supply chain chapter 9

modes of transportation- pipeline

-2% of US total freight -most reliable form of transportation -lowest per unit cost for transportation -limited variety of commodities -materials are transported in a liquid or gaseous state; petroleum, natural gas, drinking water, gasoline -little maintenance once its running

modes of transportation- air

-5% of US total freight -fastest mode of transportation -most expensive mode of transportation -cannot carry extremely heavy or bulky cargo -ideally items w/ high cost to weight ratio -shipments involve: jewelry, fine wine, pharmaceuticals -paired w/ trucks for door to door delivery -half of goods transported by air are carried by freight only airlines

modes of transportation- water

-5% of US total freight -inexpensive, very slow, inflexible -used for heavy, bulky, low value material like coal, grain, sand, petroleum -but b/c transport is so cheap almost any item may be shipped by water including: automobiles, produce, containerized cargo, etc -competes for some cargo shipments -paired w/ trucks for door to dor delivery

public warehouse

-a business that provides storage and related warehouse functions to companies on a short or long term basis, generally on a month to month basis for a fee -own their own equipment and hire their own staff to manage the facility -fees are typically a combo of a monthly storage fee plus a pallet in fee and pallet out fee -fees vary based on what is being stored

mode of transportation- rail

-accounts 9% of total US freight -competes for transportation when distance is long and the shipments are heavy/bulky -slow and inflexible but has most capability -paired w/ trucks for door to door delivery -shipments involve building materials, construction equipment, coal, gravel, sand, etc. -aging infrastructure and equipment are an issue

load/transportation broker

-bring shippers and carriers tg

green reverse logistics program

-can have positive impact on environment through activities such as recycling, reusing materials and products, or refurbishing unused products -can reduce environmental impact on landfills and deal w/ dangerous contaminants

market positioned strategy

-close to customers to maximize distribution services and improve delivery -few suppliers, many customers

product positioned strategy

-close to supply source to collect goods and consolidate before shipping products out to customer -many suppliers, few customers

freight forwarders

-consolidates LTL shipments into FTL shipments -take small shipments from multiple companies and consolidate them into larger shipments

3PL disadvantages

-control: a company will not have direct control over the logistics operation -dependency: outsourcing logistics creates a dependency on the 3PL -pricing: company is locked into pricing model specified in the contract

3PL advantages

-cost: eliminates the need for a company to invest in warehouse space, technology, and staff to execute the logistics process -logistics expertise: knowledgable of industry best practices and latest developments in tech -efficiency: 3PL's can leverage relationships and volume discounts, which result in lower overhead and the fastest possible service

LEAN warehousing

-cross docking -reduced lot sizes and shipping quantities -increased automation -green warehousing

break bulk warehouse

-divides full truckloads of items from a single source or manufacturer into smaller, more appropriate quantities for use or local delivery

returns

-done for number of reasons -item may be defective, damaged, seasonal, fail to meet expectations, or be excess inventory

net rate pricing

-established discounts and accessorial charges are rolled into one all inclusive price -pricing is tailored to individual customers needs

transportation

-function of planning, scheduling, and controlling activities related to the mode, carrier, and movement of inventories into and out of an organization

warehousing

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

contract warehouse

-handles the shipping, receiving, and storage of goods on a contract basis for a fee -contract can be for an entire building, or for a defined portion within a building -usually required a client to commit to services for years rather than months -the fee structure may be fixed cost, cost plus, or a combo -the company providing the space handles the employees, equipment, and maintenance -renting an apartment for inventory

repackaging

-happens when customers are dissatisfied, NOT bc defective -repackaged and returned to inventory for restock or resale in secondary channels

poor reverse logistics can hurt a company

-inability of information systems to handle returns -lack of worker training in reverse logistics procedures -little or no identification on returned packages -need for adequate inspection and testing of returns -danger of placing returned products into sales stocks -can affect the the entire supply chain financially -have large impact on how a consumer views a product or brand, potentially impacting future sales

fourth party logistics

-interface between the client company and multiple logistics service provider -charged w/ managing activities of all other 3LPs being used by the company

cross docking warehouse advantages

-larger and fewer shipments translate to lower overall transportation costs: 8 FTL shipments are less expensive per unit than 16 LTL Shipments -warehouse operations: 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

warehouse network: single warehouse, advantages

-less complicated -operating costs/inventory will be lower -no duplication of equipment, warehouse staff, and managers -network will be centralized and company will have its best people, equipment, and inventory systems concentrated in one place -warehouse can more actively focus on needs of customer

cross docking warehouse

-logistics practice of unloading materials from an incoming truck or railcar and loading these materials directly onto outbound trucks or railcars, with little or no shortage in between to reduce inventory investment and storage space requirements

repairs

-manufacturers may identify failure and repair, refurbish, or remanufacture product to like new condition and return it to stock, or harvest various components for reuse

objectives of transportation

-maximize value to the company through price negotiations -make sure service is provided effectively -satisfy customers needs

warehouse network: single warehouse, disadvantages

-may take longer to deliver product to some customers who are remote from central location

intermediately positioned strategy

-midway between supply source and customers, when distribution requirements are high and product comes from various locations -equal number of customers and suppliers

recalls

-more complex -involve product defect or potential hazard -may be subject to gov regulations, liability concerns or reporting requirements

warehouse network: multiple warehouses, disadvantages

-more complicated -operating costs and inventory will be higher as each warehouse costs money to staff and operate. duplication of equipment, warehouse staff, and managers -network will be decentralized and the company will have to spread its best people, equipment, and inventory systems across a larger network

modes of transportation- truck

-most flexible mode of transport -carries > 80% of US freight (bc of interaction w/ other transportation modes to and from ports and warehouses) -carries nearly anything from packaged household goods, to building materials, to liquid petroleum, etc. -competes w/ air and rail for short-to-medium hauls

logistics is necessary to...

-move goods and materials from suppliers to buyers -moves goods and materials between sites (internal/external) -move finished goods to the customer -product have little value to customer until they are moved to customers point of consumption -delivered at the right time -delivered to the desired location

shippers association

-nonprofit cooperatives which arrange for members shipping

warehouse network: hybrid approach

-one is a "hub and spoke" where there is a centralized warehouse (i.e. the hub) which holds most of the inventory linked to a series of smaller geographically dispersed warehouses (i.e. the spokes) which hold only a small amount of inventory to support their local area in the immediate time frame -hub warehouse feeds the spoke warehouses w/ inventory as necessary on a regular basis -operating costs are lower b/c the spoke warehouses are smaller than in a purely decentralized model -inventory is also lower as all of the safety stock is held centrally, which generally means that less total safety stock is required because all of the risk and uncertainty is managed centrally -customer service is better than in a purely centralized model since some of the inventory is maintained closer to customer

third party logistics (3PL)

-outsourced provider that manages all, or a significant part, of an organizations logistics requirements for a fee -generate 10-20% savings in logistics costs -favored by small businesses -used to a significant degree for international logistics

logistics

-part of supply chain management that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related info, from point of origin to point of consumption, in order to meet customer requirements

exempt carriers

-person or company specializing in services or transporting commodities exempt from regulation by the Interstate Commerce Act

private carriers

-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

common carriers

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

contract carriers

-person or company who transports freight under contract to one or a limited number of shippers

warehouse network: multiple warehouses, advantages

-potentially faster delivery to customers from a decentralized network that is geographically dispersed throughout the market, assuming adequate inventory in each warehouse

combination pricing

-price set at value between cost of service minimum and value of service maximum -used by most carriers -common in highly volatile markets and changing competitive situations

reverse logistics

-process of moving a product from the point of customer receipt back to point of origin to recapture value or ensure proper disposal -backwards flow of goods from customers in supply chain -often viewed as an "unwanted" supply chain activity; many outsource it to 3PL -viewed as cost of doing business -viewed as quality or regulatory compliance issue

global trade management systems

-provides global visibility, standardization, and documentation to comply with international trade regulations

intermodal marketing company

-purchase blocks of rail capacity and sell it to shippers

secondary functions of a warehouse

-quality inspection -repackaging -assembly operations

value of service pricing

-sets prices based on value perceived by customer -priced at what market will bear

cost of servicing pricing

-setting of a price for a service based on costs incurred in providing it

warehouse network

-simply the number of, and the relationship between, the warehouses that a company has in their organizational structure -questions for establishing are: how many warehouses are needed? where should they be located? -trade offs that will determine how many warehouses the company needs and where they should be located are: level of customer service company wants to provide, ant of inventory company is willing to invest in

intermodal transportation

-sometimes referred to as sixth mode of transportation -use of multiples modes of transportation to execute a single transport shipment -growing b/c cost efficient/effective -most common forms: rail and motor carriers, rail and water carriers, roll on/roll off ships

private warehouse

-storage facility that is owned by the company that owns the goods being stored in the facility -generally established by companies that have a large volume or the need for some type of specialized storage, or the need for some type of handling -can be operated as a sep division within a company -can be co located on site w/ manufacturing, or off site -like buying house for inventory

warehouse management systems

-track and control flow of goods from receiving dock to outbound shipment -new tech, such as RFID tags, facilitate tracking

full truckload (FTL)

-transport of goods that fill up a truck, or a partial load shipment occupying an entire truck -advantages- best way to transport large shipments. ideal for high risk or delicate freight shipments. considerable faster -disadvantages- costs more

less than truckload (LTL)

-transportation of relatively small freight i.e, the freight does not require the entire space of the truck -advantages- cost effective, ideal for small businesses, more available carrier options -disadvantages- increase risk of theft/damage. increased shipping times and delays

general freight carriers

-trucking company that handles a wide variety of commodities in standard trailers. freight is generally palletized -LTL or FTL carriers -carry majority of goods shipped -does not require use of specialized equipment

specialized carriers

-trucking company which handles the movement of cargo that requires specialized equipment for transportation because of the shipments size, weight, and shape -transport commodities like liquids, petroleum, household goods, building materials, and other specialized items

transportation management systems

-used to select best mix of transportation services and pricing

consolidation warehouse

-warehouse operation that receives products from diff plants or suppliers, sorts them, and then combines them with similar shipments from other plants or suppliers for further distribution

recycling

-when products reach end of useful lives and must be scrapped, companies must find safe, cost effective, and environmentally friendly ways to dispose of them -by salvaging, reclaiming and reusing components, companies can reduce costs and minimize waste

warehouse network strategies

1. market positioned strategy 2. product positioned strategy 3. intermediately positioned strategy

reasons for cross docking

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. consolidation- combine smaller product loads into one method of transport to save on transportation costs 3. break bulk (deconsolidation)- break down large product loads into smaller loads for transportation for an easier delivery process to the customer

warehouse ownership types

1. public warehouses 2. contract warehouses 3. private warehouses

primary functions of a warehouse

1. receiving 2. storage 3. picking 4. packing 5. shipping

R's of reverse logistics

1. returns 2. recalls 3. repairs 4. repackaging 5. recycling

warehouse

facility used to store purchases, work in process, and finished goods inventory