Final SCM 410

Passive RFID Tag

($0.15-$5) -Relies on the RF energy transferred from the reader to the tag to power the tag. -Requires strong signal from the reader, and the strength returned from the tag is low. EX: Libraries/bookstores, pharmaceuticals, passports, tolls, and high volume mfg

Active RFID tag

($15-$100) -Internal power source in the tag to power the tag and its radio frequency (ie, battery). -Contain sensors to monitor conditions such as motion, temperature, and humidity. EX: Automotive, hospitals - asset tracking, construction, mining, and laboratories

Barcodes

-A barcode is a series of parallel black and white bars, both of varying widths, whose sequence represents letters or numbers. Systems are simple and accurate. -This sequence is a code that scanners can translate into important information such as shipment's origin, product type, place of manufacture, and the product's price. -Barcoding improves data collection speed and accuracy, reduces receiving operation time and data collection labor, and helps to integrate data collection with other areas

Logistics/Manufacturing: Production Runs

-A classic logistics-manufacturing interface relates to the length of the production run (*what is a production run?). -Economies of scale are associated with long production runs (average cost of production declines fixed costs) and efficiencies from few changeovers (production line) -A production run is a quantity of units that are produced continuously by a production line. It is common for a factory to produce one type of item until desired levels of inventory are achieved. This process of producing units for a period of time is known as a production run

Freight Forwarder

-A company that provides logistics services as an intermediary between the shipper and the carrier, typically on many international shipments. -Organizes shipments to get goods from a manufacturer or producer to a market, customer, or final point of distribution Forwarders contract with carrier/s to move the goods - they do not move them, but rather, act as experts in the network. -Includes a wide range of companies that purchase shipping capacity from asset-based providers; consolidating small shipments into economical sizes (e.g., DHL; CH Robinson).

Interdepartmental Relationships

-A dimension of the micro perspective of logistics is examining the relationships between logistics and other functional areas within an organization. -By its nature, logistics focuses on processes that cut across traditional functional boundaries - particularly interfacing with two internal functional departments: Manufacturing, Marketing

Profile of Logistics Outsourced Activities

-A strategic issue is how customers feel 3PLs should position themselves in terms of depth and breadth of service offerings (i.e.,prefer single-source solution): -Significant Agreement: Third-party logistics service suppliers should offer a broad, comprehensive set of service offerings -Two-thirds of customers view their 3PLs as operational/tactical service providers, while approximately one-third perceive them as strategic/integrative.

Transferable

-Ability to transfer supply chain data from one format to another to make it understandable and useful. -Transfer data quickly from one location to another in order to facilitate accessibility and timeliness. -Information must reside in electronic formats that can be readily transmitted and converted via supply chain IT (paper-based cannot support these requirements)

Advantages of 3PLs

-Buyer can concentrate on its core business processes. -Flexibility - seasonality, geography, test new markets. -Gain management expertise and dedicated resources -Cost reduction (total logistics costs and activity costs).

Summary Chapter 5

-Certain objectives should be incorporated into good measures be quantitative, be easy to understand, encourages appropriate behavior, visible, defined, and mutually understood, encompass both outputs and inputs, measure what is important, provides multidimensionality, uses economies of effort, and builds trust. -KPIs are of strategic importance to a department or company. -Three major process categories that provide a useful way for examining logistics activities (transportation and distribution) performance include time, quality, and cost. -CTC is "the length of time a company's cash is tied up in working capital before that money is finally returned when customers pay for the products sold or services rendered.

SCM Event Management Software: TMS

-Collects real-time data from multiple sources across the supply chain. The main goal of the following TMS tool is to provide timely information regarding potential delivery expectations so that corrective actions can be taken. -Status Tracking: The in-transit progress of shipments can be monitored using TMS tools in conjunction with satellite capabilities and other visibility tools. -Shipment status information, notifications for problems and shipments at risk of late delivery, can be shared with SC members (food safety - temperature control)

Warehouse/Distribution-Based

-Contract warehousing is a customized version of public warehousing in which an external company provides a combination of distribution services (originally in-house). -These 3PLs dedicate space, labor, and equipment to the client's specific product needs with the goal of providing integrated accurate distribution services (CEVA; Ryder). -The facilities can meet handling requirements for specialized products (e.g., pharmaceuticals; electronics) and customized contract facilities lead to strong relationships (partnerships).

Total Delivered Cost is Multidimensional

-Cost of goods, transportation, inventory carrying costs, import/export costs, warehousing costs

Water industry

-Domestic carriers compete with rails for longer-distance movement of containerized material. As of winter 2015, 16 shipping companies operating in four major corporate alliances control 80% of world's container shipping fleet. -Water is a highly variable cost business. Nature provides the "highways" (no right-of-way investments) and the port authority provides terminals (carrier fees only when used). -Large ocean ships require significant capital investments, but cost is spread over large volumes of freight (capacity) that is transported during lengthy lifespans of most ships.

Defining Supply Chain Management

-Encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities -Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, 3PLs, and customers -Supply Chain Management integrates supply and demand management within and across companies -Supply chain management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. -Includes all the logistic management activities noted as well as manufacturing operations, it drives coordination of processes and activities with and across marketing, sales, product design, finance, and information technology.

Financial Based

-Freight payment and auditing; cost accounting and control; logistics management tools for monitoring, book-keeping, tracking, tracing, and managing inventory, and consulting. -Cass Information Systems (Example): Expertise in process complex payables, which are characterized by invoices with:

Information Based

-Growth and development of Internet-based, B2B markets for logistics services has been significant in recent years. -Represent alternative sources for organizations that are in need of purchasing logistics services (newest type of 3PL). -Largest online freight shipping provider -customers compare instant freight rates from carriers and book shipments online.

IT Challenges and solutions

-IT holds great promise for improving both the supply chain performance and firms' competitiveness; yet, implementing new technology/software does not guarantee success. -IT cannot compel ill-conceived SCs to be productive, make adversarial firms collaborate, or make use of poor data. -CSC study identifies major barriers and challenges that must be addressed to make SC technology work as intended

Transportation

-Important and visible activity in the logistics system. In general, this activity is the largest variable logistics cost. -Primary focus in logistics is on physical movements or flows of goods and on networks that move product (extends reach) -Important component of the overall supply chain since it servers as a physical link among SC companies (glue that holds the SC together) -On-time delivery is ratio of shipments delivered per contract specifications to the total shipments delivered (95%)

Role of Information

-Information is said to be the "lifeline" of business and supply chains, driving effective decisions and actions. -Information offers managers visibility into supply chain activities that take place at distant locations. -Such visibility of demand, inventory stock levels, customer orders, delivery status, and production schedules allow managers to make situational assessments and develop appropriate responses.

Accessible

-Information must be available to those supply chain members that have a legitimate need for it (firms or managers), regardless of their location or employer. -Difficult because SC data are often dispersed across multiple locations on different information systems that are owned by a number of external organizations. -Technical issues must be addressed and trust built between the organizations sharing information

Cash-toCash

-Length of time a firm's cash is tied up in working capital before money is finally returned when customers pay for the products. -Cash-to-Cash is a unique financial performance metric that indicates how well an entity is managing its capital -In the simplest terms, cash-to-cash is defined as the time between when a company pays its supplier to when their customer pays them (how the final number is interpreted). -Mathematically, subtract the days of payables from the days of inventory and then add the days of receivables. The final calculated number is in units of days (interpret)

Customs House Broker

-Licensed by U.S. Department of the Treasury and operate under power of attorney from the shipper to pay all import duties due on the shipment. -Oversee the movement of goods through customs and confirm that documentation accompanying a shipment is complete and accurate for entry into the U.S. (3PL).

Chapter 2 Summary

-Logistics has many definitions due to broad-based interest in its activities and the recognition of its importance. -Logistics managers are responsible for a number of critical activities (i.e., transportation, storage, packaging, materials handling, inventory control, order fulfillment, forecasting, production planning, procurement, customer service, facility location, and other activities). -Logistics adds place, time, and quantity utilities to products/services and enhances form and possession utilities that are added by manufacturing and marketing, respectively. -Logistics has an important relationship with manufacturing and marketing departments/functions.

Disadvantages/Problems with 3PL's

-Loss of internal control (i.e., visibility) -Lack of acceptance - managers and labor. -Possible increase in costs (i.e., cost creep). -Service-level commitments not realized. -Time/effort spent on logistics not reduced. -Inability to develop trusting relationships. -Lack of ongoing improvements in offerings. -Lack of consultative/knowledge-based skills.

SC Processes

-Often, companies do not change their SC processes concurrently with adopting new technology tools. -Companies automate existing/outdated activities instead of improving processes or streamline the SC network to take full advantage of the technology's capabilities. -While incremental productivity improvements are often made, failing to address process issues and root-cause problems will limit technology impact and reduce ROI.

Perfect Order Fulfillment

-On-time delivery -Complete order -Accurate product selection -Damage-free -Accurate invoice

Logistics Relationships

-Organizations have been dedicating much attention toward working more closely with their supply chain partners, including customers, suppliers, and 3PLs -Types of Relationships Vertical and Horizontal Relationships -Intensity of Involvement Arm's Length, Collaborative, Strategic -Types of Collaboration Vertical, Horizontal, and Full Collaboration

RFID

-RFID tags consist of silicon chips and an antenna that can transmit data to a wireless receiver; accordingly, RFID tags do not require line-of-sight for reading. -Unique product ID data, in terms of a universal electronic product code (EPC), identifies the manufacturer, product category, and individual item, and is stored on 96-bit tags. -It is simultaneously described as a great SCIS tool and as an overpriced feature that does little more than what is accomplished by a much cheaper barcode (lies between).

Place

-Refers to the value added to goods by having them at the location where they are needed. Logistics creates place utility through transportation. -Marketing determines whether to sell the firm's product/s to wholesalers or direct to the end retailers. This decision affects inventory levels and transportation costs

Key Performance Indicators (KPIs)

-Scorecard: Performance measurement tool used to capture a summary of KPIs. Scorecards have color-coded indicators to flag when a company is not meeting its metric targets -A measure/metric that is of strategic importance to a department or company. Properly chosen KPIs offer several benefits, including (transportation example): -Objective measures of hired or private fleet performance that are significant to the success of the organization. -Utilized to evaluate current performance versus historical results, internal goals, and carrier commitments. -Often applied to benchmark against those that have been achieved by competitors, and world-class organizations.

Modal Selection: Capacity & Product Safety

-Shipment characteristics are important - modal Capacities must match the total weight and dimensions of a shipment. -Ton-miles is captures the shipment weight and distance (tonnage multiplied by miles transported). For example, 20 tons traveling 2,130 miles equals to 42,600 ton-miles. -Products and materials must arrive at the destination in the same condition as when it was tendered for the shipment.

Poor Planning/Preparation

-Some firms fail to create a change management plan with a staged, logical approach to adopting new technologies. This can cause supply chain disruptions and problems. -Other firms do not prepare employees for new technology. This leads to suboptimal use of technology as employees do not understand the full array of software capabilities. -Some organizations do not dedicate adequate capital for technology installation and implementation. Investments in implementation is equally important as the technology.

Complexity

-Supply Chain have become increasingly complex for frims in terms of number of SKUs, customer/supplier locations, transporting, trade regulations, and taxes -Steps need to be taken to simplify various aspects of SCs (number of SKUs have caused problems for inventory management and order fulfillment)

SCM Software Categories

-Supply chain software tools aim to harness the computational power and communication abilities of technology so to plan, execute, control, and report on SC activities. -4 main categories: Planning, Execution, Event Management, Business Intelligence

Supply Chain Technology

-Technology innovation has facilitated the evolution of SCM. Ultimately, innovative technologies enable fast execution of supply chain strategies. -Automatic Identification (Auto-ID) refer to technology that helps machines identify objects, including: -Barcodes (Linear and 2D symbologies) -Radio-Frequency Identification (RFID)

Transportation Based

-The 3PL serves as the organization's private fleet and devotes a management team, drivers, and equipment to a customer (e.g., UPS; FedEx; Schneider;Penske). -Provide a wide array of services - extends beyond typical transportation activities for a more comprehensive offering.

Air Industry

-The air cargo industry is competitive. As of winter 2015, there were 29 US all-cargo carriers for domestic and/or international service (of all carriers, top 50 move >90%). -Cost structure entails high variable costs in proportion to fixed costs (similar to motor industry) and air carriers do not invest heavily in facility infrastructure or their byways. -Governments build the terminals and provide traffic control, but air carriers do pay variable lease payments and landing fees. Equipment is expensive, but small portion of total cost.

Chp 1 summary

-The concept of supply chains is not new - organizations have evolved from physical distribution management to logistics management to supply chain management. -Integrated supply chains boundary span across members and require managing three key flows - products/services, information, and financials. -The challenge to develop and sustain an efficient/effective supply chain requires members to address several issues: supply chain networks, complexity, inventory deployment, information, cost and value, organizational relationships, performance measurement, technology, transportation, and supply chain security.

Chapter 10 summary

-The five modes of transportation are motor, rail, air, water, and pipeline. Each industry is unique, has several carrier and equipment options, a set of strengths and weaknesses, as well as product and shipping characteristics. -Global transportation introduces more options as well as more complexity (e.g., land bridges, storage, customs). -Terms of sale clarify delivery and payment terms agreed upon by seller and buyer. Freight must be accompanied by documents that spell out the shipment details

Accurate

-The information must be correct and depict reality; otherwise, it will be impossible to make appropriate decisions (inaccurate data leads to many problems). -Example: Retailers rely upon checkout clerks to accurately scan each item sold scans drive replenishment system. -If a clerk scans a bottle of soda four times when four flavors were actually purchased, the inventory will be inaccurate and the wrong product will be replenished (over and short)

Timely

-The information must be up-to-date as well as shared in a reasonable time frame - supply chain managers need the knowledge embedded in real-time data. -Importantly, accuracy and timeliness are at odds with one another. For example, conditions may change over time. -Note: Since international supply chains essentially operate 24 hours a day, military time is often used

Pipeline: carrier options

-The network of oil and natural gas pipelines that serve the U.S. is not owned by a single entity. Generally for-hire, but private companies also maintain their network. -For-hire carriers move different liquids through their system at the same time, separated by a batching plug that protects the integrity of individual products (slurry is not as common). -Private companies (power or chemical) may operate a small pipeline network between their plants. Natural gas pipelines may range from large, regional to small, municipal systems.

Motor: Industry

-The trucking industry is highly competitive. As of spring 2015, there were 532,024 interstate motor carriers and intrastate hazardous materials motor carriers (i.e., US). -Economic structure contributes to the number of carriers: No significant entry barriers; reasonable entry expenses. -High-variable, low-fixed cost industry: Most expenses are related to shipping; limited terminal and equipment need.

Logistics Activities (manager might be responsible for)

-Transportation -Storage -Industrial Packaging -Materials Handling -Inventory Control -Order Fulfillment -Procurement -customer service -forecasting -prodcution planning -facility location -others: return goods handling, parts and service support, salvage and scrap disposal

Pipeline Industry

-U.S. has the largest network of energy pipelines of any other nation. About 339 operators of hazardous liquids (crude oil; petroleum) and 967 involved in natural gas. -High-fixed, low-variable cost industry: Most expenses are related to building right-of-way; minimal labor is required. -Construction of a pipeline becomes cost effective when product flows continuously, spreads out the fixed costs.

Transportation Execution

-When a shipment needs to be moved across the supply chain, decisions must be made regarding the shipment size, route, delivery method; freight documents must be prepared; in-transit issues fixed; and service monitored. -Terms of Sale: Free-on-Board (Origin and Destination) -Documentation: Bill of Lading, Freight Bill, Claims Form

Accessibility

-determines whether a particular mode can physically perform the transport service that is required. -The mode's ability to reach origin and destination facilities and to provide service over the specified route in question (A to B)

Materials Handling

-focuses on activities, equipment, and procedures related to the movement, storage, protection, and control of materials within a system. -logistics, the focus is efficient short-distance movement of products and materials within the confines of a factory, distribution center, cross-dock, or transportation terminal. -The general objective is to create a more productive, safe, and efficient operation. Four critical dimensions (pg. 499): (1)Movement; (2) Time; (3) Quantity; and (4) Space.

Inventory Deployment

-important consideration for supply chains because of the associated costs and related opportunities for increased efficiency - inventory is a major requirement of successful supply chains, but these inventory levels must be managed carefully so to reduce working capital -a phenomenon observed in poorly managed forecast-driven distribution channels is the bullwhip effect (oscillating demand magnification upstream a SC)

Logistics in its simplest form includes

-inbound logistics of materials management -Outbound logistics of physical distribution

Logistics should be viewed as?

-part of supply chain management and has four subdivisions, including business, military, event, and service -All four have common characteristics and requirements but they also have differences in their primary purpose -All four can also be viewed in a supply-chain context. -Focus of this class is business logistics management

Procurement

-process of managing a broad range of processes that are associated with a company's need to procure goods and services that are required to manufacture a product (direct) or to operate the company (indirect). -Examples: Product/service sourcing, supplier selection, price negotiation, contract management, transaction management, and supplier performance management. -Transportation costs relate directly to geographic loction (distance) of raw materials/component parts purchased for manufacturing (balance inventory and transporting costs)

Third Party Logistics (3PL)

-refers to a wide range of instances where commercial firms provide and/or manage logistics services on behalf of their clients and customers. -Terms, Advantages, Disadvantages -Major 3PL Types (Logistics Services) -Customers of 3PLs (Profile) and 4PLs -Legal Definition: Person who solely receives, holds, or otherwise transports a consumer product in the ordinary the course of business but does not take title to the product. -Depending on the company and its positioning within the industry, the terms contract logistics and outsourcing are sometimes used in place of third-party logistics -Essentially, a 3PL is defined as an external supplier that performs or manages the performance of all or part of a company's logistics functions.

Reliability

-refers to the consistency of the transit time of the modes of transportation (statistical variation in transit time). -Reliability is just as, or even more, important than speed as it impacts SC firm's ability to plan operational activities (i.e., forecast inventory, schedule production, safety stock levels).

Cost

-refers to the rate for moving the freight from origin to destination plus fees for any additional services provided. -Factors: Weight of the shipment, distance from the origin to destination, nature or value of freight, and required speed.

Challenge in developing and sustaining an efficient and effective supply chain requires organizations to address a number of issues

1) Complexity 2) Inventory Deployment 3) Others: Supply Chain Networks, Cost and Value, Organizational relationships, performance measurement, technology, transportation management, supply chain security

4PLs Differ from 3PLs

1.A 4PL is a separate entity that is established as a joint venture or long-term contract between a client and one or more partners. 2.A 4PL acts as a single interface between the client and multiple 3PL service provider firms. 3.All aspects of a client's supply chain are managed by the 4PL

IT Solutions (10 golden rules for success Fevilla and Fearne)

1.Secure the commitment of senior management. 2.Remember that it is not just an information technology project. 3.Align the project with business goals. 4.Understand the software capabilities. 5.Select partners carefully. 6.Follow a proven implementation methodology. 7.Take a step-by-step approach for incremental value gains. 8.Be prepared to change business processes. 9.Keep end-users informed and involved. 10.Measure success with key performance indicators (KPIs)

Customer Service

2 dimensions of customer service are important -Interacting directly with a customer to influence or take an order. Ability to promise the customer, at the time the order is placed, when the order will be delivered to customers. -level of customer service a company offers to its customers. Logistics plays an important role in delivering on the promises (e.g., order fill rates and on-time delivery).

Chapter 4 summary

3PLs may be viewed as an"external supplier that performs all or part of a company's logistics functions. "It is desirable that these suppliers provide multiple services, and that these services are fully integrated. -3PLs can be transportation-based, warehouse/distribution-based, forwarder-based, financial-based, and information-based suppliers. -The two most basic types of supply chain relationships are vertical (e.g., buyer-seller) and horizontal (e.g., parallel). In terms of intensity of involvement, relationships range from transactional to relational. -Collaborative relationships have been identified as highly useful to the achievement of long-term supply chain objectives.

Types of 3PL Providers

3PLs often promote themselves as providers of a range of logistics services - it is useful to categorize them into one of several ways (Note: non/asset; non/leveraged). -5 most common categorization include -Transportation Based -Warehouse/Distribution Based -Forwarder Based -Financial Based -Information Based

Encourages appropriate behavior

A basic principle of management is that the measures/metrics will drive behaviors (productive vs. playing games with system). -Example: If a warehouse manager is measured by cubic space utilization, she will attempt to keep the warehouse filled (↑ICC)

Modal Selection Criteria

A critical transportation management issue is modal selection; it affects how products flow within the SC. Five mode determinants and two key characteristics.

4PL

A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution." -Firms that provide a broader scope of services to assist in managing the various elements in the entire supply chain. -The primary value-adding service offered by 4PLs is managing several distinct providers of 3PL services

IT Challenges People

According to a CSC study, people are the major barrier to the effective use of information technology; whereby, 50% cite "lack of understanding" as the primary issue

Forecasting

Accurate forecasting of inventory requirements is essential to manufacturing efficiency, inventory control, and customer satisfaction (i.e., logisticians should help develop).

Order Fulfillment

All activities performed to fill and ship customer orders. 4 basic processes Order Transmittal(1)-customer transfers order information to supplier Order Processing(2)- Stock checking, accuracy checking, credit checking, back ordering/order cancelling, transcripting, and billing Order Preparation(3)- Product retrieval, production, or purchase, packaging, scheduling delivery, and shipping documents Order Delivery(4)- Order is transported and arrives at the set location

Other Activities

All aspects in developing reverse logistics systems that allow used, broken, or obsolete products to be returned to suppliers. Return goods handling; salvage/scrap.

Time Charter

Allow the use of a ship for an agreed-upon time period (carrier supplies crew and has no expenses).

In-transit storage area

Allows shipper to perform required operation on the cargo before embarkation (waiting for documents, packing, crating, or labeling).

A supply chain is?

An extended enterprise that crosses the boundary of several firms to span their related activities of all companies involved in the supply chain.

Promotion

Any promotional efforts to stimulate sales should be communicated to logistics managers so that adequate quantities of inventory will be available for distribution.

SCM Business Intelligence Software: TMS

Build on traditional reports and outputs that provided historical data on functional performance for internal planning, operations, and control (graphical display). Two key TMS business intelligence applications are: -Performance Reporting & Scorecarding: Automates the collection of data, measurement of KPIs, and dissemination of periodic reports capable of generating custom reports. -Freight Bill Auditing: Automates the manual transportation carrier invoice process via reconciling invoices to contracts; thus, avoiding under-/over-charging for freight services

Refined Product Pipelines

Carries petroleum products from refineries to large fuel terminals with storage tanks. Line size varies from small, up to 42 inches in diameter

Supply Chain

Cash-to-Cash is the first true metric that can bridge across three companies within the supply chain

Accounting

Cash-to-Cash offers a measure of liquidity (how quickly can the company convert assets to cash)

Production Planning

Closely related to forecasting in terms of effective inventory control. After forecast is developed and on-hand inventory and usage rate are determined, then plan

Supply Chain Collaboration

Collaboration refers to a business practice that encourages individual organizations to share information and resources for the benefit of all. It is a business practice that requires: -Parties involved to dramatically share information. -Benefits gained by parties to exceed individual benefits. -All parties to modify their business practices. -All parties to conduct business in a new/different way. -All parties provide a mechanism/process for collaboration.

Index

Combines 2 or more supply chain performance metrics into a single value. Logistics performance index (world bank)

Price

Companies may offer a discount schedule for larger purchase quantities, which should be known to logisticians

manifest trains

Contain a mixture of equipment/freight for multiple customers. Travel through multiple rail yards where cars are added/removed (requires classification).

Logistics Definitions (Business)

Council of Supply Chain Management Professionals (CSCMP) and Seven R's of Logistics (Customer Perspective)

Charter carrier

Customer-specific route, tailored service

Service Quality

Doing things right the first time according to customer-defined requirements and expectations. "Seven Rs" identify the focus/scope of transportation service quality KPIs.

High Complexity

Due to transaction volume, complex rate structures and/or specialized fees/services

Measure

Easily defined with no calculations and with simple dimensions (Trying to measure performance) ex: Industrial packaging, miles traveled, sales revenue )just counting so no calculations, units of inventory and backorder dollars

Labor and Resource Productivity

Ensure people or facilities are performing at acceptable levels (units processed/labor hr).

Resource Efficiency (Performance)

Evaluates one's ability to accomplish key tasks and the overall efficiency of operations

Measure what is Important

Firms oftentimes measure processes for which large amounts of data are available. -Just because data are available to calculate a metric does not mean the metric is important. In some cases, data are difficult to generate for important metrics

Item-Level KPIs

Focus on costs as per unit of measure (distribution is pallet, case, order) and (transportation is pound, case, selling unit).

Aggregate Efficiency

Focus on the total spending versus the goal or budget (applicable for both distribution and transportation activities).

Hold-on-Dock Storage

Free until the vessel's next departure dating, allowing the shipper to consolidate goods and to save storage costs.(carrier provides it)

For-Hire Fleets

Freight is moved by a 3PL company

Private fleet

Freight(-goods carried by a vessel or vehicle, especially by a commercial carrier; cargo) is owned by company (Pepsi).

Lines

Gathering lines are small (between 2 and 8 inches in diameter). Trunk lines are medium size (8 - 24 inches). Lines can be above ground or underground (underwater).

Seven R's of Logistics (Customer Perspective)

Getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and the right cost.

Small Package Carriers

Handle shipments up to 150 lbs. and move multiple shipments on a single van/truck (UPS)

Truckload Carriers (TL)

Handles a single large shipment or trailer that exceed 15k lbs. or use the full cubic capacity.

Facilitate Trust

If a measure/metric does not facilitate trust between departments or supply chain firms, complying with the prior characteristics makes little-to-no difference

Summary Chapter 6

In order for supply chain managers to utilize the information for decisions, it must be accessible, relevant, accurate, timely, and transferable. -CSC study identifies major barriers/challenges that must be addressed to make SC technology work as intended, solutions to these barriers/challenges have been offered. -SC software tools fall into general categories: Planning for scheduling and optimization, execution for operations, event management to monitor exceptions, and business intelligence that automates KPI reporting and invoicing. -Automatic identification technologies, including barcodes and RFID systems, facilitate tracking capabilities

Easy Understand

Individuals better understand a measure/metric when they are involved in its definition and calculation (i.e., origin and purpose).

Inventory Control

Inventory can be found in manufacturing facilities and warehouses. Inventory control has two dimensions -Assuring Adequate Inventory Levels: Requires monitoring current inventory levels and placing replenishment orders or scheduling production to bring inventory levels up to a predetermined level -Certifying Inventory Accuracy: to assure that the actual physical inventory levels match those shown in the information system, cycle counts are taken of items every period during the year

Distibution

It is important to monitor the required process time, from initial receipt until the release to the transportation provider

High Errors Tendency

Large-dollar errors and repetitive, small-dollar mistakes that if not corrected, drive up costs substantially.

Proactive

Leading firms push metrics to their owners so they can react immediately. Employees may act upon more quickly due to little/no effort to see them (means that reports are being actually performed or runned and pushed out to employees)

2 major execution softwares

Load Tendering- Rather than subjectively assigning loads, a TMS database verifies which carriers are eligible to move the freight and then tenders the load to the best carrier. Appointment Scheduling- TMS tools provide the real-time visibility necessary to make appointment scheduling easier and more accurate (i.e., automate the scheduling function)

Containerized freight

Loaded into or onto storage equipment (container or pallet) at the origin and delivered to the destination in or on that same equipment with no additional handling.

Transit Sheds

Located next to piers for temporary storage. Port usage fee includes a fixed number of free storage days, then a daily charge.

Facility Location

Logisticians should have input since site location changes could alter the place and time relationships among facilities/markets or among supply points and facilities.

Supply Side

Logistics is responsible for the materials management activities that support production. Stock-outs may result in a plant shutdown or retail lost sales, whereas unnecessary excess inventory increase ICC.

Defined and Mutually Understood

Measure/metric has been defined by and/or agreed upon by the main process parties (both internal and external parties).

bill of lading

Most Important Transportation Document: Sets Terms of Shipment; Document of Title -Provides all information the carrier needs for the move. -Stipulates the transportation contract terms (i.e., liability). -Acts as receipt for goods the shipper tenders to the carrier. -In some cases, specifies the certificate of title to the goods

Unit trains

Move entire blocks of cars that carry a single commodity from an origin to a destination; thus, one type of railcar is used (priority schedules and no classification).

Air Cargo

Move freight packages and letters/envelopes. Can be separated on basis of their service capabilities:

Less-than-truck load (LTL)

Moves a number of various shipments ranging from 150 to 15,000lbs (hub and spoke)

Metric

Needs definition, involves calculation or a combination of measurements, and often a ratio ex: Liquidity, miles per dollar (rates), inventory turns and sales dollar per SKU

IT Executives

Often fail to fully understand the business processes for which technology is being purchased (i.e., poor technology selection and implementation)

Internal Performance

Organizations must balance customer expectations with operation expenses (i.e., focal firm operational performance - improvements) Example: Orders Shipped Complete

Industrial Packaging

Protects goods during both transportation and storage. Materials include cardboard boxes, plastic bins, stretch wrap, wooden crates, banding, foam, bags, and so on. -The main purpose that industrial packaging serves is to protect the product from damage, which is distinct from consumer packaging that serves marketing/ promotions -Transportation mode affects packaging requirements. In analyzing the modes, logisticians often examine how the choice affects industrial packaging (total logistics cost). -An activity that occurs on the the interface of logistics and manufacturing, where most companies assign this as a logistics responsibility.

TL Carriers

Provide direct service from the origin point to delivery point, without stopping at freight handling terminals

Integrated Carriers

Provide door-to-door service, offer scheduled pickup and delivery window times, expedited service via hub-and-spoke (domestic next and 2nd day)

Asset and Equipment Utilization:

Provide objective indication that assets or equipment are effectively used (capacity or idle)

Linehaul

Provide service between major markets and customers within those markets (e.g., Class I railroads). Provide a full array of interregional or regional services

Shortline

Provide the local and regional links between customers and the national network of Class I railroads. Serve small markets and facilitate the interline process

Possession Utility (Marketing)

Refers to satisfaction that comes from enjoying a product or service. The satisfaction results from "consuming" the product/service as intended (e.g., leasing; installation).

Form Utility (Production)

Refers to the value added to goods via manufacturing or assembly processes. Resulting from when raw materials or components are combined to make finished products.

Time

Refers to the value-added to a good/service by having it at a demand point at a specific time when it is needed (i.e., not only where but also when needed).

Quantity

Refers to the value-added with delivering the proper quantities of an item to where it is demanded (i.e., where, when, and how much)

2 main planning applications include

Routing and scheduling-Uses mathematical methods and optimization routines to evaluate possible combinations in which routes could run and chooses the most economical. Load Planning- Builds database of package dimensions, loading instructions (i.e., top load, upright), and equipment capability - within seconds optimizes container utilization

Transload Freight

Shipment is handled and transferred between the transportation equipment multiple times (e.g., bulk, raw material that is pumped, scooped, or conveyed).

Customer Service

Significant trend is that marketers recognize the strategic value of "place" in the marketing mix and increased revenue and customer satisfaction due to logistics service.

Reactive

Some organizations state that metrics are available in the system for employees to see and use. This means that the employees must attempt to find them. (Can tell the difference in measure or metric is important to the company)

Intermodal Freight Containers

Standardized reusable steel box used for safe, efficient, and secure storage and movement of freight in a global containerized intermodal freight transport system

bonded warehouses

Storing, repackaging, sorting, or clearing imported merchandise entered for warehousing without paying duties while goods are stored (≤ 3 years)

Advantages/disadvantages of Motor/truck

Strength- Accessibility, transit time, reliability, product safety Weaknesses- Capacity, cost Primary Product Characteristics- High value, finished goods, low volume, electronics; food

Advantages/disadvantages of Rail

Strengths- Capacity, cost Weaknesses- Accessibility, transit time, reliability, product safety Primary Product Characteristics- Low value raw materials, high volume, grain chemicals

Advantages/disadvantages of Air

Strengths- Transit time, reliability, product safety Weaknesses- Accessibility, capacity, cost Primary Product Characteristics- high value, finished goods, low volume, time-sensitive, pharmaceuticals online purchases

Advantages/disadvantages of Water

Strengths-capacity, cost Weaknesses- accessibility, transit time, reliability, product safety Primary Product Characteristics- low value, raw materials, high volume, containerized goods)

Advantages/disadvantages of Pipeline

Strengths-reliability, in-transit storage, cost, capacity Weaknesses- Accessibility, transit time Primary Product Characteristics- low value, commodities, liquid, gas, slurry, gasoline, natural gas

Relevant

Supply chain managers need pertinent information to make decisions. They must know what information is needed and be able to quickly acquire only that which is applicable to their current situation. -Goal: Avoid being overwhelmed by extraneous data that are not valuable to the decision-makers and essentially waste their time

TERMS OF SALE: free on board

Terms of sale clarify the delivery and payment terms agreed upon by a seller and buyer (responsibilities begin and end).

Freight Bill

The carrier's invoice for fees charged to move the shipment - this document reports the shipment, origin and destination, consignee, items, total weight, and overall charges (based on negotiated rate)

External Performance

The objective is to meet the customer expectations (i.e., customer-facing KPIs - measures the customer's experience or perceptions) Example: Orders Delivered Complete

Logistics/Marketing: Product

The physical attributes of products (i.e., shape, weight, size, and consumer packaging) is often determined by marketing, but affects the logistics system: Modes of transportation, equipment needed, damage rates, storage ability, materials-handling equipment, Industrial packaging

Council of Supply Chain Management Professionals (CSCMP)

The process of planning, implementing, and controlling procedures for the efficient and effective transportation and storage of goods including services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements

Supply Chain Orientation (SCO)

The recognition by an organization of the systemic, strategic implications of the tactical activities involved in managing the various flows in a supply chain

Process Measure Categories

The three major process categories that provide a useful way for examining logistics activities performance include, time, quality, and cost

Process Measure categories

Time -on time delivery/receipt -order cycle time -order cycle time variability -response time -forecasting/planning cycle time Quality -overall customer satisfaction -processing accuracy -perfect order fulfillment -on-time delivery -complete order -accurate product selection -damage-free -accurate invoice -forecast accuracy -planning accuracy -budgets and operating plans schedule adherence Cost -finished goods inventory turns -days sales outstanding -cost to serve -cash-to-cash cycle time -total delivered cost -cost of goods -transportation costs -inventory carrying costs -material handling costs -information systems -administration -cost of excess capacity -cost of capacity shortfall Other/supporting -approval exceptions to standard -minimum order quantity -change order timing -availability of information

FOB Origin

Title (ownership) changes at origin - shipping point or the seller's DC loading dock. The buyer generally pays the transportation carrier.

FOB Destination

Title (ownership) changes at the destination-typically at the buyer's unloading dock. The seller generally pays the transportation carrier

Bareboat/demise charter

Transfers control of the vessel to the charterer, who is responsible for all costs and crew.

Claims Form

Transportation buyer files this document with the modal carrier to recoup monetary loss. Carrier liability is limited if goods are sent under a released value (i.e., undervaluing freight for lower rates)

LTL Carriers

Use a hub-and-spoke network of terminals to sort and consolidate shipments moving to a particular area.

Liner Carrier

Various ships, standard service, fixed route

The ranges of supply chain relationship types extends from that of?

Vendor(Arm Length)-Represented simply by a seller or provider of a product or service, such as there is little or no integration or collaboration with the buyer or purchaser. Strategic Alliance- Two or more independent organizations cooperate and willingly modify their business objectives and practices to help achieve long-term goals and objectives.

There are two general types of logistics relationships

Vertical Relationships- Refers to traditional linkages between organizations that make up the supply chain such as retailers, distributors, manufacturers, and raw parts/materials suppliers. Horizontal Relationships- Includes business agreements between firms that have "parallel" or cooperating positions in the logistics process (e.g., service agreement between two or more 3PLs)

3 types of collaboration

Vertical-Refers to collaboration typically among buyers and sellers in the supply chain. Horizontal-Refers to a relationship that is buyer to buyer and/or seller to seller, and in some cases even between competitors. Full-Refers to the dynamic combination of both vertical and horizontal collaboration. Oftentimes, it is here where dramatic efficiency gains occur.

Prior to discussing the specifics about logistics and supply chain performance methods and tools, two questions need to be answered

What is the difference between a measure, a metric, and an index? What are the 10 characteristics of a good measure and metric?

High Content Value

When raw data assets are effectively converted to business intelligence.

Supply Chain (SC)

a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, services, finances, and/or information from a source to a customer.

Postponement

a strategy that minimizes risk by delaying further investment into a product until the last possible moment (time, place, and/or form)

Qualitative metrics _

are suited to measure perceptions or assign performance categories (excellent, good, or poor). -Qualitative metrics can be converted into quantitative data. For example, a transportation carrier is rated 'excellent' if it has one late delivery for 100 attempts (# assigned to word)

intermodal transportation

combining two or more modes of transportation -Benefits: Greater accessibility via linking individual modes; overall operational efficiencies; and facilitates global trade. -Land Bridge: Substitutes land transportation for part of a container's ocean voyage, taking several days off a longer transit time and saving in-transit inventory costs.

Voyage charter

contracts covering one voyage (carrier agrees to carry cargo from the origin to final destination)

Cost is a measure for __

efficiency (ability "to accomplish something with the least waste of time and effort...").

Business Executives

expectations of IT capabilities are too high (i.e., purchase based on hype/promised benefits without real knowledge on business impact).

Logistics

in its simplest form, includes inbound logistics of materials management as well as the outbound logistics of physical distribution

Cost-Benefit Analysis

in many c and effort are devoted to collecting specific metric, while the resulting

Product Safety

is critical to the achievement of customer service, cost control, and the overall SC's effectiveness (precautions must be taken to protect the freight in transit).

A good measure/metric

is quantitative is easy to understand encourages appropriate behavior is visible is defined and mutually understood encompasses both inputs and outputs measures only what is important is multidimensional uses economies of effort facilitates trust

Transit Time

is the total elapsed time that it takes to move goods from the point of origin to the point of destination. -Impacted by mode speed and the mode's ability to handle pickup and delivery responsibilities (i.e., pickup, terminal handling, linehaul movement, delivery).

Private carrier

mostly domestic water (coal barges)

Combination

move freight and passengers with cargo loaded in belly of the aircraft (United, Delta, American).

Intermodal train

move products from a high-volume orgin (port) to major markets where containers are offloaded and given to a motor carrier for final delivery

Physical Distribution (Outbound)

movement and storage functions associated with finished goods from manufacturing plants to warehouses and to customers

A most commonly used and misunderstood logistics metrics is __

on-time delivery (what is airline on-time departure?

Logistics Management Definition

part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption in order to meet customer requirements. -"Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements -Logistics management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning, and management of third party logistics services providers -To varying degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service. It is involved in all levels of planning and execution-strategic, operational, and tactical -Logistics management is an integrating function which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions, including marketing, sales, manufacturing, finance, and information technology."

Supply Chain Management is the art and Science of integrating the flows of __

prodcuts/services, infomation, and finances through the entire supply pipeline from the supplier's supplier to the customer's customer

Nonintegrated Carriers

provide on-demand, air-only service from airport to airport. Movements to and from airports are handled by other 3pl providers or customer

Rail: Industry

railroads fall under the label "natural monopolies" As of Fall 2015, there were 575 railroads in the US, but the industry is dominated by only seven Class I companies -Economic structure contributes to few carriers: requires large investments(equipment, terminals, track); Requires capacity (fewer permit large scale moves)

Materials Management (Inbound)

the movement and management of materials and products from procurement (suppliers) through the production process

Five Principal types of economic utility add value to a prodcut/service through various activities. In general, logistics is credited with _

time, place, and quantity utility; production with form; and marketing with possession.

Motor equipment

triple-(26-28 each) Turnpike double(45-48 each) Tracker-Trailer(40-53) Flatbed (misc) Reefer (Refrigerated) Tanker(liquids) Box truck(13-24)

Storage

two separate but closely related activities -Inventory Management: how much to order, when to order, where inventory should be held, and what line items should be available at specific locations -Warehousing: What functions will be performed, how many warehouses are needed, where to locate these warehouses, and what size of warehouses

Relationship Differences

•Duration •Obligations •Expectations •Interaction/Communication •Cooperation •Planning •Goals •Performance Analysis •Benefits and Burdens