John Ozment Oren Harris Chair of Transportation University of Arkansas (479) 575-6142 (479) 521-3355 jozment@walton.uark

1. John Ozment Oren Harris Chair of Transportation University of Arkansas (479) 575-6142 (479) 521-3355 jozment@walton.uark.edu

2. Definition of Business Logistics Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements (CLM). Coordination of Activities Flow of Goods Minimum Cost Desired Level of Service

3. Activities To Coordinate Customer Service Order Processing Traffic & Transportation Warehousing Materials Handling Packaging Inventory Control Purchasing Production Scheduling Forecasting Location Analysis Communications

4. (Purchasing) (Operations) (Marketing) Suppliers Firm Customers C C C C C S S S S S Production Processing Repackaging Logistics Flow of Goods

5. Total Cost Approach Consider Total "Relevant" Costs Take Advantage of Cost Trade-Offs Avoid Suboptimization

6. President VP Marketing VP Operations VP Finance Bookkeeping Capital Budgeting Financial Management Etc. Sales Advertising Marketing Research Etc. Machine Shops Welding Shops Assembly Lines Etc. Traditional Organization Chart

7. President VP Marketing VP Operations VP Finance Bookkeeping Capital Budgeting Financial Management Etc. Sales Advertising Marketing Research Etc. Machine Shops Welding Shops Assembly Lines Etc. Traditional Organization Chart Customer Service Part of Order Processing Field Whsing Location Analyses Traffic Scheduling Raw Materials Whsing Packaging/Handling Part of Order Process Inventory Forecasting Communications

8. Development of Business Logistics Military Experience Development of the Marketing Concept Proliferation of Products Rising Transportation Costs Technological Peak Knowledge of Inventory Recession of 1958 Development of the Computer Creative Uses of the Computer

9. Educational Focus on Logistics Harvard Air Freight Study (1956) Bowersox's Textbook (1961) CLM (1963) Organizational Name Changes Supply Chain Management

10. Harvard Air Freight Study Knowledge of Inventory Carrying Costs Application of Pareto’s Law Focus on Total Costs/Cost Trade-offs Use of Premium Transportation

11. Harvard Air Freight Study Knowledge of Inventory Carrying Costs Application of Pareto’s Law Focus on Total Costs/Cost Trade-offs Use of Premium Transportation

12. Elements of Inventory Carrying Costs Interest and Opportunity Cost 10-20 % Storage and Handling 8-14 % Depreciation and Obsolescence 6-12 % Insurance and Taxes 2 -3 % Total 25-50 %

13. Harvard Air Freight Study Knowledge of Inventory Carrying Costs Application of Pareto’s Law Focus on Total Costs/Cost Trade-offs Use of Premium Transportation

14. Percent of Sales 100 95 80 A B C 50 20 100 Percent of Items ABC Analysis

15. Harvard Air Freight Study Knowledge of Inventory Carrying Costs Application of Pareto’s Law Focus on Total Costs/Cost Trade-offs Use of Premium Transportation

16. Focus on Total Costs/Cost Trade-offs Savings from Inventory Consolidation vs Added Transportation Costs

17. Harvard Air Freight Study Knowledge of Inventory Carrying Costs Application of Pareto’s Law Focus on Total Costs/Cost Trade-offs Use of Premium Transportation

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