Lecturer: Max Galarza

Students: Sergio Rosero

Gabriela RoseroJocelyne BarreraKelly ZambranoJavier Mackliff

Course: 6th AGrade: 10

Date: August 26, 2015

LOGISTICS II

• The path through which goods and services travel from the vendor to the consumer or payments for those products travel from the consumer to the vendor.

• Can be as short as a direct transaction from the vendor to the consumer, or may include several interconnected intermediaries along the way such as wholesalers, distributers, agents and retailers.

• Channels are broken into direct and indirect forms.

• It is necessary to determine correctly the channel you are going to use, so the company can supply the customer needs.

Direct and Indirect channels• "direct" channel allowing the consumer to buy the good

from the manufacturer • "indirect" channel allowing the consumer to buy the good

from a wholesaler. • Direct channels are considered "shorter" than "indirect"

ones.

Rol of intermediaries• Own the product at the time and facilitating the

transfer of ownership of the product

• Consumer search• Provider search• Storage• Price equilibrium • Financing• Services• Packaging of • Product approach• Promotion

Brokers commitments with producers• Determination of prices• General conditions of sale• Definition of the geographic area• Specification of all the details

• So on brokers can determinethe risk of the transportation ofthe goods.

Design of distribution channels It requires a well-organized method for designing channels that satisfy customers and overcome competition. There are 4 choices:

1. Specify the distribution function2. Select the type of channel 3. To determine the intensity distribution 4. Select specific members of the channel

LOGISTICS NETWORK CONFIGURATION

The Logistics NetworkThe Logistics Network consists of:

• Facilities:Vendors, Manufacturing Centers, Warehouse/ Distribution Centers, and Customers

• Raw materials and finished products that flow between the facilities.

Network Design: Key Issues• Pick the optimal number, location, and size of warehouses and/or plants.

• Determine optimal sourcing strategy• Which plant/vendor should produce which product

• Determine best distribution channels• Which warehouses should service which customers

OBJECTIVE OF LOGISTICS MANAGEMENT

Design or configure the logistics network so as to minimize annual system-wide cost subject to a variety of service level requirements

Network Design: Key IssuesThe objective is to balance service

level against

• Production/ purchasing costs

• Inventory carrying costs

• Facility costs (handling and fixed costs)

• Transportation costs

That is, we would like to find a minimal-annual-cost configuration of the distribution network that satisfies product demands at specified customer service levels.

Network Design Tools:Major Components• Mapping

• Mapping allows you to visualize your supply chain and solutions• Mapping the solutions allows you to better understand different

scenarios• Color coding, sizing, and utilization indicators allow for further

analysis• Data

• Data specifies the costs of your supply chain• The baseline cost data should match your accounting data• The output data allows you to quantify changes to the supply chain

• Engine• Optimization Techniques

Mapping Allows You to Visualize Your Supply Chain

Data for Network Design1. A listing of all products2. Location of customers, stocking points and sources3. Demand for each product by customer location4. Transportation rates5. Warehousing costs6. Shipment sizes by product7. Order patterns by frequency, size, season, content8. Order processing costs9. Customer service goals

Customers and Geocoding• Sales data is typically collected on a by-customer basis• Network planning is facilitated if sales data is in a geographic database

rather than accounting database1. Distances2. Transportation costs

• New technology exists for Geocoding the data based on Geographic Information System (GIS)

Aggregating Customers• All customers within a single cell or a single cluster are replaced by a single customer located at the center of the cell or cluster.

We refer to a cell or a cluster as a customer zone.

Impact of Aggregating Customers• The customer zone balances

1. Loss of accuracy due to over aggregation

2. Needless complexity• What affects the efficiency of the aggregation?

1. The number of aggregated points, that is the number of different zones

2. The distribution of customers in each zone.

3. Reduction of transportation costs

Displaying the Solutions Allows you To Compare Scenarios

Is not the same to have a massive production and send it to all the country, thanHaving a low production and assume the costs of sending to everywhere.

Netgraphy

• http://es.slideshare.net/laubalez/logistics-distribution-channel

• http://info.cba.ksu.edu/ehie/Faculty Site Templates/MANGT 662/Logistics Network Lecture.ppt

• http://www.inboundlogistics.com/cms/article/using-social-networking-for-logistics/