Design for logistics is a series of concepts in the field of

supply chain management In commerce, supply chain management (SCM) is the management of the flow of goods and services including all processes that transform raw materials into final products between businesses and locations. This can include the movement and stor ...

involving product and design approaches that help to control logistics costs and increase customer

service level Service level measures the performance of a system. Certain goals are defined and the service level gives the percentage to which those goals should be achieved. Fill rate is different from service level. Examples of service level: * Percentage o ...

. These concepts were introduced by Professor Hau Lee of

Stanford University Stanford University, officially Leland Stanford Junior University, is a private research university in Stanford, California. The campus occupies , among the largest in the United States, and enrolls over 17,000 students. Stanford is consider ...

, 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. It is a subsidiary of Newell Brands. It is best known for producing food storage containers and trash cans. Additionally, it produces sheds, footstool, step stools, closet ...

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 from the United States, headquarter ...

'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 stock that is maintained to mitigate risk of stockouts (shortfall in raw material or packaging) caused by uncertainties in supply and demand. Adequate safety stock ...

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 output produced per unit of time. A decrease in cost per unit of output enables ...

, 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