CH 15: Logistics, Distribution, and Transportation

the art and science of obtaining, producing, and distributing materials and products in the proper place and in the proper quantities at the right time 

logistics 

managing these functions when the movement is on a global scale

international logistics

an outside company used to manage all or part of another companies logistics functions

Third party logistics company

What is the largest third party logistics company?

US Postal Service

What is the largest PRIVATE third party logistics company?

UPS

What are the types of logistics decisions? ( in order from most to least expensive)

Plane
Truck
Train
Ship
Pipeline
Hand delivery

who started supply chain management?

military in WW2

large shipments are broken down into small shipments for local delivery in an area; minimizes inventory in the warehouse (costco)

cross docking

the sole purpose of the warehouse (the hub) is sorting goods to consolidation areas, where each area is designed for shipment to a specific location (like airports and traditional businesses) 

hub and spoke systems

What are the Facility Location Issues? (14) 

Proximity to customers
Business climate 
Total costs
Infrastructure
Quality of labor
Suppliers 
Other facilities 
Free trade zones 
Political risks 
Government barriers
Trading blocs
Environmental regulations
Host community 
Competitive advantage 

makes rapid delivery easier

proximity to customers

can include presence of similar sized businesses, businesses in same industry, and other foreign companies

business climate

adequate road, rail, air, and sea transportation along with energy and telecommunications

infrastructure

educational and skill levels must match needs 

quality in labor 

proximity of important suppliers supports lean production

suppliers

What are the least viable business state?

CA and NY

What goes hand in hand with business climate?

infrastructure

a closed facility into which foreign goods can be brought without being subject to the normal customers requirements 

free trade zones 

risks in both the country of location and the host country influence the decision

political risk

barriers in many countries are being removed

government barriers

firms locate within a block to take advantage of new markets or lower total cost

trading blocs

these affect a certain industry in a given location and must be included in the decision 

environmental regulation 

host community’s interest is part of the evaluation process

host community

What are the plant location methods?

Factor rating system
Transportation method of linear programming
Centroid method

What are the steps to the factor rating system

List factors
Assign each factor with range of possible points
Rate each site against each factor
Compute the sums of assigned points
Site with most points selected

The factor with the highest range is: 

the top factor 

transportation method is a special linear programming method; seeks to minimize costs of shipping n units to m destinations, or it seeks to maximize profit of shipping n units to m destinations

Linear Programming Transportation Method

What is the most common plant location method?

Factor rating system

used for locating single facilities that considers existing facilities, the distances between them, and the volumes of goods to be shipped between them; assumes inbound and outbound transportation costs are equal; does not include special shipping costs for less than a full load

centroid method

method involving formulas used to compute the coordinates of the two dimensional point that meets the distance and volume criteria stated earlier

centroid method

New service facilities are far more common than new factories and warehouses because: 

service facilities are much less expensive 

locations decision closely tied to: (more about max profit than min costs)

market selection decision

The multiple linear regression as a model for service location seeks to maximize:

long term profitability

What are the factors affecting service locations

Demographic and physical

T or F: International logistics is a term indicating the art and science of obtaining, producing, and distributing materials and products in the proper place, in the proper quantities, and the proper time on a global scale