2015.09.30.

Definition of logistics (Nr.1)

LOGISTICS Tamas Mankovits, PhD associate professor

Definition of logistics (Nr.2) • Logistics is the process of planning, implementing, and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of meeting customer requirements. (Reference: Canadian Association of Logistics Management, 1998)

• Logistics is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements." Note that this definition includes inbound, outbound, internal, and external movements, and return of materials for environmental purposes. (Reference: Council of Logistics Management, 1998)

Definition of logistics (Nr.3) • Logistics must ensure that a recipient is supplied from a point of origin in accordance with his requirements with the correct product (in quantity and variety), in the right condition, at the right time and in the right place at minimum cost. (Pfohl, 2004)

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Definition of logistics (Nr.4) • Logistics is that part of supply chain management that plans, creates and monitors the efficient, cost-effective flow and storage of goods, semi-finished items and manufactured products as well as related information between the point of origin and the point of consumption in order to meet customers' requirements. (Council of Supply Chain Management Professionals, 2007)

Evolution of material handling and logistics

Evolution of material handling and logistics • Historical background • Logistics has been playing a fundamental role in global development for almost 5,000 years now. Since the construction of the pyramids in ancient Egypt, logistics has made remarkable strides. Time and again, brilliant logistics solutions have formed the basis for the transition to a new historical and economic era. Examples of this fundamental progress include the invention of the sea-cargo container and the creation of novel service systems during the 20th century. Both are integral parts of globalization today.

Evolution of material handling and logistics

• Around 2700 B.C.:

• Around 300 B.C.:

• Material handling technology in pyramid construction. Blocks of stone weighing several tons were transported and assembled at the construction site. • To build the Great Pyramid of Giza, which is 146 meters high and weighs 6 million tons, the Egyptians needed sophisticated material transport equipment capable of moving the massive building blocks and putting them into place. Even today, we still cannot fully explain how this level of precision was achieved using the hoisting equipment and means of transport available around 2700 B.C.

• Revolutionary Greek rowing vessels – the new foundation of intercontinental trade. • The revolutionary invention of rowing vessels created the basis for rapid travel across the high seas. This invention formed the foundation for the creation of enormous logistics supply systems required by mobile army camps. Using these logistics capacities, Alexander the Great undertook campaigns with his troops, their families and their weapons of war that extended all the way to India.

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Evolution of material handling and logistics

Evolution of material handling and logistics

• Around A.D. 700:

• Around 1200:

• Procurement logistics in the construction of the Mezquita Mosque – pillars came to Spain from all parts of the Islamic empire. • Construction of the famous Mezquita Mosque in Cordoba, Spain, began in 756 under the Caliph of Cordoba in the Umayyad dynasty. It is considered to be the largest mosque in Europe. Extraordinary procurement logistics was required to transport the pillars of the mosque from all parts of the Islamic empire.

• The international network known as the Hanseatic League – cooperation for transport bundling and international sea transport. • In 1188, the city of Hamburg, Germany, was founded as a base on the North Sea for the Hanseatic League to make travel on the sea more secure and to represent business interests abroad. Up to 200,000 fur pelts were transported by a single Hanseatic cog ship. Hanseatic trade extended from the Black Sea to Reval. From a modern-day vantage point, the league’s cross-border trade bears strong similarities to the European Union.

Evolution of material handling and logistics

Evolution of material handling and logistics

• Around 1500:

• Around 1800:

• Progressive postal service in Europe – the first timedefinite mail shipping service. • Under an agreement with Philipp of Burgundy, Franz von Taxis organized the first postal service with strictly defined transit times. Letters were delivered to places such as Paris, Ghent, Spain and the imperial court of Vienna. In view of the infrastructure of the times and the political fragmentation created by the array of small principalities, the mail reached its destination with very little delay.

• Discovery of new road conveyances and the railroad–expansion of logistics tasks through new technologies and means of transport. • The practical use of the steam engine, the invention of vehicles, railroads and ships as well as the discovery of crude oil ushered in a new economic era that generated new missions, tools and opportunities for logistics.

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Evolution of material handling and logistics • Around 1940: • Military logistics during the world wars – transfer of military logistics concepts to the business world. • During World War I, military logistics was the vital link in the network that supplied troops with rations, weapons and equipment. With the onset of World War II, logistics was further refined. As a result, logistics gained an important place in the business world as well.

Evolution of material handling and logistics

Evolution of material handling and logistics • 1956: • Invention of the sea container – structural evolution of world trade and the boom of international flows of goods. • The invention of the sea container by the American Malcom P. McLean changed production conditions for nearly all industries around the world and, as a result, altered people’s consumption habits. Even today, the sea container continues to ensure that harbors gain major contracts, new countries and regions experience commercial booms, markets arise and products from all parts of the world can be bought and sold at reasonable prices. In this way, the container has significantly contributed to globalization.

Evolution of material handling and logistics

• Around 1970 – 1980:

• Around 1990:

• Kanban and just-in-time – logistics concepts with a special emphasis on procurement. • The Kanban and just-in-time (JIT) concepts were developed and introduced at Japan’s Toyota Motor Co. by Taiichi Ohno – with the objective of effectively linking logistics to other operational functions. Special emphasis was placed on procurement.

• QR and ECR technologies – logistics concepts with a special emphasis on distribution. • The quick response (QR) and efficient consumer response (ECR) technologies were developed during the 1990s and applied by many retail and wholesale companies. These technologies had a major impact on logistics. As a result of this technology, distribution centers are tasked with moving goods instead of storing them. This allows companies to accelerate reaction times to market developments and to set up efficient goods-supply systems.

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Evolution of material handling and logistics • Today:

Evolution of material handling and logistics • Today:

• Supply chain management – a look at the entire logistics chain from the vendor’s supplier to the end customer. • Supply chain management is a term that has grown enormously in use and significance since the late 1980s. Today, supply chain management is viewed as a holistic consideration of key business processes that extend from the vendor’s supplier to the end user. Accordingly, supply chain management is an extremely interactive, complex system requiring simultaneous monitoring of many conflicting objectives.

Evolution

• Advancing globalization – efficient logistics as a competitive edge in the era of globalization. • Global competition began to arise and spread in the 1970s and accelerated in the 1990s. Globalization is still moving forward today. Efficient logistics creates a crucial competitive edge for companies that are expanding in global markets. Successful logistics efforts in international supply chains can fuel the development of global markets.

Evolution • beating the gravity, lifting loads (lifting equipments/devices, elevators) • transportation of large amount of materials (transport equipments, conveyors) • facilitate of hard physical work (mechanized material handling) • material handling systems (utilization of production equipments, reducing the transit time of the product, reducing stocks) • the complex span of the production-market, connection of the material and the information flow (logistics) • supply chain • global logistics

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The aim of the logistics 7 rights in logistics: • Right product - delivered to the customer/client. Needs to meet customer specifications • Right customer - receiving the goods they require • Right time - when the customer can take delivery • Right place - no good at the wrong place • Right condition - working and undamaged • Right quantity - no good being one piece short of the required number • Right cost.

Further aims • • • • • • • • • • • • • • •

shorten delivery/transport time reduce transit time the maximum capacity utilization minimize the stocks reduce costs, increase efficiency create increased flexibility and increase transparency ensure quality development of internal and external recycling low-load environment (emission) application of environmentally friendly technologies achieving high transmission capacity enhancing international cooperation increase customer satisfaction increase efficiency

COMPANY LOGISTICS -conception -design of the logistics system -supervision and operation of the logistics system

tactical level

transportation loading storage formation of loading units packing collecting and classifying communication supervision management energy flow information processing financial activities

PURCHASING/ PROCUREMENT LOGISTICS -determination of delivery terms -select suppliers -orders dispositions; -deadlines determination

PRODUCTION LOGISTICS -production design -determine material flow -material handling system design -information flow design -logistics system management, control

DISTRIBUTION LOGISTICS -survey and assessment of market needs -place orders -order planning -service provision

RECYCLING LOGISTICS -making certain waste collection points -waste collection system design and management -recycling planning and management

operative level

• • • • • • • • • • • •

Logistics divisions at a company strategic level

Logistics operations

-transshipment -transportation -loading -control -formation of loading units -storage

-production, assembling -work service -inter-operation transport and storage -picking

-finished product storage and classifying -packing -formation of loading units -landing -delivery

-waste storage, classifying, loading and delivery -waste redelivery

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Material and information flow DELIVERY (in)

RAW MATERIAL WAREHOUSE (RMW)

PURCHASING

Closed chain complex material flow system TRANSPORT, STORAGE, LOADING BETWEEN PLANT PARTS

RAW MATERIAL STORAGE

FINISHED PRODUCT WAREHOUSE (FPW)

DELIVERY (out)

PRODUCTION RAW MATERIAL RECEPTION, LOADING

INTER-OPERATION TRANSPORT, STORAGE, LOADING IN TECHNOLOGICAL PROCESSES

WORKING PLACE SERVICE: LOADING, TRANSMISSION, DOSAGE, DELIVERY

SUPERVISION/ CONTROL, PACKING, FORMATION OF LOADING UNITS

TECHNOLOGICAL WASTE, USED PRODUCTION EQUIPMENT RECYCLING

INTERNAL RECYCLING

FINISHED PRODUCT LOADING

EXTERNAL RECYCLING

FINISHED PRODUCT DELIVERY

EXTERNAL TRANSPORT, STORAGE

RAW MATERIAL DELIVERY

ORDER PROCESSING

SALE

material flow

EXTERNAL TRANSPORT, STORAGE

ORDER

FINISHED PRODUCT STORAGE

REPROCESSING

DISASSEMBLY

EXTERNAL TRANSPORT, STORAGE

COLLECTION OF OLD PRODUCTS

COSTUMER

information flow SUPPLIER

Material flow structure MATERIAL FLOWSYSTEM STRUCTURE OF A PRODUCTION COMPANY

MATERIAL HANDLING OUTSIDE THE COMPANY

LOADING

MATERIAL HANDLING INSIDE THE COMPANY, BETWEEN PLANT PARTS AND WAREHOUSES

TRANSPORTATION

MATERIAL HANDLING IN TECHNOLOGICAL PROCESSES

STORAGE

PACKING

WORKING PLACE SERVICE

FORMATION OF LOADINGUNITS

MATERIAL HANDLING INSIDE THE WAREHOUSE

COLLECTING AND CLASSIFYING

"LTS" OPERATIONS

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