business logistics chapter 1 (part 2)

Offshoring (Globalization opportunity)

Moving manufacturing and distribution operations to countries with favorable labor cost and tax laws. .

Logistics Labor - Transportation

Transportation is an area with growing labor shortages due to the rapid growth in online shopping that is creating strong demand for delivery drivers. The industry is facing a record shortage with an estimated 50,000 more drivers needed to meet demand, according to the American Trucking Associations. The lack of available drivers is rippling through the supply chain, causing a bottle neck of goods_that is delaying deliveries_and prompting some companies to increase prices by as much as 20%. Driverless trucks are one proposed long-term solution to the problem, but there are more practical solutions: Increased Pay Flexible Schedules Benefits, etc.

Automating the recruiting process

from online applications, pre-hire testing, onboarding, and increasing the quantity and quality of applicants for positions. Working closely with universities and colleges to promote the career opportunities available in supply chain management while helping prepare students to enter the industry.

Forward deployment of inventory

generally postponed until customer orders are received. When customer orders are received, the orders are either delivered directly to the customer (for example, from strategic warehousing locations or the specific items are expedited to the local distributor Advantages are manufacturing economies of scale along with responsiveness to customer Often used for critical, high cost parts and assemblies)

Artificial intelligence (AI)

is intelligence demonstrated by humans_, in contrast to the natural intelligence displayed by humans AI has the ability to analyze the patterns_of today's operations to predict the possible outcome_of tomorrow's scenarios. This can be used to automate lower-level decision-making. Managers can then concentrate on high-level decision making Masses of data are not only generated, but analyzed, linked and patterned. It is all about the knowledge that can be drawn from the data AI offers a wide range of applications in the supply chain. Intelligent or autonomous technologies such as robots, drones, vehicles or appliances facilitate logistical coordination and organization in warehouses.

Assembly postponement

is relevant for companies with modular product design. Having base material in modules , and a flexible design, it is possible to construct various end-products from the modules in one kit. (example: Customers buy IKEA furniture products in flat pack boxes and assemble the product themselves at home. )

Distributed Inventory

means moving the product closer to the customer. This strategy was prompted by the desire to speed up delivery for e-commerce business. Of all the factors currently shaping trends in supply chain and logistics, ecommerce continues to be one of the most influential. Companies are shifting fulfillment from large regional warehouses to smaller, decentralized facilities strategically positioned near the customer_. The strategy involves keeping inventory in multiple distribution centers _. It reduces the time from a customer placing an order to the product being delivered while simultaneously reducing shipping costs. This means higher customer satisfaction rates and higher sales numbers with shorter delivery lead time.

Global logistics operations (Global Logistics offers Unique Challenges)

must deal with significant diversity in the workplace and various local operating environments. How consumers demand products and services must be set up to accommodate cultural variations.

Warehouse automation is

only a part of the solution to a company's fulfilment needs, and it is expected to only mitigate, not solve, the labor imbalance. The labor shortage cannot be solved with automation in the short-run. Companies simply cannot retool quickly enough.

Depth (Globalization Expanding the Supply Chain)

second and third tier suppliers and customers

Distance of typical order-to-delivery operations (Global Logistics offers Unique Challenges)

significantly longer .for global logistics compared to domestic logistics.

Documentation requirements for business transactions (Global Logistics offers Unique Challenges)

significantly more complex

Packaging postponement

when goods, that might be offered in different packages (size of package, etc.) are not packaged until the last moment . This practice allows for the storage of finished products unpacked, and minimize the risks of excessive stocks. (Example: Producing pharmaceutical drugs in bulk dosage form and delaying putting the drug into the final packaging configuration until shortly before the product is needed to support demand. Can vary type of package, quantity count, etc.)

Labeling postponement

when product differentiation takes place only by a _putting a label on a package _. This type of postponement is useful, when companies use different markets. (Examples: Private labels of the retailers Printing labels "best before" Printing informative labels in the language of the country where product is going to be sold)

Time postponement (a.k.a., Geographic or Logistics Postponement)

where a fully stocked inventory is maintained at a one or only a few strategic locations.

Logistics labor shortages

will continue through 2019 and beyond. wages will continue to rise_due to demand. While the talent gap remains a significant challenge, solutions are starting to emerge. Companies need to be more creative_about how they recruit and retain workers. Using a proactive and multi faceted approach_to recruiting and retention in tight labor markets.

Breadth (Globalization Expanding the Supply Chain)

- foreign manufacturing, office and retail sites, foreign suppliers and customers (Mature and emerging international markets have become a part of the overall business growth strategy for many companies.)

Demand Exceeds Local Supply (Globalization opportunity)

90% of global demand is not fully satisfied by local supply. Global supply market offers more options.

time postponement example

A "hub-and-spoke" warehouse network A centralized warehouse (i.e., the "hub") holds most of the inventory. It is linked to a series of smaller decentralized and 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. The hub warehouse feeds the spoke warehouses with inventory as necessary. Operating costs are lower because the spoke warehouses are smaller than in a purely decentralized model. (Inventory is also lower than in a purely decentralized model as all of the safety stock is held centrally Which generally means that less total safety stock is required as all of the risk and uncertainty is managed centrally)

Augmented Reality (AR)

AR offers numerous assistive technology_to facilitate the everyday work of employees, particularly in the areas of logistics, manufacturing, and warehousing. Example, hands-free picking with AR, where wearable technology such as smart glasses, displays all relevant information in the user's field of sight exactly when they need it. This way, picking tasks and barcode scanning can be done simultaneously. Smart displays, glasses or simulators can significantly simplify_and improve_future tasks in the supply chain. AR can also be beneficial to customers when making purchases; it may enable them to view or test a product virtually, or to visit a virtual store. In the long run, this new consumer behavior will have an impact on the retail supply chain, with fewer items stored at the point of sale and faster shipping from local warehouses. Gartner predicts that by 2022, 70% of enterprises will be experimenting with immersive technologies, and 25% will have deployed to production.

A typical cross-border shipment now involves: (Global Logistics offers Unique Challenges)

Accurately completing and filing about 35 documents Compliance with > 600 laws & 500 trade agreements which are constantly changing. Interfacing with about 25 parties, including customs, carriers, freight forwarders, government agencies, etc.

What's Next for Supply Chain Management? (1)

As the supply chain continues to evolve, it's critical for companies to adapt to emerging technologies and strategies The pace of change supply chain management continues to accelerate, and it's only going to get faster. With the _explosion of e commerce, things are moving at internet speed in both the B2C and B2B markets. Supply Chain Management has transformed from an often-overlooked cost center into a vital segment of operations that can be turned into a competitive advantage.

Strategic Sourcing (Globalization opportunity)

Identifying and matching the sources of raw materials and components to manufacturers and distributors using the global market.

combined postponement

In combination, manufacturing and time (or geographic) postponement involves keeping the basic products decentralized . and performing the final product customization at the destination distributor , rather than at the manufacturing site (Examples: Automobiles Installing options like sound systems, GPS, roof racks, trailer hitches, sun roofs on new cars at the dealership. Computers Packaging / bundling additional system options like printers, digital cameras, software, etc., along with the computer at a distribution center.)

Blockchain

, also known as a distributed ledge_, is a shared datbase_creating a permanent transaction record that can be changed only with the permission of the other members of the network. Adapting Blockchain to track physical objects in the supply chain will require knowing who is adding information to the chain. Some of the first applications in the supply chain are targeted toward food and pharmaceutical safety, tracking items to their source in case of a recall or as an anti-counterfeiting measure. It could be used to record any kind of exchange of value, smart contracts, payments and tracking. Blockchain could be used to certify the origin of products such as organic or non-GMO foods or conflict-free minerals. Initially, third-party service providers and very large enterprises will launch Blockchain services for their own supply chains. Eventually, it will increase the efficiency and transparency of the supply chains from warehousing to delivery to payments.

Logistics Labor - Warehousing

Due to the fulfillment demands of the e-commerce boom, warehouses are finding it increasingly difficult to fill open warehouse jobs. The highly variable characteristics of today's e-commerce industry are causing retailers and distributors to seek out more adaptable and scalable solutions.

machine learning

Many of the more innovative logistics technology enhancements have included Machine Learning and Artificial Intelligence, and it is expected that these will be applied much more extensively across the supply chain in 2019 and beyond. Machine learning is the scientific study of algorithms and statistical models that computer systems use to perform a specific task _without using explicit instructions,relying on patterns _and data__instead. Machine learning is especially useful for large, dynamic data sets. Large amounts of data are _______________________in today's supply chains. Machine learning is applicable to a wide-range of logistics technologies, including enhancing warehouse management systems, robotic vision systems, supply chain planning, supply chain visibility, and more

Warehouse Robots

Omni channel fulfillment, escalating labor costs, and increased access to process automation solutions are changing the way enterprises run their distribution and fulfillment centers. Warehouse operations are growing more complex as customer orders become smaller, more numerous, and more varied in their composition. Throughput has to be faster_, costs need to be lowered_, and service quality must be of the highest standards to meet rising customer expectations. Autonomous Mobile Robots (AMR) were built to optimize the order picking , fullfilment process__and they are particularly suitable for e-commerce. The ability of the current generation of robots to work alongside humans while performing low-value tasks that increase overall warehouse productivity is applicable across a broad range of industries.

Everything as a Service (XaaS) Model

The market for cloud-based products is growing. Today, all types of supply chain tools, including warehouse and inventory management systems, transportation management systems and shipping systems can be accessed as a service. You simply subscribe_to it as service, paying for only what you need_. XaaS helps mitigate concerns with speed of implementation, cost of upgrades, and the overall lifecycle of the software For example, the acquisition cost of warehouse robots could be prohibitive for your business. But with Robotics as a Service (RaaS), you can scale up your services for peak times, and drop back when volumes return to normal. To some extent, the supply chain as a service is already available by working with 3PLs, and it's likely to become a more popular model in 2019 and beyond. Companies realize the value of using experts to run their operations, allowing them to focus on their core competencies.

Cash Spin (Financial Measurement of Time-Based Supply Chains)(3)

The potential benefits of reduce assets across a supply chain is referred to as cash spin. The concept is to reduce overall assets committed to supply chain performance. Free up cash to use in R&D, M&A, Advertising & Promo, etc. Such free capital can be reinvested in projects that might otherwise have been considered too risky. The benefits flowing from cash-to-cash conversion, reduced dwell time, and cash spin combine to increase the financial attractiveness of effective collaboration.

Dwell Time (Financial Measurement of Time-Based Supply Chains)(2)

The ratio of time that an asset sits idle to the time required to satisfy its supply chain mission (For example, the ratio of the time a unit of inventory is in storage to the time that it is moving or otherwise contributing to achieving sales or operational objectives. )

What's Next for Supply Chain Management? (2)

The supply chain is more diverse than ever before. New technical innovation_offer the opportunity to reduce this complexity. Transforming the supply chain from technology-enabled to technology-centric. The enormously increasing _complextiy_of markets as well as dynamically increasing customer requirements calls for trend-setting action from all industries. Companies will continue to concern themselves with ongoing trends in the areas of Artificial Intelligence (AI), the Internet of Things (IoT) and/or Blockchain.

cash to cash conversion (Financial Measurement of Time-Based Supply Chains)(1)

The time required to convert raw material or inventory purchases into sales revenue. A measure of how efficient your supply chain is at generating revenue. In manufacturing, a composite metric described as the average days required to turn the purchase of a dollar of raw materials into the collection of a dollar from customers for the sale of products or services. In simple terms, it is a calculation of the time between the outlay of cash and the recovery of the cash.

Dwell Time Minimization (Financial Measurement of Time-Based Supply Chains)(2)

To reduce dwell time, firms collaborating in a supply chain need to be willing to eliminate duplicate and non-value-added work. Timely arrival and continuous inventory flow between supply chain partners reduces dwell. A benefit of reducing dwell time and the associated logistics cost is the ability to reduce investment in inventory and related assets.

21st-Century Supply Chains

Twenty years ago, the supply chain of a typical company would report to manufacturing_, and be responsible mainly for inbound materials management and outbound shipping. (According to Supply & Demand Chain Executive magazine, today supply chain reports to manufacturing in only 6% of companies, while in 61% of companies, the head of supply chain position reports directly to the CEO, GM or president of the business. ) Consumers are increasingly price sensitive and less brand-loyal, resulting a permanent increase in _supply chain volatility End-to-end supply chain cost optimization will remain critical in the future ___risk and opportunity management __should span the entire supply chain, including the supply chains of key partners Most existing supply chain organizations are not truly integrated or empowered The lack of integration between product development and manufacturing functions are standing in the way of capturing the benefits of economic recovery

Warehouses are increasing adoption of

automation such as shuttle systems and autonomous mobile robots to meet the requirements of direct-to-consumer fulfillment.

Internet of Things (IoT)

concerns optimally networked devices know exactly what they have to do and when. In the supply chain, these could be smart sensors on manufacturing floors in order to efficiently manage planned and predictive maintenance work. These sensors could also be used to closely monitor and track stock and the entire inventory. This could allow you to optimally plan your future production. In the future, the number of networked devices will increase enormously, boosting efficiency and productivity in supply chain. The future of IoT is predicted to lead to a 15 percent productivity increase in the supply chain. Gartner estimates the number of networked devices will be 25 billion in 2021. However, it is a trend that poses major risks. The danger of a hacker attack increases with the number of connected devices. Therefore, the security aspect will play a more important role in the future.