SCM 301 Chapter Notes - Chapter 8: Barcode, Outsourcing, Reverse Logistics
Intro
Logistics Management: the part of supply chain management
that plans, implements, and controls the efficient, effective
forward and reverse flows and storage of goods, services and
related information between the points of origin and the point
of consumption in order to meet customers' requirements
•
Logistics Activities
Transportation
○
Warehousing
○
Material Handling
○
Packaging
○
Inventory Management
○
Logistics Information Systems
○
•
8.1 Why Logistics is Critical
Managing logistics is done in effort to improve cost, flexibility,
and delivery performance
•
Sustainability: performing activities in a manner that meet the
needs of the present without compromising the ability of future
generations to meet their needs
•
Performance effects of logistics are manifold
•
Can also have a profound impact on other performance
dimensions such as delivery speed and reliability
•
8.2 Logistics Decision Areas
Mode of Transportation
Highway
Dominates the US logistics infrastructure because:
Geographic extension of supply chains
□
Greater emphasis on delivery speed and flexibility□
§
Strengths: flexibility to deliver where and when
needed; often the best balance among cost, flexibility,
and reliability/speed of delivery
§
Weaknesses: neither the fastest nor the cheapest
option
§
○
Water
Accounts for 5% of all ton-miles shipped in the US and
is ideal for materials with a high weight-to-value ratio
§
Strengths: highly cost-effective for bulky items
§
Weaknesses: limited locations
§
○
Air
Ideal for materials with a low weight-to-value ratio,
especially if speed is critical
§
Strengths: Quickest mode of delivery; flexible,
especially when linked to the highway mode
§
Weaknesses: Often the most expensive mode on a per-
pound basis
§
○
Rail
Characteristics similar to those of water transportation
but more flexible
§
Strengths: Highly cost effective for bulky items; can be
most effective when linked to a multimodal system
§
Weaknesses: Limited locations, although less so than
with water; not as fast as highways but improving over
time
§
○
Pipeline
○
•
Selecting a Transportation Mode
Firms must carefully select a mode based on their particular
competitive or operational requirements
○
Direct Truck Shipment: a shipment made directly, with no
additional stops, changing of trucks, or loading of additional
cargo
○
Less Than Truckload (LTL) Shipment: a smaller shipment,
often combined with other loads to reduce costs and
improve truck efficiencies
○
•
Multimodal Solutions
A transportation solution that seeks to exploit the strengths
of multiple transportation modes through physical,
information, and monetary flows that are as seamless as
possible
○
Roadtrailer: a specialized rail car the size of a standard truck
trailer that can be quickly switched from rail to ground
transportation without changing the wheels
○
•
Warehousing
Any operation that stores repackages, stages, sorts, or
centralizes goods or materials
○
Warehousing can be used to:
Reduce transportation costs
§
Improve operational flexibility
§
Shorten customer lead times
§
Lower inventory-related costs
§
○
Reducing Transportation Costs
Consolidation Warehousing: a form of warehousing
that pulls together shipments from a number of
sources in the same geographic area and combines
them into larger, and hence more economical, shipping
loads
§
○
Cross-Docking: form of warehousing in which large
incoming shipments are received and then broken
down into smaller outgoing shipments to demand
points in a geographic area
Combines the economies of large incoming
shipments with the flexibility of smaller local
shipments
□
Break-bulk warehousing: a specialized form of
cross-docking in which the incoming shipments
are from a single source or manufacturer
□
§
•
Hub-and-Spoke System: form of warehousing in which
strategically placed hubs are used as sorting or transfer
facilities; the hubs are typically located at convenient,
high-traffic locations. "Spokes" refer to the routes
serving the destinations associated with the hubs
§
Improving Operational Flexibility
Postponement Warehousing: form of warehousing that
combines classic warehouse operations with light
manufacturing and packaging duties to allow firms to
put off final assembly or packaging of goods until the
last possible moment
Adds flexibility because goods and materials can
be maintained in their most generic form as long
and possible
□
§
○
Shortening Customer Lead Times
When total transportation time to customers exceeds
customers' requirements, firm can use warehousing to
reduce the realized lead time to customers
§
Assortment Warehousing: a form of warehousing in
which a wide array of goods is held close to the source
of demand in order to assure short customer lead
times
§
Spot Stock Warehousing: form of warehousing that
attempts to position seasonal goods close to the
market place; at the end of each season, the goods are
either liquidated or moved back to a more centralized
location
§
○
Lowering Inventory-Related Costs
Used wisely, warehouses can dramatically lower
overall inventory levels and related costs throughout
the supply chain
§
How much can be saved?
The Square Root Rule□
!!"#$ %!!#&'()'"*+,-"#$
-#&'()'"*
.
§
○
Logistics Information Systems
Logistics information systems fall into three major
categories:
Decision Support Tools
§
Planning Systems
§
Execution Systems
§
○
Decision Support Tools
Used to design and finetune their logistics systems
§
Help mangers choose locations for their warehouses,
determines the number of containers or vessel they
need, and estimate costs and travel time
§
○
Planning Systems
Help managers with specific activities, such as selecting
a carrier for an outgoing shipment or developing a
weekly schedule of deliveries
§
Today's logistics managers can more quickly analyze a
wider range of options and identify the delivery
schedule or carrier that best suits their needs
§
○
Execution Systems
Most detailed level of a logistics information system
§
Oversee order and shipment management, warehouse
management, shipper/receiver management, satellite
and bar code tracking, and automated payment and
billing system
§
Can also help managers monitor the logistics system
and identify problems before they get out of hand
§
○
•
Logistics Decisions
Material Handling
Material Handling Systems: system that includes the
equipment and procedures needed to move goods
within a facility, between a facility and transportation
mode, and between different transportation modes
§
○
Packaging
Refers to the way goods and materials are packed in
order to facilitate physical, informational, and
monetary flows through the supply chains
§
○
Inventory Management
With regards to warehousing, the relationship is more
complex, and inventory managers have to work closely
with warehouse managers to achieve the desired
business outcome
§
○
•
8.3 Logistics Strategy
Logistics Strategy: a functional strategy which ensures that an
organization's logistics choices are consistent with its overall
business strategy and support the performance dimensions that
targeted customers most value
•
Owning vs Outsourcing
Does the firm have the volumes needed to justify a private
logistics system?
○
Would owning the logistics system limit the firm's ability to
respond to changes in the marketplace or supply chain
○
Is logistics a core competency for the firm?
Common Carriers (public carriers): a transportation
service provider than handles shipments on a case-by-
case basis, without the need for long-term agreements
or contracts
§
Contract Carriers: a transportation service provider
that handles shipments for other firms based on long
term agreements or contracts
§
Third Part Logistics Provider (3PL): a service firm that
handles all of the logistics requirements for other
companies
§
○
•
Measuring Logistics Performance
The Perfect Order
Represents the timely, error-free provision of a
product or service in good condition that is:
Delivered on time (according to buyers request)□
Shipped Completely□
Invoiced Correctly□
Undamaged in Transits□
§
○
•
/012034524670158459%:;;/717<=0158459>1584590?@7AB:08424679
717<=0158459
Landed Cost
The cost of a product plus all costs driven by logistics
activities, such as transportation, warehousing,
handling, customs fees and the like
§
Why is it important?
Logistics costs account for 5% to 35% of total sales
cost
□
Supply chains becoming more global, and that
means more closts
□
Need to be sure that we're looking at the true
total cost when making sourcing decisions. A per
unit price may look good until you include all the
logistics costs (packing, freight forwarders, etc)
□
§
Freight Forwarder: an agent who serves as an
intermediary between an organization shipping a
product and the actual carrier, typically on
international shipments
§
Customer Broker: an agent who handles customs
requirements on behalf of another firm; in the united
states, customs brokers must be licensed by the
Customs Service
§
○
Reverse Logistics Systems
Reverse Logistics Systems: a complete supply chain
dedicated to the reverse flow of products and materials for
the purpose of returns, repair, remanufacture, and/or
recycling
○
Challenges:
Firms have less control over the timing, transportation
modes used, and packaging for goods flowing back up
the supply chain. Often means reverse logistics
systems have to be designed to be more flexible and
less cost-efficient than forward-based systems
§
Goods can flow back up the supply chain for a variety
of reasons. Some might do so for service and repair
and others for remanufacturing or recycling, and
others may simply represent excess goods that need to
be deployed somewhere else. Reverse logistics
systems must be able to sort and handle these
different flows
§
Forward logistics systems typically aren't set up to
handle reverse logistics. The information system,
material handling systems, and procedures simply
aren't suited to the challenges of reverse logistics. In
many cases, firms are better off setting up separate
operations for their forward and reverse logistics
§
○
•
8.4 Logistics Decision Models
Weight Center of Gravity Method
Simple method to find the "best" location for a single
warehouse, store, or plant
○
Uses multiple demand points
○
Location expressed in terms of (X,Y) dimensional coordinate
point
○
Weighting allows for a determination of importance of
decision factors (population, demand)
○
"Best" location is determined by the Weighted X* and
Weighted Y* coordinates
○
Does not consider all factors, but may give a good "first cut"
at a suitable location
○
•
Chapter 8: Logistics
Tuesday, April 17, 2018
7:58 PM
Intro
Logistics Management: the part of supply chain management
that plans, implements, and controls the efficient, effective
forward and reverse flows and storage of goods, services and
related information between the points of origin and the point
of consumption in order to meet customers' requirements
•
Logistics Activities
Transportation
○
Warehousing
○
Material Handling
○
Packaging
○
Inventory Management
○
Logistics Information Systems
○
•
8.1 Why Logistics is Critical
Managing logistics is done in effort to improve cost, flexibility,
and delivery performance
•
Sustainability: performing activities in a manner that meet the
needs of the present without compromising the ability of future
generations to meet their needs
•
Performance effects of logistics are manifold•
Can also have a profound impact on other performance
dimensions such as delivery speed and reliability
•
8.2 Logistics Decision Areas
Mode of Transportation
Highway
Dominates the US logistics infrastructure because:
Geographic extension of supply chains
□
Greater emphasis on delivery speed and flexibility
□
§
Strengths: flexibility to deliver where and when
needed; often the best balance among cost, flexibility,
and reliability/speed of delivery
§
Weaknesses: neither the fastest nor the cheapest
option
§
○
Water
Accounts for 5% of all ton-miles shipped in the US and
is ideal for materials with a high weight-to-value ratio
§
Strengths: highly cost-effective for bulky items
§
Weaknesses: limited locations
§
○
Air
Ideal for materials with a low weight-to-value ratio,
especially if speed is critical
§
Strengths: Quickest mode of delivery; flexible,
especially when linked to the highway mode
§
Weaknesses: Often the most expensive mode on a per-
pound basis
§
○
Rail
Characteristics similar to those of water transportation
but more flexible
§
Strengths: Highly cost effective for bulky items; can be
most effective when linked to a multimodal system
§
Weaknesses: Limited locations, although less so than
with water; not as fast as highways but improving over
time
§
○
Pipeline
○
•
Selecting a Transportation Mode
Firms must carefully select a mode based on their particular
competitive or operational requirements
○
Direct Truck Shipment: a shipment made directly, with no
additional stops, changing of trucks, or loading of additional
cargo
○
Less Than Truckload (LTL) Shipment: a smaller shipment,
often combined with other loads to reduce costs and
improve truck efficiencies
○
•
Multimodal Solutions
A transportation solution that seeks to exploit the strengths
of multiple transportation modes through physical,
information, and monetary flows that are as seamless as
possible
○
Roadtrailer: a specialized rail car the size of a standard truck
trailer that can be quickly switched from rail to ground
transportation without changing the wheels
○
•
Warehousing
Any operation that stores repackages, stages, sorts, or
centralizes goods or materials
○
Warehousing can be used to:
Reduce transportation costs
§
Improve operational flexibility
§
Shorten customer lead times
§
Lower inventory-related costs
§
○
Reducing Transportation Costs
Consolidation Warehousing: a form of warehousing
that pulls together shipments from a number of
sources in the same geographic area and combines
them into larger, and hence more economical, shipping
loads
§
○
Cross-Docking: form of warehousing in which large
incoming shipments are received and then broken
down into smaller outgoing shipments to demand
points in a geographic area
Combines the economies of large incoming
shipments with the flexibility of smaller local
shipments
□
Break-bulk warehousing: a specialized form of
cross-docking in which the incoming shipments
are from a single source or manufacturer
□
§
•
Hub-and-Spoke System: form of warehousing in which
strategically placed hubs are used as sorting or transfer
facilities; the hubs are typically located at convenient,
high-traffic locations. "Spokes" refer to the routes
serving the destinations associated with the hubs
§
Improving Operational Flexibility
Postponement Warehousing: form of warehousing that
combines classic warehouse operations with light
manufacturing and packaging duties to allow firms to
put off final assembly or packaging of goods until the
last possible moment
Adds flexibility because goods and materials can
be maintained in their most generic form as long
and possible
□
§
○
Shortening Customer Lead Times
When total transportation time to customers exceeds
customers' requirements, firm can use warehousing to
reduce the realized lead time to customers
§
Assortment Warehousing: a form of warehousing in
which a wide array of goods is held close to the source
of demand in order to assure short customer lead
times
§
Spot Stock Warehousing: form of warehousing that
attempts to position seasonal goods close to the
market place; at the end of each season, the goods are
either liquidated or moved back to a more centralized
location
§
○
Lowering Inventory-Related Costs
Used wisely, warehouses can dramatically lower
overall inventory levels and related costs throughout
the supply chain
§
How much can be saved?
The Square Root Rule□
!!"#$ %!!#&'()'"*+,-"#$
-#&'()'"*
.
§
○
Logistics Information Systems
Logistics information systems fall into three major
categories:
Decision Support Tools
§
Planning Systems
§
Execution Systems
§
○
Decision Support Tools
Used to design and finetune their logistics systems
§
Help mangers choose locations for their warehouses,
determines the number of containers or vessel they
need, and estimate costs and travel time
§
○
Planning Systems
Help managers with specific activities, such as selecting
a carrier for an outgoing shipment or developing a
weekly schedule of deliveries
§
Today's logistics managers can more quickly analyze a
wider range of options and identify the delivery
schedule or carrier that best suits their needs
§
○
Execution Systems
Most detailed level of a logistics information system
§
Oversee order and shipment management, warehouse
management, shipper/receiver management, satellite
and bar code tracking, and automated payment and
billing system
§
Can also help managers monitor the logistics system
and identify problems before they get out of hand
§
○
•
Logistics Decisions
Material Handling
Material Handling Systems: system that includes the
equipment and procedures needed to move goods
within a facility, between a facility and transportation
mode, and between different transportation modes
§
○
Packaging
Refers to the way goods and materials are packed in
order to facilitate physical, informational, and
monetary flows through the supply chains
§
○
Inventory Management
With regards to warehousing, the relationship is more
complex, and inventory managers have to work closely
with warehouse managers to achieve the desired
business outcome
§
○
•
8.3 Logistics Strategy
Logistics Strategy: a functional strategy which ensures that an
organization's logistics choices are consistent with its overall
business strategy and support the performance dimensions that
targeted customers most value
•
Owning vs Outsourcing
Does the firm have the volumes needed to justify a private
logistics system?
○
Would owning the logistics system limit the firm's ability to
respond to changes in the marketplace or supply chain
○
Is logistics a core competency for the firm?
Common Carriers (public carriers): a transportation
service provider than handles shipments on a case-by-
case basis, without the need for long-term agreements
or contracts
§
Contract Carriers: a transportation service provider
that handles shipments for other firms based on long
term agreements or contracts
§
Third Part Logistics Provider (3PL): a service firm that
handles all of the logistics requirements for other
companies
§
○
•
Measuring Logistics Performance
The Perfect Order
Represents the timely, error-free provision of a
product or service in good condition that is:
Delivered on time (according to buyers request)□
Shipped Completely□
Invoiced Correctly□
Undamaged in Transits□
§
○
•
/012034524670158459%:;;/717<=0158459>1584590?@7AB:08424679
717<=0158459
Landed Cost
The cost of a product plus all costs driven by logistics
activities, such as transportation, warehousing,
handling, customs fees and the like
§
Why is it important?
Logistics costs account for 5% to 35% of total sales
cost
□
Supply chains becoming more global, and that
means more closts
□
Need to be sure that we're looking at the true
total cost when making sourcing decisions. A per
unit price may look good until you include all the
logistics costs (packing, freight forwarders, etc)
□
§
Freight Forwarder: an agent who serves as an
intermediary between an organization shipping a
product and the actual carrier, typically on
international shipments
§
Customer Broker: an agent who handles customs
requirements on behalf of another firm; in the united
states, customs brokers must be licensed by the
Customs Service
§
○
Reverse Logistics Systems
Reverse Logistics Systems: a complete supply chain
dedicated to the reverse flow of products and materials for
the purpose of returns, repair, remanufacture, and/or
recycling
○
Challenges:
Firms have less control over the timing, transportation
modes used, and packaging for goods flowing back up
the supply chain. Often means reverse logistics
systems have to be designed to be more flexible and
less cost-efficient than forward-based systems
§
Goods can flow back up the supply chain for a variety
of reasons. Some might do so for service and repair
and others for remanufacturing or recycling, and
others may simply represent excess goods that need to
be deployed somewhere else. Reverse logistics
systems must be able to sort and handle these
different flows
§
Forward logistics systems typically aren't set up to
handle reverse logistics. The information system,
material handling systems, and procedures simply
aren't suited to the challenges of reverse logistics. In
many cases, firms are better off setting up separate
operations for their forward and reverse logistics
§
○
•
8.4 Logistics Decision Models
Weight Center of Gravity Method
Simple method to find the "best" location for a single
warehouse, store, or plant
○
Uses multiple demand points
○
Location expressed in terms of (X,Y) dimensional coordinate
point
○
Weighting allows for a determination of importance of
decision factors (population, demand)
○
"Best" location is determined by the Weighted X* and
Weighted Y* coordinates
○
Does not consider all factors, but may give a good "first cut"
at a suitable location
○
•
Chapter 8: Logistics
Tuesday, April 17, 2018 7:58 PM
Intro
Logistics Management: the part of supply chain management
that plans, implements, and controls the efficient, effective
forward and reverse flows and storage of goods, services and
related information between the points of origin and the point
of consumption in order to meet customers' requirements
•
Logistics Activities
Transportation
○
Warehousing
○
Material Handling
○
Packaging
○
Inventory Management
○
Logistics Information Systems
○
•
8.1 Why Logistics is Critical
Managing logistics is done in effort to improve cost, flexibility,
and delivery performance
•
Sustainability: performing activities in a manner that meet the
needs of the present without compromising the ability of future
generations to meet their needs
•
Performance effects of logistics are manifold•
Can also have a profound impact on other performance
dimensions such as delivery speed and reliability
•
8.2 Logistics Decision Areas
Mode of Transportation
Highway
Dominates the US logistics infrastructure because:
Geographic extension of supply chains□
Greater emphasis on delivery speed and flexibility□
§
Strengths: flexibility to deliver where and when
needed; often the best balance among cost, flexibility,
and reliability/speed of delivery
§
Weaknesses: neither the fastest nor the cheapest
option
§
○
Water
Accounts for 5% of all ton-miles shipped in the US and
is ideal for materials with a high weight-to-value ratio
§
Strengths: highly cost-effective for bulky items
§
Weaknesses: limited locations
§
○
Air
Ideal for materials with a low weight-to-value ratio,
especially if speed is critical
§
Strengths: Quickest mode of delivery; flexible,
especially when linked to the highway mode
§
Weaknesses: Often the most expensive mode on a per-
pound basis
§
○
Rail
Characteristics similar to those of water transportation
but more flexible
§
Strengths: Highly cost effective for bulky items; can be
most effective when linked to a multimodal system
§
Weaknesses: Limited locations, although less so than
with water; not as fast as highways but improving over
time
§
○
Pipeline
○
•
Selecting a Transportation Mode
Firms must carefully select a mode based on their particular
competitive or operational requirements
○
Direct Truck Shipment: a shipment made directly, with no
additional stops, changing of trucks, or loading of additional
cargo
○
Less Than Truckload (LTL) Shipment: a smaller shipment,
often combined with other loads to reduce costs and
improve truck efficiencies
○
•
Multimodal Solutions
A transportation solution that seeks to exploit the strengths
of multiple transportation modes through physical,
information, and monetary flows that are as seamless as
possible
○
Roadtrailer: a specialized rail car the size of a standard truck
trailer that can be quickly switched from rail to ground
transportation without changing the wheels
○
•
Warehousing
Any operation that stores repackages, stages, sorts, or
centralizes goods or materials
○
Warehousing can be used to:
Reduce transportation costs
§
Improve operational flexibility
§
Shorten customer lead times
§
Lower inventory-related costs
§
○
Reducing Transportation Costs
Consolidation Warehousing: a form of warehousing
that pulls together shipments from a number of
sources in the same geographic area and combines
them into larger, and hence more economical, shipping
loads
§
○
Cross-Docking: form of warehousing in which large
incoming shipments are received and then broken
down into smaller outgoing shipments to demand
points in a geographic area
Combines the economies of large incoming
shipments with the flexibility of smaller local
shipments
□
Break-bulk warehousing: a specialized form of
cross-docking in which the incoming shipments
are from a single source or manufacturer
□
§
•
Hub-and-Spoke System: form of warehousing in which
strategically placed hubs are used as sorting or transfer
facilities; the hubs are typically located at convenient,
high-traffic locations. "Spokes" refer to the routes
serving the destinations associated with the hubs
§
Improving Operational Flexibility
Postponement Warehousing: form of warehousing that
combines classic warehouse operations with light
manufacturing and packaging duties to allow firms to
put off final assembly or packaging of goods until the
last possible moment
Adds flexibility because goods and materials can
be maintained in their most generic form as long
and possible
□
§
○
Shortening Customer Lead Times
When total transportation time to customers exceeds
customers' requirements, firm can use warehousing to
reduce the realized lead time to customers
§
Assortment Warehousing: a form of warehousing in
which a wide array of goods is held close to the source
of demand in order to assure short customer lead
times
§
Spot Stock Warehousing: form of warehousing that
attempts to position seasonal goods close to the
market place; at the end of each season, the goods are
either liquidated or moved back to a more centralized
location
§
○
Lowering Inventory-Related Costs
Used wisely, warehouses can dramatically lower
overall inventory levels and related costs throughout
the supply chain
§
How much can be saved?
The Square Root Rule□
!!"#$ %!!#&'()'"*+,-"#$
-#&'()'"*
.
§
○
Logistics Information Systems
Logistics information systems fall into three major
categories:
Decision Support Tools
§
Planning Systems
§
Execution Systems
§
○
Decision Support Tools
Used to design and finetune their logistics systems
§
Help mangers choose locations for their warehouses,
determines the number of containers or vessel they
need, and estimate costs and travel time
§
○
Planning Systems
Help managers with specific activities, such as selecting
a carrier for an outgoing shipment or developing a
weekly schedule of deliveries
§
Today's logistics managers can more quickly analyze a
wider range of options and identify the delivery
schedule or carrier that best suits their needs
§
○
Execution Systems
Most detailed level of a logistics information system
§
Oversee order and shipment management, warehouse
management, shipper/receiver management, satellite
and bar code tracking, and automated payment and
billing system
§
Can also help managers monitor the logistics system
and identify problems before they get out of hand
§
○
•
Logistics Decisions
Material Handling
Material Handling Systems: system that includes the
equipment and procedures needed to move goods
within a facility, between a facility and transportation
mode, and between different transportation modes
§
○
Packaging
Refers to the way goods and materials are packed in
order to facilitate physical, informational, and
monetary flows through the supply chains
§
○
Inventory Management
With regards to warehousing, the relationship is more
complex, and inventory managers have to work closely
with warehouse managers to achieve the desired
business outcome
§
○
•
8.3 Logistics Strategy
Logistics Strategy: a functional strategy which ensures that an
organization's logistics choices are consistent with its overall
business strategy and support the performance dimensions that
targeted customers most value
•
Owning vs Outsourcing
Does the firm have the volumes needed to justify a private
logistics system?
○
Would owning the logistics system limit the firm's ability to
respond to changes in the marketplace or supply chain
○
Is logistics a core competency for the firm?
Common Carriers (public carriers): a transportation
service provider than handles shipments on a case-by-
case basis, without the need for long-term agreements
or contracts
§
Contract Carriers: a transportation service provider
that handles shipments for other firms based on long
term agreements or contracts
§
Third Part Logistics Provider (3PL): a service firm that
handles all of the logistics requirements for other
companies
§
○
•
Measuring Logistics Performance
The Perfect Order
Represents the timely, error-free provision of a
product or service in good condition that is:
Delivered on time (according to buyers request)□
Shipped Completely□
Invoiced Correctly□
Undamaged in Transits□
§
○
•
/012034524670158459%:;;/717<=0158459>1584590?@7AB:08424679
717<=0158459
Landed Cost
The cost of a product plus all costs driven by logistics
activities, such as transportation, warehousing,
handling, customs fees and the like
§
Why is it important?
Logistics costs account for 5% to 35% of total sales
cost
□
Supply chains becoming more global, and that
means more closts
□
Need to be sure that we're looking at the true
total cost when making sourcing decisions. A per
unit price may look good until you include all the
logistics costs (packing, freight forwarders, etc)
□
§
Freight Forwarder: an agent who serves as an
intermediary between an organization shipping a
product and the actual carrier, typically on
international shipments
§
Customer Broker: an agent who handles customs
requirements on behalf of another firm; in the united
states, customs brokers must be licensed by the
Customs Service
§
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Reverse Logistics Systems
Reverse Logistics Systems: a complete supply chain
dedicated to the reverse flow of products and materials for
the purpose of returns, repair, remanufacture, and/or
recycling
○
Challenges:
Firms have less control over the timing, transportation
modes used, and packaging for goods flowing back up
the supply chain. Often means reverse logistics
systems have to be designed to be more flexible and
less cost-efficient than forward-based systems
§
Goods can flow back up the supply chain for a variety
of reasons. Some might do so for service and repair
and others for remanufacturing or recycling, and
others may simply represent excess goods that need to
be deployed somewhere else. Reverse logistics
systems must be able to sort and handle these
different flows
§
Forward logistics systems typically aren't set up to
handle reverse logistics. The information system,
material handling systems, and procedures simply
aren't suited to the challenges of reverse logistics. In
many cases, firms are better off setting up separate
operations for their forward and reverse logistics
§
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8.4 Logistics Decision Models
Weight Center of Gravity Method
Simple method to find the "best" location for a single
warehouse, store, or plant
○
Uses multiple demand points
○
Location expressed in terms of (X,Y) dimensional coordinate
point
○
Weighting allows for a determination of importance of
decision factors (population, demand)
○
"Best" location is determined by the Weighted X* and
Weighted Y* coordinates
○
Does not consider all factors, but may give a good "first cut"
at a suitable location
○
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Chapter 8: Logistics
Tuesday, April 17, 2018 7:58 PM
Document Summary
Managing logistics is done in effort to improve cost, flexibility, and delivery performance. Sustainability: performing activities in a manner that meet the needs of the present without compromising the ability of future generations to meet their needs. Can also have a profound impact on other performance dimensions such as delivery speed and reliability. Strengths: flexibility to deliver where and when needed; often the best balance among cost, flexibility, and reliability/speed of delivery. Weaknesses: neither the fastest nor the cheapest option. Accounts for 5% of all ton-miles shipped in the us and is ideal for materials with a high weight-to-value ratio. Ideal for materials with a low weight-to-value ratio, especially if speed is critical. Strengths: quickest mode of delivery; flexible, especially when linked to the highway mode. Weaknesses: often the most expensive mode on a per- pound basis. Characteristics similar to those of water transportation but more flexible.
