Supply Chain Management (Chapter 11)
What are 3 customer service benefits?
-Availability -Lead-Time Performance -Service Reliability
What are 3 secondary location factors?
-Community considerations -Site considerations -Quality-of-Life considerations
What are 4 advantages of Rail?
-Cost effective for long haul, large volume products -Multiple service offerings (carload, COFC, TOFC) -Own rights-of-way -Intermodal now permits seamless dock-to-dock service by one company
What are 2 critical types of trade-offs that logistics managers deal with when they strive to minimize total logistics costs?
-Cost-to-Service Trade-Off -Cost-to-Cost Trade-Off
What 2 segments are Water carriers broken into?
-Domestic -Deep-Water
What are the 2 fundamental economic principles underlying the efficiency and the cost of transportation movements?
-Economy of Scale -Economy of Distance
What are 3 responsibilities of logistics managers?
-Ensure that the inbound flow of materials meets the firm's requirements for its own operations -Responsible for flows of information, products, and materials among a firm's different plants and facilities -Ensure that customer requirements are satisfied
What are 2 methods for determining location?
-Factor-Rating -Center of Gravity/Centroid method
What are 5 types of International Water Carriers?
-General Cargo Ships -Bulk Carriers -Tankers -Container Ships -RO-RO (Roll on-Roll off)
What are 3 advantages of Motor carriers?
-High accessibility -Fast transit -Small vehicle size = lower inventory strategies and quick replenishment
What are 2 disadvantages of Motor carriers?
-High cost -Reliability
What are 3 disadvantages of Rail?
-High fixed costs -Carload -Intermodal
What are 4 disadvantages of Air transportation?
-Highest rates -Low accessibility -Low capacity -Dependability
Why has the Motor transportation mode experienced rapid growth since it began in 1910? (3)
-Highways and roads financed at public expense -Trucks offer door-to-door service -Low fixed costs and relatively high variable costs
What are the 3 steps in the location analysis process?
-Identify dominant location factors -Develop location alternatives -Evaluate locations alternatives
What are the 6 objectives of Logistics Management?
-Inventory management -Order management -Transportation -Warehousing -Packaging and materials handling -Network design
What are 2 disadvantages of Direct Shipment?
-Less likely to ship FTL -Each retail store will require higher levels of inventory and safety stock
What are 3 types of Consolidation?
-Market Area -Pooled Delivery -Scheduled Delivery
What are 3 advantages of Pipelines?
-Operates 24/7 -Transportation usually not affected by weather -Low variable costs
What the 3 choices available in choosing warehouse facilities?
-Private Warehouse -Public Warehouse -Contract Warehouse
What are 3 primary location factors?
-Proximity to suppliers -Proximity to customers -Proximity to labor
What are the 5 modes of transportation?
-Rail -Motor -Water -Air -Pipeline
What are the 6 primary process activities involved in warehouse operations?
-Receiving and Unloading -In-storage handling -Storage -Orderpicking -Staging -Shipping
What are 2 advantages of Warehousing?
-Reduced inbound costs -Risk Pooling
What are 3 advantages of Water carriers?
-Relatively low cost -High capacity -Cost effective for long distance move of low value, bulk-type mineral, agricultural and forest products
What are 3 disadvantages of Cross-Docking?
-Requires... -Excellent communication links -Very reliable transportation system -Accurate demand forecasts are critical
What are 2 disadvantages of Water carriers?
-Speed -Availability
What are the 5 characteristics transportation managers look at when deciding which transportation mode to use?
-Speed -Availability -Dependability -Capability -Frequency
What are 3 advantages of Cross-Docking?
-Transportation efficiency -Avoids need for product storage -Customers benefit because they receive one shipment containing their many different products
What 3 segments can the Motor industry be broken into?
-Truckload (TL) -Less-than-Truckload (LTL) -Specialty Carriers
Which mode of transportation is appropriate for moving products that exist in a gaseous, liquid, or slurry form?
Air
What does Warehouse Consolidation allow a customer to receive?
An assortment of products in a single shipment
Computer-controlled systems that use robots to automatically select, find, retrieve, and convey product items from storage bins to loading docks
Automated Storage and Retrieval System (AS/RS)
The ability to service any possible location
Availability
Why is Reverse Logistics used?
Because as products become more complex and as consumers become more environmentally conscious, the number of products that are returned and reclaimed is growing dramatically
Why is a Production Support Warehouse useful?
Because the cost of stopping a production line due to a lack of needed material can be very high
Splitting a large shipment into individual orders and arranging for local delivery to customers
Break-Bulk
The ability to handle any type of product and/or size of load
Capability
Transportation companies that provide service to the public
Common Carriers
Combining small orders of shipments into one larger shipment to take advantage of transportation economies
Consolidation
Creating one large container out of several smaller units
Containerization or Unitization
Carriers that have specific contracts with a limited number of shippers
Contract Carriers
These companies offer to build, own, and operate warehouse facilities for the benefit of clients who do not want to undertake those responsibilities themselves
Contract Warehouse
Increasing the cost of one logistics activity reduces the cost of another
Cost-to-Cost Trade-Off
As service levels increase, typically so do costs
Cost-to-Service Trade-Off
Continuous shipment from suppliers to warehouses where goods are redirected and delivered to retailers in continuous shipments; combines break-bulk and consolidation warehouse activities
Cross-Docking
The variance in the expected delivery times
Dependability
Term used to describe the strategic role of warehouses in storage and creating assortments that meet customer requirments
Distribution Center
Includes warehouses, production facilities, retailers, and the inventory that flows between them
Distribution Network
Government controls of the entry, rates, and services provided by transportation carriers
Economic Regulation
The cost per unit of distance decreases as the distance moved increases; "the longer the haul, the lower the cost per mile"
Economy of Distance
The cost per unit of weight decreases as the size of the shipment increases; "the larger the load, the lower the cost per pound"
Economy of Scale
What is an advantage of Direct Shipment?
Eliminates warehousing costs
The process of identifying the best geographic location for a service or production facility
Facility Location
Number of scheduled movements that can be arranged by a shipper
Frequency
Once unloaded the goods must be moved to the desired destination within the facility
In-Storage Handling
Who generally handles Pooled Delivery Consolidation?
Independent transportation companies
A combination of two or more transportation modes to take advantage of the economies and service characteristics of each
Intermodal Transportation
All other things being equal, total inventories are ______ in centralized systems where all items are held in just a few large warehouses.
Less
These carriers usually move loads of less than 15,000 pounds
Less-than-Truckload (LTL)
What is a disadvantage of Warehousing?
Likely to ship full truckloads (FTL) inbound, but may ship less than full truckload (LFTL) outbound
Management of the movement and storage of materials at lowest cost while still meeting customers' requirements
Logistics Management
What is a disadvantage of Pipelines?
Low accessibility
Combining several small shipments from ONE SHIPPER that are going to the same market area into one shipment
Market Area Consolidation
Determines the number and location facilities and establishes the linkages among the facilities through which information and material transportation flows occur in the network
Network Design
The products are removed from storage and assembled into appropriate quantities and assortments to fill customer orders
Orderpicking
What is the number one cause of product damage and loss in logistics?
Packaging and Materials Handling
In this arrangement, a trailer or a container is placed on a rail flatcar for the long distance movement between cities and then a truck picks up the trailer or container at the city to complete the delivery
Piggyback Service
What is the most common form of Intermodal Transportation?
Piggyback Service
Combines small shipments from DIFFERENT SHIPPERS that are going to the same market area
Pooled Delivery Consolidation
Companies that own and operate transportation equipment to transport their own products
Private Carriers
Own and operated by the firm that owns the products
Private Warehouse
A warehouse dedicated to storing parts and components needed to support a plant's operations
Production Support Warehouse
A firm that offers warehouse services to the public for a fee based on the amount of space used and the number of shipments into or out of the facility
Public Warehouse
Places a coded electronic chip in or on a package that emits a signal identifying its contents as it moves through facilities or on transportation equipment
Radio Frequency Identification (RFID)
Inbound shipments must be received and unloaded from the transportation vehicles
Receiving and Unloading
The logistics needed to send products or packaging materials back to disassembly, reclamation, or disposal sites
Reverse Logistics
Inventory is held in one warehouse to service a large number of retailers
Risk Pooling
Regulation designed to ensure that transportation carriers conduct their activities in a safe and responsible manner
Safety (and Social) Regulation
Establishing specific times when deliveries to customers will be made...customers then adjust their pattern of ordering to fit the schedule
Scheduled Delivery Consolidation
Involves verifying that the assembled orders are correct and the actual loading of the transportation vehicles
Shipping
These carriers include package haulers such as FedEx and UPS
Specialty Carriers
The elapsed time to move from the point of origin to the destination
Speed
What is an advantage of Air transportation?
Speed
Assembled orders are moved to an area in the warehouse in readiness for loading in a transportation vehicle bound for customer locations
Staging
The storage of inventories in warehouses to protect against seasonality either in supply or demand
Stockpiling
Products are held in a storage area
Storage
What is a challenging aspect of managing logistics?
The fact that providing ever-higher service levels typically results in higher cost
What is the objective of logistics management?
To minimize the total of all logistics costs, not just one element
The sum of all product-and-logistics-related costs
Total Landed Cost
A form or method of transporting items
Transportation Mode
A facility where products are received, sorted, sequenced, and selected into load consistent with the customers' needs
Transshipment Point
These carriers generally carry only full trailers of freight (shipments in excess of 15,000 pounds)
Truckload (TL)
True/False: inventories are lowered when firms offer lower levels of customer service.
True
The ratio of a product's value to its weight
Value Density
What are the primary cost variables driving the transportation service decision?
Value and weight of the items being shipped
Any work that creates greater value for customers
Value-Added Services
Product _______ drives inventory costs, and product ______ drives transportation costs.
Value; weight
Combining shipments from a number of sources into one larger shipment going to a single location
Warehouse Consolidation
What is the oldest transportation mode?
Water
