MGT 431 Final
fill rate
% of customer demand filled from on-hand inventory; measures magnitude of in-stock occurrences (is a complement to the in-stock rate); this is an effectiveness measure
in-stock rate
% orders without any stockout occurrences; measures frequency of in-stock occurrences; this is an effectiveness measure
how to calculate cash to cash cycle
(days sales A/R + inventory days) - days paying A/P
why do we need warehouses
- uncertainty in demand so they hold inventory - value-added manuf - consolidate/ship mix of goods and break bulk - get closer to customers - create kanbans to decouple production and support JIT
why is reverse logistics difficult (in 2 groups)?
-*control*: returns, recalls -*uncertainty*: condition of packaging, condition of product, costs
what logistics activities are most often outsourced to 3pls
-operational: domestic and international transportation -strategic: customer facing and IT
how to decide where to put a warehouse
-regional determinants: labor climate/rates, availability of transportation, proximity to markets, taxes/incentives, supplier networks, land costs -specific site determinants: transportation access via modes, traffic congestion, workforce, land costs/taxes
while warehousing uses lots of technology, people are still vital because
-they send information to the systems, like a picker scanning and RFID -someone programs the wms to make the right decisions -smart people have to design the warehouse for optimal efficiency
is reverse logistics cost higher or lower for the following categories: -transportation -holding cost -shrinkage (theft) -obsolescence -collection -sorting,quality -handling
-transp: higher -inventory holding: lower -shrinkage: much lower -obsolescence: may be higher -collection: much higher -sorting/quality diagnosis costs: much greater -handling: much higher
the warehouse management system deals with inventory in a FIFO or LIFO method?
FIFO; helps decrease the obsolescence risk with inventory...decreases risk of owning out-of-fashion merchandise
what are the two requirements of the company that they have to do to be able to achieve their information technology goals
1. ability to collect, store, disseminate info 2. willingness to share
3 key types of reverse logistics
1. e-commerce & returns 2. sustainability & recycling 3. safety & recalls
whats the basic Cintas supply chain process according to Brian Bensman
1. forecast/plan 2. pick suppliers & negotiate 3. look at internal manufacturing 4. send to DC 5. rental locations 6. customer delivery from rental locations
drivers of reverse logistics
1. growth in ecommerce and online shopping 2. greater focus on sustainability which has led to more recycling 3. more emphasis on safety regulations -> more product recalls
3 types of activities cash can come from
1. operations 2. investments 3. financing
what are the 2 key factors that the cash to cash cycle depends on?
1. process design & efficiency 2. power
what are some general principles of warehouse layout and design
1. use one-story facility 2. use straight line of goods 3. use efficient material handling equipment 4. use effective storage plan 5. minimize aisle space 6. make max use of facility height + add visual cues
what are the 6 fundamental principles of logistics
1. value is key & defined by customers 2. customer rules (but not all are created equal) 3. tradeoffs are everywhere, and lean principles lessen their impact 4. inventory is a friends (w benefits and costs) 5. fast is convenient but costly 6. change is the only constant in life - and logistics
only ____ if retailers account for the full price of returns
1/3
estimates say that about ___ to ____ percent of items bought online will be returned
15-40%
amazon was born in ____
1995
inventory turnover
COGS/inventory; this is an efficiency measure
what is one of the biggest enablers of effective logistics and SCM
IT and IT systems
which trade agreements does Cintas interact with most often?
NAFTA and CAFTA (central america)
a tennis ball in the garage to tell you when your car is pulled far enough to clear the garage door closing is an example of what type of visual management
Poka Yoke
walmart is using ____ to work on better information sharing
Retail Link
what was one particular logistics partner that Cintas mentioned they work with?
Scheider Logistics
define warehouse
a generic term for a facility where materials and goods are stored
centralized return center
a place that handles returns; consistent, accurate decisions, retail/manufacturing space is saved, enhances the image of companies if they partner with environmentally friendly partners, more rapid financial recovery when its in one place; quick trend identification
what does the lean principle of 5s dictate
a safe and orderly work environment is also an efficient work environment
poka yoke
a simple method used to detect, prevent, or control a defect in the operation. It helps to identify when there's an abnormality or something that isn't quite right; uses visual cues like outlines of tools/brooms so you know when they're missing/out of place
scenario analysis
a systematic process to analyze possible decisions by considering the outcomes under different assumptions; this challenges forward thinking companies & allows you to gain insights into future opportunities
what's the biggest challenge of lifecycle costing
accurately estimating all of the costs
what is included with the technology game changer for scm
additive manufacturing, big data & predictive analytics, robots (IoT), social media
taking time out of your supply chain by using information enables a more ___ supply chain
agile
what are the positive aspects of inventory
allows us to meet customer demands, buffer against uncertainty, and speculate (take advantage of lower prices)
how big is the secondary (returns) market as a percent of gdp?
almost 3% of GDP
square root of N rule
an equation that boils down to the fact that when you quadruple the # of warehouses, you double safety stock (difference in # of warehouses is under a square root)
what is inventory
an investment with holding costs that ties up capital and may change in value... it is worth MONEY
perfect order as defined by the supply chain council
an order delivered to the right place with the right product at the right time in the right condition in the right package in the right quantity with the right documentation to the right customer with the correct invoice (aka nothing went wrong)
pilot projects
another way to do a scenario analysis/complements it; proves concepts and develops a sure-fire implementation plan; allows companies to test small scale before major implementation
what are the two major types of 3PLs
asset-based and non-asset based
customer relationship management (CRM)
automatic system of customer management so you can segment and communicate with customers; allows for targeted promotions, product selection, new product development -- etc
elements of reverse logistics in order of importance and ability to reduce costs!!
avoidance***, gatekeeping, quick disposition, remanufacturing & refurbishment, asset recovery
elements of reverse logistics in order of importance
avoidance, gatekeeping, quick disposition, remanufacturing and refurbishment, asset recovery
what is the best way to reduce costs and hassle of returns?
avoidance.. to avoid the probability of returns in the first place
ellram said that the secondary market is really _____
beautiful hahaha
how has the 3pl industry changed in the last 20 years
become more sophisticated, standardized services, systems are much bigger issue, international demands, customers want better, faster, cheaper, customers want better integration, value-added services growing
do you have better or worse customer service when you have more warehouses
better; More warehouses = less distance to customers = lower order fulfillment cycle time
a warehouse management system is know as a _____ of the operation of warehouses
brain
goals of reverse logistics
capture value, recycle, reuse, reduce cost
____ is king!
cash!
according to Ellram, the ERP system is basically a company's ____________
central nervous system
what are some risks of not looking at reverse logistics holistically
china isn't taking our waste anymore, 82% of e-waste is going in landfills
closed loop system
circular economy where goods naturally go back into the system (a type of circular economy)
advantages of using stores for fulfillment
close to the customer, fast last mile, transfer between stores more quickly, inventory already available in the store
what are some reasons that sharing information externally is good
collaborate w/ major customers; detailed sharing leads to lower inventory costs and higher service levels
what are some fears associated with tracking and tracing?
companies knowing what I'm buying, can sense trends about a company based on what the company is buying, location/GPS issues
channel design is a good source of ________
competitive advantage
six sigma
complements lean practices; this was originally Motorola's response to 1980s japanese quality challenge (still in use today) -- refers to the greek letter that notates standard deviation. All about standardizing processes
benefits of a centralized returns center
consistent & accurate disposition of returned product, as well as specialization that reduces labor costs and reduced transportation costs
potential advantages of omni
consistent experience, should be lower lost sales while achieving the same customer service, lower inventory levels overall, requires good information systems, easier for customer to return, DCs serve all locations
how can you solve the problem of having too long production lead times
construct a larger warehouse
what is another name for third party logistics company
contract logistics or logistics service providers (LSP)
which type of warehouse ownership (private/public/leased/contracted) is able to provide value-added warehousing and logistics services by a comprehensive 3PL?
contract warehousing - the contract contains the duties of the workers
pros of owning warehouses
control, customer service, known costs and avoiding markups, increased security, higher real estate value
what is the key decision variable for whether or not to use 3pls
cost (it used to be high service or level of service, but now that high level of service is expected)
whats a common opportunity cost with the decision of how many warehouses to have
cost of poor service (adding more warehouses adds more warehouse costs, inventory costs and other costs, but allows you to miss out on the cost of poor service)
what are some things that transportation management systems do?
create vehicle loading/unloading plans, identifying optimal routes, tracking shipments, comparing modal options, providing comparative data to select the right carrier, track carrier performance
working capital =
current assets - current liabilities
potential disadvantages of omni
customer service could vary, possibly could lose more sales if a channel doesnt have inventory available, challenging to have inventory in the best place for customers, can be expensive to get info systems, some people could be trying to get the same inventory at the same time, more complexity in the DC design, pulling and shipping from stores is expensive and complex
what are results of data breaches
damage to reputation, disruption of operations, legal liability w/ laws and contracts
dwell time
days inventory sits idle/days inventory moves in supply chain; this is an efficiency measure
what happens during gatekeeping
decide whether to take the item back
what is the ordering vs holding costs tradeoff
deciding how much to order and how frequently to order;
what does lifecycle cost analysis tell us?
decisions you make in the design-and-development stage (i.e. deciding what materials to use and how you will assemble them) affect the usage and disposition costs
what does the square root of N rule determine
determines how the inventory will change to account for uncertainty in demand as number of locations changes
what are some keys to omni success
determining optimal ship points, developing efficient picking
why work with secondary market partners as a company?
dispose of the product quickly, recover as much value as possible, protect the brand
if a distribution center is quadruple the size of another distribution center, the EOQ of the large DC will be _____ the EOQ of the smaller one
double
if a distribution center is quadruple the size of another distribution center, the inventory turnover of the large DC will be _____ the inventory turnover rate of the smaller one
double
as the holding cost per unit increases, the Q* (quantity per order) goes _______
down
characteristics of a transactional relationship
driver: cost/price; arms length, minimal interaction, transitory... results in a commoditized relationships
strategic relationship characteristics
driver: innovation characteristics: trust-enabled, resources commingled, gain-sharing, long term; results: relationships are a competitive differentiator
cooperative relationship characteristics
driver: scale characteristics: joint planning, frequent interaction, information-intensive, value-added services, long term; results in relationships that are essential to day-to-day operations
gatekeeping
empowering front-line people to screen returned merchandise at the entry point to the reverse logistics system to determine how to handle the product; you have to make these decisions as close to the consumer as possible with easy rules and determining product target disposition ahead of time
is technology a solution or an enabler
enabler
what is the purpose of the visual management/poka yoke/5s stuff?
enhanced safety, efficiency and effectiveness
examples of closed loop systems
european glass bottle collection, kegs, cintas rugs and uniforms (this is largely about reuse)
t or f: if order placement cost decreases (K), the optimal order quantity (amount ordered per order) will increase
false... if a numerator EOQ item decreases, then so will the EOQ (amount per order)
t or f: every item should have a dedicated place in the warehouse
false; sometimes the less common skus should be placed randomly in multi-use spots because otherwise they take up space and increase distance to picking other items if there are too many dedicated places
t or f: there isn't a huge urge to change the working capital accounts into cash right away
false; there is a strong desire to turn all the WC accounts to cash quickly
t or f: amazon is completely online
false; they now own whole foods and have had some locations for christmas
t or f: lower inventory turns at smaller DCs means that those DCs are less efficient
false; this could be because they have smaller economies of scale and are not seeing their demand fulfillment as high in eoq
what's the goal in picking warehouse location
finding the geographic center - the location that minimizes the distance between you and your supply chain partners (suppliers and customers)
what are some main Cintas products
fire protection, uniforms, cleaning supplies (dispensers etc)
salvage brokers
first level brokers buy returns in bulk and sell to secondary markets;
is forward or reverse logistics more clear
forward
types of non-asset based 3PLs
freight brokers, freight forwarders, customs brokers, intermodal freight transporters, lead logistics providers (LLP), contract logistics
examples of warehouse-oriented 3PLs
fulfillment services, reverse logistics, public warehousing
what happens to roa if... income decreases
goes down
are 3PLs growing or staying constant size in the market
growing and taking on more responsibility
environmental returns
hazardous materials must often be returned for proper disposal
warehouse management systems (WMS)
helps automate and organize warehouse operations for efficiency/compliance; directs warehouse activities using RFID for tracking goods in warehouses
whats the point of an eoq for managers
helps determine size of an individual order
key phrase for why warehouses are valuable
helps you get product where it needs to be when it needs to be there at the lowest cost
waste management hierarchy
hierarchy of most to least favored options of waste management - prevention, minimization, reuse, recycling, energy recovery, disposal
as a company, do you want your days payable to be high or low
high because you want to wait to pay your suppliers
total logistics costs =
holding + ordering costs
bonded (customs) warehouses
holds inventory to delay the payment of taxes/duties; if it's never sold in the country it's imported into, the items can leave the country without ever paying the import taxes; 5 year max storage
what should you consider financially regarding outsourcing
identify relevant cash flows, define the timing of cash flows, calculate the net present value
is clicks and mortar more popular in the US or in Europe
in europe - particularly widely popular in the UK
what are the two metrics that customers care most about regarding inventory
in-stock rate, fill rate
key inventory effectiveness metrics include _____ and _____
in-stock rates, fill rates
what happens to inventory as we increase the number of warehouses
increased uncertainty that each facility experiences in the demand for its products because it's more specific/less spread across the portfolio
is Q dependent or independent of the total acquisition cost?
independent
is it easier to forecast demand for a product with dependent or independent demand
independent
EOQ is good for which type of demand
independent demand
what makes a great third party logistics company
innovation and customer-orientation, value-added services, standardization, good pricing
what metric measures how often inventories are depleted and replenished over the course of a given time period
inventory turnover
key inventory efficiency metrics include _______ and ________
inventory turnover (increase) and dwell time (want to decrease)
key inventory performance metrics
inventory turnover, dwell time, in-stock rate, fill rate
ways companies affect supply to get the item to the customer if you don't have the inventory where needed
inventory, multiple suppliers, fast shipping, expedite processing/manufacturing (excess capacity, overtime, fms), postponement, inventory pooling
what is the square root law of cycle stocks
it describes that when a distribution center's annual demand increases (D), the inventories (i.e. inventory turns) and EOQ only increase by the square root of that same increase. For example, if one DC serves quadruple the demand of another DC, the bigger DC only has double the inventory turns and double the EOQ as the first
what does the strategic profit model indicate for inventory
it shows how inventory management affects overall firm profitability
what does the term "sawtooth" mean regarding inventory
it shows the pattern of inventory consumption and replenishment over time
why wouldn't you want to outsource logistics?
lack of control, less visibility, maybe you have more internal expertise with the product/industry, too expensive if you have the ability to do it yourself
using information to substitute for inventory allows you to have a more ____ supply chain
lean
if you enable collaboration with the supply chain through information, then you could have a better ____ supply chain
learning
disadvantages of using the stores for fulfillment
less inventory variety, less efficient, double handling, stockouts - people buying before the orders are filled, more complexity in forecasting, costs!
would finance departments tend to prefer you have more or less warehouses
less to minimize required investment
RFID (radio frequency identification)
little microchips and antennas that can automatically identify the good and track it
as a company do you want your days inventory to be high or low
low -- inventory is valuable and accumulates costs
as a company do you want your days sales to be high or low
low because you want LESS days before sales
compared to a larger warehouse, a smaller warehouse should have ____ (higher or lower) inventory turnover... assuming all else is held equal
lower
other trends in 3PLs
major consolidation, projects getting larger and more complex, global projects, systems element, continued growth and flattening, more outsourcing of total supply chain
more information can allow companies to do what with their inventory
manage it better and have less inventory sitting around
how to enhance warehouse operations?
mapping, value stream maps, kaizen events to brainstorm opportunities for service enhancement and waste reduction
benefits of the secondary market
meaningful contribution to the GDP, drain for product that cannot be sold as first quality in the primary channel, keep products out of the landfills
product availability
measured by a fill-rate metric like item fill rate (items filled/items ordered), line fill rate, or order fill rate
distribution channels are an important way to ________
meet underserved markets that may not even realize they're underserved
cons of owning warehouses
more liability, high upfront costs, more assets, can decrease ROA, stuck in one location even if customer base changes, more risk!
are there more or less returns/recalls/recycling recently?
more! more ecommerce and therefore more returns/reverse logistics activity
which company launched six sigma
motorola - and cintas uses it now a lot too
outlet stores
move "seconds" or product that is not selling well through the primary market
does amazon have a negative or positive cash to cash cycle?
negative! classic amazon, good at everything
what is the lifecycle equation
net present value of the sum of design, manufacturing, operations, and end of life costs
how to implement avoidance
no free shipping, deadlines, cash/some store credit, try on
is the last mile problem solved?
no. if you think yes then look up the song "nobodys perfect" by hannah montana -- same thing - no complex business problem like this is solved immediately in the best way possible
are all returns of equal value
nope definitely not lol
what is the goal of asset recovery
obtain the maximum value when you have returns by limiting return periods, dealing with them quickly, or requiring that products are in a certain condition
common measures of order fulfillment EFFECTIVENESS
on-time delivery, order fill rate, order accuracy, line accuracy, order cycle time, perfect order completion
are operational or strategic activities more often outsourced
operational because most companies aren't comfortable with handing off their most strategic activities to people (losing control)
what are examples of integrated solutions
order fulfillment management, reverse-logistics execution
order cycle time
order fulfillment performance metric that measures the time from order placement to customer receipt of delivery
what is clicks and mortar
order online, pick up in store or at a dropbox
classic measures of warehouse productivity EFFICIENCY
orders picked/packed per hour, lines per hour, items per hour, cost per order, cost as a % of sales
what are some of the easiest ways to increase the cash flow without damaging stock
pay slower, reduce costs, creatively collect faster, maybe sell an asset
what is included in the resources category of the supply chain management game changers
peak oil or water etc
main purpose of TMS
plan and manage all transportation needs
what is lifecycle cost analyis
popular approach to sales that also applies to reverse logistics; it 1. considers all costs, 2. creates visibility and 3. reevaluates the system periodically;
what is a part of value-added warehousing?
postponement (configure to order), promotion support, help support regional differences/preferences, helps with returns and reverse logistics (incl separating repairable items and quality assurance)
define reverse logistics
process of planning, implementing and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods, and related info from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal LOL PROBS WILL NOT MEMORIZE
what happens during quick disposition (one element of reverse logistics)
product accepted and now you have to decide what to do
a relatively new function that warehouses can serve is ______
product processing for final assembly; it is helpful for companies to do this because they are able to do final revisions on the product based on customizations
define marketing returns
product returned because of slow sales, need to reposition inventory, or channel stuffing
types of ownership of warehouses
public, contracted, leased, private (manual), private (automated)
one major trend in getting products to customers
rapid growth in ecommerce
types of warehouses based on function
raw materials warehouses, distribution centers, cross-dock facilities, breakbulk warehouses, customs warehouses
why would companies engage in gainsharing
reasonable margin, opportunity for return, shared benefits, shared risks via offramps
what are traditional warehouse operations
receiving and unloading, storage placement, order selection, final processing/packaging, checking & verifying orders, consolidating and staging, loading & shipping, administrative, facility maintenance, equipment maintenance
asset recovery
reclaim or reuse materials that have scrap value
why outsource logistics?
reduce asset ownership, reduce employee base, lack of expertise (too many costs to getting expertise), better response from 3PL than an internal function, reduce costs; allow more free moving capital
avoidance
reducing reverse logistics costs making products and developing processes to eliminate returns and recalls
what are the aspects of reconditioning the items in reverse logistics
repair, refurbishment, remanufacture, cannibalize, recycle
remanufacture and refurbishment
repairing or making a product for resale or reuse
when was the birth of ecommerce
right around 2000
what happens to roa if transportation costs go up (less income) and assets go up
roa goes down
is EOQ robust or not?
robust - factors can be adjusted and it won't change too greatly since the square root is taken
pareto principle and how it applies to warehousing
rule that says 80% of the sales come from 20% of the goods so it explains how rack space should be dedicated to the highest volume and fastest-moving items. It justifies that your slower moving items can go into random places so they aren't taking up space and slowing down the other items
how do companies affect demand/ get customers to demand what you're able to supply
sales, free shipping, discounts for waiting/future sales, offering better substitutes for same/better price, order custom item (mto policy), subscriptions with discounts
3 paths to the secondary market
salvage brokers, outlet stores, other (auctions, internal dispositions, large internet wholesalers)
4 benefits of autonomous vehicles
savings, safety, shortages, sustainability
if you have 10 trailer loads of last fall's women's clothing that needs to be moved out of the retail stores and out of the manufacturer's distribution centers... what are 2 possible options of things to do
sell to salvage dealer or sell it to a value priced retailer such as ross or marshalls
how can cash flow be increased?
selling more goods/services, increasing price, collecting faster, selling an asset, reducing costs, paying slower, bringing in financing through equity or a loan
distribution channels
set of interdependent organizations used by a selling organization to provide its products or services to the marketplace; they are limited by own imagination and technology/costs
what's blockchain
shared ledger for recording the hisotry of transactions. It's secure and prevents tampering. All parties to transactions have to agree before the transaction is recorded. It stores the information in locks with links to form a chain. This allows companies to not have separate ledges and prevents errors/duplication/extra expenses
breakbulk
shipments are taken truckload to a place closer to customers, then LTL to final locations
Do you want your cash to cash cycle to be long or short?
short - think like you want cash faster so shorter cycle of cash becoming cash
what are the top 10 issues facing the logistics industry (maybe just read these to possible recognize on the exam)
shortage of drivers, hours of service, driver retention, ELD mandate, truck parking, compliance safety accountability, driver distraction, infrastructure congestion funding, driver wellness and health, economy
why might people be hesitant to share too much information/be too integrated with their customers/suppliers
some information can be used competitively
what are the 5s of warehousing (different from last ones slightly)
sorting, set in order, shine, standardizing, sustaining
average inventory varies as the _____ of demand
square root
multi-channel distribution centers
support ecommerce and retail stores and other channels;
what is included with the "people" category of SCM game changers
talent development, demanding customers, shifting age/population centers
what challenges do 3PLs face in the industry?
talent shortage, big data, omnichannel logistics, trend toward consolidating purchasing
scm game changers
technology, people, resources
what is gainsharing
the 3pl shares a portion of the variance between budgeted and actual costs with you as investments reduce the costs of service
what does the EOQ tell
the Q per order
what happens if brands put too much of their product in the secondary market
the brand name would be harmed/diluted. It could become seemingly less high end if it's being sold at discounts often
define dependent demand
the demand for the product depends on another bigger item (is a component part or input)
what else is affected in the EOQ formula as the order placement cost increases
the eoq overall increases because it is in the numerator of the EOQ equation
what are transportation economies
the fact that warehouses allow you to transport in full truckloads; inbound shipments are broken down and stored at the warehouse, and outbound shipments are consolidated and shipped from the warehouse
what is the key idea of omni channel
the idea of a single inventory: that all the company's channels are aligned so that the customer in all channels can access all inventories and return all inventories to the location convenient to the customer
what are production economies
the idea that producing in large lots (huge batches) is economically better and then it's stored until customers want it
what is the most expensive type of warehouse to operate
the private, automated
why might a distribution center look better if it is large
the square root of cycle stocks
what is one of the most important factors in deciding whether to own, lease, contract, or use a public warehouse?
the volume of product that will be handled over time (throughput); higher volumes justify higher fixed cost; the costs of ownership and automation can be spread over a large amount of inventory if you have a higher throughput
what is the undervaluation issue that Cintas faced
they accidentally were undervaluing the worth of products that were sent to Canada. They were forgetting the value of the logos, hangers, and many overhead costs in their value calculations
what is the key to dedicated distribution channels
they are set up only to fulfill the demand by customers;
why are 3pls appealing
they can take the logistics burden off your company so you can focus on building core competencies; they are experts in the key logistics services
what could happen if companies try to extend their payment terms too long to their clients/partners
they could make the whole supply chain more expensive, or damage relationships with service providers/suppliers
Briefly describe the Cintas global logistics network
they source from suppliers in Canada, Haiti and many other countries. In doing so, they deal with tariffs, import clearance, and try to get their products to duty-free countries before importing them into the US. They've run into some problems and Brian as the global compliance employee is on the line for any major missteps with their global logistics compliance
what is the goal of using information technology (IT) that companies have
they want to be able to inexpensively share accurate, relevant information with supply chain decision-makers
what was the issue with Customs that Cintas was facing
they were doing the necessary paperwork each time the goods crossed the border to canada and came back.
3pl meaning and definition
third party logistics company- external service suppliers that perform all or part of a company's logistics functions
what are the negatives of having inventory
ties up capital/cash, increased risk for theft/damage, it can become expired/outdated
how is reverse logistics different from forward
timing and quantities uncertain, many to one distribution points, packaging damaged/hard to handle, disposition unclear, less visibility, erratic volumes, adjusting book value is a big deal
what is the goal of quick disposition
to quickly and accurately decide what to do with the returned, recalled or recycled item
what is a retailers first choice of disposition?
to re-stock a returned item and sell it as new
what does it mean that IT is an enabler?
today's logistics and supply chain best practices, as well as today's global economy, are enabled by IT
center-of-gravity model
tool used to help identify the optimal location for a DC based on the locations and sales volumes of customers
what are some relative costs to think about with regards to the warehouse decisions (where/howmany etc)
total logistics costs, transportation costs, inventory carrying costs, warehousing costs, order processing costs, cost of poor service
main purpose of warehouse management systems
track movement and storage of materials in the DC system
3pl offerings continuum
traditional services -> value-added services -> integrated solutions.... margins increase as you go right on the continuum
types of relationships
transactional, cooperative, strategic collaboration
what are the 3 parts of the 3pl continuum
transactional, cooperative, strategic collaboration (increasing margins)
t or f: 3PLs are very adaptable
true
t or f: reverse logistics is a brand builder and a competitive weapon that contributes to profits
true
t or f: reverse logistics should be recognized as a holistic, value-adding process
true
t or f: target used to be all bricks and mortar before ecommerce became vital
true
t or f: warehouses enable smoother coordination of supply and demand
true
t or f: you always round up for EOQ
true
t or f: a negative cash to cash cycle is good thing
true: its good to have cash to cash happening quickly (very small)
t or f: a warehouse can allow a company to take advantage of quantity purchase discounts
true; they can't store large quantities of inventory without warehouses
e-commerce dedicated channel
type of e-commerce distribution channel that involves the customer ordering on one side and the DC shipping to the fulfillment center which then goes to the customer; it's set up to deliver only to ecommerce customers
what factors should be considered when deciding the transportation strategy
type of product, complexity, timing, customer service, cost increases if TLs aren't full
if transportation costs go up and assets go down, what happens to roa?
unclear - not enough info
types of pricing
unit rate/transaction pricing, cost +, or gainsharing
if warehouse costs go down and assets go down, roa goes ______
up
as annual demand and/or order costs increase, the quantity per order goes ______
up (increases too)
quick disposition
use simple rules and clear policies to quickly decide how to manage the returned product
what do inventory holding costs typically end up totalling as a percent of the unit value per year
usually 15-40% of unit value per year are holding costs
what are some areas of Cintas that require internal controls
valuation, classification, trade agreements and country of origin
hidden rocks/challenges with inventory
volatile demand, inaccurate forecasts, unreliable suppliers, quality problems, bottlenecks
throughput
volume of material or product that moves through a warehouse facility over a given time
asset returns
when assets like reusable pallets, racks, or totes need to be returned for future use
when would you want to own your own private warehouse rather than using public space (regarding customer service and headquarters)
when there are high customer service requirements and a need for a regional sales headquarters, it would be a good idea to own
reverse factoring (supply chain finance)
when there's a middleman between the supplier and the buyer... the supplier gets paid when they need to and the bank works it out with the buyer to make sure they're getting payment (maybe on different terms)
regarding volume and demand variability, when would you want a public warehouse rather than owning a private one
when volume is low and there is high variability in demand based on significant seasonality (you want to be able to have more or less space only when consumers are demanding that)
what is the portfolio effect of inventory and # of warehouses
when you have one warehouse, you are fulfilling all demand so some customers will demand more than others, resulting in the "overs" and "unders" cancelling each other out. When you add warehouses, you reduce the # of customers each warehouse serves, so there is a smaller portfolio effect at each location resulting in a net increase in safety stock network-wide
can 3PLs add significant value?
yes
should outsourcing logistics be looked at as a make-buy situation?
yes
what could be the case if inventory turnover is low and stockouts are high
you might have inventory but not the right inventory (there could be multiple products and one is selling out while the other is stockpiling)
cash to cash cycle
A measure of the number days between the time a company pays their supplier for inventory and the time that same company is paid for the same inventory by their customer
cross-docking
A technique whereby goods arriving at a warehouse from a supplier are unloaded from the supplier's FTL and loaded onto outbound trucks, thereby avoiding warehouse storage; try to not stay overnight
What system does Cintas use to enable their global trade?
Amber Road
automated storage and retrieval system (AS/RS)
Computer controlled equipment system that stores and retrieves cases or pallets from specified storage racks;
additive manufacturing
3D printing
cost + pricing
3pl charges a cost of service plus a management fee. this doesnt always incentivize continuous improvement
unit rate/transaction pricing
3pl charges you for each measurable activity; very popular but both you and the 3pl need to understand the true costs of providing desired services
Brian Bensman said that _____% of the good has to be made in the country that the tag claims the product was made in
50
if EOQ is 100, what is the average amount of cycle stock
50 (average inventory is the amount per order divided by 2)
WEEE
A European law which requires electronic equipment manufacturers to begin employing disassembly centers, take responsibility for products @ end of life
CTPAT
Customs-Trade Partnership Against Terrorism; allows customs preclearance (like TSA pre check); it's voluntary and led by US customers and border protection to focus on improving security of private supply chains
what do each of the letters D, Q, K, h mean in the EOQ
D: annual demand Q: quantity per order K: cost of placing an order h: holding cost
types of returns (PD CAME)
Product recalls Damage returns Consumer returns Asset returns Marketing returns Environmental returns
What is one way amazon is working to decrease the issues of forecasting
They're trying to bring the inventory closer to the consumer before the consumer even knows they want it
how do companies track/trace their goods
UPC codes, QR codes, RFID, blockchain
