Short summary about Logistics. What it is and how does it affect on your business.

1. What is Logistics?
Jesse Uitto
jesseuitto.fi

2. How is value added in manufacturing
Stored raw
materials
Payment
time for
purchasing
debt
Buy stuff and
get payment
time

3. How is value added in manufacturing
Stored raw
materials
Manufacturing
Finalized
products in
stock
WIP
Payment
time for
purchasing
debt
Buy stuff and
get payment
time
Add value
trough
processing

4. How is value added in manufacturing
Stored raw
materials
Manufacturing
Finalized
products in
stock
WIP Sales
payment
time
Margin
Payment
time for
purchasing
debt
Buy stuff and
get payment
time
Add value
trough
processing
Add margin
and sell your
stuff with
payment time

5. How is value added in manufacturing
Stored raw
materials
Manufacturing
Finalized
products in
stock
WIP Sales
payment
time
Margin
Payment
time for
purchasing
debt
Tied up working capital
Buy stuff and
get payment
time
Add value
trough
processing
Add margin
and sell your
stuff with
payment time
You have tied up working capital from the moment you
pay debts until the moment you have money from sales

6. So what does logistics has to do with this?

7. So what does logistics has to do with this?
• Negotiate longer payment time for purchasing
debt and shorter payment time for sales
– Optimum would be if you had money from sales
before you have to pay your purchasing debt!

8. So what does logistics has to do with this?
• Negotiate longer payment time for purchasing
debt and shorter payment time for sales
– Optimum would be if you had money from sales
before you have to pay your purchasing debt!
• Optimize storage time for both raw materials
and finalized products
– Less working capital

9. Optimize finances

10. Optimize finances
Stored raw
materials
Payment time for purchasing debt
Negotiate long payment time for purchases

11. Optimize finances
Stored raw
materials
Manufacturing
Finalized
products in
stock
WIP Cash
sale
Margin
Payment time for purchasing debt
Negotiate long payment time for purchases
Sell stuff with cash,
advance payment
or with very short
payment time

12. Optimize finances
Stored raw
materials
Manufacturing
Finalized
products in
stock
WIP Cash
sale
Margin
Payment time for purchasing debt
Negative
working capitalNegotiate long payment time for purchases
Sell stuff with cash,
advance payment
or with very short
payment time
You need very
little or no
working capital

13. Optimize material flow

14. Optimize material flow
Stored
raw
materi
als
Payment time for purchasing debt
Try to
minimize
raw
material
storage.
Also
negotiate
lower
prices.

15. Optimize material flow
Stored
raw
materi
als
Manufacturing
WIP
Payment time for purchasing debt
Try to
minimize
raw
material
storage.
Also
negotiate
lower
prices
Try to minimize
Cycle Time

16. Optimize material flow
Stored
raw
materi
als
Manufacturing
Finalized
products
in stock
WIP
Payment time for purchasing debt
Try to
minimize
raw
material
storage.
Also
negotiate
lower
prices
Try to minimize
Cycle Time
Minimize
end product
storage

17. Optimize material flow
Stored
raw
materi
als
Manufacturing
Finalized
products
in stock
WIP Cash
sale
Margin
Payment time for purchasing debt
Try to
minimize
raw
material
storage.
Also
negotiate
lower
prices
Try to minimize
Cycle Time
Minimize
end product
storage
Again cash
is the king

18. Optimize material flow
Stored
raw
materi
als
Manufacturing
Finalized
products
in stock
WIP Cash
sale
Margin
Payment time for purchasing debt
Negative working capital
Try to
minimize
raw
material
storage.
Also
negotiate
lower
prices
Try to minimize
Cycle Time
Minimize
end product
storage
Again cash
is the king
Due to shorter storage times we now have
even more negative working capital

19. Summarization
• Although some companies do negotiate long
payment times for their debts it is not always
reasonable to use your suppliers as an bank
– Instead try to build working cooperation with your
suppliers

20. Summarization
• Although some companies do negotiate long
payment times for their debts it is not always
reasonable to use your suppliers as an bank
– Instead try to build working cooperation with your
suppliers
• Best ways to decrease working capital is to
manage storages and decrease cycle time and
WIP

21. Thank You
• This presentation showed some basic ideas
about logistics. Read more about how to use
them in practice from jesseuitto.fi