Intro To Supply Chain Management

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Logisticsis necessary to:

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-Move goods and materials fromsuppliers to buyers

-Move goods and materials between sites (internal and external)

-Move finished goods to the customer

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Productshave little value to the customer until they are moved to the customer’s pointof consumption:

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-Delivered at the right time

-Delivered to the desired location

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Warehouse:

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A facility used to store purchases, work-in-process (WIP), and finished goods inventory.

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Warehousing:

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Function that allows a company to receive, store, breakdown, repackage, and distribute items to a manufacturing location, or finished products to a customer

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Receiving:

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Physical receipt of material, identification, inspection for conformance with the purchase order (quantity and damage), put-away, and preparation of receiving reports

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Storage:

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The safe and secure retention of parts or products for future use or shipment.

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Picking:

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Withdrawing components from stock to make assemblies or finished goods, or to ship to a customer.

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Packing:

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Placing one or more items of an order into an appropriate container for safe shipping , and marking and labeling the container with customer shipping destination data, and other information that may be required

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Shipping:

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Outgoing shipment of parts, components, and products. Includes packaging, marking, weighing, and loading for shipment.

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Other Functions of a Warehouse

-QualityInspections -incoming and outgoing.

-Repackaging –for specific customer orders.

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AssemblyOperation:

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Warehouse operation that puts products together with other items/components before shipping them out to the final customer. Examples: —Literature —Spare Parts —Advertising Materials

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Public Warehouse Ownership:

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Abusinessthatprovides storage and related warehouse functions to companies on a short orlong-term basis, generally from month-to-month.

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Advantages of Public Warehousing:

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-No capital investment or property taxes --

-Flexibility:

—Can be short or long term contract

—For seasonal products

—Add storage capacity even on short notice

-Lower costs and reduced risk

-Access to special features and services: —Temperature-controlled storage

—Customer Service, Inventory Ordering, etc

—Office space for customer’s sales, accounting, etc.

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Disadvantages of Public Warehousing:

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-Potential for incompatible computer systems

-Specialized services may not be what is required/needed

-Space may not be available when/where needed

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Contract Warehousing:

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A variation ofpublic warehousing that handles the shipping, receiving, and storage of goodson a contract basis

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Advantages of Contract Warehousing:

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Services: client can obtain specialized services tailor-made to suit their needs.

Cost: can be bundled in the contract and negotiated at a lower cost.

Control: contract warehousing offers a degree of control at a reasonable price

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Disadvantage of Contract Warehousing :

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Duration: The client company is expected to enter into a contract for a specific period of time; generally three years.

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Private Warehousing:

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A storagefacilitythat is owned by the company that owns the goods being stored in thefacility.

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Advantages of Private Warehousing:

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Control: Offers greater flexibilityin designing thewarehouse and gives users significant control over operations.

Visibility: inventory,material flow, handling, supervision, and associated costs.

Cost: Operating cost can be 15% - 25%lower if the company achieves at least 75% utilization.

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Disadvantages of Private Warehousing:

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-High Start-up Cost: Capital to build or buy a warehouse. Long, risky investment. Cost of hiring and training employees. Purchase of material handling equipment.

-Fixed Location: Not easy to move to another location if the market changes.

-Fixed Size and Costs: When volume is low, the company still assumes the fixed costs.

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Consolidation Warehouse:

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Warehouse operationthat receives productsfrom different plants or suppliers,sorts them, and then combines them with similar shipments from other plants or suppliers for further distribution.

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Break-Bulk Warehouse:

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Warehouseoperation that divides full truckloads ofitems from a single source or manufacturer into smaller, more appropriatequantities for use or further distribution.

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Cross-Docking Warehouse:

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The logisticspractice of unloading materials from an incoming truck or railcar and loadingthese materials directly onto outbound trucks or railcars, with little or nostorage in between to reduce inventory investment and storagespace requirements.

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Reasons that cross docking is implemented is to:

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1.Provide a central site for products to be sorted and combined for delivery to multiple destinations in the most productive and fastest method possible.

2.Consolidate:Combine smaller productloads into one method of transport to save on transportation costs.

3.Break-Bulk:Break downlarge product loads into smaller loads for transportation foran easierdelivery process to the customer.

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Advantages of Cross-Docking:

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-Operational Efficiency: Warehouse operations are more efficient as the material does not have to be stored at the warehouse, moving directly from receiving to shipping.

-Inventory Efficiency: As there is no storage at the warehouses, total inventory in the supply chain can be reduced.

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Warehouse Network:

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-A warehouse network is simply thenumber of, and the relationship between, the warehouses that a company has intheir organizational structure.

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Single Warehouse vs Multiple Warehouses

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Warehouse Network: Hybrid Approach

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Companiesmaychoose to do some type of a hybrid approach to balance costs and inventoryagainst customer service.

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Warehouse Network Strategy:

1.Market Positioned Strategy:

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Close to customers to maximize distribution services and improve delivery.

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2. Product Positioned Strategy:

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Close to supply source to collect goods and consolidate before shipping products out to customers.

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3.Intermediately Positioned Strategy:

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Midway between supply source and customers, when distribution requirements are high and product comes from various locations

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CrossDocking

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A LEAN concept because it eliminates the need to store inventory, and reduces some transportation, which are both wastes.

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ReducedLot Sizes and Shipping Quantities

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By reducing lot sizes and shipping quantities, a company can increase velocity in the warehouse, and get shipments out faster. Faster throughput is a LEAN concept.

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IncreasedAutomation

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Companies are using automated systems like pick to light, voice picking, conveyor systems, automatized guided vehicles (AGV’s), and robotics to improve efficiencies and throughput times in the warehouse.

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GreenWarehousing

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- One of the more sustainable goals for a green warehouse is to make it a net zero energy user.

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Third Party Logistics (3PL)

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is an outsourced provider thatmanages all, or a significant part, of an organization’s logistics requirementsfor a fee.

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Fourth Party Logistics (4PL)

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Fourth-partylogistics (4PL) is an interface betweenthe client company and multiple logistics service providers.

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Transportation

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The function of planning, scheduling, andcontrolling activities related to themode, carrier,and movement of inventories into and outof an organization.

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ObjectivesofTransportation:

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1.To maximize the value to the company throughprice negotiations

2.To make sure service is providedeffectively

3.To satisfy customers’ needs

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TransportationCompany Classifications

Contract Carriers:

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Person or company who transports freight under contract to one or a limited number of shippers.

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Common Carriers:

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Person or company who transports freight for a fee that can be hired by anyone to transport goods.

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Private Carriers:

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person or company that transports its own cargo as a part of a business that produces, uses, sells or buys the cargo that is being hauled.

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Exempt Carriers:

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Person or company specializing in services or transporting commodities exempt from regulation by the Interstate Commerce Act.

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Intermodal:

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combinations of other modes of transportation

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Intermodal Transportation:

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Intermodalis sometimes referred to as the sixth mode of transportation, but it is really the use of multiple modes oftransportation to execute a singletransport shipment.

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Different Forms of Intermodal Transportation:

Railand Motor Carriers:

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Offer point-to-point pickup and delivery service known as Trailer-on-Flatcar (TOFC)

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Railand Water Carriers:

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Offer point-to-point pickup and delivery service known as Container-on-Flatcar (COFC)

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Roll-On/Roll-OffShip:

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specifically designed to allow trucks to be driven directly on and off the ship without the use of cranes. Provides flexibility and speed

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Transportation Pricing:

CostofService Pricing:

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is the setting of a price for a service based on the costs incurred in providing it.

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ValueofService Pricing:

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- is a pricing strategy which sets prices based on the value perceived by the customer, i.e., “priced at what the market will bear”.

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CombinationPricing:

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- price is set at a value between cost-of-service minimum and value-of-service maximum. Most carriers use some form of combination pricing. Common in highly volatile markets and changing competitive situations

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Net-RatePricing

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- Established discounts and accessorial charges are rolled into one all-inclusive price. Pricing is tailored to the individual customer’s needs

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Termsof Sale:

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the delivery and payment terms agreed between a buyer and a seller.

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TRANSPORTATION REGULATION AND DEREGULATION

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..

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Other TransportationIntermediaries

FreightForwarder -

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Consolidates LTL shipments into FTL shipments

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Load or TransportationBroker-

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Bring shippers and carriers together

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Load or TransportationBroker-

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Bring shippers and carriers together

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Shippers’Association-

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Nonprofit cooperatives which arrange for members’ shipping

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IntermodalMarketing Company-

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Purchase blocks of rail capacity and sell it to shippers

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Logistics Management Software

Applications

WarehouseManagement Systems (WMS):

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Track and control the flow of goods from receiving dock to outbound shipment. New technologies, such as RFID tags, facilitate tracking.

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TransportationManagement Systems (TMS)–

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Used to select the best mix of transportation services and pricing.

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GlobalTradeManagement Systems (GTM):

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Provides global visibility, standardization, and documentation to comply with international trade regulations.

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Reverselogistics:

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involves the process of moving a product from the point of customer receipt back to the point of origin to recapture value or ensure proper disposal.

-Backwardsflow of goods fromcustomers in the supply chain