Chapter 1 Rutgers Business Logistics

Time Postponement

Refers to a situation where a fully stocked inventory is maintained at one or only a few strategic locations When customer orders are received, orders are either delivered directly to the customer or expedited to the local distributor Useful for economies of scale along with responsiveness to customer Ex. high cost parts and assemblies/ "hub-and-spoke"

Depth

Second and third tier suppliers and customers

Barriers to Implementing Responsive Systems

Trying to stop Channel stuffing and loading the channel

Breadth

foreign manufacturing, office and retail sites, foreign suppliers and customers

Management control

handles reporting process

Everything as a Service (XaaS) Model

helps mitigate concerns with speed of implementation, cost of upgrades, and the overall lifecycle of the software -You simply subscribe to it as service, paying for only what you need.

Supply Chain Strategy

is a channel and business organizational arrangement, based on acknowledged dependencies, and collaboration

Artificial Intelligence (AI)

is intelligence demonstrated by machines , in contrast to the natural intelligence displayed by humans -has the ability to analyze the patterns of today's operations to predict the possibly outcomes of tomorrow's scenarios

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 inference instead -Large amounts of data are more prevalent than ever today's supply chains. -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.

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. -Companies are shifting fulfillment from large regional warehouses to smaller, decentralized facilities strategically positioned near the customers.

Integrated Service Providers (ISP)

offer a range of logistics services to accommodate customers, ranging from order entry to product delivery

Historic Perspective

performing and measuring work on a functional basis

Decision Analysis

requires use of analytical tools

Primary Logistics Activities

the basic functions that have to be performed in any logistics system. These activities are all interrelated, and a change in one will likely create a ripple effect of change throughout the entire system.

The goal of postponement

to supply desirable products to customers at a relatively low cost and in a responsive way

Warehouse Robots

were built to optimize the order picking and fulfillment process and they are particularly suitable for e-commerce.

What opportunities does Globalization offer?

-Demand Exceeds Local Supply - 90% of global demand is not fully satisfied by local supply. Global supply market offers more options. -Strategic Sourcing - Identifying and matching the sources of raw materials and components to manufacturers and distributors using the global market. -Offshoring - Moving manufacturing and distribution operations to countries with favorable labor costs and tax laws. .

Challenges of Global Logistics

-Distance of typical order-to-delivery operations significantly longer for global logistics compared to domestic logistics -Documentation requirements for business transactions is .significantly more complex -must deal with significant. diversity in work practices

What is necessary to achieve integrated management?

-Focus of integrated management is the lowest total process cost -Collaboration of operating information, technology, and risk across the end-to-end supply chain. -Includes expanded managerial influence and control beyond traditional ownership boundaries of a single enterprise -Integrated service providers (ISP) offer a range of logistics services to accommodate customers, ranging from order entry to product delivery

Enterprise Integration and Administration

-General Administration -Accounts Receivable and Payable -Financial Inventory Accounting -General Ledger -Human Resources

Enterprise Planning and Monitoring

-Sales & Operations Planning (S&OP): Senior Managements tool to run business -Supply Chain Compliance: Regulatory -Supply Chain Visibility and Event Management: "Control Towers"

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. -a record shortage with an estimated 50,000 more drivers needed to meet demand -causes a bottleneck of goods that is delaying deliveries and prompting some companies to increase prices by as much as 20%.

Financial Measurement of Time-Based Supply Chains

1. Cash to Cash Conversion 2. Dwell Time 3. Cash Spin

_ % of companies, the head of supply chain position reports directly to the CEO, GM or president of the business

61%

Augmented Reality (AR)

AR offers numerous assistive technologies to facilitate the everyday work of employees, particularly in the areas of logistics, manufacturing, and warehousing. -Smart displays, glasses or simulators can significantly simplify and improve future tasks in the supply chain.

Assembly Postponement

Assembly postponement is relevant for companies with modular product design. Having base materials in modules, and a flexible design, it is possible to construct various end-products from the modules in one kit. -Example: IKEA flat pack boxes

Manufacturing Postponement

Base is made; customization are delayed until after actual orders are received The objective is to maintain products in an uncommitted status as long as possible, while building a sufficient quantity of "ready to customize" basic units This strategy balances economies of scale with responsiveness, but it requires a lot of forethought during product design

Supply Chain Information System (SCIS) - Framework

Enterprise Resource Planning Enterprise Integration and Administration Enterprise Planning and Monitoring Enterprise Operations Financial and Operations Reporting

Disadvantages of Pull Model (Responsive Business Model)

Every order is a rush order Any problem will lead to customer dissatisfaction Highly dependent on customer relationship Reduced ability to receive economies of scale

Economic Value

Focus is on economies of scale in product and service creation, and striving to achieve the lowest total landed cost. -High quality at a low price -Provided through the Procurement and Manufacturing Strategy

What is the focus of integrated management?

Focus of integrated management is the lowest total process cost

Market Value

Focus on achieving economies of scope in product and/or service presentation. -Convenient product/service assortment and choice -Provided through the Market and Distribution Strategy

Disadvantage of Push Model (Anticipatory Business Model)

High inventories Long lead-times Dependency on forecasting Inefficiencies, obsolescence, shortages

Advantages of Pull Model (Responsive Business Model)

High levels of customer service Responsive and Flexible to meet uncertain customer demand Short lead times Reduced dependency on forecast Low inventory

Advantages of Push Model (Anticipatory Business Model)

If forecast is accurate product is immediately available to ship to the customer on demand Manufacturers have the opportunity to plan resources better or with more flexibility and can maximize the utilization of resources at the lowest cost

Enterprise Operations

Customer Relationship Management Logistics Manufacturing Purchasing Inventory Deployment

Make-to-Stock

Push Model; Producing stock on the basis of anticipated demand. Demand forecasting can be done via a variety of sophisticated techniques.

Combined Postponement

Combination of manufacturing and time postponement which involves keeping the basic products centralized and performing the final product customization at the destination distributor, rather than the manufacturing site Ex. Cars (installing options like sounds systems, GPS, roof racks) Computers ( packaging/ bundling additional system options like printers, digital cameras, software)

Capacity Crunch

Companies are forces to find more ways to cut costs and avoid scaring off customers with rising prices. -One of the ways businesses might be able to save resources upfront is with cloud-based SCM.

Integrative Management Requires Simultaneous Achievement of 8 Processes

Demand Planning Responsiveness Customer Relationship Collaboration Order fulfillment/ service delivery Product/ service development launch Manufacturing customization Supplier Relationship Collaboration Life Cycle Support Reverse Logistics

Efficient Supply Chain Model

Designed to minimize cost Predictable supply and low cost Low-cost production and highly utilized capacity High inventory turns Ideal for Functional Products

Responsive Supply Chain Model

Designed to respond quickly to market demands Excess capacity/ flexible processing Inventory of parts Short lead time (and quick changeovers) Premium/ Expedited transportation Ideal for Innovative Products

Logistics Labor - Warehousing

Due to the fulfillment demands of the e-commerce boom, warehouses are finding it increasingly difficult to fill open warehouse jobs. -Warehouses are increasing adoption of automation such as shuttle systems and autonomous mobile robots (AMR) to meet the requirements of direct-to-consumer fulfillment. -The labor shortage cannot be solved with automation in the short-run. Companies simply cannot retool quickly enough.

What are the three perspectives of value that customers have?

Economic value, market value, relevancy value

Primary Logistics Activities include:

Inventory, Facility Network, Communication & Information, Material Handling, Transportation

Types of Postponement Strategies

Manufacturing Postponement Assembly Postponement Packaging Postponement Labeling Postponement Time (or Geographic) Postponement Combined Postponement

Relevancy Value

Means the right products and services (Market Value), at the right price (Economic Value), modified, sequenced, synchronized, and otherwise positioned in a manner that creates valuable segmental diversity (i.e., distinctiveness). -A unique product/service bundle -Provided through the Supply Chain Strategy

ERP transactions

Order Entry Order Management Inventory Assignment Receiving Shipping

All supply chains follow the basic model:

Plan → Source → Make → Deliver → ← Return

Make-to-Order, Assemble-to-Order, Engineer-to-Order:

Pull Model; Producing stock in response to actual demand

Postponement

The act of leaving the final configuration of a product to the last possible moment and moving those operations closer to the customer A strategy that works to reduce the risk of a supply chain performance issue hybrid of "Push" and "Pull" Models designed to overcome the disadvantages of each

Business Logistics

The coordination of projected requirement, procurement, physical movement, and storage of components, parts, raw materials, and semi-finished and finished goods, to achieve optimum service level at minimal cost

Customer Service

The output of the logistics system

Cash Spin

The potential benefits of reducing assets across a supply chain Concept is to reduce overall assets committed to supply chain performance in order to free up cash to use in R&D, M&A, Advertising & Promo ect.

Dwell Time

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

Cash-to-Cash Conversion

The time required to convert raw material or inventory purchases into sales revenue Measures how efficient your supply chain is at generating revenue

Dwell Time Minimization

Timely arrival and continuous inventory flow between supply chain partners

Packaging Postponement

When goods that might be offered in different packages (size of package) are not packaged until the last moment Allows for the storage of finished products unpacked, and minimized the risk of excessive stocks

Labeling Postponement

When product differentiation takes places only by putting the labels on the package Useful when companies use different markets Ex. Different languages on labeling/ "Best before"

Blockchain Technology

also known as a distributed ledger, is a shared database creating a permanent transaction record that can be changed only with the permission of the other members of the network. -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.

Internet of Things (IoT)

concerns optimally networked devices that know exactly what they have to do and when. -these could be smart sensors on manufacturing floors in order to efficiently manage planned and predictive maintenance work. Dangers: -a hacker attack increases with the number of connected devices. -the security aspect will play a more important role in the future.

Supply Chain Management

consists of firms collaborating to leverage strategic positioning, and to improve operating efficiency

Transaction System

day to day information flows

Strategic Planning

encompasses strategy evaluation