week 8 logistics processes 2006

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Information about week 8 logistics processes 2006

Published on March 24, 2008

Author: Penelope

Source: authorstream.com

Slide1:  Logistics The basics transportation modes mixed mode and containers A step up materials handling and warehousing True SCM Step back:  Step back So far we have examined: trust what we do internally some of the processes related to managing our suppliers of materials and information Logistics is then managing these flows of goods and information. Not only the inbound side (from our suppliers) but the outbound side (to our customers) Logistics as a Source of competitive advantage:  Logistics as a Source of competitive advantage “Sharing the load”– 10 million plus employees What did the CEO of WalMart do before he took over the company? “Delivering the goods” Globalization is not possible without changes in logistics North American companies need to expand globally to grow UPS, Fed-EX and Yellow are logistics providers- doing this well is their competitive advantage So what are they doing? Some other key issues from articles:  Some other key issues from articles US cost of logistics – 1998- 898 billion or 10.6% of GDP / 2002 – 1,027 billion Mixed modes and containers change shipping tremendously Move to 3rd parties Stepping forward:  Stepping forward Some people look at inbound logistics separately from outbound logistics. This often leads to treating purchasing as a cost center This assumes that managing the flows is significantly different. What is contained in the flows may differ greatly but the flows themselves are similar Transportation - usually defined as movement of goods. This is the foundation of logistics so we will build off of basic transportation Slide6:  How goods actually move (modes) There are five basic modes of transportation – what are their pluses and minuses Motor - basically trucks Air - planes Water - boats/ barges and the like Rail Pipeline Intermodal (mixed mode) transportation is a major issue as well Slide7:  Mixed mode The container has significantly changed transportation containers are 8 foot high, 8 foot wide metal boxes than range in length from 20 feet to 53 feet a good can be loaded into a container at a plant in Corvallis, taken by truck to a rail terminal in Eugene, placed on a train that goes to Los Angles, placed on a boat to Japan, unloaded from the boat and placed on a truck to be delivered to the customer. never unloaded time to change modes of transport is minimal Why does this matter so much ? Slide8:  Mixed mode continued Containers, piggy back and other innovations have enabled mixed mode transport which makes transportation a more strategic function: can have the access of trucks and the cost of trains can reduce costs of long hauls – increases range of possible suppliers if we use a single logistics provider can get from the middle of Africa to the Middle of America using a single relationship By improving time and place utility (usually at lower costs) transport starts to become more than a cost center Transportation in a Post 9/11 world:  Transportation in a Post 9/11 world Transportation safety is not just an airline industry issue You might have noticed trucks with special license plates (trusted carrier) or plastic seals on their doors. Containers are both easier to control (only opened once) and harder to control (out of sight for longer periods of time- arrive in bunches – large volume). Food safety is the probably the area we will deal with next – the lettuce story Slide10:  Mixed modes have lead to the rise of 3PL As we move away from using inventory logistics must be much more precise Moving stuff = 10% of costs Transportation has traditionally been very fragmented – but why should a company spend lots of time coordinating various shippers when they can outsource this? How many companies get their competitive advantage from logistics? How many put their competitive advantage at risk if logistics is not done well? Description of typical 3Pl relationship :  Description of typical 3Pl relationship Penske, Yellow Freight, and dozens of other large transport companies offer these services. This also occurs in the movement of information Though at this point most of the companies providing integrated data management are trying to perform all services Slide12:  Physical functions of transportation – beyond movement All of the following are done to provide time and place utility. Sorting out: Physically separating a homogeneous subgroup from a heterogeneous population of items ( e.g. grading, separating by sizes, or other physical characteristics) lumber / paper / beef Accumulating: Combining homogeneous stocks of products or materials into larger quantities Allocating (breaking bulk): Dividing up stocks of homogeneous items into smaller quantities break truckloads or carload shipments into smaller local shipments Assorting: Mixing heterogeneous items into assortments needed by customers and end users What are we basically trying to achieve ?:  What are we basically trying to achieve ? Efficient flow of goods Small shipments travel short distances Largest shipment possible over long distances Minimal number of “touches” Minimal amount of materials stored Effective flow of goods On time delivery Deliver in the quantities the customer wants Right materials stored Looking ahead:  Looking ahead Our discussion to this point is about transportation. One of the key notions of logistics is that it adds value. Containers and mixed mode transport are part of moving toward a view of logistics. note US bombers in Afghanistan taking off without targets Reexamining how we store goods is the next step. Much like transportation , warehousing has become much more sophisticated and is now seen as part of the potential for logistics to add value. Warehouses:  Warehouses Go back to our physical functions of logistics. In general the processes of sorting, accumulating, allocating and assorting occur in a warehouse. A warehouse is anyplace where goods are stored. Note that we can have virtual warehouses (data bases) Services tend to store all sorts of facilitating goods Distribution centers are generally warehouses where stuff sits for very little time and other value adding activities occur. All DC’s are warehouses but not all warehouses are DC’s There are a wide range of warehousing issues:  There are a wide range of warehousing issues First is where in the supply chain do we wish to hold materials (or data). We do not want to duplicate these activities (in general) In addition, we need to consider the physical location of the facility. There are also issue of size, ownership, management and the like to consider. In fact this is a major issue for any supply chain that needs to handle a flow of goods. However, our focus is at a more basic level Basic purposes of warehouses: storage:  Basic purposes of warehouses: storage This is the most traditional view of a warehouse - a place to store stuff Temporary storage waiting for a full truckload (accumulating) waiting for other items in customer order (assorting) Semi-permanent storage buffers or safety stock just in case inventory often results from “achieving” economies of scale most supply chains try and limit this as much as possible (preferable eliminate) Abbot Aluminum? Basic purposes of warehouses: movement:  Basic purposes of warehouses: movement Types of movement receiving of goods from other chain members inspection, pricing, assembling, ect. transfer - moving goods through the warehouse to storage or some value adding activity order picking - retrieving goods from the warehouse shipping cross docking discuss if needed movement has been the focus of many improvement efforts - think of JIT and unnecessary movement or storage Basic purposes of warehouses: information transfer:  Basic purposes of warehouses: information transfer Warehouses tended to equal paper Paper tends to indicate what? The first use of information in warehousing was automation AS/RS systems faster / cheaper (fewer people) / more accurate / better service etc. But they are expensive There is also an old rule about automating a bad process Steelcase’s warehouses Bar coding and now RFID if we can do it in the warehouse can we do it for the entire supply chain ? Logistics and information:  Logistics and information When we look at our supply chain models there are two sets of flows- the physical flows we have mainly focused on and equally important information flows. It is often the management of this second set of flows that separates the well run supply chains from the rest of the pack The computer has made this much easier possible to eliminate paper eliminate transit time for paper eliminate redundant entry so we are faster and more accurate at a lower cost Types of info in a supply chain :  Types of info in a supply chain EDI for purchasing Demand, order quantities, due dates, deliveries, and so on. Truck information linkages Bar coding and scanning for tracking in warehouses and production – next RFID CAD / CAM systems linking design and production End customer information Honda’s web site collects info on colors, models, options and the like What else ? Key point on Information:  Key point on Information Entire supply chain needs to be working off the same information Would bullwhips occur if third tier suppliers had end customer forecasts ? If the company at the end of the chain is planning a marketing promotion their suppliers will perform better if given enough lead time (Volvo example) If a supplier develops a new process that might be useful to others there needs to be a way to share this information If customers desires change the entire chain needs to react (preferably be ahead of the change) More information:  More information There are many experts who can design an information system for you (we even train them here) But it is the managerial decisions that determine how well the system will work What information do we include? What form is that information in? Who has access? Really it all comes down to the first thing we talked about - trust and relationships Information sharing:  Information sharing Every person who researches supply chain management finds the following there are many tactical issue that effect success but it is the relationships that make or break a chain this is mainly trust there are also personality issues here - some mangers have all by themselves screwed up a supply chain Boyd’s boss With all of the information we have covered the companies who excel are those that understand the issues of trust and information sharing. Logistics conclusions :  Logistics conclusions There are many physical elements to consider in the design of a logistical system (flows through supply chain) It is the intangible flows of information that are the real make or break issues. Do not ignore flows back from end customer Transportation become logistics when we start to include information flows. Logistics becomes SCM when we understand the need for these flows to be available to the entire chain. For most supply chains this is all conjecture- they are still getting internal chains sorted out. Recent HBR article notes that suppliers are often better partners than members of your own organization - less fighting over resources (trust / global view / etc.)

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