03 - Logistics - ISC

Basic concept
Transporting goods.

Objective: Deliver right quantities at the right moment in the right pale

It includes:

• Warehousing
• Manipulation
• Tansport

Warehouse classification

based on products:

• Semifinished
• Finish
• raw materials

Based on distribution

• Central
• Staggered
• transit

Legal:

• Owned
• Rented

Preparations

• Manual
• Automatic
• Picking

Logistic functions

• Logistic design
  • Define location
  • Numbers
  • warehouses
• Sotcks
  • Safety stock policy
  • Planning
  • Administrative control
• Preparations
  • Reception
  • #Order preparation
  • Load & unloading
• Transport
  • Long distance
  • widespread distribution
• Information
  • Customers
    • Internal:
    • External: clients
  • Other internal areas
• Future actions
  • Reverse logistics
  • Recover consumed product
• Customer service
  • Manage deliveries
  • Incidents

Order preparation

The order preparation is the most critical activity

Main objective is to deliver best service to customers

Determines critical aspects:

• velocity
• accuracy
• reliability
• information

Key aspects in cost:

• Picking is more than 50% total warehousing cost
• NO QUALITY (every non sellable product) has a huge cost

Main activities

• Order capture
• Order management
• Documentation
• Picking
• Movement to load zone
• Checking and product accomodation

Distribution models

• #Direct distribution
• #Staggered distribution
• #Central warehouses

Direct distribution

• Direct from factory to consumer
• Avoid intermediate products
• Requires high flexibility to have a quick & reliable response to customers

Staggered distribution

• Based in one or some central warehouses thar receive product from factories / suppliers and deliver to second raw of regional warehouses
• Requires high investment on infrastructure & duplicated stock
• Give a very quick response to customers

Central warehouses

• Eliminates the need of regional warehouses and uses Cross-docking platforms to deliver
• The product can be delivered to this Cross-Dock platforms from different locations and there it occurs the group preparation
• Less infrastructure even big spaces are needed

Cross-dock platform is a place where the product is not stopped or stored. Funge tipo smistamento treni.

Reverse Logistics

• What is reverse logistic
• Direct vs Reverse logistic
• Reverse logistic process

Reverse logistics

• Processing returned products for reasons such as damage, seasonal, restock, recall or excess inventory
• Recycling packaging materials and reuse
• Reconditioning and remanufacturing products
• Obsoletes
• Hazardous material programs
• Asset recovery

Sometimes, is cheaper to leave the product to the consumer.

Direct vs reverse logistic

• In Reverse logistic we don't know how many products we will have to return
• Transport is from many to one
• Non uniform quality
• Non uniform price
  • Costumer buys at discount and returns at full price
  • There is a discount if you buy a lot of units. If you don't return all of them, it becomes more complicated
• Revers cost is not always visible - there are hidden costs
  • Costumer is not home when the courier comes to pick up the return
• Complex inventory management
• Complex product lifecycle
  • Ex. food - if it has expiration date, it will be closer to expiration at return
• Speed is not critical

Costs

• Transport
  • Higher cost due to more kilometres
• Thied
  • Less probability of item being stolen
• Obsolete
  • Products are more obsolete
• Pickup
• Condition
• Quality

Process

!! We refund as soon as we get the product. We check quality after.

After return, the product can go back to inventory, or to secondary market

Key factors for logistic success

MERCADONA automatic warehouse:

• Everything is automated -> prevent a lot of physical work
  • Workers have more of a supervision and maintenance work
• They manage 6000 kind of products - diveded in 2 categories
  • High rotation products (milk, water) --> they send the full pallet to the shops, without picking
  • Low rotation products (spices bottles - you cannot ship 3000 of them at the same time)
• They take into account several factors to assemble the pallets
  • Volume
  • Fragility
  • Weight
• 1200 pallets/day
• 1 pallet in 2/5 min
• 24h per 6 days
• In 3 days, they pick up lettuce in field and get it ready in the supermarket

Costumer service

Services provided to customers before, during and after purchase

It is the area of any organization that is responsible for answering questions, complaints, doubts and comments...

TRADE-OFF

• Do everything the costumer wants
• Be very profitable

Costumer satisfaction = Perception - Expectation
Deliver always more than is expected.

KPI

B2B

• Order fill rate
• Line fill rate/item fill rate
• On time delivery
• Quality of delivery/delivery accuracy
• OTIF (On Time and In Full)

B2C

• Index of costumer satisfaction (CSAT)
• ???

CRM : Costumer Relationship Management

Companies spend a lot of time to sell a product. They spend even more time for cross sales: extras to the product the costumer is buying.

Functions and role

• Master data
  • Ensure to have the right data
    • Costumer
    • Material
    • Price
• Back office - they work without contacting the costumer
  • Enter orders
  • Enter sales condition
  • Ensure right portfolio alignment
• Front office
  • SPOC - Single Point of Contact to costumer
  • Manage costumer incidences
  • Invoice accuracy
  • Costumer collaboration
• Stock control tower
  • Prevent OOS -
  • Stock availability and assigment
  • Delivery creation warehouse
• Claims
  • Managing incidences in quality, price...

Order To Cash (OTC) - Process that begins with the client set up and order and ends with delivery and payment.

Things needed in CS

• Excellence in service
• empathy
• people first attitude
• excellence in operation
• problem solving mentality
• excellence communication and proactivity

Outsourcing