Logistics Operations and Management Concepts and Models
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Logistics Operations and Management Concepts and Models Reza Zanjirani Farahani Informatics and Operations Management Kingston Business School Kingston University, Kingston Hill Kingston Upon Thames, Surrey KT2 7LB Shabnam Rezapour Industrial Engineering Department, Urmia University of Technology, Urmia, Iran Laleh Kardar Department of Industrial Engineering, University of Houston, Houston, TX, USA AMSTERDAM G BOSTON G HEIDELBERG G LONDON G NEW YORK G OXFORD PARIS G SAN DIEGO G SAN FRANCISCO G SINGAPORE G SYDNEY G TOKYO Elsevier 32 Jamestown Road London NW1 7BY 225 Wyman Street, Waltham, MA 02451, USA First edition 2011 Copyright r 2011 Elsevier Inc. All rights reserved No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage and retrieval system, without permission in writing from the publisher. 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Contents List of Contributors xv Part I Introduction 1 1 Overview 3 Reza Zanjirani Farahani, Shabnam Rezapour, and Laleh Kardar 1.1 History 3 1.2 Definition of Logistics 3 1.2.1 Why Is Logistics Important? 4 1.3 Evolution of Logistics Over Time 4 1.4 Other Logistical Books 5 1.5 The Focus of This Book 5 1.6 Organization 6 1.7 Audiences 8 2 Physical Flows 11 Hannan Sadjady 2.1 The Transportation System 13 2.1.1 Transport Modes and Their Characteristics 13 2.1.2 Other Transport Options 21 2.2 Physical Nature of the Product 24 2.2.1 Volume-to-Weight Ratio 24 2.2.2 Value-to-Weight Ratio 24 2.3 Channels of Distribution 26 2.3.1 Distribution Channels and Their Types 26 2.3.2 Physical Distribution Channel 27 2.4 Warehousing and Storage 30 2.4.1 Warehousing Functions 31 2.4.2 Packaging and Unit Loads 33 2.4.3 Storage and Handling Systems 34 Part II Strategic Issues 41 3 Logistics Strategic Decisions 43 Maryam SteadieSeifi 3.1 Strategy 43 3.2 Strategic Planning 44 vi Contents 3.3 Logistics 45 3.3.1 Logistics Differences to Supply Chain 45 3.4 Logistics Decisions 46 3.4.1 Operational Decisions 46 3.4.2 Tactical Decisions 46 3.4.3 Strategic Decisions 47 3.5 Logistics Planning 47 3.6 Logistics Strategic Decisions 48 3.6.1 Customer Service 48 3.6.2 Logistics Network Design 49 3.6.3 Outsourcing versus Vertical Integration 50 3.7 Tools of Strategic Decision Making 51 3.8 Logistics Strategic Flexibility 52 3.9 Summary 52 4 Logistics Philosophies 55 Zahra Rouhollahi 4.1 Lean Logistics 55 4.1.1 Japanese Philosophy 55 4.1.2 Just-in-Time Philosophy 56 4.1.3 Lean Principles 58 4.1.4 Lean Warehousing: Cross Docking 59 4.2 Agile Logistics 62 4.2.1 Agile versus Lean 63 4.2.2 Quick Response 64 4.2.3 Vendor-Managed Inventory 66 5 Logistics Parties 71 Seyed-Alireza Seyed-Alagheband 5.1 Third-Party Logistics: An Overview 72 5.1.1 Why 3PLs? 72 5.1.2 Definition 73 5.1.3 Emergence of 3PLs 74 5.1.4 Activities of 3PLs 74 5.1.5 Advantages and Disadvantages of 3PL 75 5.1.6 Types of 3PLs 76 5.1.7 2009 3PLs: Results and Findings of the Fourteenth Annual Study 77 5.2 New Generations of Logistics Parties 78 5.2.1 Fourth-Party Logistics 78 5.2.2 Fifth-Party Logistics 80 5.2.3 Future Trends 81 5.2.4 Logistics Vendors 81 5.3 3PLs: Theories and Conceptualizations 83 5.3.1 Outsourcing Decision 83 Contents vii 5.3.2 Selecting the Right 3PL 84 5.3.3 Purchasing 3PL Services 85 5.3.4 Strategic Behavior of 3PLs 86 5.3.5 Theoretical Models 87 5.3.6 A Framework for the Development of an Effective 3PL 88 5.4 Concluding Remarks 90 6 Logistics Future Trends 93 Amir Zakery 6.1 Main Influencing Issues 93 6.1.1 Globalization 93 6.1.2 Information Technology 95 6.1.3 New Technologies 96 6.2 Future Trends in Some Logistics Sectors 97 6.2.1 Future Trends for Inventory Management 98 6.2.2 Global Transportation Issues 99 6.2.3 Future Trends for Warehousing 100 6.3 Future Trends in Technical Reports 101 6.3.1 Future Trends of Logistics in the United Kingdom 101 6.3.2 Thinner Margins in the Industry: A Chance to Improve for Shippers 102 6.3.3 Third-Party Logistics Maturing Quickly 103 6.3.4 Strategic Shift Toward Redesigning Logistics Networks 103 6.3.5 Need for Broader Range of Logistics Services 103 6.3.6 Five Influencing Factors in the Future of European Logistics 103 6.3.7 Five Trends Supporting Logistics Success in China 104 Part III Tactical and Operational Issues 107 7 Transportation 109 Zohreh Khooban 7.1 Basic Aspects in Transportation Systems 109 7.1.1 The Role of Transportation in Logistics 109 7.1.2 Transportation Participants 110 7.1.3 Delivery Frequency System 111 7.1.4 Long-Haul Consolidated Freight Transportation 113 7.2 Classification of Transportation Problems 114 7.2.1 Planning Levels 115 7.2.2 Variants of the Standard of TPs 116 7.2.3 Carrier Decision-Making Problems 119 7.2.4 Shipper Decision-Making Problems 122 7.3 Case Study: An Application of Cost Analyses for Different Transportation Modes in Turkey 124 viii Contents 8 The Vehicle-Routing Problem 127 Farzaneh Daneshzand 8.1 Definitions and Applications 127 8.2 Basic VRP Variants 127 8.2.1 The Capacitated VRP 128 8.2.2 Distance-Constrained and Capacitated VRP 130 8.2.3 VRP with Time Windows 131 8.2.4 VRP with Backhauls 132 8.2.5 VRP with Pickup and Delivery 134 8.3 Solution Techniques for Basic VRP Variants 136 8.4 Other Variants of VRP 137 8.4.1 Open VRP 137 8.4.2 Multidepot VRP 138 8.4.3 Mix Fleet VRP 138 8.4.4 Split-Delivery VRP 139 8.4.5 Periodic VRP 141 8.4.6 Stochastic VRP 142 8.4.7 Fuzzy VRP 143 8.5 Case Studies 143 8.5.1 The Product Distribution of a Dairy and Construction Company 143 8.5.2 The Collection of Urban Recyclable Waste 145 9 Packaging and Material Handling 155 Mahsa Parvini 9.1 Material Handling 155 9.1.1 History 155 9.1.2 Definition 155 9.1.3 MH Principles 157 9.1.4 MH Equipment 158 9.1.5 Unit-Load Design 160 9.1.6 Designing MH Systems 161 9.1.7 MH Costs 164 9.1.8 MH System Models 166 9.2 Packaging 169 9.2.1 History 169 9.2.2 Definition 169 9.2.3 Functions of Packaging 169 9.2.4 Packaging Operations 171 9.2.5 Packaging Equipment 171 9.2.6 Labeling 172 9.2.7 Protection Packaging 174 9.2.8 Packaging for Distribution Efficiency 175 9.2.9 Packaging Costs 176 9.2.10 Packaging Models 177 9.3 Case Study 177 Contents ix 10 Storage, Warehousing, and Inventory Management 181 Maryam Abbasi 10.1 The Reasons for Storage Inventory 181 10.2 The Role of Distribution Centers and Warehouses in Logistics 181 10.3 Warehouse Location 182 10.4 Warehouse Design 183 10.4.1 Size of Warehouse 183 10.4.2 Storage Policies 183 10.5 Types of Warehouses 184 10.6 Warehouse Components 185 10.7 Warehouse Tasks and Activities 186 10.7.1 Material Flow in Warehouse 186 10.7.2 Order Picking 186 10.8 Inventory Management 188 10.8.1 Types of Inventory 188 10.8.2 Costs of Inventory 188 10.8.3 Inventory Control 189 10.9 Virtual Warehouses 195 11 Customer Service 199 Samira Fallah 11.1 Customer-Service Definition 199 11.1.1 Customer Service as an Organizational Activity 199 11.1.2 Customer Service as a Process 199 11.1.3 Customer Service from the Customer’s Side 199 11.1.4 How Experts Define Customer Service? 200 11.1.5 Defining Customer Service in Logistics Context 200 11.2 What Is Behind the Growing Importance of Customer Service? 200 11.2.1 Customer Service: The Intangible Part of a Product 200 11.2.2 Costs of Attracting New Customers 201 11.2.3 Customer Service, Customer Satisfaction, and Loyalty 201 11.2.4 Customers as a Means of Marketing 201 11.2.5 Customer Service and Organization Excellence 202 11.2.6 Customer Service and Staff Job Satisfaction 202 11.3 Customer-Service Elements 202 11.3.1 Pretransaction Elements 203 11.3.2 Transaction Elements 203 11.3.3 Post transaction Elements 204 11.4 Order-Cycle Time 204 11.4.1 Order Preparation and Transmittal