Example of an order process within a small company


loingg04.ppt

Processes within the company

Purchaseorder Delivery

Time

Flow of a logistical Organisation Process


Associated with Christof Schulte: Logistik, 2.Edition, München 1995, p. 341loingg08.ppt

Phases

Decision about theproject

As-Is analysis

Recognition of theweaknessesDevelopment of theTo-Be conceptIntroduction of thenew logisticsorganisation

Results

Goal setting, project team, limitation of the area of investigation, project schedule, budget

Analysis of activities incl. related efforts, flow of information, inspection of documents etc.

Duplication of work, overlap of competencies,laborious ways of information, missing information

Valued alternatives, plan of realisation by stages,job charts, job descriptionsTrained employees, new process organisation, instrumental support of work, higher logisticsperformance

Important are all results of the decision phase: The project team should beinvolved in the planning: this leads to a better motivation within the projectwork. A team coworker who planned his own tasks concerning the timelineand the project results will do all to reach his goals. The definition of the aims of project is essential because every decisionwithin the daily routine depends on their contribution to the project success.„Without target every way doesn‘t care“. „Without target every shot is a hit“. The task designation of a project consists in doing all necessary works to reach the defined aims.Generally an aim is a status in the future which must be desirable, reachable and measurable .The project schedule should be differentiated and the phases as well as theactivites must be briefly described and planned in the right order.Typically this is done in form of a critical path diagram with thecorresponding Gantt-diagram.


Explanation

The area of investigation must be limited prototypically for reducing theproject effort. The portability of the project results to the not consideredareas must be ensured.The budget for the „paper-phases“ must be defined exactly, whereas forthe realisation phase it is enough to give a qualified estimation.At the end of the To-Be-concept it is also necessary to develop an exactinvestment calculation. Each phase will be terminated by a milestone i.e. there must be issued an interim report with interim results, deadline check and, if necessary, a new scheduling for the rest time of the project.One of the concept results consists in developing alternative proposals forsolution and in comparing them by means of a value benefit analysis. Itmust be clear, which solution is preferred by the team. Otherwise it ispossible that the project owner (that is the „client“ of the project) opts foranother solution because of special information which only he knows: thatcan be for example a planned corporate merger which leads to othercriteria weights within the value benefit analysis.


Explanation

Source: Associated with Christof Schulte: Logistik

Criteria for the Choice of the adapted Transport System

" Fundamentals of Logistics "- Transport Systems -

loingtal.ppt

Requirementsof market

Material to betransported

Auxiliarymeans of Transport

TransportSystem

require-ments forproducts

extern (truck)

intern

externpackage

mesh box pallet

in-houseproduction

bought-in partlogisticalrequire-ments

Intern (fork lift)

Source: Associated with Christof Schulte: Logistik

Functions of Auxiliary Means of Transport (AMT)

loingt01.ppt

• Intake and aggregation of the material to be tranported whichleads to a faster handling

• Protection of the cargo against damage, theft etc.• Manipulability: simple grabbing and deposition of the AMT• Suitable for storage• Information carrier (when the material to be transportedit is not allowed or possible to be marked itself (glasses, fluids))


Examples of Auxiliary Means of Transport (AMT) )

loingt02.ppt

pallet mesh box pallet work piece carrier

box ISO-Container tank pallet


External Transport Systems

Source: Christof Schulte: Logistik, München 1999, p.135 (there Vogt and others)loingt07.ppt

Judging the means of transportation by aspects of costs:

• Costs of freight• Additional costs of transportation (customs, service fees)• Costs of handling (loading/unloading; changing of thethe transport system: multimodal transport)

• Additional costs of logistics (insurance, theft, depreciation)• Cost effects outside of logistics (costs of shipping routeoptimisation within the IT-department; administration of depreciation when using own trucks; administrationof truck personnel)


Source: Christof Schulte: Logistik, München 1999, p.135 (there Vogt and others)loingt08.ppt

Judging the means of transportation by performance characteristics:• Transport time• Transport frequence (how many times per day/week/month)• Technical features (special technique for fluids, gases etc.)• Connectivity to other transport systems• Flexibility (changing of clients wishes)• Start- and endpoint of the transport system (relation)• Reliability (dependency of weather?)• Additional service (feeding of animals; tracking/tracing; load/unload; publicity; control of temperature)

External Transport Systems


Advantages and Disadvantages of the several carriers

Source: Christof Schulte: Logistikloingt10.ppt

Road Transport:plus: the only system which delivers directly to the customersminus: dependent on traffic and weather; cargo load max. 25 tonsRail Transport:plus: up to 1000 tons per train; independent from weatherminus: rail terminal connection necessary, Costs for special wagonsInland Navigation:plus: 1000 – 3000 tons, on the Rhine up to 16.000 tons with combined ships,low freight costsminus: limited relations, dependent on water level and weather


Maritime Navigation:plus: up to 100.000 tons, big shipping spaceminus: ports only at the North sea resp. Baltic sea, dependent on weather,

seaworthy packaging necessary

sources: Christof Schulte: Logistik; Fortmann/Kallweit: Logistikloingt11.ppt

Aircraft Transport:plus: high speed, no seaworthy packaging necessaryminus: high freight costs, limitations at dangerous goodsCombined Transport:plus: Usage of the advantages of all carrier typesminus: time-consuming handling of cargo because of intermodal transportPipeline Transport:plus: lowest costs, when permanently usedminus: high investment, only cost-efficient when used over a long time


Advantages and Disadvantages of the several carriers

Rocket Transport:plus: in space no other transport system usableminus: extreme high costs

In-House Transport Systems

sources: Christof Schulte: Logistik (dort Schulze/Weber)loingt12.ppt

Points ofinfluence

Transportsystem

Aims

Transport System

Material to be

transportedTransport-intensity

Transportway

Laws

OptimalUsage

HighService-

levelFlexibi-

lityTranspa-

rency


= function of availability

Given is the following conveyor track for transport of brown coal into a power plant. The availability of each component can be seen in the drawing.

a) Please calculate the availability of the whole system!b) Calculate the total availability for the following structur:

Solution:a) Vtotal = 0,97*0,95*0,98*100 %=90,307 %b) Vtotal= [1-(1-0,94)*(1-0,93)]*100=99,58%

V1=94 %

V2=93 %

V3 = 98 % means, thatthe belt conveyor 3 isusable in 98 of 100 hoursV1=97 %

V2=95 %

V3=98 %


The Technical Availability of a System depends on each Component

FM 1 FM 2

V1 = 0,97 V2 = 0,99

Vtotal = V1 x V2, e.g. conveyor FM1 and FM2 must be both in function at the same time (so-called „and“-relation, mathematically: multiplication)

FM1 for example belt conveyor or fork lift

FM2 for example belt conveyor or fork lift

V1 = 0,97

V2 = 0,99

Failure probability A = 1 – VA1 = 1 - V1, A2 = 1 – V2Atotal = A1 x A2, e.g. FM1 and FM2must both be in malfunction at the same timeVtotal = 1 - Atotal = 1 - (A1 x A2)

= 1 - (1 - V1) x (1 - V2)Tip: For every parallel way i must be applicated a bracket-expression of theType (1 – Vi)

„Series connection“

„Parallel-connection“

Vtotal = 0,9603

Vtotal = 0,9997


V1 V2

V3

V12 = V1 x V2

Vtotal = 1 – (1-V12)(1-V3)

The Total Availability must be developed successivly from the Partial Availabilities considering the rules for Series resp. Parallel Connection.

V1 V2 V4

V3

V5

V12345 = Vges

V12

V123

V1234

V1 V2 V4

V3

V5

V12345 = Vges

V12

V123

V1234

Examples for the Total Availability of Transport Networks


V12345 = Vtotal



Structure of In-House Transport Systems

Continuousconveyor

Cranes Stacker cranes

Withoutrails

Railbounded

Trackbounded

Floorconveyors

Elevators

Conveyors for In-House Transports

Discontinuousconveyor

AGVS automated guidedvehicle system

locomotivewagons

fork lift

In-House Transport Sytems: Examples for Continuous Conveyors

Source: Jünemann: Materialfluß und Logisticsloingt22.ppt

Roller conveyor Belt Conveyor Platform Conveyor

Tilt Tray Sorter Paternoster conveyor Circular Conveyor


Computer controlled In-House Transport System


FERTIGUNG

MONTAGE

Trans-port or-ders

ConveyInstruc-tions

Feedback

Computerfor Transport

ControlProduction In-House

Transport systems


Manufacturing

Assembling

Chapter Outline

Source: Christof Schulte: Logistikloinglue.ppt

Selection Criteriafor the suitableStorage System

Warehouse Functionsand Types ofWarehouses

Stock accountingand Warehouse

Control

Centralisation Levelof Warehouses

External orInternal Warehousing

Storage SystemsOutline

" Fundamentals of Logistics "- Storage Systems -

Selection Criteria for the suitable Storage System


loinglal.ppt Source: Associated with: Zeitschrift Materialfluß: Lagerplanung (Sonderpublikation), Verlag Moderne Industrie

Very SmPa Small Parts Parts Long Good

Small Box Box Box Pallet Cassette

Drawer-styleCabinet

Shelving PalletRack

CantileverRacking

Stock Goods

WarehouseUtility

StorageSystem

Warehouse Functions


loingl-1.ppt Source: Christof Schulte: Logistik, 2.Edition, München 1995, p. 91 (dort: Kupsch)

„The basic task of a warehouse consists of the economiccoordination of different dimensioned good flows“

Compensation Function: concerning time and quantity

Security Function: risk compensation against production malfunction,

delay of supply, variation in requirements

Assortment Function: help with building assortments

Speculation Function: absorb expected increase in prices

Refinement Function: maturing processes, drying processes

Kinds of Warehouses classified


loingl-2.ppt Source: Christof Schulte: Logistik, 2.Edition, München 1995, p. 90

InboundStorage

IntermediateStorage

OutboundStorage

Phase ofadded Value

Process

CentraleStorage

PeripheralStorage

Level ofCentralisation

MaterialorientedStorage

ConsumptionorientedStorage

Sortation

GeneralStorage

ProvisionStorage

Area forSmall Parts

Storage

Number ofpossible

Consumers

Kinds ofWarehouses


loingl-3.ppt Source: Christof Schulte: Logistik 2.Edition, München 1995, p. 90

Warehousingwithin Buildings

Storageoutside

WeatherProtection

ExternalStorage

InternalStorage

Location

SelfAdministration

ExternalAdministration

Administration

Kinds ofWarehouses

Kinds of Warehouses classified

Types of Warehouses

loingl-4.ppt Source: Christof Schulte: Logistik, 2.Edition, München 1995, p. 91

Flat Rack

High Rack

Gravity Flow Rack

fixed

Mobile Rack

horizontal

vertical

Rotating Rack

movable

Shelving

Flat Rack

High Rack

Drive-in Rack

Drive-through Rack

Gravity Flow Rack

fixed

Mobile Rack

Rotating Rack

movable

Pallet Rack Flat Goods Rack Special Rack

Racks

Block Storage

Line Storage

Floor Storage

Types ofStorage


Examples: Floor Storage without Storage Device, Line Order

Source: Zeitschrift Materialfluß: Sonderdruck Lagerplanungloingl01.ppt

Advantages:• Flexibility• Low Investment• Overview• Low Staff• Barely technical Faults

Disadvantages:• No Possibility of Automation• Storage Location Order necessary• Low Use of Room• Low Number of Articles• Impact Pressure downstairs• Fifo only by means of Rearrangement


Examples: Storage in Pallet Racks


Advantages:• Direct Access to all Articles• Automation possible• Free Storage Allocation• High Order Picking Performance• Fifo-Principle possible• High Use of Room• Adaptable to new Tasks• Low StaffDisadvantages:• High Investment• High Turnover necessaryfor being economic

• Standardised Load Units necess.• Security Conditions, given by

the Authorities (dep. of Hight))• High-Level Organisation necc.when using Random Storage

• Vulnerable to technical Faultswhen automated


loingl05.ppt

Using Fork Lift Using Stacker Cranes


Examples: Storage in Pallet Racks

Examples: Storage of long Goods Cantilever Racks


Advantages:• Changeable into a Shelving• Expandability• Adaptable to the Assortment• Picking with Stacker Crane poss.• Low Investment• Good Use of Room• Direct Access to each Article• Possibility for Automation

Disadvantages:• Autom. only when using Cassettes• Partially only LiFo• Floor Conveyors necessary• Risk of Accident


Examples: Storage of long Goods Cantilever Racks


Examples: Storage in Miniload Warehouse


Advantages:• Goods-protection againsttheft and pollution

• Highest Automation Level poss.• Ergonomic „Goods to Man“Principle

• Good Organisation because of Electronic Data Processing

• No Inventory• Standardised Load Units• No Weight Limits• Adaptation to AssortmentDisadvantages:• Limited Dimension Variance• Vulnerable to technical Faults

because of Usage of Computers• High Investment


Examples: Storage in Mobile Rack


Advantages:• Good Use of Room• Good Use of Area• Lock-ability• FiFo• Possibility for Semi-Automation

Disadvantages:• No Possibility for Full-Automation• Low Turnover• No direct Access• High Costs of Maintenance• High Investment• Low Order Picking Performance• Stable Ground necessary• Limitation for Expansion


Examples: Storage in Gravity Flow Rack


Advantages:• Good Use of Room• High Performance• Good Use of Area• FiFo• Possibility for Automation• IT-Organisation• Expandable

Disadvantages:• Risk of Accident• High Requirements to Tolerances• Run down depends on Weight• Impact Pressure in Front• Drive-against Crash• Security of Loads necessary• High Investment• Only single Material Channels• High Costs of Maintenance


Examples: Storage in horizontal Rotating Rack


Advantages:• Good Use of Room Depth• Ergonomic „Goods to Man“Principle

• Free Choice of Storage Allocation• FiFo• Possibility of Automation• Parallel Serving of more than oneRotating Rack

Disadvantages:• Serial Order Picking• Limited Payload• Low Flexibility against variable Turnover Performance

• Payload/Rack Weight unfavourable• Long Access Time• High Investment• Expansion limited• High Costs of Maintenance


Examples: Pick an Pass by Means of a Rotating Rack

loinbk09.pptSource: Praxishandbuch für den MaWi-Leiter, Augsburg 1995, Teil 10, Kap. 3.2.2., Seite 6


Examples: Remote Picking with a Rotating Rack System


loinbk10.pptSource: Praxishandbuch für den MaWi-Leiter, Augsburg 1995, Teil 10, Kap. 3.2.2., Seite 6

Stock Accounting and Warehouse Control

Source: Christof Schulte: Logistikloingl12.ppt

Functions:• Optimisation of the sequence of Storing and Retrieval fromStorage

• Allocation of Storage Orders to empty Bins• Allocation of Retrieval Orders to Load Units• Instigation and Control of carry commands for the Stacker Cranes• Smooth Identification and Control of Storing and Retrieval of Storage Devices

• Storage Slot Status Database (occupied/available)• Real-Time Update of the Quantities of all inbounded resp. Outbounded Articles


Source: Oeldorf/Olfert: Materialwirtschaftloingl15.ppt

Central Warehouse: Mainly used in small and medium-sized Enterprises

Advantages of central Storage versus decentral Storage:• Stock lower than the Sum of decentral Stock• Minimum Stock lower than the Sum of minimum Stock decentral• Lower Capital Lockup• Better Use of Room• Higher Turnover: Therefore lower Perishableness• Personnel Placement more economic• Use of Storage Devices more efficient


loingl16.ppt

Decentral Warehouses: Necessary...

• when a Factory must be supplied directly• as Buffer Storage within the Production• when the short-term supply is very important for the customers• when the direct Contact to the Clients is Part of the Business


Decentral Stock versus Central Stock

Sources: Gudehus, Tim: Logistik 1, p. 308, Berlin, Heidelberg, New York, 2000 , there: Maister, D.H.,(1976), Centralisation of Inventories and the „Square Root Law“, International Journal of Physical Distribution, Vol. 6, No.3, p.126 ff.lohdgt35a.ppt

Warehouse 1Stock Article A:300 pieces

StockArticle A:400 pieces

StockArticle A:500 pieces

Central Warehouse

Stock Article A:

3002+4002+5002

= 707 Pieces

1200 Pieces - 707 Pieces = 493 Pieces is equivalentto 41 % Reduction of Stock, when centralized

Additional correction factor, when more technicalperformance is installed in the central warehouse than in the decentral locations:0,7 bis 0,8 (that means for example: 0,7x707 pieces)

General Conditions:

• Optimal Disposition of Stock and further Supplies

• Same Turnover decentraland central

• Same Assortmentdecentral and central

Re-

storage


Warehouse 2

Warehouse 3

Criteria for the Decision: Own-Storageor Warehousing by a Logistical Service Provider (LSP)

Source: Christof Schulte: Logistikloingl17.ppt

• Needs for Investment for Facilities or/and Equipment• Grade of Dependency on external Personnel• Current Operating Costs• Requirement of Personnel and Know how of Experts• Peaks of Workload and Variation of Capacity Requirements

Warehousing by a LSP often takes place within theProcurement Logistics and the Distribution Logistics.Production Warehouses normally are administratedautonomously.


„ Procurement Logistics "

loinbtitle.ppt

Procurement Logistics =

All logistical activities within the area of procurement

• Optimal Disposition of Quantities• Early Requirements Identification• Responsible Integrating of Suppliers• High Disposition Quality• Adapted Selection of Suppliers• Fixing of Quality Standards• Short ways from the Supplier to

the Factory• Optimisation of the Costs of Freight• Costs-favourable Place and Equipment• Optimisation of Storage Processes• Clear Stock Policy• Short Delivery Cycles• Accurate Supervisory of Stock


Aims and Tasks of Procurement Logistics

loinbg05.ppt

Favourable Purchase Price

Supply Security

Flexibility of DeliveryHigh Quality

Low Costs of Freight

Low Costs of Storage

Low Stock

loinbs05.ppt

Value Benefit Analysis for Suppliers

SumRank

Suppliers

Criteria

Product Quality

Price

Delivery Time

Fulfillment of Contract

Delivery Date Reliability

Quantity Reliability

Weight

1....5

Supplier Miller Supplier Mayor Supplier Smitt

5

2

4

1

4

2

3

5

4

2

2

1

15

10

16

2

8

2

4

4

2

3

3

5

20

8

8

3

12

10

5

2

1

5

5

3

25

4

4

5

20

6

Points1...5

Points1...5

Points1...5

PxG PxG PxG

53III.

61II.

64I.


Alternative Procurement Concepts

GlobalSourcingGlobal

SourcingModularSourcingModularSourcing

Multipleor SingleSourcing

Multipleor SingleSourcing

“World wide” “Purchase ofComponentsinstead of Parts”

“A Lot of or onlyone Supplier(s)”

loinbd01.ppt


Traditional versus Modular Sourcing

Source: Ch.Schulte: Logistik 2. Edition, München 1995, p.149loinbd03.ppt

SystemSupplier

PRODUCER

Supplier 1

Supplier 3

Supplier 4

Supplier 5

Supplier 2

Supplier 6


Supplier 2

Supplier 3

Sup.4

Suppl.5

Supplier 1

Sup.6

PRODUCER

loinbd05.ppt

10/06PlanPlan Act. Diff. Plan Plan

10 11 12 01Plan

Edition11/05

11/06PlanPlan

02Plan

12 01 02 12/06Plan

Responsible:Sales Department!

Responsible:Sales Department!

Forecast: 12 Months

Edition12/05

Edition01/06

Moving Period Planningfor each Finished Product

11 12 01 02


Plan Act. Diff. Plan Plan

Plan Act. Diff. Plan Plan

loinbd06.ppt

Finished Product 11 12 01/98 ...X 1000 900 1300 ...

Y 3000 2500 4000 ...

Purch.Prod. 9 10 11 ...A - 6.000 5.000 ...

B 18.000 15.000 24.000 ...

C 45.000 37.500 60.000 ...

IHPT 1) = 1Month

IHPT = 1Month

Y

2A 3Q

2B 5C

ProcurementProgram

Moving PeriodPlanning

„ Procurement Logistics“

The MPP leads to thein-time procurement

1) IHPT= In-House Production Time

Just-In-Time-Concept

loinbd17.ppt

Coordination of the Production Control Systems with the Assembly Control SystemsTimely Delivery of Parts „as late as possible“No or (at most) small BuffersSmall Lots, high Delivery Frequency

Because of the Complexity of the JIT-Process this is onlyeconomic with A-X-Parts 1)

AssemblyControl

ProductionControl

„Procurement Logistics“

1) A=high value, X=constant requirement

Information and Material Flow at JIT

loinbd18.ppt

„Procurement Logistics“

Material Flow

In-HouseProducts

FERTIGUNGProduction MONTAGEAssembly

AssemblyControl

ProductionControl

ProductionControl

Supplier

FERTIGUNGProduction

Own

Information Flow

PurchaseProductsMaterial Flow

While processing JIT the Assembly “pulls” the Material

Material Flow

„ Production Logistics "

loinbtitle.ppt

Production Logistics =

All logistical activities correspondingto the production process

lointm04.ppt Source: REFA MLBO: Planung und Gestaltung komplexer Produktionssysteme

Definitions: Linking of Work Stations

„Production Logistics“

Fixed linked Loose linked Flexible linked

Occupancy time: equal approximate equal variable

Work piece sequence: equal equal variable

Without buffer buffer buffer, collecting, distributing

Material move: tact dependent tact independent tact independent


Calculation of the Buffer Capacity between two loose linked Working Places

n = quantity of work pieces to be bufferedtv1, tv2 = maximum possible time without working at each station

(reasons: the worker has to go to toilet or is outside for smoking)te = working tact in minutes per piece (always the same)

lointm04.ppt Source: REFA MLBO: Planung und Gestaltung komplexer Produktionssysteme

Example: tv1=10min, tv2=14min, te=4 min/piecen=(10min+14min)/(4min/piece)=6pieces

lointf30.ppt Sources: Chr.Schulte: Logistik (there: Kettner, Aggteleky, Nestler)

Transport Matrix and Sankey-Diagramm1

1) H.R.Sankey (1853-1921), Irish engineer


Raw material storage

Production

Assembling

Finished goods stor.

Waste, cuttings

Forwarding

Scrap

Sum

Goods receipt 100 100

Raw material storage 72 20 10 102

Production 52 16 8 76

Assembling 4 65 3 72

Finished goods storage 91 91

Waste, cuttings 2 9 11

Sum 102 76 72 91 11 91 9

To

From

Goods receipt

Raw material st.

Production

Assembling

Finished goods storage

Forwarding91

100

72

5220

6516

2

9

4

8

310

Waste-

Cut -tings

Scrap

Material Flow in Tons per Month

lointm42.ppt Source: Fortmann/Kallweit: Logistics, Stuttgart 2000, p. 82


The Transportation Work depends on the Allocation of the Machines

Tons per monthbetween the Production machines

Distances between thelocations of the production facilities

FromTo

1

2

2 3

70 40

50

A

B C

80 m

60 m

100 m

Variations of allocationof the production machinesto the production facilities

A B CV1

V2

V3

1 2 3

1 23

2 3 1

Transportation work fo the alternatives:

optimalVariant 1: 70 t x 80 m + 40 t x 100 m + 50 t x 60 m = 12.600 tm

Variant 2: 70 t x 60 m + 40 t x 80 m + 50 t x 100 m = 12.400 tm

Variant 3: 70 t x 100 m + 40 t x 60 m + 50 t x 80 m = 13.400 tm

Sources: Chr.Schulte: Logistik, there: Brankamp, Ellinger/Wildemann, Hammer et al.)loinmf01.ppt

Aims when using Production Planning and Control Systems (PPC)


• High delivery reliability• High and continuous utilization of capacities• Short throughput time (also called lead time)• Low warehouse inventory• Low workshop inventory• High delivery service level• High information service level• High flexibility• Low procurement costs• High material availability• Increase of planning security

loinmf02.ppt Source: Fortmann/Kallweit: Logistics, Stuttgart 2000, p.89

Functionsof

PPC-Systems

Client orders Forecast

MovingPeriod

Planning

Stochast.Planning

Production programm for finished products = Primary requirement with the items: article number,

lots, delivery date

Computer aided net require-ment planning for in-house

products and bought-in parts

Bills ofmaterial

LotOptimi-sation

Availablestock

Production pro-gram (in-houseproducts)

Procurement-program

(bought-in parts)

Production

Finished products

Provision of material Goods receipt

Assembly

IHP BIP

Procurement

Pro-duction-control

Work-shop

Schedu-ling

C o

n t

r o l

P l a

n n i n

g

Workingplans


Deterministic Requirements Planning: Based on Bills of Material

Source: Associated with Oeldorf/Olfert: Materialwirtschaftloinmf12.ppt

1 T12 G1

4 T1 1 T2

1 T24 T1 1 T4

1 T31 G22 T11 G1

E1

Single-level BOM

E1 G1 G2

Name Quantity Name Quantity Name Quantity

G1 1T1 2G2 1T3 1

T1 4T2 1

G1 2 T1 1T4 1

Finished product structure of E1

The deterministic requirements planning normally is used with high-value parts (A-,B-Parts) and is based on orders (resp. expected orders)



1 T12 G1

4 T1 1 T2

1 T24 T1 1 T4

1 T31 G22 T11 G1

E1

Listing of the Structure BOM for E1

NameLevel Quantity

E1

1 G1 1.2 T1 4.2 T2 11 T1 21 G2 1.2 G1 2..3 T1 4..3 T2 1.2 T1 1.2 T4 11 T3 1

Finished product structure of E1

Two Ways of Presentation of Structure BOM


Stochastic Requirements Planning: Types of Models for Consumption

Source: Associated with Oeldorf/Olfert: Materialwirtschaft; REFA: Planung und Steuerung, Teil 2loinmf18.ppt

The stochastic requirements planning normally is used with lower-value parts (C-Parts) and is based on the consumption in the past.

Consumption

TimePure constant-model

Season- constant-model

Season- trend-model

Consumption

Time

Consumption

Time

Consumption

TimePure trend-model


Stochastic Requirements Planning: Forecast Methods


Moving average value = Average consumption over x past periods; at thebeginning of each new period the oldest one is cancelled;suitable for the pure constant model

Weighted moving average value: Each period-consumption corresponds withweight factors: the oldest one receive the lowest weight; suitable for thepure constant model

Regression analysis = Used for the forecast with trend-type function; linear case: y=a+bt ; non-linear: polynomal of n-th order

Exponential smoothing: Most important stochastic method; the new forecast isbuilt from the old one to which is added the with α weighted differencebetween the old actual value and the old forecast value;suitable for the pure constant model; with the exponential smootingof second order it is possible to take into account trend functions ofthe past-consumption values

For season models are suitable mathematic combinations of the above models.


Source: Associated with Oeldorf/Olfert: Materialwirtschaft; Kernler: PPS der 3. Generationloinmf21.ppt

FC Act.

V(11) V(12) V(14)T(11) T(12) V(13) T(13)

Δ Δα αα

Week 11 Week 12 Week 13 Week 14

Vt+1 = Vt + α(Tt-Vt)α = 0,1 ... 0,3

Vt+1: new forecastVt : old forecastTt : actual requirement

of the old periodα : smoothing factor

Consumption

Time

Advantage:Low calculating amount: Onlythe data of the month beforeare necessary (the total pastis involved in the values of the earlier months).; Influenceof the newest values is strongerthan the effect of elder ones.

Effective copnsumptionα bigα small

Stochastic Requirements Planning: Exponential Smoothing

FC Act. FC Act. FC


loinmf24.ppt

Calculation of Material-Availability in the Future by means of a Simu-lation of the Function „Stock over Time“, dependent on Events

Stock

Start-stock

Time

Planned outgoing of material 2)

Planned incoming of material 1)Incoming of material as an effectof computer- planned orders (netrequirements planning program)

Day ofevaluation

1) Possible reasons:- purchase orders- production orders

2) Possible reasons:- material needed for production orders- material needed for sales


Source: Associated with Oeldorf/Olfert: Materialwirtschaftloinbd08.ppt

Top stock T = 3 S

Safety stock S = S

Order point O = 2 S

Deliverytime Delivery dates

Time

Stock of a definite material Ideal Model

Order quantity 2 S

Order

The Order Point System as a function of a PPC System


loinmf26.ppt Source: Chr.Schulte

Optimal Order Quantity Formula, developped by ANDLER :

OptimalOrder Quantity(pieces)

=200 x J x F

E x TWER [%]

J: annual requirement of bought-inmaterial

F: fixed costs of the purchase processfor one orderline

E: delivered price per pieceTWER: Costs of all storage activities

EconomicLot Quantity(pieces)

=200 x J x SC

MC x TWER [%]

Similarly is valid for in-house-products: J: annual requirement of in-housematerial

SC: costs of the set-up process at theproduction machine: once per lot

MC: manufacturing costs for theconsidered in-house part

TWER: Costs of all storage activities


loinmf28.ppt Source: Chr.Schulte: Logistik

Graphical Interpretation of the ANDLER Formula

Costs per Year in €

Optimal Order Quantity

Minimum ofTotal Costs

Order quantityRequirement

per year

Costs of storage (incl. in

terest)

Purchasing process costs

Total costs

Assumptions for the Validity:- Exact knowledge of the requirement per year

- regular consumption- price independent of the lot quantity

- no corresponding parts- exact knowledge of costs


loinmf29.ppt

The calculation of the purchase order date within the requirementsplanning is based on the lead time offset along the structure of the billof material (BOM) plus the delivery time.

Final assembly 4 days

Pre-assembly 3 days

Manufacture ofcomponents 10 days

PurchasingDelivery time 25 days

4

3

10

25

Total throughput time17 working days = 4 calendarweeks

Delivery time25 working days = 5 cal.weeks

Conclusion: The material mustbe ordered 9 calendar weeksbevore the delivery date of thefinal product.


Functions of PPC

loinmf30.ppt

Scheduling: Calculation of the start dates and finish dates of eachoperation without involvement of capacity restrictions

OP1 OP2 OP3

Time

Start Finish

Basic dates from therequirements planning

OP3OP2OP1

Start

Finish=Start

Finish

FinishStart

FinishStartStart

Finish

B B

B=Time bufferT=Transit time

T T


OP2OP1

Functions of PPC

loinmf31.ppt Source: Associated with REFA MLBO Planung und Steuerung Part 3

Variants of Scheduling

Capacity

Time

Capacity

Time

Capacity

TimeS F TS FS=today T

Forward scheduling Backward scheduling Combined scheduling

S=Start dateF=Finish date

T=Target dateS=Start date

Beginning with T, the start date lies in thepast: Changing to Forward scheduling


Functions of PPC

loinmf32.ppt

Possibilities of reduction of the throughput time (TPT)

Actual operationsequence

Shortening ofTransit time

Parallelising

Shortening ofIndividual TPT

Overlapping

TPT

Transit time

Total TPT

TPT

TPT

TPT

TPT

The combination of all actions leads to the

biggest effect.


Functions of PPC

loinmf45.ppt Source: Chr.Schulte: Logistik

Order control by means of order completion confirmation (feedback):

Order-related data:Start and finish dates of all operations, produced quantities, scrap, missed deadlines, processing timesIndividual-related data:Performed working hours, attendance time, illness timeMachine-related data: Output (as percentage of input), work load, amount of time for: set-up, production, idle and hold-upMaterial-related data:Inventory and consumption of material; quality defects; deviation of planned consumption; availability of the needed material

Important: Realtime Feedback


Functions of PPC

loinmf46.ppt

Masterdata are the base of an operative PPC System

Data of workstations

(work center)

Capacity in man hours and machine hours per day:Basic information for the capacity load, base of working plans

Working plans(routing)

Operation sequences; standard times per OP: personal time,machine time, setup time: Base of continuous scheduling

Material-masterdata

Material type: in-house part or bought-in part; in-house productiontime rsp. replenishment lead time; lot-sizing procedure; consump-tion history; requirements indicator (determin. or stoch.)Base of: requirements planning, basic date building, BOM

Bills of material Description of all building blocks and structures; base of require-ments planning, basic date building (lead time offset), in-houseproduction orders rsp. procurement of bought-in parts


Functions of PPC

loinmf47.ppt

Transaction data within a PPC-System

Productionorders

PO-No., article number of the parts to be produced, quantity, date, PO-routing, PO-BOM

Purchaseorders Purchase order no., art. no., quantity, date, vendor, conditions

Independent requirements

Article number, quantity, date

Reservations Article number, quantity, date, connection to PO or CO

StockArticle number, quantity, planning type, storage locationnumber of the material requirements planning group

Planned orders,dependent

requirementsArticle number, quantity, basic dates, pegged requirements


Functions of PPC

loinmf48.ppt

The basic data construction of a PPC-System needsa special sequence

1. Building and storage of material master data2. Building and storage of the master BOM by means of a combination of articles3. Building and storage of work units4. Building and storage of working plans by means of combination of work units

via operation sequences5. Building and storage of supplier master data6. Capture an input of the actual stock7. Input of the independent requirements on the level of finished goods8. Requirements planning: building of planning orders and purchase order proposals9. Convert of the planned orders into production orders

10. Convert of the purchase order proposals into purchase orders


Functions of PPC

„ Distribution Logistics "

Distribution Logistics =

All logistical activities correspondingto the distribution process

Definition:The distribution logistics represents the connection between the production process(industry) rsp. the merchandise provision (commerce) and the client site. It contains all warehousing- and transport-processes of goods to be delivered to theconsumers incl. the corresponding activities of information, directing and controlling.

Aim of the Distribution Logistics:The main aim is the provision of the right goods to the right date in the right quantityand in the right quality, optimising the ratio between the wished delivery performanceand the associated costs.

Main Activities of the Distribution Logistics:The main activities of the distribution logistics are directed at:- the choice of the right locations of the distribution warehouses, - the warehousing itself, - the order processing, - the order picking, - the packaging, - the goods issue, - the load securing and - the transport

loindü02.ppt Source: Ch. Schulte: Logistik, 2. Edition, München 1995, page 275


lohddb04.ppt / Sources: Weber; Kummer: Logistikmanagement, p. 156 andKrampe; Lucke: Grundlagen der Logistik, p. 267ff.

Alternative Distribution StructuresFactory Warehouses:They are used for storing the finishedgoods at the producer site, realising thequantity compensation betweenproduction and transport.Central Warehouses: They contain the full assortment of a company (evtl. from several factories),realising the time- and quantity-compensation between the productionsite and the sales site.Regional Warehouse: Realises the regional presence; thelocation near the clients makes it possibleto transport big quantities over longdistances (producer regional warehouse)Distribution center: In big distribution regions a division intodistribution areas is useful. Activities in distribution centers are order picking andshipping route optimisation.

factoryWare-Houses

centralware-houses

regionalware-houses

distribu-tioncenters

clients

3-leveldistributionwith factorywarehouses

3-leveldistributionwith centralwarehouses




lohddb07.pptSource: Tietz, B.: Handelsbetriebslehre, 1993, p. 797

Costs as function of Decentralisation

Model forcalculating theoptimal number of warehouseswithin thehorizontal distributionstructure

Costs

Centralisation

Number of warehouses

Decentralisation

Costs of warehousing

Freight forreceiving goods

Freight for sending goods


Costs of transportand warehousing

Source: Chr. Schulte: Logistik, 2. Edition, München 1995, Page 279loinds10.ppt

Points of Influence while defining the Number of Warehouse-Levels within the vertical Distribution-Structure

The decision for an adapted number of warehouses depends on the aimsof the company, for example a wishable delivery time.

Costs are caused by:• Number and size of the warehouses• Transhipment and Handling• Costs for transport between the warehouses• Costs of distribution to the clients• Capital lockup (stock)

With a low number of clients and/or big delivery quantitiesa centralisation is possible.


lohddb15.ppt Source: Tietz, B.: Handelsbetriebslehre, 1993, p. 799

Example for forecasting the storage area demand

“Dis

trib

utio

n Lo

gist

ics“

. /.Sales by third-party deals

2004

= Stock sales2004

As-isarea-

produc-tivity

-

Warehouse-area 2004

Forecast

Clearing -difference 1)

Sales 2017

. /.

2017

2017

Requiredarea 2017

Additional Require-ment for Ware-house capacity2004 to 2017

Locations for andtypes of warehouses

1)e.g. by means of anassortement clearingand/or removing of slow-moving items

Sales 2004

Sales by third-party deals

= Stock sales

To-bearea-

produc-tivity

Calculation of the Warehouse Size, based on planned Sales


To-be sales per day: 100 T€Average value per pallet: 500 € 200 pallets per dayAssumptions:• working time: 8 h per day, 300 days p.a., 50 weeks p.a.• 400 different articles, for each a pallet place• Ø delivery time: 2 weeks• Investment price per pallet place

in a warehouse: 600 €

500€

500€ 500

€

500€

500€ 500

€500€

500500 500

500

100 T€daily

200Palletsdaily

500€

500€ 500

€

500€

500€ 500

€500€

500500 500

500

100 T€daily

100 T€daily

200Palletsdaily

Sales p.a.=300•100 T€=30 Mio€Sales per week=30 Mio €/50=600 T€Sales per article per week=600 T€/400=1.500 €

corresponding with 1.500 €/500 €=3 palletsSafety stock=6 pallets (for 2 weeks in „Ideal Model“)Average stock=12 pallets per articleTotal # of pallets: 12•400=4.800 palletsØ capital lockup=4.800•500 €=2,4 Mio€Inventory turnover = 30 Mio€/2,4 Mio€=12,5Warehouse invest=4.800•600€=2,9 Mio€Warehouse performance=200 pallets/8h=25 double cycles per hour

Top stock T = 3 S

Safety stock S = S

Order point O = 2 S

Deliverytime Delivery dates

Time

Stock of a definite material Ideal Model

Order quantity 2 S

Order

lohddb03.pptSource: Schmidt, Klaus Jürgen: Logistik, 1993, p. 194

Global Aims while planning a Distribution System

• To ensure a unified, customer-oriented service at the POS• Minimising the costs of the total supply chain through all distribution levels

Strategies for reaching the Aims• Realisation of a networked traffic organisation• Shorten the stream of goods (commodity flow): With big and often needed

supply quantities use of regional centers (receiving of goods fromthe suppliers and forwarding to the outlets); with small and rare neededsupply quantities use of central warehouses and delivery directly to theoutlets

• Area-wide networking of information• Through shipment with the same packaging and identification


lohddb09.pptSource: Krampe, H.; Lucke, H.-J.: Grundlagen der Logistik, 1993, p. 269f.

Influencual Factors while planning Distribution Systems

• Delivery service (primary goal: reaching a defined logistics service level)• Demand variation (changing of the market requirement: casual, due to

economic situation, seasonal fluctuation)• Customer related criteria (quantity demanded, required assortment, special

needs, geografical allocation of the customers)• Properties of the transport goods (types, quantities, volumes, tolerances,

sensitivities)• Infrastructure (networking of goods traffic, energy and communication)• Environmental impact (ecolocical and social burden for cities and

communities like emission of noise and harmful substances, damages and victims caused by traffic accidents, area requirement and traffic conditions, social consequences for the urban development)

• Costs (for stream of goods, i.e. costs for transport, warehousing, capitallockup and information flow)


lohddb14.pptSource: partially: Wildemann, H.: Das Just in Time-Konzept, p.165

Contract Warehouse and Consignment Warehouse

Idea

Main focus of negotiations

Advantages

Dis-advantages

Contract Warehouse Consignment Warehouse

Third party storage place, nearthe buyer

Changing the property of theproducts to the buyer

Costs don‘t lead to negotiationproblems because normallyrented rooms are used

Marginal transparency for thebuyer; the supplier is notallowed to deliver biggerquantities whenever he wants

The warehouse areas are provided bythe buyer

Amount of warehouse costs = controversial article of a contract

Planning scope for suppliers, stock transparency for buyers, changing of property as well as invoicing at the point of withdrawal

Not suitable for many clients and/orunimportant clients


“For the Succes in Retail there are threeThings important:First the Location,

Secondly the Location and Thirdly the Location!”

lohdds01.ppt Source: Bienert, L.M.:Standortmanagment,Methoden und Konzepte für Handels- u. Dienstleistungsunternehmen, Gabler, Wiesbaden 1996, p. 3, there: Berekoven, L.: Erfolgreiches Einzelhandelsmarketing, Grundlagen und Entscheidungshilfen, München 1990, p.351


lohdds02.ppt Source: Bienert, L.M.: Standortmanagement, Methoden und Konzepte für Handels- u. Dienstleistungsunternehmen, Gabler, Wiesbaden 1996, p. 3-4

Relevance of the Decision on a Location

Choosing of locations are fundamental decisions , which fix the externals marketingconditions (like structure of the competition, traffic connection at al.) and which also arebounded to long-term fixations of internal prameters like operating facilities, personnel orform of contract

“Opening new stores is inherently risky. There are significant monetary costs associatedwith opening a new outlet” ( GHOSH & Mc LAFFERTY 1987, S.1 ). “Large new stores cannow cost many millions of pounds to develop, so the consequences of poor locationdecisions are extremely serious” ( Mc GOLDRICK 1990 , S.183 ).

Decisions on locations are not rapidly or only with extreme costs revisable; the rent-risk withsupermarkets for example amounts from 1 to 15 Mio€ (depending on the size of the rentalobject) with a usual duration of the rent contract of 15 years (HEEGER 1991 , p.92 ).


lohdds03.ppt Source: Bienert, L.M.: Standortmanagement, Methoden und Konzepte für Handels- u. Dienstleistungsunternehmen, Gabler, Wiesbaden 1996, p. 3-4

The achievable sales, made by commercial enterprises, are determined by locationconditions. Disadvantages of the location of an outlet lead quickly and directly to continuous economic consequences.

Good locations are a bottle-neck ( MÖHLENBRUCH & NICKEL 1994, p.4, talk aboutentry barriers in form of slender locations) : The decreasing number of “lucrative“location-alternatives and therewith the increasing risc of poor location decisions point thevalue of careful location analyses out.“Experience becomes a less reliable guide” ( BREHENY 1988, p.41 ).

In contrast to the other marketing parameters the location decision is barely imitable byother commercial enterprises. “ Location is the only marketing mix variable, that cannotbe duplicated” (GOLDEN & ZIMMERMANN 1980, p.119).

Opening of new outlets rsp. the aquisition of existing (competition-) locations are themost effective single measures for realising the (necessary) growth. “The pressure to invest in new outlets increases” (BREHENY 1988, p.42).


Relevance of the Decision on a Location

lohdds04.ppt Source: Bienert, L.M.:Standortmanagment,Methoden und Konzepte für Handels- u. Dienstleistungsunternehmen, Gabler, Wiesbaden 1996 p. 25

Location Dynamic

• Changing of the number of outlets within the considered trading area(closing or new-opening of outlets)

• Quantitative and qualitative changing of existing outlets(especially concerning the size of the sales area, the design of the salesroom and the assortment)

• Development of complete new types of outlets• Changing of the infrastructure (e.g. traffic ways, available types of means

of transportation, all types of building projects), urban development• Changes in the populations structure (e.g. age structure, trends in earnings,

level of education)• Structural and “stylish” changes within the behaviour of the consumers• Political-legal changes of location-relevant basic conditions


lohdds05.ppt Source: Bienert, L.M.:Standortmanagment,Methoden und Konzepte für Handels- u. Dienstleistungsunternehmen, Gabler, Wiesbaden 1996, p. 26

Location Dynamic

Locationcomplexity

TrafficDemandCompetition

...

individualexternalenvironment

Locatio

n Dynamic

Outlet size

Sales roomdesign

Marketing mix...

individualinternalOutlet conception

Living space

Outlets

Business park

2005

2006


lohdds13.ppt Source: Bienert, L.M.: Standortmanagement, Methoden und Konzepte für Handels- u. Dienstleistungsunternehmen, Gabler, Wiesbaden 1996, p. 69

Location Rating by Global Analysis

Start-Infos for a case study:

Sector: Food retailer

Inhabitants within the trading area : ITA = 10.000(Source: e.g. national/ country/ regional statistics; marketing research institutes)

Existing sales area within the trading area (alimentation): ESA = 2.500 m²(Source: e.g. GFK, Nielsen, local companies/ authorities, own investigation)

Average to-be area performance: TBAP = 4.500 EUR/m² and year(Source: e.g. intercompany comparisions, information of associations)

Average efforts for food: AEFA = 1050 EUR / Person(Source: e.g. GFK – indicators of buying power, regional statistics)


lohdds14.ppt Source: Bienert, L.M.: Standortmanagement, Methoden und Konzepte für Handels- u. Dienstleistungsunternehmen, Gabler, Wiesbaden 1996, p. 70

Location Rating by Global Analysis

= 4.200 EUR / m² As-Is area performanceITA x AEFA

ESAThe ratio between the As-Is area performance and the To-be area performance resultsin the competition index; hereby are three constellations possible:

CI =As-Is area performance

To-be area performanceCI = 1 normal competitionCI > 1 weak competitionCI < 1 strong competition

The result here is: 4200 / 4500 = 0,93 ; i.e. the distribution area is slightly„overstaffed“. Opening a new outlet would tend to result into a risky situation,

a cutthroat competition is probable.


lohdds20.ppt Source: Bienert, L.M.: Standortmanagement, Methoden und Konzepte für Handels- u. Dienstleistungsunternehmen, Gabler, Wiesbaden 1996, p.115

Phases of the Location Planning

Choice of a region

Region-pre-selection

Trade arealimitation

punctuallocation analysis

MAKRO ANALYSIS

MIKRO ANALYSIS


lohdds22.ppt Source: Bienert, L.M.:Standortmanagement,Methoden und Konzepte für Handels- u. Dienstleistungsunternehmen, Gabler, Wiesbaden 1996, p. 127

Methods for the Limitation of the Trading Area


Time Distance Method

Retailer location

Living building

Lake

Radii of trading areas

lohdds23.ppt Source: Bienert, L.M.:Standortmanagement,Methoden und Konzepte für Handels- u. Dienstleistungsunternehmen, Gabler, Wiesbaden 1996, p. 141

Methods of punktual Location Analysis

The potential of clients near the projected new outlet-location can befound out by means of interviewing actions.Contents of questions: domicile, buying practice

Location of outletDomicile of clients


SumRanking

Locations

Criteria

No. of parking places

Transport connection

No. of competitors

Image of the comp.

No. of consumers

Buying power

Weight

1....5

Location A Location B Location C

5

2

4

1

4

2

3

5

4

2

2

1

15

10

16

2

8

2

4

4

2

3

3

5

20

8

8

3

12

10

5

2

1

5

5

3

25

4

4

5

20

6

Punkte0...5

Punkte0...5

Punkte0...5PxG PxG PxG

53III.

61II.

64I.


Methods of punktual Location Analyses: Value Benefit Analysis

Definition of Order Picking

„Order Picking" is the combination of determined subsets(articles) from a provided total quantity (assortment), based on demand information.

The following basic functions are necessary with order picking:

• Provision of demand information,• Provision of groups of articles, • Contolled withdraw of subsets from the total quantity,• Planned walking to the withdrawal coordinates and picking action, • Transfer of the subsets to the next process station and signalling the

execution

lohddk02.pptSource: Christof Schule: Logistik


Order-picking warehouse with separated charging and picking

lohddk01.ppt Source: Rudolf Pieper: Auswahl und Bewertung von Kommissioniersystemenp. 8-9


Charging system Picking systemProvisioning system

Variants of Order Picking

static provision dynamic provisioncentral delivery de-central delivery

Source: Rodolf Pieper: Auswahl und Bewertung von Kommissioniersystemenp. 10-11lohddk05.ppt

Man to Goods Goods to Man


Source: Krampe; Lucke: Grundlagen der Logistik, 1993, p. 241lohddk06.ppt

Variants of Order Picking LegendLegend:one zone: one order picking zonemulti zones:many separated order

picking zonesserial: one picking order after

the otherparallel: picking order will be

served in several zonessimultaneously

single-level: customer-related order picking in one step

multi-level: article-related rsp. storage-unit-relatedpicking in the first step, then customer-relatedpicking from theprovided quantities

Order picking systems

one zone

serial serialparallel parallel

multi zones

single-level

multi-level


single-level

multi-level

single-level

multi-level

single-level

multi-level

Example for serial and parallel single-level Order Picking

several sourceslohddk08.ppt

Picking Orders:Client A: 2 x 4711, 1 x 4812, 10 x 5014 and Client B: 3 x 4812, 2 x 4913

article in warehouse

4711 4812 4913 5014

order A

order B

2 1 10

parallel, order-related

3 2serial, order-related

order A

2 1 10

order B

3 2


Σ2 x 4711; 4 x 4812;2 x 4913; 10 x 5014

Picking Orders:Client A: 2 x 4711, 1 x 4812, 10 x 5014Client B: 3 x 4812, 2 x 4913

Example for parallel multi-level Order Picking

4711 4812 4913 5014

2 4 102allorders

114711 1349131212 45 5 5014

order A

order B

4812 45 5 50141. levelparallel

2. levelserial

several sourceslohddk10.ppt

2 1 10

3 2


article in warehouse

Quelle: Chr. Schulte: Logistik, 2. Auflage, München 1995loindw00.ppt

Main Tasks of Goods Issue

The main tasks of goods issue are:• Provision of the articles• Identity- and quality control• Printing of shipping instructions• Combination and packaging of the parcels for each consignment• Provision of the consignments• Loading of the goods


Material Flow Information Flow

loindw01.ppt Souirce: Chr. Schulte: Logistik, 2. Edition, München 1995, page 295 (source there: ZVEI)

Material- and Information FlowWithin the Goods Issue


ProductionWarehouse

Sales DepartmentOrder

Provision of goods Order Copy

Put down of the goods

Control of identityand quantity

fulfilled ?

Rejection

Customer

Combination of theconsignments

Packaging of The goods

Packaging of consignments

Privision ofconsignments

Loading of goods

Printing of shippinginstructions

fulfilled ?

Failure report

Exceeding of delivery date

Delivery datePacking slips

Transport scheduling

Shipping advice

Finishing of shippinginstructions

yes

no

yes

no

Com

plai

nt

Res

hipm

ent

good

s re

ceip

t

Goods Issue

lohddw04.ppt

Goods Issue Posting

Posting data:

• Date• Article number• Quantity• Order item / Project• Stock transfer• Store order item

The accounting will be supported using a posting type key: Herewith are connected logical plausibility checks to ensure

the correct accounting procedure.

• Interface to invoicing• Interface to store settlement• Interface to accounting• Departure warehouse


Client

Client

Client

Client

Client

Hub

Hub

Hub

Spoke

Spoke


Hub & Spoke-System

lohdlt17.pptSource: Wolfgang Oelfke:Güterverkehr-Spedition-Logistik, S. 226

Characteristics of Inland Navigation Vessels

The special suitability of barges as means of transport is the result of

• high performance and load capacity, • save transport process and good suitability for dangerous goods,• any time enough and available cargo hold, • favourable prices, • low ecological damage because of low energy consumption,• reduction of road traffic.

The possible disadvantages are the low speed (which is nevertheless takeninto account), the sporadical dependency on the water level, the glaciationand the relative small waterway net.


Source: http://www.wsv.de/Schifffahrt/Statistik/pdf/Wegelaenge_BRD.pdfdort:

Lengths of Inland Traffic Typesin GermanyRailway: 35.600 kmRoad: 231.581- BAB 12.037- Bundesstr.: 41.246- Landstr.: 86.868- Kreisstr.: 91.430Inland waterway: 7.300Pipelines (Oil): 2.966


Proportion of Main TransportSystems as Part of all Transportsin Germany

Source: http://www.wsv.de/Schifffahrt/Statistik/Binnenschifffahrt/index.html


Cargo Handling (Mio t) of Inland Ports



Transported ton-kilometer on the inland waterways in Germanytotal on the Rhine




Requirement of primary energy in liter diesel per 100 ton-kilometer

Transport range for one tonwith the same energy affort

Emission of CO2 of the different carrier types in gramm per ton-kilometer

The best Protection of the Environment is done by the low Energy Consumption of Inland Navigation Vessels


Source: http://www.shortseashipping.de/de/foto-galerie/fotos/Schubverband_in_Hamburg.JPG

A push tow1

on the Rhine can grow up to 16.000 tons

1) or pushing unit(=Schubverband)



Example of a push-tow with 6 barges and 1 motor ship

Source: http://stahlarbeiter-online.de/links.htm Original: “Die Verhaaven XIII im Sechserschubverband mit Erz”

AMS BARGE IS A KEY ELEMENT IN AN INNOVATIVE TRANSPORT CONCEPT OPERATING IN NETHERLANDS. PHOTOS OF AMS BARGE ARE COURTESY OF SHIPYARD BEGEJ.

Source: http://www.dpc-belgrade.co.yu/gallery.htm


Source: http://www.dpc-belgrade.co.yu/gallery.htm



Types of Business in the Maritime Navigation

With „Types of Business“ the shipping companies indicate the kind of usingthe seagoing vessels for transportation of goods.

Types of Business

Liner traffic Non-scheduled services

conventional container- other types: charterage contractLASH-, (or consecutiveRo/Ro-, Ferry route)



Types of Seagoing Vessels


1. Passenger liner2. Container ship3. General cargo vessel4. Ro/Ro ship5. Supertanker (Oil-tanker)

Important Sea Port – Cargo Handling (Mio t)



„Logistics Performance Measurement“

„Logistics Performance Measurement“= part of logistics controlling by means of

Key Performance Indicators (KPIs)


The most important KPIs within the Procurement Logistics

Purchaseperformance costs of the purchasing department p.a. in EUR

total order value p.a. in EUR=

Costs perorder item

costs of the purchasing department p.a. in EUR= number of order item p.a.

This KPI valuates the performance of the purchasing departement; it indicates, whichorder value was realised per 1 EUR costs of the purchasing department. It is difficultto manipulate this KPI. Example: 50:1

This KPI is necessary for the ANDLER-formula

= sum of price deviations / sum of planned prices x 100 [%]

A negative value indicates a negotiation success because the paid prices werelower than the planned prices.

Purchasesuccess

Sources: Chr.Schulte: Logistik; Praxishandbuch für den Materialwirtschaftsleiter, WEKA-Fachverlag, Augsburg 1996; Abels et al.: Wie gut ist Ihre Logistik ?, Verlag TÜV Rheinl, Köln ´94t

The most important KPIs for warehousing

Average stock = (start stock + 12 ultimo stocks) / 13

Warehouse ex-pense ratio

total costs of warehousing p.a.average stock (capital lockup)

x 100 [%]

Total warehousingexpense ratio

Total warehousingexpense ratio

The costs of warehousing do not contain the interest costs of the capital lockup.

(WER) =

(TWER) = WER + interest for capital lockup

This KPI is necessary for the ANDLER-formula; normal value range: 15 – 25 %



Inventory turnover = warehouse sales p.a. (pieces rsp. value) /average stock (pieces rsp. value)

Range of inventory in months = 12 months / inventory turnover

The inventory turnover is one of the mostly used KPI. The average turnover over the full assortment must be built only via values!

The range of inventory tells us, how long the average stock meets the normal demand without replenishment. The average range must be built using theaverage turnover.

The most important KPIs for warehousing



Logistics cost rate = costs of logistics / sales x 100 [%]

Delivery service level demand of the customer

directly delivered number of pieces of an article= x 100 [%]

Average delivery service level: sales realised / wished sales * 100 [%]

Costs of logistics = depend on the definition, what logistics is: planning of materials,purchasing, goods receipt, included quality control, warehousing, in-house transport,External transport, order picking, packaging, shipping, logistics-IT-system, order processing, production planning and control (PPC) etc.


The most important KPIs for warehousing an logistics


Pick-Rate man hours

number of picked colli= [ pieces per hour ]

The most important KPIs for warehousing an logistics



Delivery reliability total number of delivery positions

number of on-time delivered positions= x 100 [%]

Delivery Time = time between issue of order and disposability for the client

Klaus-Michael Fortmann-Fundamentals of Logistics

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