Supply Chain Management Final Exam

. Describe an ITU and transloading using an example:

An inter-modal transport unit (ITU) holds the same freight during the transportation process but may itself be transported using different modes which is called transloading. Let's say you produce bananas in the banana belt and you need to ship them to stores in the US. You finish harvesting and bundling the bananas and load them into a container to be shipped. The bananas leave your port and reach the US. The bananas then are transported in the same ITU and transferred to a truck. This is transloading.

Describe the concept of order qualifiers? What do you consider as the top five most important order qualifiers:

In order to have an appropriate supplier, they must have adequate processes to meet the parameters to produce the product or to complete the service which is to be outsourced. Order qualifiers set performance expectations for a potential supplier. My top 5 order qualifiers in order of most important to least are: a. Reliability of delivery b. Quality certifications c. Price or cost reduction d. Responsiveness to demand uncertainty e. Performance track record

Identify and explain the key developments behind the evolution of logistics and SCM. Which one of the developments do you think had the largest impact on this evolution?

Supply Chain Management (SCM) is a vital concept to understand in the world of business and of everyday life. Key developments behind the evolution of Logistics and SCM are as follows: • Reduced transport intensity: this concept states that international trade went from being dominated by raw materials to more refined and finished goods. • Falling product prices: this concept simply describes the phenomenon that occurs when competition is introduced into the marketplace: performance improves, quality improves, and prices fall. • Deregulation of transport: unnecessary barriers to trade have been removed to allow for easier and more efficient transport of goods and services across borders. Along with more trade, this initiative has brought a reduce in cost to these goods and services due to competition. • Productivity improvements: the introduction of containerization lead to massive improvements in productivity. Other improvements to transport were bar-coding and online tracking of product. • Emphasis on inventory reduction: reducing inventory lessens costs to companies and overall reduces prices, the less time a product can sit in the warehouse, the more you are making money. • Changes in company structure: common company structure used to be vertically integrated. Companies are becoming more horizontally integrated due to outsourcing and offshoring efforts. Companies are now focusing on their competitive advantage and getting the rest for the other experts around them. All of these developments have had a great impact on the evolution of Logistics and SCM. I believe the most important is the change in company structure. Becoming more horizontally integrated allows employees to have a personal stake in a company that is not just their paycheck. When an employee feels they are part of a team and are working on something that matters, their quality of life is improved drastically. When this happens, when people truly love working at a company, it no longer feels like work. Productivity will increase, and the company can branch out to new and innovative ideas with the help of their employees.

What is meant by supply chain vulnerability?

Supply chain vulnerability means that a product or service is at risk to be lost or damaged in any step of the supply chain. In order to identify supply chain vulnerability we need to ask these three questions: a. What has disrupted operations in the past? b. What known weaknesses do we have? c. What 'near misses' have we experienced? These questions can help management understand where the weak points in the supply chain are, which in turn will allow them to be fixed. It is also important to understand what might happen if your supply chain is disrupted. To be proactive we ask questions like this: What would be the effect of a shortage of key material? What would be the effect of the loss of a distribution center? In February of 2019 ShopKo in Boise Idaho filed for bankruptcy and will close its distribution center which will cause 120 workers to lose their jobs. What would be the effect of the loss of a key supplier?

What is ABC analysis?

ABC analysis is essentially gearing more focus towards the more important stock. For instance, at Walmart, the employees will take a count for the televisions every day because of the great expenses of them, but they will only do the packets of gum once a year. Some companies will use a bin analysis to count their c level stock, this is essentially throwing a c level product into a bin prior to market, and then throwing the remaining amount into a bin when it is time to take inventory for c products. The numbers won't be exact but they don't need to be for such inexpensive items. The way most companies will count their stock is counting c level once a year, b level once every month or every other month, and A every day with the use of a reorder point system to keep their analysis as precise as possible for these expensive products.

What are wicked problems and give an example:

A wicked problem has no common definitive goal, no clear mission, and no universal solution due to the many stakeholders involved and their difference in interests and values. A wicked problem, if solved by one party in accordance to their goals, will inevitably generate waves of consequence over an unpredictable period of time and in turn cause extremely undesirable repercussions. A wicked problem has a large interconnected network that causes the outputs of one system to be the inputs of another. The solution to a wicked problem could be the worst action to take. Some examples of wicked problems are as follows: poverty, sustainability, equality, quality of life, homelessness, technology use, education, nutrition, economic structure, government structure and so on. The solution to one aspect of a wicked problem reveals yet another problem.

. Briefly describe the three main areas of transport security technology (access controls, biometrics, detection systems). Which area do you think is the easiest for a terrorist to compromise and why?

Access controls are used to make sure only authorized people can enter port facilities. These controls are extremely common and include gates, vaults, wired or electric fences, and locks. For most thieves and criminals physical access controls provide the needed security to prevent them from attempting to break in. Biometrics are more advanced than access controls as they require the use of personal technologies. Identification cards are the best example, especially cards with RFID chips inside them containing information about the individual. United States passports have been using RFID chips for quite some time now in order to make customs and port crossings more efficient. Fingerprint scanners are also occasionally used to make sure only authorized people can access facilities. Detection systems are systems that can see and detect threats. The most common systems include security cameras, motion detectors, and x-ray machines. I think x-rays are really important in detecting the potential smuggling of dangerous weapons into and out of US ports, but I think in general, security cameras provide the most direct benefits to minimizing threats at ports. Terrorists would likely have the easiest time overcoming basic access controls such as gates and fences. Depending on how coordinated they are and how much planning is done, sneaking into facilities when they are understaffed or unprepared would be easiest to do. Motivated terrorists could get around biometric barriers and if they are seeking to do serious damage they probably do not care about being filmed by security cameras.

. Explain the terms "carbon footprint" and 'food miles':

Carbon footprint is a term used to describe the negative effects that economic activities like transporting freight has on the environment. Carbon footprint includes the way which a good is transported from the distance it travels to the way the packaging effects the environment. Food miles refers to the distance each component of a food item has to travel before its final consumption. Consumers are becoming more aware and more concerned about the sustainability of their purchases. They want to have a smaller carbon footprint and a way in which they achieve this is by consuming products with the fewest food miles.

Look at the generic warehouse functions from Figure 10.3. What is cross-docking and when should it be used?

Cross docking is a supply chain function that eliminates storage and warehouse areas and picking and packing areas. Cross docking should be used when the goods being shipped do not gain value from these extra steps in the supply chain. Warehousing activities add value to certain products that need to bulked together, broken down from bulk to smaller shipments, combined to make a final product, or smoothed over time. Cross docking can be used to reduce costs and enables the seller to hold less inventory. It is typically used for fast moving freight with constant demand. A great example of this is Costco's demand for groceries. Costco used cross docking as a break-bulk function to sort goods from the manufacturer to each Costco location.

With over a million square miles of ocean to patrol and limited resources, the job of combating Somali (and other) pirates by naval power alone seems impossible". According to the book and outside research, what are the other options besides naval power to combat piracy?

Different options to combat piracy in the book include using technology on board ships such as long-range acoustic devices in order to fight pirates non-lethally, and by encouraging nations and businesses to adhere to global transport security initiatives that provide frameworks for establishing and executing security programs such as the ISPS code. Other technologies are discussed in the book such as x-ray and drones but they are not referred to with use in the context of fighting piracy. Outside research talks about the possibilities of providing armed security on-board valuable transport ships, which would be a low-cost option in terms of upfront payments, but could potentially be a legal nightmare for companies in the case that crew members become injured in accidents with firearms or become injured in real pirate encounters. Another idea is financing a legitimate authority in the region, such as Somalia grassroots leadership. Since Somalia is a failed state the best idea for a long-term solution to piracy is establishing a law-abiding government, yet this solution would take a very long time to implement. Lastly, it has been suggested that companies should refuse to pay ransom to pirates in order to push pirates away from continuing operations, but again companies could face criticism for not taking any actions possible to prevent harm from coming to their crew members.

Explain the notion of directional imbalances. Why are they important?

Directional imbalances occur due to the very nature of freight: freight in one-directional. Once an item is sold, is travels one way to the buyer and whatever brought it there is now at the buyer's location. It would be uneconomical to transport the container which brought the freight back to it's original destination empty. No money can be made on an empty container. There would be no issue if the same amount that was shipped to the destination would be shipped back to the origin, but that's not how the system works. There are imbalances in the amount of cargo leaving the origin and the amount coming in. It is vital to understand directional imbalances so that solutions can be made. Empty containers don't make any money. Too many containers could go to one place and not have enough goods to bring back or move along, or too few containers could be brought in and more would have to be imported.

Describe "drop box logistics" and give an example in use today:

Drop box logistics is a recent storage handling development mainly targeted at the last mile of delivery in the supply chain. One company in particular is focusing on the chaotic last mile for field service technicians. ByBox, a UK company, is using drop box logistics to bring critical parts to their field service technicians. They use Bluetooth, low energy and very secure boxes strategically located in the city for their operation. The locations are chosen by the customer. This technology is changing the way companies get items delivered. It was estimated that the Automated Parcel Delivery Terminals market would grow from $799.0M in 2017 to $1.79B in 2025. The diagram below shows a visual of the predicted growth of the market by region.

Are logistics and SCM only of interest to manufacturers? Use examples to illustrate your answer.

Everyone has a stake in logistics and SCM and it should be of the upmost importance to all types of producers, manufacturers, and sellers. It is even important for non-profits and the public sector to be concerned with their supply chain. The supply chain affects all areas of commerce including the consumers. You need to buy a textbook for a class, how do you do it? Simple, log onto your Amazon account, find the book, click 'Order Now'. How does the book get to you? Another way could be going to the bookstore, but how do they get the book? Someone has to write the book, the digital (or physical) draft of the book is sent to a publisher who then edits and refines the book for printing. The book will then be printed according to market needs and sold to suppliers. These book suppliers will then see who is in the market for the book and sell it to places like a brick and mortar campus bookstore. The supplier could also sell their product on Amazon directly to the consumer. All aspects of this process involve Logistics and SCM. How did the book get to the publisher? How did they know how much to print? How did they get the books to the bookstore? How will they get the book to your mailbox should you buy it online? All of these questions involve SCM and Logistics. Let's throw another wrench in here, what if you are only renting the book? How will you get the book back to Amazon so they can get it back to their supplier? Easy answer, use the supply chain!

Explain factory gate pricing and why it is used:

Factory Gate Pricing (FGP) occurs when the retailer takes control of the delivery of their goods. The supplier used to be in control of the logistics to get their goods to the retailer, then they were in control up until the distribution center. Now the supplier is in control of what they make and the retailer is in control of their own supply chain to get the goods to their stores. This gives the retailer full visibility of their supply chain and efficient delivery of their product.

Explain the different motivators for companies to increasingly focus on reverse logistics.

Government policy and legislation, economic considerations and environmental considerations are three motivation for companies to focus on reverse logistics. Many governments require producers to take back their products after use. Generally, this legislation involves the collection, transportation, recovery, and disposal of used products. E-waste has become an ever more concerning topic for reverse logistics. Government programs like WEEE (Waste Electrical and Electronic Equipment) focus on recycling e-waste, reducing hazardous substances, and properly disposing of leftover waste. Economic considerations such as the rising landfill usage cost and other disposal costs make recoverable manufacturing systems more profitable. The profitability of reverse logistics for automobile parts, copier parts, computers, tiers, and aviation equipment has risen. Companies are also motivated to participate in reserve logistics due to environmental concerns. Consumers have a heavy voice in which companies continue thriving and which ones fall off. Since the public is more aware and more concerned about the carbon footprint and other environmental effects, companies must be concerned with them as well. Reverse logistics not only provides companies with the proper tools to conform to legislation, but also allows them to market themselves as green and sustainable companies.

FedEx pioneered the concept of the hub and spoke system. According to the text and outside research, what is this type of system and is it still utilized today by FedEx and/or other companies or industries?

Hub and spoke system means that freight is shipped from origin points to a central hub, re-sorted, and then shipped out to final destination. This is different from point-to-point, where freight goes from 1 to 2 to 3. The Hub-spoke system increases agility, reduces risk of scale, enables a "big picture" insight, and offers a maximized ROI on technology because of the communication (nchannel). FedEx still uses this model, as does Amazon (LogisticsViewPoints).

Since holding inventory costs money, what do you consider the top two reasons for holding inventory (table 9.1) and give an example of each.

I think the two most important reasons for holding inventory are buffering against seasonal demand and supply and hedging against price and exchange rate fluctuations. First, again speaking to my own experience, seasonality is huge in inventory management. With our distribution patterns, we had two national parks to service in the summer as well as the oil fields in North Dakota among a lot of other things. Those parks and North Dakotan stores needed much more in the summer times than in the slow winter. To counteract that we had to have much more inventory on hand. That meant more frequent, bigger deliveries. On the flip side winter is slower. Glacier Park is closed. The Bakken is a frozen wasteland as opposed to the summer when it is a less frozen wasteland. There simply isn't as much demand. But at the same time for certain goods you can use that dead period to get ahead. Secondly, regarding fluctuations, I already hit on that a bit in the first question. Hedging against fluctuations in price is huge. My example was if I know that Reeses bars are going to be much more expensive in 2 months, wouldn't it be stupid of me not to buy a crap load of Reeses bars now at a lower price? By paying attention to fluctuating goods you can capitalize on lower prices when they present themselves. Some of this will just be industry specific, where you know what goods tend to fluctuate. To use my oh so eloquent wording from before, those are the ones you want to buy a crap load of when they're low so you don't pay a crap load more a little bit later.

. What is ISO 28000 and its main methodology?

ISO 28000 is a supply chain security standard established by the International Organization for Standardization. Unlike the ISPS it is voluntary, but it has been designed to accommodate for any type of supply chain regardless of organizational structure, in order to implement security systems to prevent and minimize risks and threats. Its main methodology is following: Plan, Do, Check, Act. "Planning" means to establish a security process, then "Do" refers to the actual implementation of the security process. Next, "Check" means companies must examine their process and compare the observations to the goals outlined in their policies, and lastly, "Act" involves always seeking to improve the security processes in order to make sure the system will perform security functions correctly.

. Explain the importance of information visibility and the top barriers to achieving it in a supply chain:

Information visibility refers to the ability to see information at various points within the supply chain. This visibility and communication allows people to solve the complex problems inherent to the supply chain for any company. It is important to share information but there are also important barriers to information that companies need to consider. These barriers can be classified in different ways: cultural, financial, technical, and organizational. It is important to protect proprietary information while maintaining relationships with crucial suppliers. Benefits to sharing information include customer oriented operations, reduced lead time, time compression, reduced schedule variability, shorter planning periods, a single point of control, and integrated IT. In the aerospace industry (or any manufacturing industry) information visibility has help with first time quality and collaborative plans to solve problems when they arise. Without this open communication, suppliers fall short of delivery promises and quality and the entire supply chain becomes disrupted.

Explain the difference between external integration and internal integration in supply chain management:

Integration refers to the linkages and communication channels within a supply network. There are two types of integration in the supply chain; external and internal. External integration extends beyond a single organization while internal integration refers solely to a singular organization. External integration links the raw materials supplier, the component manufacturer, the original equipment manufacturer, the freight forwarder, and the retailer. Internal integration links the sales department, the marketing group, the finance department, operations, human resources, as well as the internal logistics of each of these organizations.

What are INCOTERMS and why are they important for multinational companies and their supply chain?

International Commercial terms (Incoterms) are rules and terms explaining who (the buyer or the seller) has responsibility for freight at different stages in international shipment. Incoterms are published by the International Chamber of Commerce and the last update was published on 2/13/2018. The following diagram details where the risk transfers from seller to buyer for each mode of transport. Incoterms are an important action to discuss in world trade as governments change and shift. A guide to the changes to EU and UK shippers and receivers was last published and updated in January 2019.

Explain the importance of inventory management:

Inventory management is incredibly important to companies. For this answer, rather than regurgitating the book, I'll speak out of my own experience from working in a warehouse for a convenience store distributor here in Missoula. Inventory management goes so much deeper than just knowing how much of something is in the building even though that's what people often think of. It can be all encompassing in everything that a company does. For us, decisions from the top down could be made with inventory management in mind. Say we were stocking up for trade show season and needed to find space for all of those items-- well now we have to decide what is coming off of the shelf to make space. Maybe we just picked up a bunch of new stores in North Dakota-- we need to make sure that we have enough on hand and are ordering more to keep inventory levels adequate to service all customers. What if I know that the price of Reeses bars is about to go way up? I'm going to by a bunch now to keep the cost down later. But even then it can be more. We had to make sure that perishable goods were rotated and kept in date. We had to make sure that breakable items weren't broken and if they were that they were accounted for. We had to track where every single product was at all times so that it could be picked, packed and shipped in a quick and timely fashion. Why does this all matter so much? Money. Yeah, it's really that simple. Inventory is crazy expensive, and not just because it has to be purchased. Yes, you have to buy it up front but then it has to be received, stocked, replenished, moved, sold, picked, shipped, discontinued-- a whole myriad of things can happen after that initial purchase. Inventory management is so important because mismanaging inventory is throwing away money. And throwing away money is a good way to make sure your business has a nice, short life.

According to the textbook and outside research, distinguish between LSP, 3PL and 4PL. What advice would you give to a company that is looking to replace multiple 3PL relationships with a single 4PL solution?

LSP: Logistic Service Providers are companies that provide the ability to "transport cargo, freight, goods or merchandise, and can refer to both the cargo sender (like a manufacturer delivering to customers) or the cargo receiver (like the retailer picking up cargo from a supplier)" (TradeGecko). 3PL: Third-Party logistics companies "provide outsourced logistics services to companies. These services can make up part or sometimes all of their supply chain management functions" (TradeGecko). Some of these services include inventory storage/management, picking and packing, freight forwarding, etc. The difference between LPS and 3PL is not in the different activities, but that 3PLs provide multiple logistic services. 4PL: Fourth-Party logistics companies "essentially takes third-party logistics a step further by managing resources, technology, infrastructure, and even manage external 3PLs to design, build and provide supply chain solutions for businesses" (TradeGecko). Basically, while a 3PL is to LPS a step further, 4PL is 3PL even more steps forward by integrating services and making a comprehensive supply chain solution. For a company that is trying to replace 3PL with a single 4PL solution, I think the big difference according to the book is outsourcing. Rather than using one or a few 3PLs in the supply chain, those 3PLs would outsource to other 3PLs. This effectively makes a "control tower", where the main 3PL has more options to apply more broadly have more integrations of the bigger supply chain/logistics model.

. What are the top three most frequently reported problems in outsourcing?

Late delivery When a manufacturing company outsources a part or many parts to a supplier, they rely on the timeliness of their delivery in order to produce on schedule. If the supplier is late (due to their own fault or their own supplier's fault) then the company is also late. This tardiness loses companies a lot of money as well as trust with their clients. This issue can be mitigated by having the supplier hold onto extra inventory called 'safety stock' in case any unforeseen issues sure arise. b. Quality Quality is a major player in the manufacturing game. Companies are in this business to produce quality products and many people rely on the safety of these products. If a supplier is producing on time but with many quality issues, then the company will have to return the mistakes and take more time to process and return. When quality is an issue, the trust between company and supplier is put at risk. This issue can be mitigated by making sure the supplier is competent enough to handle the task given and to ensure their quality check department is up to par with what yours is looking for. Sometimes suppliers make a mistake, it is good to have a relationship between company and supplier in order to solve issues when they arise and not after they have affected the entire manufacturing line. c. Difference in culture Sometimes the culture of a company and its supplier don't line up. If there is no communication, then it is easy for the supplier to slack off and go unchecked. To mitigate this, a supplier must be completely honest during negotiations and give the company a realistic look at what they are capable of or they will risk over promising and under delivering.

. When would you use a "lean" and when would you use an "agile" supply chain strategy (ie. what supply demand characteristics)? What is a "leagile" supply chain?

Lean: A lean supply chain strategy applies to production where demand is predictable and lead time are long. A lot of planning is required for lean production, especially with lead times that can go out two or three years into the future. A great example of a lean manufacturer is Boeing and their aviation products. A part for an airplane could take the supplier two years to build and deliver while the nuts, bolts, and shims can take as little as two days. Planning here is vital and lean production can help manage the risks. Agile: An agile supply chain strategy applies to production where demand is unpredictable and lead times are short. Electronics manufactures need an agile supply chain strategy since their production times are low and the demand is always changing, as is the technology itself. These companies need to be on their toes to changing market conditions in order to maintain their competitive advantage. Leagile: A leagile strategy is needed when demand is unpredictable and lead times are long. This strategy combines both lean and agile supply chain strategies. Postponed production is used here to cope for the long lead times of the manufacturing process as well as the ever-changing market. Items can be made until the point where they need to be customized and then as demand comes, it will pull these to be customized. This is a great strategy for a global company who customizes the product to the language and culture of its intended destination.

How do logistics and supply chain management differ? Explain with more than just defining each term.

Logistics is the process of moving and storing goods (and services) from the point of origin to the final destination according to the customer's requirements. Logistics applies to inbound, outbound, internal, and external movements. More simply stated, logistics is knowing all the ways to move something from point A to point B and choosing the best one dependent on the situation at hand. Supply Chain Management (SCM) is the management of the flow of materials, resources and information both upstream and downstream in an organization for the purpose of creating value. Stated another way, SCM is the integrated network of all businesses, functions, and people involved in making and getting a good or service to a customer and bringing information back to the people involved in the process. There are four views on how logistics and supply chain differ: a. The traditionalist view states that SCM evolved from Logistics and therefore is a subset of Logistics b. The re-labeling view states that SCM encompasses all of Logistics and is therefore just a new name for Logistics c. The unionist view states that Logistics is a subset of SCM and that SCM is a much wider concept than Logistics d. The interventionist view states that there is an overlap between parts of Logistics and SCM yet they remain two separate entities

What is volumetric charging? Use an example to explain why it is used.

Logistics service providers will apply volumetric charging when the shipment is bulky or difficult to handle. Volumetric charging applies a rate for the size of the shipment rather than the more common rate per kilo charge. An example of this is shipping popped popcorn or chips. If these items are charged per kilo, the shipping

. Outline and fully explain the various stages in the evolution of manufacturing. Where is the optimum point in this evolution and why?

Manufacturing begins its journey before the industrial revolution. Skilled artisans prepared specialty goods for consumers in what is called craft production. For many years, and still today, artisans made goods to order which did indeed satisfy the consumer's needs however costly it was. Craft production still exists for the specialty consumer, but another type of production took over the market. Next in the journey came mass production to produce goods and services to satisfy the high levels of demand from the consumer. Producing goods in mass quantities helped producers take advantage of the economies of scale. In this type of manufacturing there are enough goods to satisfy the consumer, but they lack in customization. Mass production limits choice in the marketplace. The manufacturing industry needed to move forward to solves these new demands while maintaining their profits. Lean manufacturing offered a solution to enhance both volume output and variety of output. Lean manufacturing introduced JIT (just-in-time) delivery in order to keep inventory down and only have on hand what is needed for that period. Lean production also uses a pull system to ensure that inventory is only produced and moved when required and helps align production with current demand. This type of manufacturing works extremely well however, the products are becoming more of an issue. Current products have short life cycles and are made in an extremely wide variety of options. With these factors the supply chain needs to become more agile to changing market conditions. Manufacturing is now moving towards what is dubbed mass customization. This is a type of production that focuses on producing items what contain the same components and customizing them into different finished products. Mass customization starts off with mass production of key components and ends with almost a craft production style to finish it off. Mass customization works off a principle known as postponement. This basically says that it is better to produce similar inputs and wait to customize until the end of production. The optimum point in the evolution of manufacturing at this point in time is mass customization. That is because the demand of the market pulls the products through the manufacturing process, eliminating excess inventory and waste. Without a consumer, there would be no need to produce. Mass customization makes the consumer the forefront of production, not the end point. This is important because the consumer will decide where manufacturing will grow to next.

Explain the distinction between outsourcing and offshoring

Outsourcing occurs when a company decides to transfer its own management and delivery of a process to a third party. When a process it outsourced, it is operated by a third party which then becomes a partner to the original company. The company must now manage their chosen partner, but no longer manages the process which their new partner has taken over. Offshoring occurs when a company decides to transfer a specific process to a lower cost location in another country. In this case, the company may still own the process and manage it fully, it just occurs in another country. The company also has the choice of having it run by a third party which means the process would be both outsourced and offshore.

When might pallets not be used in storage systems?

Pallets should not be used in warehouses for extremely large goods because they would not fit easily on a pallet. They also won't be used for odd shaped items as a pallet may not improve the handling process. They won't be used for items which already have easily transportable containers which already have warehouse management systems. One example of pallets not being used in a warehouse can be found at Boeing in Mesa, AZ. Boeing has a lean production system where parts are placed into Kanban bins from the warehouse and brought directly to each stage of the production line. Small rotor-craft pieces are held in plastic bins in tall rows of metal shelving. Workers tell robots which parts to retrieve and workers place parts into new bins which get sent down the line to be further sorted into stations. After sorting the parts are moved to the production line when needed and the bins themselves act as Kanbans for the manufacturing employees.

Explain the three inventory reduction principles?

Pool inventory: this reduction principle is the idea of combining different products to lower the safety stock, all while providing the same service level. For instance, Nordstroms began to pool both their online and virtual inventory. This led to a lower amount of safety stock but did not disrupt either market which means it provided equal service levels. Reduce Variation: This one is essentially reducing the bullwhip in any possible way. By reducing the bullwhip you reduce safety stock because you can have more precise analysis throughout your supply chain. By implementing communication within the supply chain and RFID you can very easily reduce variation. Reduce Lead time: If you are able to reduce the lead time you will reduce safety stock. The earlier you order the more likely changes will happen and the more likely your order will be off, causing the need for higher safety stock. A company will have to find a perfect balance between when they need to order and when it is too late to order, otherwise known as the reorder point.

Explain the concept of 'port-centric logistics' in regards to efficiency in SCM:

Port centric logistics refers to locating distribution centers at ports rather than traditional locations. Traditional locations for distribution centers tend to be geographically central, inland location in order to have an even distribution of distance to travel to retailers or other consumers. Ports are arguing for distribution centers to be located next to the ports. Their reasoning is that almost all cargo inbound to the distribution center passes through the port first. Locating a distribution center next to a port cuts down on the empty containers traveling the road and provides easier logistics movements when freight must go back from the distribution center to the port. Stripping containers at the port also provides a solution to the directional imbalances of road freight traffic into and out of the city.

What is RFID and how does it add value (ie operational improvements) to logistics and SCM?

RFID stand for Radio Frequency Identification and is one of the most common automatic identification and data capture technologies used in logistics. RFID tags are paired with an RFID reader in a company's materials management system. The company is then able to monitor and control the movement of their freight. RFID gives a company real-time visibility of point of sale data that can be used across the entirety of the supply chain. This can helpful in adding value to the supply chain by reducing logistics costs. Having this data can tell production how much to make, help them hold less inventory, allow for smaller and more frequent batches, and thus prevent overstock as well as under production. RFID tags also increase the security of the supply chain. Currently, people must be hired to ensure the right stuff gets to the right place at the right time. With these tags, all information will be visible to the company and operators will no longer need to keep a physical eye on product. This will also reduce the cost of human error in the supply chain.

Explain the different recovery options identified in Figure 15.2:

Recover options within the reverse logistics chain include: reduce, reuse, remanufacture, recycle, dispose with energy recovery, and use a landfill. The first step to take to produce less waste is to reduce the amount of waste from production. Next, a company can reuse the recovered product. Highly reused product in the supply chain includes bottles, pallets and containers. In Germany, in order to buy water at the store, you must return your used bottles. Companies can also remanufacture old product which may require extensive work. Remanufacturing includes three steps: dismantling, preparation, and reassembly. Recycling is another recovery option for companies. It is the process of collecting and disassembling used materials and sorting them into categories to be broken own into materials to be used again in production. Categories include metals, plastics, and papers. Recycling is the least valued added of these processes since the original functionality of the product is not maintained. The other two options are disposal with energy recovery and disposal to the landfill.

It is mentioned on page 23 that "containerization has been more of a driver of globalization than all trade agreements in the past 50 years". Why?

Research "The Box" project by BBC News at: http://news.bbc.co.uk/2/hi/business/7600180.stm (Links to an external site.)Links to an external site. Identify one fact you found interesting from this project? There are two important factors about containerization which trade agreements cannot do. Those two factors are improved productivity and scale. Trade agreements are a key factor in globalization but they could not determine how much one ship could carry. Containerization changed this. The cost of shipping goes down, the risk of losing cargo goes down, the risk of theft drops dramatically, and the time to ship decreases. Since all of these factors are decreasing, there is now room for the industry to grow. Companies can now produce more and ship more at a lower risk and cost than before containers. The Box project by BBC is interesting because it will show how versatile a simple box really is. This shipping container will travel across the globe and it will be used my many different countries to transport a variety of products. It could also give a glimpse into the risks still involved in shipping cargo across the ocean and potentially losing cargo.

According to the textbook, what is the definition of "reverse logistics"?

Reverse Logistics is to focus on the movement of freight from the point of consumption back to the point of origin for the purpose of creating value or providing proper disposal. Companies participate in reverse logistics to reuse, recycle, remanufacture, or dispose of a previously shipped product or part.

. Many factors are considered when selecting logistics service providers. From the textbook, explain which of the factors would you rank as the top three when selecting a 3PL:

Reverse logistics issues, performance metrics and service levels, and information systems would be my top three factors when selecting a 3PL. Depending on the industry the company is in some factors are less relevant than others like value-adding versus core services. Some factors, like speed/transit, terms of carriage, and costs are also going to depend on the industry and will probably be competitive. However, if your industry needs to be able to get repairs or returns, an efficient reverse logistics system is necessary. Also, knowing how to measure effectiveness through metrics is key to assessing success or the need to switch. Finally, information systems will determine how quickly communication can happen which is critical. Information systems will also help smooth out the system.

Distinguish between risk and uncertainty in relation to SCM.

Risk: an unplanned event that may affect your supply chain either positively or negatively. Risk can either be known or unknown. Known risks are identified (i.e. sipping risks like piracy and weather delays or the currency, culture and political risks of global trade) and can be proactively managed. Unknown risks are not identified but can be managed by reaction. Uncertainty: the outcome on any event is unknown and cannot be measured or guessed due to a complete lack of information and a complete lack of certainty.

Look at the key characteristics of the different modes of transport on Table 5.1. In addition to cost, what are the key operating characteristics to consider between the road, rail, air and water transport modes?

Road: Fixed costs are low and the availability of roadways is predicable. Variable cost change somewhat frequently with changing fuel prices. This transport system is fast, reliable, and dependable but lacks in capacity. Rail: Fixed cost is high since these operate using expensive equipment and variable cost is low. Rail is good on speed but not great and is very dependable especially at transporting large quantities. Air: Fixed cost is low but variable costs sky rocket. The fuel is expensive and so are the maintenance costs for this complicated equipment. Speed is quick but capacity lacks greatly. Water: Fixed costs are in the middle range due to the labor of handling the large equipment. Variable costs are low due to the economies of scale which comes from the massive amount of volume these vessels can transport. This mode is very slow and can be limited on the ports it is able to use depending on the size of the ship.

Explain the use of SLAs and KPIs in logistics and SCM:

SLAs (service level agreements) are mutually agreed upon contracts that detail the understood agreements to both service provider and service receiver. An SLA will typically lay out the duration of the service, the scope of the services provides, the area of responsibility and the performance metrics. SAL's can be internal or external in a company and many manufactures use SLAs when using 3PLs. KPIs (key performance indicators) are used in SCM to manage performance. KPI's are used by companies to increase reliance, see the effectiveness of new manufacturing techniques, have visibility of the supply chain, add improvements to IT, and empower employees to perform at higher levels. A company should decide its own KPIs based on it core competencies and should also benchmark its own performance to other companies in their industry. Some examples of important KPI's are inventory turnover, return on investment, on-time shipping, first time quality, reverse logistics, freight accuracy, total logistics costs, losses and damages, inventory levels, cost of goods sold, and gross profit.

. Is the ISPS Code a voluntary or a mandatory security initiative? What are the ISPS Code main objectives and which type of international trading vessels are affected by the code?

The ISPS code is a mandatory security initiative for any nation that is part of the International Maritime Organization. Meaning member nations can't opt-out of upholding ISPS standards. The ISPS states that its main objective is to prevent security threats from becoming a problem by adhering to various security plans regarding ships and ports. ISPS security plans for ports and ships include basic steps such as controlling and restricting access, inspecting cargo, and establishing security communication systems to more complex steps such as planned evacuations and distress signal responses. Advanced planning and auditing systems for security threats makes up a very large component of ISPS regulations. International trading vessels affected by the code include many passenger vessels, cargo vessels carrying more than 500 tons, and even offshore drilling ships. Relating in general to vessels going from port location to port location.

. What is the Internet of Everything and how does it impact logistics?

The Internet of Everything is an extension of the idea of the 'Internet of things', a name that refers to the connected network of electronic objects. The Internet of Everything covers more than just objects communicating via a network and software, the objects are able to speak directly with each other and make their own decisions. The Internet of Everything has four parts as follows: a. Data: how it is collected and used b. People: how they are connected in a value adding way c. Things: objects connected to the internet and to each other, particularly pertaining to autonomous decision making d. Process: getting the right information to the right place at the right time The Internet of Everything has a major impact on logistics, particularly the process component. Logistics is getting the right thing to the right place at the right time. The process aspect of the Internet of Everything plays this same role, just not in a physical sense like logistics. As the supply chain becomes more dependent on technology it is crucial to have a way to maintain order and information. The Internet of Everything will work hand in hand with the global supply chain and help enhance its safety and efficiency.

What is the Linear Shipping Connectivity Index? Research the most recent LSCI data and list the three countries with the highest LSCI and list the three countries with the lowest LSCI. Any surprises?

The Linear Shipping Connectivity Index (LSCI) attempts to capture a country's level of integration and use of it's existing shipping network. Knowing which countries are connected to global trade through ports and shipping lines can give insight into which are most connected in the global economy. The index is measured through four components: container-ship deployment, container carrying capacity, number of shipping companies, and average and maximum vessel size. (I have used the most recent information available online from UNCTAD for this question in order to get a more appropriate picture of today's global economy) According to the UNCTAD LSCI, the top 3 countries in 2018 were China, Singapore, and the Republic of Korea at 1, 2, and 3 respectively. The bottom 3 are Paraguay, the Republic of Moldova, and Norfolk Island ranked 176, 177, and 178 respectively. My greatest surprise from the data was seeing Japan ranked #17 in 2018 as well as seeing the Ukraine's rank change -48 points from #12 in 2017 to being #60 in 2018.

What is the bullwhip effect and why is it a serious problem for any supply chain?

The bullwhip effect describes a large imbalance of finished product to the demand in the market which has been caused by a minor imbalance in the beginning of the supply chain. Many imbalances can cause the bullwhip effect: shortage of supply from a supplier, a supplier not making their quality inspections, a machine braking with a long downtime, and many more. Let's look at a shortage from a supplier. Say you are a manufacturer and you have a pull style supply chain where you produce according to the orders you have. You need to build 2 items this month and 2 next month. Your engine supplier's machine breaks and they are one week late with the engine. No big deal right? Wrong. You planned your entire production line off the lead time of your parts and not only are you behind one week for this order, you're now behind one week for each of your following orders. This mistake didn't just mess up the production for one week, you will be scrambling to make up this time or you will be late on every other order.

Why the explosive growth in international trade over the last few decades? Research the top 5 exporting countries and list them below along with your source

The explosive growth of global trade can be directly related to the emphasis on Logistics and Supply Chain Management (SCM). With this growth comes the arrangement of trade agreements such as the European Union and the North American Free Trade Agreement. The growth in outsourcing and offshoring has also had a major impact due to SCM. If there is more international trade, there must therefore be a need for more international transport. In 2017, Statista.com reports that the top 5 exporting countries (measured in billions of U.S. dollars) are: 1. China 2. United States 3. Germany 4. Japan 5. Netherlands

What is the maker movement?

The maker movement refers to the technological development of additive manufacturing and its potential to significantly change the flow of the traditional supply chain. Additive manufacturing, also known as 3D printing, has significantly impacted the way current manufacturers design and build new products. In the aerospace industry, companies use additive manufacturing to make complex pre-production parts to test their usefulness and make on the spot changes. Medical companies use 3D printing to make custom medical implants and there is currently research to 3D print organs such as livers, kidneys, and hearts. With this new technology there has been a spark in the creativity and problem solving of people. 3D printing isn't just for companies is large budgets, a 3D printer could cost you as little as $189.99 or you could just design and build your own like the Cerberus 3D printer designed and built by Steve Graber. The maker movement is bringing creativity and innovation into the hands of everyday people. This has an extreme potential to shift the entire supply chain to send raw materials to the consumer, not finished goods. Consumers will have the ability to customize their own raw goods and may no longer need someone else to do the work for them. Additive manufacturing has a long way to go, but the flame for creativity has been reignited.

Read the Emma Maersk "Santas Ship" and the figures below it on page 282. What do you believe is the role of "Scale" for the future of logistics and SCM?

The role of scale in the future of logistics and SCM is to reduce the carbon footprint of transport companies. To put it simply, if you ordered two items from amazon, would you want them to be delivered in different boxes using different trucks? Or would you want the items packed in the same box (if possible) and shipped to you o the same truck? In other words, do you want both your items to have twice the carbon footprint or not? The transportation industry is the same. Producers and consumers have the opportunity to affect the environment less by grouping their shipments to be larger. Filing the space on the transportation vehicles means reduced cost for buyers and reduced carbon footprint.

What are the key features for the supply chain strategy at Zara? Use at least one outside source (and cite it) in your answer.

Zara uses an agile supply chain strategy in order to respond to fashion trends in their ever-changing industry. Zara's unique supply chain strategy keeps it a leader in the market with its three key features. a. Quick response to demand Zara uses a pull model to manage their inventory and creates up to 100 new designs each month to meet current trends and demands. b. Small batch productions Zara produces a small quantity of each design. This helps them realize which products work and which don't. It can also give them a higher value in the market since demand is high and supply is low the consumer is willing to pay more for the product. c. Central distribution center Zara has a strong IT system and they keep their center of shipment in Spain. All items produced to Spain and then ship from there.

Select two different categories of automation listed in the chapter. Give an example of how you think they will function in SCM in the next three to five years

a. Condition monitoring and self-regulation of freight in transit Condition monitoring can help aid producers to ensure their product does not get damaged while being transported. Self-regulation of freight in transit can also help protect goods. As the temperature outside the container shifts, the inside will need to keep a constant temperature for shipments like produce or frozen goods. This technology combined with a network able to support and relay this information back to the producer will help with food safety, freight safety, and even give the consumer real time feedback on their purchases. b. Augmented reality Augmented reality will have a major impact on the manufacturing side of the supply chain. For example, many assembly-based manufacturing companies rely heavily on a technically specialized work force and are currently lacking in available labor. Augmented reality will be a useful tool to help train and aid new and seasoned employees. Manufacturing is a strenuous task and many wiring harnesses and other crucial parts must be installed in hard to reach places. With augmented reality workers will be able to see exactly where a part goes, the tension the bolts need to be set to, the angle it needs to be installed at, and may other factors. In the next five years with this aid in the manufacturing process, there will be less work-related injuries, manufacturing will be completed faster and with more accuracy, and workers will have a higher quality of life at their job. Augmented reality may even begin to help with other important SCM areas like shipping and receiving, quality inspection, and maybe even delivery to aid robots with tricky last mile tasks.