Location And Logistics - Outsourcing, Reshorinng, Offshoring, SubContracting Flashcards
what is logistics
the art and science of obtaining, producing and distributing material + products in the proper place in proper quantities
what are the 7 Rs of Logitics
Right Product Right Quantity Right Condition Right Place Right Time Right Customer Right Price
supply chain management and logistics
order processing warehousing transportation material handling packaging
1) Transportation
- the most expensive cost in logistics
= more than just moving goods
= need to be packaged, loaded, unloaded, warehoused and distributed
= NEED TO BE PAID FOR WHENEVER THEY CHANGE HANDS
to keep costs low - need to choose the right combination of transport
2) Warehousing
- the less time goods are spent in warehousing and the less goods are stored there, the cheaper the costs are = however sometimes they need to stay here
^^^^ for when they’re not being moved between locations - need for security if there are valuable goods
- if theres choice, warehousing will be needed to store the consumer choice = enable a firm to meet customer demand easier
- relating to recieving, storing and shipping materials to and from production/distribution locations
3) IT systems
INTERNAL INFORMATION SYSTEMS
essential for a firm to have an ICT system that connects departmments of a business to coordinate operations with each other
EXTERNAL INFORMATION SYSTEMS
if demand is variable then to be able to communicate externally with customers to track requirements
4) need to balance logistic costs against appropriate customer service
achieving customer satisfaction at the LOWEST TOTAL COST
5) Logistics
= all needs to be integrated to reach strategic objectives
= coordination of functions within the firm and others in its supply chain before production/warehousing
= pros and cons of doing production/warehousing on your own or paying someone else to do it
= distribution process of managing the movement of goods to get them to be sold
^^^^^ how? routes? subcontracting or on your own?
Factors affecting location
QUANTITATIVE
FIXED COSTS
- site costs
- availability of grants/subsidies
VARIABLE COSTS
- transportation costs
- nearness to supply of skilled/unskilled labour
- labour costs
- ability to achieve external EOS (reduced unit costs in the industry)
- currency costs
REVENUE
- accessibility by target customers
- proximity of competitors
- globilisation
Factors affecting location
QUALITATIVE
- type of business and its product/service
- working environment
- ease of access for staff/suppliers = cost link
- quality of infastructure = cost link
- health and safety considerations
- opportunities for expansion
FIXED COSTS
QUANTITATIVE
SITE COSTS
- influenced by supply and demand
- expensive in london
- cheaper in out of town retail parks
- cheaper the more up north you go
AVAILABILITY OF GRANTS/SUBSIDIES
- areas of high unemployment where existing companies providing employment for these people
- enterprise zones = encouraging start ups
VARIABLE COSTS
QUANTITATIVE
TRANSPORTATION COSTS
- Bulk Increasing = locating close to market (car manufacturers)
- Bulk Reducing = locating close to raw materials (quarrying)
NEARNESS TO SUPPLY OF SKILLED/UNSKILLED WORKERS
- setting up your factory in an area of high unemployment
LABOUR COSTS
- need to pay more in some areas due to higher costs of living to workers (London’s Weighting Allowance)
ABILITY TO ACHIEVE EXTERNAL EOS
- Silicon Valley on M4 corridor where all big businesses are and share information
CURRENCY COSTS
- avoid exchnage rate issues
- locate in country of customers/suppliers (EU)
REVENUE
QUANTITATIVE
ACCESSIBILITY BY TARGET CUSTOMERS
- particularly important for retailers with footfall (corner shops, B2B, near business customers)
PROXIMITY OF COMPETITORS
- most likely to be distant (not close competitors to not ‘steal’ business)
- some like to be close (i.e. Harley St for Dentistry)
GLOBALISATION
- need to be as competitive as possible
- off-shoring (call centres, manufacturing to areas of cheap labour)
QUALITATIVE
TYPE OF BUSINESS AND ITS PRODUCT/SERVICE
- coal mine must be in the right location
WORKING ENVIRONMENT
- google campus has a desk near other similar businesses and able to share ideas
EASE OF ACCESS FOR STAFF/SUPPLIERS = COST LINK
- good transport links
QUALITY OF INFASTRUCTURE = COST LINK
- bandwith/rail links/road links
HEALTH AND SAFETY CONSIDERATIONS
- nuclear power plants near the sea
OPPORTUNITIES FOR EXPANSION
- ability to get planning permission/land/offices nearby
Offshoring
- relocating products abroad
- provision of service (call centres)
:) - access to growing markets
:) - labour cost savings
X - realised problems of rising shipping costs
X - wars and natural disasters to come back to the UK
X - marketing issues of call centres and language barriers - customers are angry
