SCM 300 Module 4

5 Modes of Transport

1. Road Primary Strengths: Fast (2nd fastest mode of transport), Cheaper than air. High flexibility (roads are everywhere, roads can take you from one mode to another), this is a highly competitive market so costs may be reasonable and shippers need to be reliable to survive. Typically, a vital component in intermodal transport. Gets your product right into the customer's hands. Primary Weaknesses: Weather, traffic, and crime may pose dangers and delays. Requires lots of licensed and reliable drivers. Fuel costs fluctuations. Rules and regulations may quickly change from one region to the next. When to use: if the shipment needs to be shipped rather quickly, at a reasonable cost, directly into the hands of a customer it would likely be a good idea to use road transport. 2. Rail Primary Strengths: Can handle heavier loads than road. Better for longer distances than road because fewer in-transit regulations. Cheaper than road transport. Works well in conjunction with intermodal ocean and/or road transport. More capable in poor weather conditions. Primary Weaknesses: Slow. Rails are not as easily accessible and available as roads. Loss can be higher due to vibrations during transport. Not a very competitive industry so reliability can be low. Getting product directly to customer using only rail is difficult. Access to infrastructure required for tracks and loading. When to use: Good for heavy and/or bulky shipments that do not need speedy delivery. Also good for items with low "value/weight" ratios. A good intermodal option for lengthy domestic shipments where speed is not vital. 3. Ocean/Water Primary Strengths: Low cost per mile for large, bulky, or heavy shipments. Almost anything can be shipped via ocean vessel. Works well in conjunction with intermodal rail and/or road transport. Primary Weaknesses: Very slow. Reliability of shipment can be low. Due to lengthy shipments, more exposure to the elements, thieves, and hazardous conditions. Getting product directly to customer using only ocean shipment is very difficult. Port capabilities (safety, handling, warehousing). When to use: Excellent for large and bulky international shipments that require low transportation costs, but do not require quick shipment. 4. Air -overnight carriers and freight carriers Primary Strengths: Fastest mode of transport. Minimal exposure to the elements, theft, and hazardous conditions. Can work well when linked with road transport in getting items into the hands of the customer. Fastest growing transport mode - becoming more affordable. Shorter lead times, lower inventory levels required, prevent downtime, increased shelf life. Primary Weaknesses: Extremely expensive. Not easily linked with rail and ocean. Cannot accommodate standardized containers. Requires accommodating airports on both ends of a shipment. When to use: An attractive option with items that have a high "value/weight" ratio. Especially useful when short lead times and low inventory levels are valued. In addition, useful when security and damage are significant concerns. ex: high insurance costs, overnight preference or emergencies, short shelf life. examples: diamonds, art, fine wines, cigars, race horses 5. Pipeline (for liquids or items that can be shipped in a slurry)

Primary packaging

In contact with the end item (plastic bag, can, bottle, shrink wrap) example: Advil bottle, wine bottle

Logistics

The branch of the supply chain responsible for developing the transportation itinerary and finding the appropriate transportation and storage business partners to successfully navigate the flow of materials from the point of origin to the final destination. **Part of supply chain 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. Logisticians are responsible for the coordination of all material flows throughout the supply chain. responsible for synthesizing information between supply chain partners to create large scale plans to ensure goods are available to consumers.

Cargo classifications

1. Bulk Cargo that is loose and free flowing. Bulk cargo is not in any type of bag, box, or packaging vessel. As such, bulk cargo is typically loaded and unloaded by being pumped, scooped, shoveled, etc. 2. Break Bulk Cargo that is packaged (box, bottle, can, etc.) and/or secured on a pallet. This type of cargo can then be placed inside of a standardized container or a truck trailer. 3. Neo-Bulk Typically these are large items that do not quite fit into either the bulk or break bulk categories. This might include vehicles, logs, and livestock. Neo-bulk items are typically not moved in standardized containers. *While every item that is transported has its own individual characteristics, these three cargo classifications help logisticians understand some of the likely issues related to their cargo.

Reasons for packaging

1. Consumer Related Reasons Marketing and Promotion Provide Product Information - Weight, Volume... Legal Considerations - Warning labels, nutritional info, safety seals, language... 2. Supply Chain Related Reasons Provides Protection - Light, Thieves, Dust, Moisture, Impact... Provides Support - Other products and/or boxes Preservation of Perishable Products - Longer shelf-life Facilitates Movement/Handling Boxes, shrink wrap, crates, pallets Easy for carrying, simplifies storage Easy to stack on pallets, slipsheets, shelves

Advantages of using Controlled Atmosphere Containers

1. Longer Transit Times Possible 2. Delay Aging / Ripening Process 3. Reduce water loss and weight shrinkage 4. Eliminates insects 5. Harmful gases removed

Central Return Center

A facility that performs a number reverse logistics functions typically related to returned consumer products.

Shipping Labels

A label that is often attached to inventory (typically affixed to a box) that contains information about the shipment. The label may contain information about the "buyer, seller, the shipper, the cargo, and any other data that may be important to the members of the supply chain. In addition, the label may have bar codes, RFID tags, or some form of encrypted code that will allow supply chain partners to quickly store or investigate shipment data. Shipping labels are vital in helping supply chain members quickly scan a box for important shipment details.

Pallets

A platform upon which large amounts of cargo can be securely placed for easy movement by a human-operated or automated forklift, pallet jack, or reach truck. These pallets are often made of wood, but can also be made of metal, plastic, or composite material. Pallets allow for many boxes of inventory to be stacked in a stable and secure fashion. These pallets can then be placed in a container or a truck-trailer.

Drop shipment

A three-party system made up of a retailer, a manufacturer or wholesaler, and a consumer. The consumer places the order directly from the retailer, typically through the retailer's website. The retailer then relays the order to the manufacturer/wholesaler. Upon receiving the order, the wholesaler picks, packs, and ships the ordered items to the consumer. the online retailer does not in fact own, nor do they ever possess, the inventory they are selling. They simply showcase the item on their webpage and then pass along the sale to a third party. **can be both online or in store.

Cargo ship classifications

Bulk Carriers: Oil Tankers, Ore Carriers, LNG carriers ( free flowing) Dry Bulk Carriers Container Ships: Primarily carry breakbulk cargo Container Vessels, General Cargo Vessels Neo-Bulk Ships: Used to ship cargo like: Lumber, Vehicles, Large Machinery, Metals Example: Roll On/Roll Off Carriers - RO/RO's (Cars, Trailers, etc.)

Secondary packaging

Contains end item and primary packaging (Box, case, drum, tape, shrink wrap) Example: Aspirin box which contains aspirin bottle inside; cardboard box

Tertiary packaging

Contains several items which are in secondary packaging. (crate, cardboard boxes, pallet, metal straps, shrink wrap)

Cube vs. Weight

Cube: represents the dimensional space (volume) inside of a container. Weight: weight limit of a container communicates the maximum combined weight of the cargo that can fit inside of that container. Weighing out- when the maximum weight limit is reached in the cargo but space is still available. Cubing out- when the container is completely filled with cargo but the maximum weight limited has not been reached.

Order Fulfillment

Delivering the right order (product and quantity), to the right place (location and customer), at the right time, in the expected condition, with the appropriate documentation. documentation, containers, forecasting, information management, and communication throughout the supply chain are essential in fulfilling every customer's order.

Cross-docking

Distribution of goods from an upstream supplier to a downstream consumer through a distribution center with minimal handling and storage time typically less than 24 hours. Wal-Mart uses cross-docking to quickly get products from suppliers to stores using the smallest number of distribution centers and minimal logistics resources. By tying together supplier data, store data, DC data, trucking data, and sales data, Wal-Mart can have the right amount of trucks, filled with the right products, arrive at the DCs when needed. Those products can be quickly unloaded, sorted, and then prepared for loading on outbound trucks headed for Wal-Mart stores. For big box retailers, cross-docking is an essential part of effective and efficient supply chain management.

Warehouses and Distribution Center services

Downstream Storage and Consolidation/Sorting Picking and packing: Think Amazon.com. Certain facilities store items for online retailers and then quickly pick, pack, and label a shipment before it is put on a truck headed for a customer. Doing this well - being fast, accurate, and cost effective - is not as easy as it sounds. Assembly: Shipping pre-assembled tables or bicycles and then storing them in a facility is not ideal. Shipping these types of items boxed and unassembled is typical, but consumers may want the item to arrive to their home assembled and ready for use. As a result, some storage and distribution facilities may offer convenient and high quality assembly services at additional cost to either the retailers or the retailers' customers. Postponement: Sometimes retailers offer customization opportunities. Consider the table from the assembly example above. Suppose that the customer could choose from 5 different colors. Rather than having inventory of those tables in 5 different colors, tables could arrive to the facility unpainted. If the facility offers postponement services, the company could wait until orders were received and then have the table painted. No guessing of demand for each color. Instead, every table can be sold in the color the customer desires. Quality inspections: Items can be damaged in transport, during handling, and even while on the shelf. Damaged or defective items can also sneak their way through the supply chain. Some facilities will offer additional services designed to catch quality issues before they impact the final customer. Management of packing materials: Boxes, pallets, and other types of packaging can be rather expensive. Modern supply chains do their best to reuse these items as often as possible. To aid this endeavor, some facilities are responsible for recovering, handling, and even distributing packaging materials throughout the supply chain. Upstream Disposal, disassembly, and/or recycling of unwanted or defective products: What happens to items that are broken, returned, or unsold? Some facilities focus on dealing with items that have little or no use. Repair or refurbishing of defective product: If items can be repaired or re-sold, some facilities will provide services to prepare those products for re-sale.

Major issues involved using labeling

Easy to tell what package contains? Helps the Thieves? Hazardous contents, Facilitates smuggling

Dimensions of containers

External - 8' x 8.5' x 20' (or 40') Interior - 7.7' x 7.83' x 19.35' (or 39.4')

Key pieces of the logistics infrastructure

Intermodal capabilities - Handling devices Warehouses and distribution centers Communication and Technology Network Natural resource distribution Utility and fuel network Labor- Skill and/or education level Legal Landscape - Legal Environment -Customs laws, Taxes, Environmental laws, Law enforcement -Requirements - Certifications, Licenses

Container Considerations

Itinerary - What does the full Logistic Plan include? Multiple Modes? Trucks Only? Train and Boat? Consider weight and size limits for each mode of transport involved. Vehicles, Port Capabilities, Moving Equipment Own or Rent/Lease Containers? While always an option, it should definitely be considered with Small Shipments. Also, most trips are one-way only so you end up with an empty for the return trip Energy Requirements for CA Containers - Plug-ins or Generators required on both Vehicles and in the Warehouses Passing Through Customs - Avoid mistakes in document preparation - Consider outsourcing and utilization of electronic documents? Air Cargo? Air shipments require a different type of container. Why? Different shaped containers in order to fit and fill inside different parts of the aircraft.

Packaging considerations

Product characteristics Supply chain trade-offs (More/less? Materials?) Protection, weight, cost, consumer safety, marketing Destination (Where will this stuff end up?) Retail Store - Sized to display on store shelves, Planogram Warehouse - Shelf Size vs. Box Size Location - Climate, security, crime rates, language Inventory Turnover -Replenish needs, Time on shelf Logistics Itinerary (All points in between origin/destination) Mode of Transport - Time in transit, vibration, climate, handling Moving Equipment - Fork Lifts, Hand Carts, Lift Trucks Warehousing, Containerization, Assembly, Manufacturing Sized to Travel - Will it fit in vehicle, box, shelf, on pallet? Security -Insurance, logos, easy to detect? Legal Considerations International Product Markings - Languages, Laws Waste/Sustainability Related Issues - Packaging is ultimately garbage. It requires retrieval, landfill space, energy for pick-up, etc. This concerns governments from an environmental standpoint. Green Laws may require recycling or retrieval of packaging materials. Economic (How Much? Costs across Supply Chain) Cost of Packaging Cost of Shipping - Weight of Packaging Size of Packaging - Cubing Out? Fitness for Use - Amount of Total Packaging Required Expected Losses - Pilferage, Damage Expected Gains (Simple handling, Marketing opportunity)

Distribution Options

Product mixing: slow mixing center. getting full trucks of different products from 3 different manufacturers and mixing them together and distribution to retailers. (cell phones, DVDs, and cameras mixed and distributed to different retailers) Cross-docking: fast mixing centers. moves inventory quickly and has no safety stock or inventory on hand. example: 4500 units in, 4500 units out. ZERO units stay behind. Outbound consolidation: Assembly and/or packaging of end Item. Used when end item is made up of multiple components produced at separate locations. The packed end item could then possibly enter additional distribution systems. example: video game console with game, booklet, and power cord. product from 3 different suppliers but put into one box. Supply Chain: suppliers, consolidation warehouse, distribution center (Walmart/Target), retail stores, consumers.

Planogram

Schematic drawing that illustrates product placement Store Chains get store standardization, effective shelf-space utilization, easy-to-stock shelves What does a Planogram designer need to consider? Product design and dimensions Packaging design and dimensions Store Variety Store Demographics Manufacturer and Retail Store Preferences Product Location - Top shelf, Lowest shelf? Product Variety -Beverages, Canned Goods, Hanger Items.. Shelf Space - Height, Width, Depth (Exact Product Location) Impact on utilization of pallets, warehouses, trucks, etc.

TEU

Stands for Twenty-foot Equivalent Unit. This is how containerized cargo is measured. One 20-foot container is equal to 1 TEU. One forty-foot container is equal to 2 TEUs. TEUs are used to measure a number of things including: • Amount of break bulk cargo imported or exported into or out of a country. (Not necessarily restricted to break bulk cargo.) Example: Last year Dingo Digital imported 3500 TEUs into the USA. • Size of a container ship. Example: That ship that just docked is American President Line's 14000 TEU container ship. • The amount of cargo that enters or leaves a shipping port. Example: In 2011 the Port of Dubai handled over 13 million TEUs. Example: 250 forty-footers and 120 twenty-footers 250 forty-footers * 2 TEUs each = 500 TEUs 120 twenty-footers * 1 TEU each = 120 TEUs Total shipment size = 620 TEUs

Standardized Containers

Steel boxes that can be loaded with cargo. Presently, the vast majority of the standardized containers in the world come in one of two sizes: • Twenty-footers - Container dimensions: 20'x8'x 8.5' (length, width, height) • Forty-footers - 40'x8'x 8.5' (length, width, height) Of these two categories, forty-footers are much more prevalent. It estimated that over 75% of the cargo on earth moves in forty-footers. These make for easy stacking and securing. intermodal shipments that use standardized containers are easy to accommodate since these standardized containers can be moved from truck, to train, to ship with no materials handling and minimal hassle. • Basic 20 and 40 footers capable of carrying all sorts of packaged and/or palletized cargo. • High-cubes - a container that is 1 foot taller than the standard 40' container. Dimensions 40'x8'x 9.5' (length, width, height) • Controlled Atmosphere (CA) - Often called reefers because they are refrigerated, modern CA containers can also control humidity, composition of the air, and pressure. • Garmentainers - These containers are similar to the basic containers, except they would have a rod or cable that would allow for easy and secure movement of clothing on hangers. • Ventilated - For products that require ventilation while in transport. Example: livestock • Open-top - Allow for bulk cargo to be poured into the container. Can also allow for heavy and bulky items to easily be craned into the container.

Transportation

The logistics function that is responsible for the effective and efficient movement of goods from one location to another. a transportation specialist would likely focus on issues related to trucking, air shipment, rail shipment, and ocean shipment.

Reverse Logistics

The management of products that flow backward in the supply chain (upstream), away from the consumer and back in the direction of manufacturers. Making errors in shipping, making defective products, damaging goods in transport, or making products that do not satisfy the customer can increase the need for reverse logistics.

Types of intermodal railcar shipments

Trailer on Flat Car (TOFC): also referred to as piggyback. when a truck trailer is placed directly on a rail car. Container on a Flat Car (COFC): when standardized containers are placed directly on a rail car. Doublestack: when two containers are stacked on top of each other on a single but specialized rail car that can safely accommodate two containers while still allowing the double-stacked containers to clear tunnels.

Types of loads and shippers

Truckload shippers (TL): These types of shippers specialize in moving large amounts of goods, enough to fill an entire truck. If you are dealing with 20 or 40-foot containers instead of a truck, the term CL Shipper can also be used, where CL stands for container-load. On some occasions it is possible that you may see the term FTL, which stands for full container load. In general, there is no difference between TL and FTL. examples: (DHL Cargo, Knight Transportation) Less-than-truckload shippers (LTL): If a company has a reasonable amount of goods going to a single location, but not enough goods to fill an entire truck or container they have an LTL shipment. examples: (UPS or FedEx) Small Package Shippers: A small package typically refers to anything from an envelope to a single packaged shipment of less than 150 pounds, although the upper limit varies from one small package shipper to another. Sometimes they are also referred to as small parcel shippers. (Amazon, Ebay, retail stores sending product that is not available in store at the moment).

Warehouses and Distribution Centers

Warehouses: typically used to store inventory for long periods of time (weeks, months, or even years). In a warehouse, storage is the primary function. Items need to be kept safe and preserved for future use. Inventories - Safety Stock, Anticipation Inv., Large and/or Expensive Inventories Location Advantages - Closer to the Retailers, Customers, Shorter Lead Times Distribution Centers: focus on efficiently getting items to retail and/or wholesale outlets. DCs try to quickly get large shipments of a single good off of a single truck and then get those goods ready for distribution to dozens of downstream stores. The idea here is to have full trucks with large quantities of one (or a few goods) in-bound and then full trucks with small quantities of many different items outbound. Break-up large shipments to create assorted full trucks LTL to TL - Consolidation, Lower Cost In both the case of warehouses and DCs, location of the facility and subsequently proximity to customers is vital to providing high levels of supply chain responsiveness to downstream needs. Having a facility within hours of dozens of stores and tens of thousands of customers allows for short lead times when expected or unexpected demand is detected.

Intermodal

When cargo is moved from one vehicle or vessel to another vehicle or vessel without directly handling the cargo. Seamless Multimodal shipment. No Need to Unload Container, Repackage Products. One Container for entire trip. Typically the cargo would be stored inside of a standardized container or a truck trailer. The standardized container can swiftly and securely be moved from a ship to a rail car, from a rail car to a truck chassis, etc. - common for shipping breakbulk cargo throughout the world.

Key advantages of using Standardized Containers

intermodal capabilities, facilitates movement, protection, and standardized. Easy to move 10 containers instead of moving them all separately Easy to arrange pallet inside of container when everything is identical

Infrastructure

the physical structure within a region that is available for the movement and distribution of goods through a supply chain. Some would also include the organizational structure that provides standard procedures, laws, maintenance, oversight and even human resource education and development for a given region. •Roads - number of roads, size and condition, connections between major and minor cities • Bridges - availability, size, condition • Rails - availability for freight and/or passenger transport • Fuel and Energy - availability, distribution network, reliability • Warehouses - number of facilities, services offered, safety, reliability • Law enforcement - availability, concern for commerce, reliability • Availability of skilled employees - competent and reliable workforce capable of utilizing machines and technology required to facilitate logistics Any decision that considers global expansion of the supply chain and/or facility relocation will require a careful analysis of the regional infrastructure.

Last Mile

the portion of the supply chain between the final inventory holding facility and the end consumer.

Packaging

• Boxes, Bottles, Cans • Tape, steel straps, plastic wrap • Dunnage - bubble wrap, Styrofoam popcorn, small inflatable airbags used in boxes, large inflatable bags "atable airbags used in boxes, large inflatable bags used in shipping containers • Pallets, slip sheets, crates Packaging can be expensive to purchase. It can add weight to a shipment or increase the size of a shipment, thus increase the cost of shipping. Nonetheless, without well-thought out packaging solutions, items can easily be lost, broken, or stolen in transit. In addition, items that are packaged in an inappropriate manner may not fit on store shelves, inside of containers, or on warehouse and DC shelves.