MKT 411 EXAM #3
T/F: A primary advantage for motor carriers is the weather.
FALSE
T/F: Lean production, JIT, and Six Sigma quality mean the same thing.
FALSE
What logistics involves, and the types of utility (or value) it provides:
Logistics is necessary to: - Move goods from suppliers to buyers - Move finished goods to the customer - Move work-in-process materials within a firm - Return or recycle goods - Store items along the way in supply chains Logistics provides: - Time utility: products are delivered at the right time - Place utility: products are delivered to the desired location
What must managers commit to (in terms of the workforce) for lean production to be successful:
Managers must support Lean Production by providing subordinates with the skills, tools, time, & other necessary resources to identify problems & implement solutions
How product life cycle impacts logistics strategy:
Product life cycle: the firm's distribution strategy within the logistics strategy must change based on the characteristics of the stage that it is at in the product life cycle
Public warehouses:
Public warehouses provide a number of specialized services that firms can use to create customized shipments and goods. These services include the following: - Breakbulk: Large-quantity shipments are broken down so that items can be combined into specific customer orders and then shipped out. -Repackaging: After breakbulk, items are repackaged for specific customer orders. Warehouses can also do individual product packaging and labeling. - Assembly: Some public warehouses provide final assembly operations to satisfy customer requests and to create customized final products. - Quality inspections: Warehouse personnel can perform incoming and outgoing quality inspections. - Material handling, equipment maintenance, and documentation services. - Short- and long-term storage. -Public warehouses allow firms to test various market areas and withdraw quickly if demand does not materialize as expected. The cost for firms to use a public warehouse can also be very small if their capacity requirements are minimal. - More recently, pharmaceutical companies are using public warehouses in conjunction with third-party cold chains to ensure their product reaches buyers in good shape. Disadvantges: - One of the main disadvantages associated with public warehouses is the lack of control provided to the goods owners.
T/F: The Malcolm Baldrige National Quality Award recognizes firms for their quality achievements but is only given to U.S. firms.
TRUE
T/F: The responsibility of transportation is to create both time utility and place utility, which means that products will be delivered at the right time to the desired location.
TRUE
T/F: When lean firms share their best practices with supply chain members, this is referred to as yokoten.
TRUE
Why the TPS includes visual cues so heavily:
Toyota Production System includes visual cues heavily so that the lines of visibility are unobstructed, and the operators at one processing center are able to monitor work at another
Categories of warehouses:
Warehousing: - Allows firms to store purchases, WIP, & finished goods and perform break bulk and assessment services - Provides faster & more frequent deliveries & better customer service Crossdocking: - To receive, breakdown, repackage, & distribute components to a manufacturing location or finished products to customers warehouse. This description more accurately refers to a distribution center
Cost-of-service Pricing:
prices based on fixed & variable costs of transportation
Jidoka
- "Autonomation" - Autonomation means 'Automation with human touch'. Jidoka is one of the three pillars of the world famous 'Toyota Production system' and also a key concept in 'Lean Manufacturing'.
What the Toyota Production System is:
- A methodology created by Toyota Motor Company in the 1950s. The idea is to make the best use of an organization's time, assets and people in all processes in order to optimize productivity. Also known as JIT and lean production - Lean Production: an operating philosophy of waste reduction & value enhancement & was originally created as Toyota Production System (TPS) by key Toyota executives -
The differences among the four different legal forms of transportation service companies:
- Common carriers: offer transportation services to all shippers at published rates between designated locations without discrimination - Contract carriers: not bound to serve the general public. Contract carriers serve specific customers under contractual agreements - Exempt carriers: exempt from regulation of services & rates & if they transport certain exempt products like produce, livestock, coal, or newspapers - Private carrier: not subject to economic regulation & typically transports goods for the company owning the carrier
What small-batch scheduling is, and how Kanban is involved:
- Small batch scheduling drives down costs by: Reducing purchased, works in progress, & finished goods inventories; Makes the firm more flexible to meet customer demand - Small production batches are accomplished with the use of kanbans - Kanbans generate demand for parts at all stages of production creating a "pull" system
Kanban
- signal card & part of JIT - Small production batches are accomplished with the use of - Kanbans generate demand for parts at all stages of production creating a "pull" system
Private warehouses:
- For firms with large volumes of goods to store or transfer, private warehouses represent an opportunity to reduce the costs of warehousing as well as control the levels of service provided to customers. - Currently, one of the largest e-commerce companies, the Alibaba Group, is expanding its number of private warehouses in China to streamline deliveries across the nation - With private warehousing, firms are free to decide what to store, what to process, what types of security to provide, and the types of equipment to use, among other operational aspects. Private warehousing can also enable the firm to better utilize its workforce and expertise in terms of transportation, warehousing, and distribution center activities. Disadvanatges: - Owning warehouses, though, can also represent a significant financial risk and loss of flexibility to the firm. The costs to build, equip, and then operate a warehouse can be very high and most small- to moderate-sized firms simply cannot afford private warehouses. Private warehouses also restrict firms to locations that may not prove optimal as time passes. Warehouse size or capacity is also somewhat inflexible, at least in the short term. Another problem can be insurance. Insurance companies, in many cases, do not like insuring goods in private warehouses, simply because security levels can be meager or nonexistent, creating a significant concern regarding fires or thefts of goods.
keiretsu
- Japanese term referring to a business network made up of different companies, including manufacturers, supply chain partners, distributors, and occasionally financiers - Translated literally, keiretsu means "headless combine."
Why some companies have tried to implement TPS but had limited success:
- Lack of direction and vision in running the projects - Lack of time allocated for the projects - Lack of resources - *Lack of adherence from employees of the company.* (most important)
What LTL and TL mean in trucking, and what the difference can mean in logistics cost and complexity:
- Less-than-truckload (LTL) & truck-load (TL) carriers move small shipments & fees are higher
How logistics strategy should be tied to larger corporate goals - and the types of goals most directly relevant to (and affected by) logistics:
- Logistics strategy is usually formulated by first establishing customer service goals -Once the customer service goals are established, larger corporate decisions regarding facility location, inventory deployment, and transportation mode selection can be made -The goal of these decisions is to minimize cost
The two types of jidoka:
- Mechanical jidoka and human jidoka - Important together because they ensure products are made with high levels of quality because defects are automatically detected throughout the process
Origins of six sigma:
- Near quality perfection (the statistical likelihood of nondefects 99.99966% of the time) - Or 3.4 defects/million observations - Pioneered by Motorola in 1987 - A statistics-based decision- making framework designed to make significant quality improvements in value-adding processes
The seven wastes (seven types of mudas):
- Overproducing - Waiting - Transportation - Overprocessing - Excess Inventory - Excess movement - Scrap & Rework
The difference between "producer's risk" (Type I statistical error) and "consumer's risk" (Type II statistical error) when using statistical sampling:
- Producer's risk: A buyer rejects a shipment of good quality units because the sample quality level did not meet standards (type I error) - Consumer's risk: Buyer accepts a shipment of poor-quality units because the sample falsely provides a positive answer (type II error) -
Reverse logistics:
- Returning products, warranty repairs, and recycling or disposing of items. Also referred to as returns management. - Refers to the backward flow of goods from customer in the supply chain occurring when ^^
How substitutability impacts logistics strategy:
- The more substitutable the product is, the higher the logistics costs that must be incurred - The higher costs allow for high product availability, more warehouses closer to customers to reduce lead time, and faster modes of transportation
The major modes of transportation:
- Trucks: Fast, but more expensive - Train (rail carriers): (could go from a truck to a train and take it down to Miami) Less expensive than a truck Slow - Plane: Very expensive - Water carriers: Works better when more complicated, not for everything Lumbar - Pipelines: (oil, water, natural gas, etc.) Limited Latest trying to extend Keystone pipeline
kaizen
- a Japanese term meaning "change for the better" or "continuous improvement." - ways to reduce supplier delivery and quality problems, solve movement problems, visibility problems, machine breakdown problems, machine setup problems, and internal quality problems.
What a kaizen blitz is, and what it is designed to accomplish:
- a rapid improvement event or workshop, aimed at finding big improvements quickly. Most kaizen improvements though, are small individual events, emphasizing creativity.
How value-to-weight ratios impact logistics strategy:
- allows for a distinction between "inventory-heavy" products and "transportation-heavy" products - Inventory heavy: high value-weight ratio (pharmaceuticals) - Transportation heavy: low value-weight ratio (coal and cement)
Six Sigma:
- an enterprise and supply chain-wide philosophy, that emphasizes a commitment toward excellence & encompasses suppliers employees, and customers
What lean layouts are, and their typical impacts on productivity
- are very visual (lines of visibility are unobstructed) with operators at one processing center able to monitor work at another - Switching to a U-Shaped Layout increased productivity by 2.31% to 10.10% on average - These gains increased as the number of required crossovers increased and also increased as flexibility in production decreased.
The scenarios best suited for using any of the four strategic combinations of manufacturing and logistics postponement: The Full Postponement Strategy
- best suited for logistics and manufacturing postponement - centralized inventories and direct distributions, and make to order - Mid/high production costs, low inventory costs, high distribution costs, and low customer service
The scenarios best suited for using any of the four strategic combinations of manufacturing and logistics postponement: The Full Speculation Strategy
- best suited for logistics and manufacturing speculation - make to inventory and decentralized inventories - Low production costs, high inventory costs, low distribution costs, high customer service
The scenarios best suited for using any of the four strategic combinations of manufacturing and logistics postponement: The Logistics Postponement Strategy
- best suited for logistics postponement and manufacturing speculation - centralized inventories and direct distribution, and make to inventory - Low production costs, low/mid inventory costs, high distribution costs, low/mid customer service
The scenarios best suited for using any of the four strategic combinations of manufacturing and logistics postponement: The Manufacturing Postponement Strategy
- best suited for logistics speculation and manufacturing postponement - decentralized inventories and make to order - Mid/high production costs, mid/high inventory, low distribution, mid/high customer service
The concepts of Form Postponement (manufacturing):
- delaying the final differentiation of a product until a customer order is received - The label will not be put on, the final product will not be packaged, the final product will not be assembled, and full customization will not be completed until the customer order has been received
Poka-yoke
- error or mistake-proofing
Yokoten
- sharing of best practices
How customer service impacts logistics strategy:
- the required levels of customer service drive decisions with regards to inventory policies, transportation mode selection, and facility location - Consistency meeting promised due dates is more important than overall lead time
What Intermodal transport is:
- the use of multiple modes of transportation Most common forms: - Most common trailer-on-flatcar (TOFC) service, container-on-flatcar (COFC), or piggy-back service *same containers can be placed on board containerships and freight airliners - Water & motor offer point to point service for overseas manufacturers *RO-ROs or roll-on-roll-off containerships truck trailers & containers directly driven on & off the ship, without the use of cranes
The Malcolm Baldridge Award and its role in recognizing production excellence:
- was signed into law on August 20, 1987, and is named in honor of then U.S. President Reagan's Secretary of Commerce, who helped draft an early version of the award, and who was tragically killed in a rodeo accident shortly before the award was enacted. The objectives of the award, which by the way is given only to U.S. firms, are: Stimulate firms to improve, Recognize firms for quality achievements, Establish guidelines so organizations can evaluate their improvement & provide guidance to others
Toyota Production System (TPS) principles:
-"customer first" - low-batch production - lean manufacturing
FOB and its implication for ownership and liability:
-"free on board" - Who owns the goods and who is liable for them as they move through the chain: Who has the exposure/gets paid, So carrier does not have liability - For high-value shipments, small shipments, or when the buyer has little transportation expertise, FOB destination pricing is typically preferred. Otherwise, the buyer may decide to purchase goods and supply its own transportation to the shipping destination; in this case, the supplier quotes the lower FOB origin pricing.
The impact on return rates (and thus reverse logistics) due to the growth of e-commerce:
-About 20-30% of e-commerce sales are returned, whereas only 6-10% of retail purchases are returned -Returns have a direct negative impact on the environment, customer service, firm's reputation, and profitability
How product type impacts logistics strategy:
-There are convenience products (soft drinks), shopping products (cars and furniture), and specialty products (items that are special order and take a long time to come in) -Convenience products affect logistics strategy because you must plan to deliver to a large number of locations frequently - Shopping products do not have as many delivery points - Specialty products allow for a more centralized distribution of products - All three type of products affect logistics strategy because you have to plan truckloads and deliveries and determine what is going where and at what point it needs to happen
simple activity we did in class - what it demonstrated in terms of stop/start, experience, and training effects on productivity:
-We had two different colored pens and we had to write A thru J with one color and the roman numerals corresponding to the letter of the alphabet in the other color. In the first round we had to write horizontally, going from one column to the other column and back to the first column, switching pens in between, but in the second round we were able to go all the way down the first column before switching pens and going all the way down the second column. - It took a much longer time to continuously stop and start in the first round than it did to only stop and start once during the second round. - There are some people that will have more experience in the task at hand that can go quicker no matter which way they have to complete the task, but everyone is able to complete the task faster when they are not required to continuously stop/start. People are more productive without the need to stop/start.
muda:
-waste in all aspects of production - Firms reduce costs & add value by eliminating waste from the productive system. - Waste encompasses wait times, inventories, material & people movement, processing steps, variability, any other non-valueadding activity. - Taiichi Ohno described the seven wastes
How many defects (per million) that a six sigma approach will tolerate:
3.4 defects per million
_______________ carry the majority of the world's water-transported manufactured goods. a. Containerships b. Supertankers c. Barges d. None of these choices are correct.
a. Containerships
The acts of receiving shipments, breaking down shipments, repackaging shipments, and distributing components to a manufacturing location or finished products to customers by a distribution center is referred to as: a. Crossdocking b. Piggy backing c. Risk pooling d. Customs Brokering
a. Crossdocking
Which company probably played the largest role in the development of the Toyota Production System? a. Ford b. Boeing c. Chrysler d. General Motors
a. Ford
It is argued that transportation deregulation is good because: a. It encourages competition b. It ensures adequate transportation service throughout the country c. It protects consumers in terms of monopoly pricing d. All of these choices are correct.
a. It encourages competition
________________ are the most flexible mode of transportation and account for 70 percent of all the freight tonnage moved in the U.S. a. Motor Carriers b. Rail Carriers c. Air Carriers d. Water Carriers
a. Motor Carriers
Calculate the defects per million opportunities (DPMO) given the following: Blake, owner of Blakester's T-shirt Shoppe, keeps track of customer complaints.For each T-shirt sold, there are four possible complaints: T-shirt shrinks, poor quality, design wears off, and doesn't fit right. Each week, Blake calculates the rate of T-shirt "defects" per total T-shirts sold, and then uses this information to determine his company's DPMO. During the past week, his company sold 1200 T-shirts. His company received 22 customer shrinkage complaints, 16 poor quality complaints, 12 design wears off complaints, 8 doesn't fit right complaints. Calculate his firm's DPMO. a. 5.8 x 10-6 b. 12,083 c. 69,600 d. 0.193
b. 12,083
Calculate the inventory container size required given the following: Demand rate = 10 parts per hour, Safety stock required = 16% Number of containers = 14, Time to cycle through entire system = 6 hours a. 2 parts b. 5 parts c. 3 parts d. 4 parts
b. 5 parts
Which of the following is a direct benefit from the adoption of NAFTA? a. An increase in manufacturing job opportunities in the U.S. b. An increase in trade between U.S., Canada, and Mexico c. An increase in trade between U.S. and China d. A reduction in immigrants crossing the border from Mexico
b. An increase in trade between U.S., Canada, and Mexico
Which of the following quality gurus believed that companies should strive for zero defects and that quality was, in a sense, free since quality improvement programs invariably paid for themselves? a. Baldrige b. Crosby c. Juran d. Deming
b. Crosby
A ___________________ consolidates large numbers of small shipments to fill entire truck trailers or rail cars to achieve truckload or carload transportation rates. a. Consolidation forwarder b. Freight forwarder c. Load broker d. Transportation broker
b. Freight forwarder
Which of the following is NOT consistent with the lean philosophy? a. Positioning WIP inventories near each processing center b. Increasing batch sizes to take advantage of economies of scale c. Cross-training employees to increase processing flexibility d. Developing a culture of continuous improvement within the organization
b. Increasing batch sizes to take advantage of economies of scale
The Five-Ss refer to: a. Robust evaluation techniques b. Industrial housekeeping c. Keiretsu relationships d. Overspending habits
b. Industrial housekeeping
A product positioned strategy: a. Places warehouses midway between the sources of supply and the customers b. Places warehouses close to the sources of supply c. Places warehouses close to customers d. None of these choices are correct.
b. Places warehouses close to the sources of supply
Intermodal marketing companies (IMCs) are companies that act as intermediaries between intermodal a. Trucking companies b. Railroad companies c. Waste management companies d. Warehouse management companies
b. Railroad companies
Returns management is also known as _______. a. Inverted logistics b. Reverse logistics c. Backward logistics d. Waste reduction
b. Reverse logistics
What type of firm would be most interested in using a third-party logistics service? a. A freight forwarder b. Small firm with no logistics expertise c. A for-hire transportation company d. Large integrated global manufacturing company
b. Small firm with no logistics expertise
We discussed in class that logistics strategy is usually best tied to this category of overall business objectives: a. Topline revenue b. Profitability c. Customer satisfaction or NPS d. Operating cost e. Geographic reach
c. Customer satisfaction or NPS
The Quick Response program, developed in the 1980's, was an offshoot of the following supply chain concept: a. Efficient Consumer Response b. Kaisen c. Just-in-Time d. Six Sigma
c. Just-in-Time
Japanese manufacturing firms sometimes create cooperative coalitions with their suppliers in order to provide the suppliers with a certain degree of financial support. What are these cooperative coalitions called? a. Kanban Networks b. Jidoka Networks c. Keiretsu Networks d. Kaizen Networks
c. Keiretsu Networks
______________ creates the efficient flow of goods between supply chain partners, allowing profits and competitive advantage to be maximized. a. Operations b. Procurement c. Logistics d. Transportation planning
c. Logistics
Which tool is useful for presenting data in an organized fashion, indicating process problems from most to least severe: a. Fishbone Diagrams b. Cause-and-Effect Diagrams c. Pareto Charts d. Check Sheets
c. Pareto Charts
Foreign-trade zones are: a. Markets in the U.S. where foreign countries set up and sell products b. Bodies of water where cargo ships are allowed to dock to deliver imported goods c. Secure sites within the U.S. where goods and materials can be assembled and exported without being levied domestic duties or excise taxes d. Secure sites in foreign countries where goods wait for clearance by importing country
c. Secure sites within the U.S. where goods and materials can be assembled and exported without being levied domestic duties or excise taxes
A current warehouse system has five warehouses with 4,000 units at each warehouse. The company desires to change to three warehouses to become more centralized and keep the same customer service levels. Determine the average warehouse inventory levels, using the square root rule. (Choose the closest answer.) a. 11,619 b. 6,667 c. 25,820 d. 15,492
d. 15,492
When mistakes occur in the supply chain, which of the following things might happen? a. Customer service levels drop b. More safety stock must be held c. Cost may increase due to expedited deliveries d. All of these choices are correct
d. All of these choices are correct
Which of the following is an example of how lean programs can help to protect the environment? a. Using rubber from used tires in auto parts b. Batch size reduction to reduce plastics c. Parts made from recycled materials d. All of these choices are correct.
d. All of these choices are correct.
An important outcome of statistical process control is: a. Firms can take corrective actions before process variabilities get out of control b. Firms can minimize total inventory cost c. Firms can visually monitor process performance d. Both "Firms can take corrective actions before process variabilities get out of control" & "Firms can visually monitor process performance" e. None of these choices are correct.
d. Both "Firms can take corrective actions before process variabilities get out of control" & "Firms can visually monitor process performance"
For integrated supply chains, logistics is considered: a. Somewhat important b. Not at all important c. Important d. Critically important
d. Critically important
Lean production systems are sometimes referred to as pull systems because demand from customers activates the production actions of the manufacturing facilities. In order for this demand to be communicated to everyone in the supply chain/manufacturing facility a signal must be passed from downstream processing centers to the upstream processing centers. This system of relaying signals is referred to as a: a. Keiretsu Network b. TQM Network c. Semaphore System d. Kanban System
d. Kanban System
In the text, Table 9.1 shows that for-hire logistics expenditures in the U.S., have _____________ in the past thirty-one years. a. Decreased for the first 10 years, then increased b. Remained the same c. Slowly declined d. More than quadrupled
d. More than quadrupled
The following is a term that refers to error or mistake proofing: a. Kanban b. Muda c. Kaizen d. Poka-yoke
d. Poka-yoke
Reverse logistics can have a positive impact on the environment through activities such as? a. Reneging b. Risk pooling c. Data warehousing d. Recycling
d. Recycling
Which person was a key figure in developing the Toyota Production System and also developed the concept of poka-yoke? a. Ohno b. Toyoda c. Deming d. Shingo
d. Shingo
If you needed to transport bulky products to a customer, your primary concern was keeping costs low, and speed were not a priority, then which of the following modes would be best? a. Rail b. Air c. Pipeline d. Ship e. Truck
d. Ship
Which of the following marked the end of the initial push by Congress to deregulate the entire U.S. transportation industry? a. The Transportation Act of 1920 b. The Granger Laws c. The Interstate Commerce Act of 2013 d. The Shipping Act of 1984
d. The Shipping Act of 1984
The foundational concept in the Toyota Production System that defines the value of partnership arrangements is: a. Muda b. Keiretsu c. Flow d. Hunky-dory e. None of the above
e. None of the above
Understand the concepts of Time (logistics) "postponement,":
holding inventory in a centralized location, as opposed to positioning it at forward locations closer, physically, to customers
nemawashi
in Japanese means an informal process of quietly laying the foundation for some proposed change or project, by talking to the people concerned, gathering support and feedback, and so forth.
Negotiated pricing:
prices fall somewhere between above two levels
Value-of-service Pricing:
services priced at market bearing competitive levels