FINAL EXAM- (chaps 1-5, 7-11,13,15)

Information

The challenges: -The sharing of information along the supply chain -The discipline to ensure the integrity of the vast amount of data collected and stored

Transportation Management

The challenges: -Transport "perfect storm." Transport market changes; driver shortages; fuel costs; infrastructure constraints; and regulatory changes

Reorder point (ROP)

Major concern is to place an order when the amount of on-hand inventory is just sufficient to satisfy demand until stock replenishment can occur -have to factor in how long does it take to process, to ship?

CASH FLOW

Management of working capital -*one of the most important flows*

Distribution Execution- Product-Handling Functions

Receiving (into warehouse) • Schedule carriers • Unload vehicles • Inspect freight • Verify order Put-away (ship out other door) • Identify product • Verify location • Fill storage/pick slots • Direct fill orders Order Picking • Travel to pick slots • Validate SKU & qty • Fill customer orders • Prep & deliver product to shipping dock Replenishment (long/short term inventory) • Re-supply pick slots • Move pallet quantity orders to shipping dock • Verify moves Shipping • Schedule carrier • Load vehicle • Secure freight • Complete paperwork • Call for dispatch For many organizations, order picking is the most labor-intensive and expensive distribution activity, often accounting for more than half of DC operating costs.

Order Fulfillment

activities involved with completing customer orders. Order fulfillment measures the total lead time from when the order is placed to actual delivery in satisfactory quantity & condition. -how do you get order

Production Planning

determining the number of units necessary to provide market coverage. The integration of production planning into logistics has become increasingly popular in large companies to effectively forecast & control inventory. -scheduling

Population

labor -where is the cheapest labor cost- good to look at for globalization

Packaging

necessary packaging needed to move the product to the market safely and securely. Logistics managers must analyze the trade-offs b/t the type of transportation selected and its packaging requirements, e.g. truck/sea container vs. air freight. -size/ weight -how many units & requirements from retailers- goes back to marketing -overseas- durability/customs

Transportation

physical movement or flow of raw materials to finished goods; involves the transportation agencies that provide service to the firm. - biggest cost

Customer Service

play an important part in logistics by ensuring the customer gets the right product, at the right time & place. Logistics decisions about product availability & inventory lead time are critical to customer service => peace of mind. -communication - anything that touches the customer

Napoleon Bonaparte Quote

"An army marches on its stomach"

Peter F. Drucker Quote

"Logistics is... one of the last real frontiers of opportunity for organizations wishing to improve their corporate efficiency"

Information & data

"blood" of the supply chain

Demand forecasting

*Trickiest part of supply chain! -trying to predict demand- sales forecast- biggest issue is that it's never right

Types of Inventory Costs

- Carrying Costs - Ordering and setup -Expected stockout -intransit inventory

Short-run and Long-run Analysis

- as a whole- operate as smooth as possible - visibility to entire supply chain - risk of squeezing the balloon- move problem to another place - have to look at the picture- info system

Inventory in the Firm

- total logistics costs - SKU- stock keeping unit

Allocation

-Allocation focuses on matching available inventory to customer orders for an SKU. -This break-bulk capacity promotes product availability for multiple customers and in desired quantities.

Globalized economy

-Brexit & pandemic & terrorism -trade flows -globalization- here to stay

Accounting

-Cost information for analysis of alternative logistics options -Supply chain tradeoffs and performance measurement

Logistics Trade-offs

-Customer Service Levels (Cost of lost sales) -Transportation Costs (per unit)- empty shelves? saving customer? -Warehousing Costs (Throughput costs, not storage) -Lot Quantity Costs -Inventory Carrying Costs -all interrelated -how to we tradeoff? -how many times do I want to ship to D.C. (distribution center)?

Competitive Relationships

-Customer service can be a very important form of competition. -partnership -can be a competitive advantage -loyalty

Substitutability

-Customer service is important for highly substitutable products to reduce lost sales cost. - tradeoffs -negotiations

Distribution planning & strategy- Facility considerations: Size

-Demand forecasts for the region to be served by the facility will drive the sizing process as follows: 1) develop a demand forecast2) convert the units into cubic footage 3) add space needs for aisles & other fulfillment activities. -After the facility size is determined, attention shifts to the layout of the operations within the distribution operation. -Product protection is another key objective: 1) separate hazardous materials2) safeguard high-value goods from theft3) provide temperature-sensitive goods w/ refrigeration, heat. -Proper use of automation & materials-handling equipment is an important goal. Another objective is process flexibility. The facility design should not be so permanent as to limit the facility from handling new product lines & providing value-added services when new requests emerge.

Role of Ports - Global Supply Chain and Security

-Over 90 percent of U.S. international trade passes through ports. -Ports are bases of operation to deploy troops and equipment. -Ports are a critical part of global supply chains and a major focus for global security

Distribution Planning and Strategy- Network Design Issues: Number & Location

-Determining the number of facilities needed for a supply chain involves the evaluation of cost tradeoffs with other functional areas. -Effective location selection requires analysis of the DC's intended function, sources and volume of supply, customer locations and demand patterns, and related fulfillment costs. -match requirements to capabilities -how to match inventory--> tradeoffs -do you want to be close to customer?

Product-related Factors

-Dollar value. The product's dollar value typically affects warehousing costs, inventory costs, transportation costs, packaging costs, and even materials-handling costs. -Density. Weight/space ratio affects transportation and warehousing costs. As density increases for a product, its transportation and warehousing costs tend to decrease. -Susceptibility to damage. The greater the risk of damage to a product, the higher the transportation and warehousing cost. -Special handling requirements. Need for special handling (e.g. refrigeration, heating, or strapping) will usually increase warehousing, transportation, and packaging costs. -increase value, increase cost to ship -most cost efficient by boat- takes longer -take trade offs again -fastest- plane (most expensive) - having a relationship with customer (or retailer) is better long term than plane cost

Value-added Roles of Logistics- Five Principal Types of Economic Utility

-Economic Utility -Form -Time -Place -Quantity -Possession

6. Anticipatory Stocks

-In some cases, companies anticipate that some forecasted event will negatively impact the production cycle. -For example, labor strikes, shortage of supplies due to weather or political event, or significant price increases may prompt the firm to build inventory levels higher than normal. -Risk assessment is important in these cases. -risk hedging

Finance

-Inventory -Warehouses & transportation fleet owned and/or outsourced -Customer service

1. Cycle or Working Stock

-Inventory acquired and/or held in advance of requirements so that ordering can be done on a lot size rather than on an as-needed basis. -Lot sizing: ÷To minimize ordering and holding costs ÷Achieve quantity discounts ÷Qualify for favorable freight rates. -The average amount of inventory on hand that results from lot sizes constitutes an organization's working stock. -procurement standpoint- how much do I bring in (one batch of inventory)? -truck loads- how much inventory to send out?

Inventory basics

-Inventory as an asset has taken on increased significance as companies struggle to reduce investment in fixed assets that accommodate inventory (plants, warehouses, MHE, etc.). -Changes in inventory affect return on assets (ROA), an important internal and external metric. -Ultimate challenge is to balance supply and demand for inventory.

Cross-docking

-Inventory destination is known when received -Customer is ready to immediately receive inventory -Small number of daily shipments or throughput -Time sensitive inventory -Capacity issues -product arrives one side of the warehouse and is shipped out the other

Manufacturing

-Length of the production run -Available quantity of raw material and component -Industrial packaging

Micro Dimension of Logistics

-Logistics interface with other functional areas -Factors affecting cost & importance of logistics

NAFTA

-NAFTA establishes free trade among Canada, the United States, and Mexico. -NAFTA's goals involve making structural changes to operate a borderless logistics network in North America.

5. Seasonal Stocks

-Perishable supply in agricultural products or seasonal-related transportation problems. -Seasonal demand compressing selling seasons in some industries results in smaller plants producing for stock. - when do you make/ store? raw materials

Contributing Factors for Global Flows and Trade (5)

-Population size and distribution -Urbanization -Land and resources -Technology and information -Globalized economy

Marketing (5 Ps Marketing Mix)

-Price e.g. purchase quantity discounts -Product e.g. size, shape, weight, packaging -Promotion -Place (distribution channel selection -People

Logistics - heartbeats of SC pipeline

-SCM - Focus on integration of all business processes that add value for customers -Logistics - Design & manage necessary activities centered around transportation, inventory, warehousing, and communications -Make materials available for manufacturing and to consumers: inbound & outbound -Focus on flow of product through the supply chain, with timely information driving the entire process

Supply Chain Security-A Balancing Act

-Security -Security Measures: The Trade Act of 2002 The U.S. Maritime Transportation Security Act of 2002 The Customs Trade Partnership Against Terrorism (C-TPAT) -Efficiency flows -Global Trade Flows: Electronic filing of cargo information Standards for container seals and locks, cargo tracking, identification, and screening systems for ocean containers A "green lane"

Order Cycle Length

-Shorter order cycles reduce the inventory required by the customer. -prevent -just in time- balance -order transmission, receiving order, processing, preparation, shipping order

Sortation

-Sortation focuses on assembling like products together for storage in the distribution facility, processing or transfer to customers. -Proper sortation is essential for effective inventory & order fulfillment.

Key Distribution Tradeoffs-Facility-Level Tradeoffs

-Space vs. Equipment. The larger the facility and the more space used for distribution operations, the more equipment will be needed in the facility. -Equipment vs. People. The greater the use of equipment to automate materials handling and distribution activity, the lower the labor requirements of a facility. -People vs. Space. The larger the facility workforce, the larger the facility size and throughput possible.

Global Markets and Strategy- Customer Service Perspective

-Standardization to reduce complexity must maintain some customization. -Global competition often reduces the product life cycle. -Organizational structures and business models change with more outsourcing. -Globalization introduces more volatility and complexity.

Global Markets and Strategy- Supply Chain Perspective

-Strategically sourcing materials and components worldwide -Selecting global locations for key supply depots and DCs -Evaluating transportation alternatives and channel intermediaries -Understanding governmental influences on global SC flows -Examining opportunities for collaboration with 3PLs or 4PLs

Technology and Information

-Technology has two important dimensions. -Technology as an "internal" change agent: -- Enhanced efficiency, effectiveness, and ability of an organization to compete in the global marketplace -Technology as an "external" change agent: --New forms of competition or new business models (e.g. omnichannel distribution, global outsourcing)

Urbanization

-The rise of "megacities" - By 2030, 60% of the world's population will live in urban areas (vs. 47% in 2000) -Change most profound in the less and least developed countries of the world - Urban sustainability challenges

Distribution Planning and Strategy- Facility Considerations: Size

-Typically, the more facilities in the distribution network, the smaller they need to be. -Demand forecasts for the facility can be used to create a rough estimate of space requirements. -Given forecasted demand, each facility must be large enough to: Accommodate the distribution activities that will be performed within the four walls. Interface with the transportation network. -ex: Amazon--> more small distribution centers -layout/size

Inventory Effect

-depends on costs for 100% customer satisfaction -Increasing inventory costs can reduce the cost of lost sales.

Logistics mgmt. enables SCM

-differentiator -way to separate from the competition -From 'necessary evil' to differentiator -Adds value to customer relationships: => 'peace of mind', superior CX, loyalty -Primary marketing tool to gain & sustain competitive superiority

Storage

-involves two closely related activities: inventory management, warehousing. A direct relationship exists b/t transportation vs. the level of inventory & number of warehouses required. -It is important to examine the trade-offs related to the various alternatives in order to optimize the overall logistics system.

Inventory Discontinuity

-makes it unnecessary to gear production directly to consumption or to force consumption to adapt to the necessities of production. -Frees stages in supply-production-distribution process from the next, permitting each to operate more economically. (often called decoupling.) -trying to figure out when to build different products

The last mile

-most expensive -most dangerous -most crucial

Parts of supply chain

-operation management -supply management -logistics management -channel management -sales --> supply chain gets you product- sales forecasting -marketing-- promotes the product -technology, globalization (more of a focus) -allocation of products- who gets what & how much -competitive advantage -focus on the customer- the ultimate consumer

4 flows of supply chain

-product -demand -cash flow -information

Inventory in the US Economy

-real time visibility to inventory -where, how much -asset (income statement), variable (balance sheet)

Shrinkage

-retail- almost 2% -employees stealing -shop lifting -fraud

Global Megatrends

-rising middle class- "Emerging Asia" adds 100M new passengers each year; ~2x global air passenger journeys in 2035 vs. today -urbanizations- Continued urban population growth drives heightened building and construction demand -energy efficiency- Consumer preference and increasing regulations drive demand for light-weighting & energy efficient solutions across transportation, building & construction -Large transformative global forces -Define the future by having a far reaching impact on business, economics, industries, societies, individuals -Can be overlaid by short-term economic cycles, e.g. global recession 2008/09

Inventory costs

-significant cost in logistics -tradeoffs

Factors Affecting Cost & Importance of Logistics

1) Competitive relationships 2) Order cycle length 3) Substitutability 4) Inventory effect 5) Transportation effect 6) Product-related factors 7) Spatial relationships

What is Inventory?

1) stock on hand at a given time; 2) itemized list of goods or property held; 3) v. act of weighing and counting items on hand; 4) value of stock of goods owned by an organization at a particular time. Inventory is property assembled and stockpiled in advance of its future intended use. -different types of inventory- be sure to define the type!

Types of Inventory and Rationales

1. Cycle stocks (Batching economies) 2. Safety stocks (Uncertainty) 3. Time/In-Transit (Mode choices) 4. Work-in-Process stocks (scheduling & production techniques) 5. Seasonal stocks (Seasonality) 6. Anticipatory stocks (Risk hedging) 7. Maintaining Retailer

Five Major External Forces

1. Globalization 2. Technology 3. Organizational consolidation 4. Empowered consumer 5. Government policy & regulation

Objectives of Inventory Management

1. Satisfactory level of customer service 2. Minimizing costs of ordering and carrying inventories -Satisfy desired customer service levels at minimum carrying cost" -competing objectives -keeping customer happy while decreasing inventory carrying costs

Inventory management approaches- Vendor-Managed Inventory (VMI)

A relatively new inventory management technique, vendor-managed inventory, manages inventories OUTSIDE an organization's logistics network - VMI is used to manage a firm's inventories held in its customer's distribution centers (DCs). VMI was initiated by WMT so its suppliers could manage their inventories within WMT DCs - better than WMT could. Suppliers took responsibility to make sure their products were always available in WMT DCs when stores demanded them. VMI was traditionally used for independent demand items b/t suppliers & retailers and can be used for both independent & dependent demand items. Many organizations are now using VMI in conjunction with CPFR to manage system-wide inventories. The use of VMI to manage inventories is not affected by which organization owns those inventories. Suppliers using VMI used to ship products to customer DC under the FOB (free-on-board) destination concept, i.e. supplier owned inventory in transit & ownership transferred once product was received at the DC. So the supplier managed its inventory while customer maintained ownership (title). Some customers have been investigating the use of what can be called almost consignment inventory as the supplier manages & owns the inventory in the customer's distribution until that inventory is pulled for shipment (or mfg.). -used to manage inventory @ retail & manufacturing standpoint -sell thru data -partnership with manufacturing -consignment model

Inventory is an "Asset"

AND, it is expensive to hold, especially when a company can earn a HIGHER RETURN by INVESTING it elsewhere in the business. Also, we need to quantify the costs of holding inventory as an EXPENSE --- so we can conduct TRADE-OFF analyses with the other costs involved in managing a SUPPLY CHAIN. We do this by computing "Inventory Carrying Costs" (ICC) = cost to carry 1 unit of inv for 1 entire year Inventory creates a Liability (cost) -opportunity type of an asset -quantifiable

Supply chain

All the organizations and activities involved with the flow and transformation of products from raw materials through to the end consumer -slow your roll slide from article- if you miss a step, product is delayed

2. Safety Stock

Also known as Buffer Stock, is inventory held in reserve to protect against the uncertainties of supply and demand. - safety stock--> uncertainty

4. Work in process (WIP)

Also known as Transit or Work-In-Process (WIP) inventories. It is inventory put in transit to allow for the time it takes to receive material at the input end, send material through the production process, and deliver goods at the output end. -WIP- can you have multiple? -transport time -inventory cost -holding cost -carrying cost

Distribution Facility Functionality-Primary Functions: Assortment

Assortment involves the assembly of customer orders for multiple SKUs held in the distribution facility. This mixing capability avoids the expenses related to placing numerous orders and having them shipped from a variety of locations.

Short-run or Static Analysis

Concentrates on a specific point in time or level of production output

Empowered Consumers

Consumers are empowered by exponentially expanded access to product sources and related information and increased buying power due to high income levels. -Increased pressures on supply chain due to increased demands at the retail level in terms of: -Competitive prices -High quality in products and services -Tailored or customized products -Convenience and responsiveness - 24/7 availability with a minimum of wait time -Flexibility - Omnichannel distribution strategies -internet -brand loyalty -can do product research -lower tolerance for poor quality in products & services -"let the seller beware" -increases challenges for supply chain

Transportation Effect

Cost of lost sales can be reduced by spending more on transportation service to improve customer service.

Distribution Planning and Strategy

Distribution strategies should tailor to products being handled, customer requirements, and available internal expertise and resources. A series of interrelated planning decisions must be made to ensure that the strategy can be executed at a reasonable cost while supporting supply chain demands. -Capability Requirements ••Product attributes ••Flow requirements ••Roles to be fulfilled -Network Design Issues ••Inventory positioning ••Number of facilities ••Location of facilities ••Facility ownership -Facility Considerations ••Size of operations ••Interior layout ••Product location

Organization Consolidation and Power Shifts

During the 1980s and especially the 1990s, economic power and the driving force in supply chains shift from product manufacturers to the retail end of the supply chain. -More collaboration among organizations in supply chains -Win-win, improved services such as: Scheduled deliveries "Rainbow" pallets Advance shipments notices (ASNs) shrink-wrapped pallets -Sharing of point-of-sale data to mitigate "bullwhip effect" -ex: Walmart--> supply chain -innovate or die -collaborate- half/30% customers count for 80% of sales

Long-run or Dynamic Analysis

Examines a logistics system over a long time period or range of output.

Supply Chain in Global Economy

Global trade growth has been fueled by free trade agreements (FTAs) that lift most tariff, quota, and fee/tax limitations on trade. The best supply chains compete very successfully on a national, regional, and global basis. -Bi-lateral agreements are between two nations -US currently in 20 bi-lateral FTAs -Regional trade agreements involve 3 or more nations -US currently involved in: 4Free Trade Area of Americas 4Middle East Free Trade Initiatives 4Enterprise for ASEAN Initiatives 4North American Free Trade Agreement (NAFTA)

Globalization

Globalization creates more economic and political risk, shorter product life cycle, and the blurring of traditional organizational boundaries - Inventory management challenges: -Faster duplicability of products & services -Faster reduction in demand -Requirement of new pricing policies -Higher risk of obsolescence -Longer and more complex supply chain challenges: --Growth and increased scope of outsourcing -time and distance have compressed -questions: (1) Where in the world should we source our materials and/or services? (2) Where in the world should we manufacture or produce our products or services? (3) Where in the world should we market and sell our products or services? (4) Where in the world should we warehouse and distribute our products? (5) What global transportation and related service alternatives should we consider?

Inventory Management ApproachesKey Factors of Difference

Inventory management approaches differ in terms of three key factors. -Dependent vs. Independent demand. Independent demand is unrelated to the demand for other items, while dependent demand is directly related to, or derives from, the demand for another inventory item or product. (end used--> independent) -Pull vs. Push. The "pull" approach relies on customer orders to move product through a logistics system, while the "push" approach uses inventory replenishment techniques in anticipation of demand to move products. (pull: customer pulling product off shelf, creating demand. push: channel partners) -System-wide vs. Single-facility solutions. A system-wide approach plans and executes inventory decisions across multiple nodes in the logistics system. A single-facility approach does so for shipments and receipts between a single shipping and receiving point.

Inventory management approachesAdditional approaches: Just-in-Time (JIT)

JIT systems are designed to manage lead times & to eliminate waste. Ideally, product should arrive exactly when an organization needs it, with NO tolerance for late or early deliveries. In a true JIT system, the length of the lead time is not as important as the reliability of the lead time. The JIT concept is an Americanized version of the Kanban system, which the Toyota Motor Company developed in Japan. Kanban refers to the cards attached to carts delivering small amounts of needed components and other materials to locations within manufacturing facilities. Each card precisely details the necessary replenishment quantities and the exact time when the replenishment activity must take place. Four major elements underlie the JIT concept: - zero inventories - short, consistent lead times - small, frequent replenishment quantities - high quality, or zero defects JIT is an operating concept based on delivering materials in exact amounts & at the precise times that organizations need them—thus minimizing inventory cost. JIT can improve quality & minimize waste. -Japan- cars- Toyota- started JIT -JIT- order exact amounts at the right time -ideal- as you use the last one, the new parts show up

Inventory management approachesFixed order quantity EOQ: Reorder point

Knowing WHEN to order was as necessary as knowing how much to order. The WHEN, reorder point, depends on the inventory level on hand. Under the assumptions of certainty, an organization needs enough inventory to satisfy demand during the replenishment or lead time => 'demand inventory'. There's no need for safety stock, b/c everything is known & certain, thus there is no stock-out risk and the cost associated w/ it. Replenishment or lead time consists of several components: order transmittal, order processing, order preparation, order delivery. Therefore, given a known lead time, multiplying lead time length by daily demand determines the reorder point. Example: Order transmittal = 1 day Order processing & preparation = 4 days Order delivery = 5 days Demand = 10 units per day ÞReplenishment or lead time = 10 days ÞReorder point = 100 units -certainty- do you need safety stock?--> no -uncertainty- lead times vary--> have to have safety stock

Logistics definition

Logistics can be viewed as part of organizational management with four major subdivisions. -Business Logistics -Part of supply chain that plans, implements, and controls the flow and storage of goods, services, and related information. -Military Logistics -Design and integration of all aspects of support for the operational capability of the military forces and their equipment. -Event Logistics- Network of activities, facilities & personnel required to organize, schedule & deploy the resources for an event to take place and withdraw after the event. -Service Logistics- Acquisition, scheduling & management of facilities, assets, personnel & materials to support a service operation & business.

Distribution Metrics

Many aspects of distribution performance can be evaluated across customer service and DC order fulfillment activities. -Customer-Facing Metric Examples -Unit Fill Rate -Case Fill Rate -Order Value Fill Rate -Order Accuracy -Document Accuracy -On Time Dispatch -Perfect Order Index -Distribution Operation Metric Examples -Distribution cost per unit -Distribution cost ratio -Capacity utilization -Equipment utilization -Labor productivity -Distribution efficiency -KPIs--> goal: time frame--> want to know during quarter to fix an issue- stop light: yellow=fix, green=good, red= danger

Government Policy and Regulation

More competitive environment is a result of the deregulation of several important sectors in the United States occurred in the 1980s and 1990s. -The transportation industry: Expanded services beyond transportation, with service providers' role evolving to outsourcing partners -The financial sector: More flexible and responsive to customer needs, making businesses more cognizant of supply chain management impact on efficiency and cash flow -The communications industry: A component of the information revolution, leading to dramatic improvements and opportunities in logistics and supply chains

Time Function of Inventory

Process (long) of production and distribution required before goods reach the final consumer. Few consumers would be willing to wait for such an extended period of time. Inventory enables an organization to reduce the lead time in meeting demand. -has to be built ahead of time to meet customer needs

Inventory Economic Function

Permits the organization to take advantage of cost reducing alternatives: -to purchase in economical quantities -to take advantage of quantity discounts -to put off future price increases - hedging (a.k.a., forward buying, speculative buying) -negotiation -decrease costs -hedging- speculation buying- airlines do this -inventory costs can increase -give & take

PRODUCT FLOW

Physical movement of goods and materials

Distribution planning & strategy- Facility considerations: Slotting

Proper product slotting can improve labor productivity while generating other advantages for the organization & its customers. • Picking productivity - Reduce travel time, thereby reducing picking labor. • Efficient replenishment - By sizing the pick face location based upon a standard unit of measure (case, pallet) for the product in question, one can significantly reduce the labor required to replenish the location. • Work balancing - Balancing activity across multiple pick zones can reduce congestion in the zones, improve material flow, reduce the total response time for a given order or batch of orders. • Load building - To minimize product damage, heavy product is located at the beginning of the pick path ahead of crushable product. Product may also be located based on case size to facilitate pallet building. • Accuracy - Similar products are separated to minimize the risk of picking errors. • Ergonomics - High velocity products are placed in easy to reach locations which reduce bending & reaching. Heavy or oversized items are placed on lower levels or in a separate area where material handling equipment can be utilized, e.g. forklift. • Pre-consolidation - Storing & picking product by family group can reduce downstream sorting & consolidation activity. • Sustainability - Reduce carbon emissions & energy use.

6 Rs

Right: -product -place -quantity -condition -time -cost

Integrated Supply Chain - Basics

SCM is the art and science of integrating the flows of products, information and financials through the entire supply pipeline from the supplier's supplier to the customer's customer. -Suppliers -Contracted Manufacturers -Manufacturers -Wholesalers/ Distributors -Retailers/ Customers -Product/Services Flow -Information Flow -Finance /Cash Flow -Demand Flow

Supply chain security

The challenges: -Risk of disruptions, vulnerability, and exposure to terroristic threats exacerbated by distance and complexity in global supply chain

Distribution Planning and Strategy- Facility Considerations: Product Location (Slotting

Slotting is defined as the placement of product in a facility for the purpose of optimizing materials-handling and space efficiency. -Popularity. Locate high volume (popular) items near the shipping area and the low volume (unpopular) items away from the shipping area. -Unit size. Locate small-size items (cubic dimensions) near the shipping area and larger-size items farther away from the shipping area. -Cube. Locate the items with smaller total cubic space requirements (item cube multiplied by the number of items held) near the shipping area and those with larger space requirements farther away from the shipping area.

Inventory Deployment

The challenges: -Increased requirements for coordination or integration to reduce inventory levels on horizontal (single-firm) and vertical (multiple-firms) levels in the supply chain.

Why we have inventory

Supply and demand cannot be perfectly matched. A. Time B. Discontinuity C. Uncertainty E. Economy -how to not have empty shelves

Global Markets and Strategy

Success in the global market-place requires development of a cohesive set of strategies including product development, technology, marketing, manufacturing, and supply chains. -Supply chain perspective -Customer service perspective

Distribution Execution- Support Functions

Support functions provide coordination between key processes and across the supply chain, protect the organization's inventory investment, and improve working conditions within the facility. -Inventory control--> very important -Safety, maintenance, and sanitation -Security--> shrinkage -Performance analysis--> hitting metrics -Information technology -database management

Technology Definition

Technology is a facilitator of internal process and supply chain transformation. It is also a major force in changing the dynamics of the marketplace. -The Internet. "Connected" 24/7 -Social networks. Impact on customer demand and the speed of information transfers -The world's "knowledge pool" connection. Opportunities for collaboration in supply chains -goes all the way to when it sells (ideally, not all the way there yet)

Distribution Facility Functionality-Primary Functions: Accumulation

The DC serves as a collection point for product coming from multiple origins and provides required transfer, storage, or processing services, allowing firms to consolidate orders and shipments for production and fulfillment processes.

Complexity

The challenges: -Increased requirements in simplifying and continually evaluating areas of complexity in the various aspects of supply chains

Organizational Relationships

The challenges: -Internal collaboration (marketing, sales, operations, finance, etc.) -External collaboration (vendors, customers, transportation companies, 3PLs)

Supply chain network

The challenges: -Network system (facilities and supporting transportation services) must be capable and flexible to respond and change with market dynamics.

Technology

The challenges -Evaluate, strategically plan, and successfully implement the technology to make the improvements desired - right tech for the problem

Talent management

The challenges: -Attract, develop, and maintain the appropriate pool of talent from entry level to executive level

Performance Measurement

The challenges: -Connecting lower-level metrics in an organization directly to the high-level performance measures of the organization and the supply chain -KPIs- proactive

Distribution

The decisions and activities that make products available to consumers when and where they want to purchase them * Rev - COGS ----------- Gross profit - SG&A (selling, general, & admin expenses) -------------- Net Profit

Spatial Relationships

The location of fixed points in the logistics system with respect to demand and supply points are very important to transportation costs.

Inventory management approaches- Trade-offs

The management of inventory levels in the supply chain has often been the underlyingrationale for the focus on SCM. The interest in reducing inventory levels along the supply chain is indicative of the importance of inventory as a cost of doing business.In many firms, inventory is the first or second largest asset on the balance sheet. Firms can reduce their costs of doing business, improve their return on investment or assets (ROI/ROA/RONA) and improve their cash-flows by decreasing inventory levels - as long as necessary service levels are met when doing so. Investments in inventory can add value by reducing cost in other areas like manufacturing, transportation - and/or enhance revenue thru better service levels. It always comes down to striking the optimal balance b/t effectiveness & efficiency. -inventory- tradeoff -shipment- full truck loads -squeezing the balloon -supply chain impacts business

Macro Perspective of Logistics - Major Categories of Logistics Costs

Three major categories of logistics costs: Warehousing and inventory costs, transportation costs, and other logistical costs

Inventory Uncertainty

Unforeseen events modify the original plans of the organization including: ÷Errors in demand estimates ÷Variable production yields ÷Equipment break downs ÷Strikes ÷Acts of God ÷Shipping delays Inventory provides protection from unanticipated or unplanned occurrences. - demand forecasting = inaccurate -unanticipated issues

Distribution Technology

Warehouse Management Systems (WMS) -Core software used to manage fulfillment processes, with value-added capabilities, including labor management, automated data collection, task interleaving, fulfillment flexibility, and systems convergence. Automatic Identification (Auto-ID) Tools -Auto-ID technologies help machines identify objects. Examples: Bar codes, smart cards, voice recognition, biometric technologies, radio-frequency identification (RFID).

Inventory Control

assuring appropriate levels of materials are available and certifying inventory accuracy => prevent stock-outs

Procurement

availability for production of needed parts, components, materials in the right quantity, at the right time, at the right place, and at the right cost.

Materials Handling

important to efficient warehouse operation and relates to the mechanical equipment for short-distance movement of goods through the warehouse, e.g. overhead cranes, conveyor belts, forklifts, automated storage & retrieval systems (ASRS). -how does it get into the warehouse (robots)

Parts & service support

maintaining an adequate channel to anticipated repair needs.

Facility Location

optimizing the time & place relationships b/t plants & markets (outbound), or b/t supply points and plants (inbound). -Site location impacts transportation rates & service, customer service, inventory requirements, and possible other areas.

Forecasting

predicting inventory requirement, materials and parts essential to effective inventory control.

Salvage & scrap disposal

reverse logistics systems & channels in order to effectively & efficiently dispose of containers and other scrap at the end of the distribution channel.

Return goods handling

reverse logistics systems to deal w/ returned merchandise from customers.

3. Time in transit

transport time- plane, truck, train? -cost of transportation

Land and Resources

•Crop & forest Land •Water •Food •Energy -Critical role of technology in mitigating resource scarcity

DEMAND FLOW

•Detect and understand demand signals •Synchronize demand vs. supply- demand driven systems

•Comparative advantage

•Differences in the cost of producing products in different countries

INFORMATION FLOW

•Enabling physical flow of products •Decision making •Supply chain collaborations

•Absolute advantage

•Lower cost and/or access to items not available locally

Areas included in logistics:

•Packaging •Warehouse/DC management •Parts and service support •Plant/warehouse site selection •Production scheduling