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Unit 2: Introduction to Logistic
appropriately provided by other performance cycles. Because of the focus on external supplies, Notes
this facet of procurement is referred to as inbound logistics.
2.6.5 Performance Cycle Uncertainty
A major objective of logistics in all operating areas is to reduce performance cycle uncertainty.
The dilemma is that the structure of the performance cycle itself, operating conditions, and the
quality of logistical operations all combine randomly to introduce operational variance.
The performance cycle illustration is limited to finished goods inventory delivery. The time
distributions, as illustrated, statistically reflect performance history for each task of a typical
performance cycle. The diagram illustrates the minimum to maximum time historically required
to complete each task and the related time distribution for the overall performance cycle. The
vertical dashed line reflects the average time for performance of each task.
In terms of specific tasks, the variance results from the nature of the work involved. Order
transmission is highly reliable when electronic transfer (EDI) or Web-based communications
are used and more erratic when using telephone or routine mail. Regardless of the level of
technology deployed, operational variance will occur as a result of daily changes in workload
and resolution of unexpected events.
Time and variance related to order processing are a function of workload, degree of automation,
and policies related to credit approval. Order selection, speed, and associated delay are directly
related to capacity, materials handling sophistication, and human resource availability. When a
product is out of stock, the time to complete order selection includes manufacturing scheduling.
The required transportation time is a function of distance, shipment size, type of transport, and
operating conditions. Final delivery to customers can vary depending on authorized receiving
times, delivery appointments, workforce availability, and specialized unloading and equipment
requirements.
Self Assessment
State whether the following statements are true or false:
16. Supply chain output is the level of performance expected from the combined logistical
operations that support a particular arrangement.
17. Market distribution is not an integral to sales performance because it provides timely and
economical product availability.
18. Marketing is dedicated to satisfying customers to achieve the lowest possible sales
penetration.
Case Study Improving Supply Chain Responsiveness at a
Leading European Grocery Retailer
ow does a leading European Grocery Retailer with nearly 1000 stores and over
10 million SKU/Store combinations respond when the need to cater to rising
Hconsumer incomes, expectations and individualism translates into higher supply
chain complexity and costs? The answer: Improve visibility and enhance collaboration
between retail stores and central functions in order to replenish stores more efficiently
while simultaneously lowering logistics costs.
Contd...
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