CHAPTER 1: Business Logistics and the Supply Chain

1. What is supply chain management? Compare it with

business logistics management.

The Supply Chain Management is an integration of activities

functional that supply (materials, transport, inventory control, flows,
services, etc.), converted into intermediate goods and final products for a client
final. The activities include purchasing and outsourcing activities, plus many more.
more functions that are important for the relationship with suppliers and distributors.
In practice, it is very difficult to separate the management of logistics from business.
supply chain management.

On the other hand, the logistics department is responsible for controlling the flow and
efficient and effective storage of goods and services, as well as of the
information related, from the point of origin to the point of consumption, with the
in order to meet the requirements of the customers.

The definition implies that logistics is the coordinated direction of activities

related and a part of the supply chain process, not the entire process.

2. Describe the logistics of the business as you would expect it to be practiced.

in the following countries or regions:

United States: It utilizes logistics in transportation issues as it being a

A large country takes time and money to move products from a certain place.
place to another, incurring monetary factors depending on the distance and
type of transport to be used.

Japan: They base their logistics on the introduction of raw materials for
manufacturing it, achieving savings in the production stage, and its subsequent
export to other countries.

European Union: The transport and logistics sector in the European Union continues
characterized by a high degree of atomization and exchange among its
members of their semi-finished and finished products by the different
means of transportation.
 Australia: Considers logistics as essential for this country as it requires
as a resource to supply products and goods that are not produced in their territory.

South Africa: Scarce logistics regarding transportation, infrastructure, policies

of the state, environment, means of production, related to mobility no
The time generated by transportation is minimized.

China shares the same logistics ideology as Japan.

Brazil: Considering it as an emerging economy, it should have improvements.

strategic logistics for the mobility of resources within their territory;
A proof of this is that there is no distribution of resources in the different areas.

3. Summarize the factors and forces that give importance to logistics among others.
functional areas (marketing, finance, production) of a company.

Customer Service Standards

Demand forecast
Distribution communications
Inventory control
Material handling
Order processing
Parts and service support
Selection of factory and storage location
Purchases
Packaging
Management of returned goods (Reverse Logistics)
Removal of merchandise
Waste
Traffic
Transportation
Storage and provision.

4. Comment on the similarities and differences in logistics management.

of a manufacturing company and

A service company (bank, hospital, etc.)

 Just like manufacturing companies, a service one seeks to reach
finally to the client through advertising that grabs their attention and with
a fixed price that is acceptable to them. There is increasingly more
market competition that both the service company and the
manufacturer tries to add value to its product or service with the sole
purpose of satisfying its customers.
Bad logistics can lead to losing money, resources, and therefore
get us out of the business.

Non-profit organization (symphony orchestra, art museum, etc.)

It may happen that the staff does not maintain a good work pace and therefore
affects the organization causing a final product of poor quality
due to the times in logistics.

Military industry
It allows us to identify and recognize possible internal and external threats.
through strategies select the critical places to designate the
necessary resources to safeguard the interests of the nation.

A retail company (general merchandise, fast food, etc.)

Find a way to reach the customer and make their products
distribute in the shortest time possible and the replenishment is done
immediate manner.

5. Comment on the role that effective and efficient logistics systems play
to promote a high level of foreign trade.

The logistics system plays an important role in the handling of products and
services, being one of the links to fulfill customer deliveries in
the place and moment required for its consumption.

In this way, we observe how over time it has been evolving.

in companies, the topic of logistics has reached the point of discussing its execution today
in an effective and efficient manner, referring to the flow and storage of
goods and services, thus providing the supply chain with a
notable improvement in the process, leading to generating added value for
customers, suppliers, and shareholders.
 Now, if we place this practice in a global context and analyze it from
look for the payment granted to promote international trade
We can observe how low-cost transportation will help countries to
trading with one another and obtaining comparative economic advantages, as
the price on the ground of imported products would be lower than that of the available ones
locally. This is how it can be observed that the production of some
Products may be limited in some areas of the world, where their costs
are inferior, either due to the excess of the raw material, or due to their low cost of
operation. And the consumer markets are located in other parts
of the world, playing an essential role in the activities of logistics.
bridge between production locations and market locations, separated by the
time and distance; where the effectiveness and efficiency of logistics will be the
in charge of defining the final costs of the product and its continuity
business relationships between producers and marketers of the product or
service.

6. Why can Marketing and production claim that some or all of the
Logistics activities are part of your area of responsibility.

Companies are currently made up of two main areas.

which are Marketing and production, where it is clearly
conceived and coordinated, they can effectively direct the activities of
logistics without having to create an independent area for its management. Each one of
these areas create value different from the product, in the case of Marketing it is
primarily responsible for market research, promotion, management
from the sales force and the product mix, creating value for the product
of Possession. Production, on its part, will be responsible for the creation of the product or
service, having the responsibilities of quality control, planning of
production and scheduling, job design, planning of the
capacity, maintenance, and working measures which create a value of possession;
and logistics would be responsible for transportation, inventory, order processing
and materials management will provide the product with a value of time and place.
This is how these product flow activities must be a
coordinated process within Marketing, production, and logistics, being
always directed collectively in order to achieve service objectives
established clients

7. What are the key activities of the logistics function of the

business? Comment on its existence and importance for management of:
 A manufacturer of television sets (Sony)
A musical group on tour (Berlin Philharmonic)
a hospital (Massachusetts General)
The government of a city (New York City)
A fast food chain (McDonald's)

The key activities of the business logistics function are as follows:

Customer service standards
Transport
Inventory management
Information flows order processing

At the same time, the following support activities are deployed from these:
Storage
2. Materials Management
[Link]
4. Protective packaging
5. Cooperation with production
6. Maintenance of information

The existence and importance for each of the following cases:

a. A television manufacturer (Sony): Being a company that

To produce a product, it is essential to take into account the 4 key activities of logistics.
of business, since each of them provides the customer with value to the product
acquired.

Customer service standards: Determine the needs and requirements of

client, as well as the times and service levels.

Transportation: Determines the costs of moving goods from the

factory up to the points of obtaining the product, adding value of location to the
product.

Inventory management: Determines product availability by ensuring the

coverage between supply and demand, adding time value to the product.

Information flows for order processing: Determines the times of

 company's reaction to deliver the product to the customer at the agreed location.

b. A musical group on tour (Berliner Philharmonic): Being a company that

When producing a service, it is essential to take into account the 3 key activities of logistics.
business, these are:

Customer service standards: Determines the needs and requirements of

client, as well as the times and service levels.

Transport: Determines the costs of moving the musical instruments and

the artists to the place where the event will take place.

Information flows order processing: Determines the times of

company's reaction to delivering customer service at the agreed location.

c. A hospital (Massachusetts General): Being a company that produces a

service must take into account the 3 key activities of logistics
businesses, these are:

Customer service standards: Determine the needs and requirements of

client, in addition to the times and levels of service.

Information flows order processing: Determines the times of

company's reaction to delivering customer service at the agreed location.
Inventory management: Determines service availability by ensuring the
coverage between supply and demand, adding time value to the service.

d. The government of a city (city of New York): Being a company that produces
a service must take into account the 2 key activities of business logistics,
these are:

Customer service standards: Determines the needs and requirements of

client, in addition to the times and levels of service.

Information flow order processing: Determines the times of

reaction of the company to deliver customer service at the agreed location.

e. A fast food chain (McDonald's): Being a company that produces a

product and a service, must take into account the 4 key activities of logistics
in business, since each of them provides the customer with value to the product
acquired.

Customer service standards: Determine the needs and requirements of

client, in addition to the times and service levels.

•Transport: Determines the costs of moving goods from the

factory up to the points of obtaining the product, adding value of place to the
product.

Inventory management: Determines product availability by ensuring the

coverage between supply and demand, adding time value to the product.

Information flow order processing: Determines the times of

company's reaction to deliver the product to the customer at the agreed location.

8. How do you think international logistics differs from domestic logistics?

a company with global operations?

The difference between international logistics and global logistics is that logistics
international trade is conducted from a single country exporting and importing products
services to other countries, where the company does not make investments outside its country.
The logistics of a company with global operations is aimed at all countries.
and where they market their products with the same image and/or brand everywhere
markets, they also have investments in different countries, where logistics
implemented by these companies extends to every corner where it
they distribute their products or services.

9. Suggest some products that significantly benefit from a

increase in the value of time and place.

In general, all products that are marketed outside of their area of

influence can benefit from an increase in the value of time and place,
but to mention a few examples:
Heineken beer that is marketed as imported beer and therefore is from
higher price than the nationals, which prompted Postobon to create a plant
brewery for its production and subsequent distribution, having said that it is assumed that
The costs to the end customer should decrease and thus increase their consumption.
by being more competitive at the price level.

All products that are marketed to chains dedicated to importation, type

Price Mart, where you can find everything from televisions to cosmetic soaps
passing through all kinds of food. Large-scale imports make that
logistical costs decrease as the proportion for absorbing them increases. By
they become more accessible to the end customer and open up the selection spectrum
consumption.

10. Establish logistics as a separate area from management within a

business company creates an additional set of interface activities.
What are interface activities? Why would it cause concern in the
most companies the creation of an additional set of
interface activities?

An interface activity is one that cannot be effectively directed within

of a functional area. The interface is created by the arbitrary separation of the
activities of a company in a limited number of functional areas.
It serves as a connection between functional areas.

The creation of an additional interface set means the creation of another group.
functional, where each functional group has its own objectives which
it leads to a fragmentation of interests and a possible lack of coordination
among logistics activities as a whole. This can have repercussions on the
customer service or increase costs. Conflicts may arise.
international cooperation since each department can turn into
on islands.

Political and economic barriers continue to fall between some countries.

of the European Union. If you were the physical distribution director for a
multinational company that sells finished goods in its own country to
consumer (for example, Procter & Gamble from Italy), what decisions regarding
What distribution will face in the future?

Evaluate logistics costs and compare them with the tariffs involved in exporting
to other countries and consider things like:
Is there actually a decrease in transportation?
 2. What is more cost-effective in terms of logistics, to create a company in
another country or create a distribution center in strategic locations?
3. Do tariff policies benefit the cost of the product to the customer?
final?
4. The extensive connection that Europe has in transportation modes and its
Does full utilization for distribution favor the value of time and place?
5.
12. Suppose that a manufacturer of men's t-shirts can produce a
dress shirt at its plant in Houston, Texas, at $8 per shirt (including
the cost of raw materials). Chicago is an important market with 100,000
shirts per year. The shirt costs $15 at the Houston plant.
The transportation and storage charges from Houston to Chicago
They are $5 per quintal. Each packed shirt weighs one pound. As
Alternatively, the company can have the shirts produced in Taiwan for $4.
per unit (including the cost of raw materials). The raw material weighs
1 pound per shirt, and it would be shipped from Houston to Taiwan at a cost of $2
per quintal. When the t-shirts were manufactured, they would be shipped.
directly to Chicago at a transportation and storage cost of $6
per quintal. An import duty of $0.50 per shirt is charged.
From a logistics/production cost perspective, should it be
produce the t-shirts in Taiwan? b. What other considerations, besides
from the economic aspects, they could be taken into account before making a decision
final?

Demand 100,000/year
Cost of sales $8

Houston Chicago Taiwan

Production costs $ 8,00 $ 8,00 $ 4,00

 Transportation costs $0.05 $0.02

Cost Taiwan -
Chicago $0.06

Tariff $0.06

$ 8.00 8.05

Conversion

Houston to Taiwan

$2 Quintal 1Lb $0.02 For shirt

Quintal 100Lb mother first shirt

Houston to Chicago

$5 Quintal 1Lb $0.05 For shirt

Quintal 100Lb first shirt

From an economic point of view, the shirts could be produced in Taiwan.

but additional aspects must be taken into account such as:

a. International treaties that promote exchange

b. Internal policies that may affect trade agreements in the future
c. Social and political stability. The lack of these can have negative repercussions.
Environmental policies that must be addressed by the company
depending on their production waste.

13. Use the following forms as part of a class exercise. Get ready.
to discuss your options and to compare them with your peers.
Identify the common elements that make some companies
they are logistically successful and the elements that are missing (among others) and that
they lead to logistical and supply chain failures.
Many companies use the strategy of logistics and supply chain
supplies as a central element in their corporate strategy.
Identify those companies that have succeeded due to execution.
its logistics and supply chain strategy and note why
it considers that execution excellent (Hall of Fame). And vice versa,
identify those companies that suffer from poor execution of a
important logistics and supply chain strategy (Hall of the
Shame.

Hall of Fame. Identify three companies that use a logistics strategy.

and the supply chain as an important element of their overall strategy
of business.

Hall of Shame. Identify three companies that have failed in execution.

of an important logistics and supply chain strategy for your
general strategy.

Hall of Shame Logistical and supply chain elements

of supply that failed
New Coke - Coca Cola Company The truth was not taken into account.
In the 80s, Coca-Cola tried to sense logistics, the increase
change its flavor, making it more valuable to the customer, who not only
sweet, and did not take into account it must be of place and time, must
meaning of the brand that had already become sentimental for
in the market. create brand recall.
The investigation failed. of
markets (marketing)
Pax–MichelinNokia System The ones were not taken into account.

Wheel what allowed follow end user requirements,

driving 160Km after failure the research of
punctured upon arriving at the workshop, these are not markets
they were ready to repair
this type of wheels, therefore the
the end user had to choose
buy some new ones
Nokia and Ericsson - 3G Technology .
Cell phones were developed Market research failed
with a high investment suitable to be
used with 3G technology, but not
 it was taken into account that the
network operators could only
offer the technology 10 years
after. It was not conceived that not
there were channels for use
Argentinian Blueberries In this example, it was not taken into account.

In 2006, the growing demand accounts for the management of elements.

blueberry international made perishables in the chain of
Argentina seeking to take advantage of the supply, the inventories
market, quadrupled its rapidly increased and not
production. Without preparing, the previous handling.
excess production exceeded the
availability of cold storage and lack of predictability, it was not available
of packing plants, and therefore account for proper handling
so, a volume of goods production.
costly and unwieldy.

3.- From the point of view of logistics and the supply chain, what
What distinguishes the Hall of Fame from the Hall of Shame?

DISTINGUISHING CHARACTERISTICS:

Operation and cost reduction orientation by using resources well

concepts of time and place, against a marketing-based approach.

Reaction against global changes, against the traditional approach.

Search for a more efficient transportation and storage system,

against long transportation times and little inventory movement