Design for logistics is a series of concepts in the field of
supply chain management
In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management, logistics and marketing channels, through which raw materials can be developed into finished produc ...
involving product and design approaches that help to control logistics costs and increase customer
service level
Service level measures the performance of a system, service or supply. Certain goals are defined and the service level gives the percentage to which those goals should be achieved.
Examples of service level:
* Percentage of calls answered in a ca ...
. These concepts were introduced by Professor
Hau Lee of
Stanford University
Leland Stanford Junior University, commonly referred to as Stanford University, is a Private university, private research university in Stanford, California, United States. It was founded in 1885 by railroad magnate Leland Stanford (the eighth ...
, and have the three key components: Economic packaging and transportation, Concurrent and parallel processing, and Standardization.
Economic packaging and transportation
There are three levels, moving from operational, to tactical and finally strategic.
# Common sense: Product and packaging must be designed so it is easy to ship and shelf (for instance,
Rubbermaid
Rubbermaid is an American manufacturer and distributor of household items. A subsidiary of Newell Brands, it is best known for producing food storage containers and trash cans. It also produces sheds, step stools, closets and shelving, laundry ...
design that fits
Walmart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores in the United States and 23 other ...
's 14x14 shelving). Making a product much stronger and more rugged than necessary for its normal function typically increases parts cost, but sometimes it lowers the net cost by reducing the cost of padding and protection for shipping.
# Facilitate logistic function: Must be easy to pack and repack, and easy to track.
# Enables efficient design of supply chain and business model: For instance, IKEA's supply chain and business model (flat packages etc.)
Concurrent and parallel processing
Modify the manufacturing process so that steps that were previously performed in a sequence can be completed at the same time. This will help reduce manufacturing lead time, lower inventory costs through improved forecasting, and reduce
safety stock
Safety stock is a term used by logistics, logisticians to describe a level of extra inventory, stock which is maintained to mitigate the risk of stockouts, which can be caused, for example, by shortfalls in raw material availability or uncertainty ...
requirements, among other benefits.
Standardization
The idea of standardization is to exploit
economies of scale
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of Productivity, output produced per unit of cost (production cost). A decrease in ...
, and doing things once that can be applied many times. Standardization can be done through:
# Parts: Where common parts are used in many different products
# Process: Standardize manufacturing and product processes so that decisions about which specific product to manufacture can be delayed. This is in fact
delayed differentiation.
# Product: Also known as downward substitution. For instance, car rental companies frequently fill reservations with higher-end vehicles when the lower-end vehicles are not available.
# Procurement: Standardize processing equipment and approaches that can be used for several products (for instance, one machine for both high and low end products).
References
{{DEFAULTSORT:Design For Logistics
Supply chain management
Design for X