Logistics Test 2

Lessons 5-7

Marketing Department

Outbound transportation, demand forecasting, warehouse management, and customer service would be grouped under which department?

Manufacturing Department

procurement, inbound transportation, packaging and materials handling might be grouped under what department

Fragmented Structure

different departments of the organization are split into multiple departments and managed separately

Unified Structure

System combines activities and coordination amongst different departments into one department to better manage the activities

Unified and Fragmented Structure

Both structures are designed to help the organization of activities amongst departments in order to increase management

Basic Unified Structure

activities such as warehousing, inventory, management and transportation might be housed under this structure

Progressive unified structure

activities such as warehousing, inventory, management, transportation, customer service, and order management, might be housed under this structure

Advanced Unified Structure

activities such as warehousing, inventory, management, transportation, demand forecasting, procurement, customer service and order management might be housed under this structure

Unified Supply Chain and Logistics System

better positions the organization than the fragmented and substantially aids in achieving coordination across all activities

Centralized Structure

a central authority, normal a single activity, responsible for decision-making

Decentralized Structure

individual activities normally at the divisional or product level, make their own decisions

Organizational Design

A step-by-step methodology which identifies dysfunctional aspects of workflow, procedures, structures, and systems, realigns them to fit current business realities and goals and then develops plans to implement the new changes.

What organizational design aims to achieve

excellent customer service, increased profitability, reduced operating costs, improved efficiency and cycle time, culture of committed and engaged employees, clear strategy for managing and growing your business

Functional Organizational Structure

Used to organize workers, contains specialized units that report to a single authority (usually top management), each functional unit handles one aspect of the product or service

Advantages of a Functional Design

production is more efficient as a higher quality

Roles and tasks do not change very much

little time spent learning

accountability is clear

employees can feel confident about what they are doing because it is standardized

clear path of growth for employees which provides motivation

perfect environment for learning

Disadvantages of Functional Organization Design

employees may find it boring

problems may arise among management if department heads are only focused on their department and do not communicate effectively with other departments

a rigid structure where changes, innovations, and flexibility can be difficult to implement

managers tend to make decisions without consulting the department first, which can lead to problems

difficult to pin the blame for a specific product or service malfunction on any individual

Matrix Organizational Design

most used in organizations to distribute resources and workers across multiple operations

The Matrix Structure

is a workplace format in which employees report to two or more managers rather than one manager overseeing every aspect of a project

useful when skills need to be shared across departments

Matrix Organizational Structure Benefits

Increased communication efficiency, improved employee motivation, maximizes resource usage.

Matrix Organizational Structure Disadvantages

potential conflict between managers and projects, authority confusion, increase management overhead costs

Weak matrix organization, balanced matrix organization, strong matrix organization

The three types of matrix organizational structures

Weak Matrix

This type of matrix organizational structure is most like a traditional workplace hierarchy.

Most organizations start out with this type of matrix structure

Balanced Matrix

In this type of matrix organizational structure, more authority is given to the project manager

organizations normally mature into this structure

Strong Matrix

provides the project manager with equal or more power than the functional manager

project manager has primary control over resources and distribution of tasks

organization with advanced project management knowledge normally adapt this structure

Process Organizational Design

a horizontal approach where instead of organizing along function the organization is structured along key process with each functional unit

Process organizational design

functional organizational design is reorganized horizontally and dependencies between divisional units identified

a matrix is then sliced horizontally along the product management and interconnected based on interdependencies

once core processes are identified, multi-skilled teams are build around the core processes and led by a process owner

Process organizational design strength

strong customer orientation, rapid response, encourages teamwork

Process organizational design weakness

identification of core processes, threatens middle management, limited career growth

Network organizational structure

is an extension of the process structure where each major process or its teams are distributed physically geographically or into separate organizations

Network Organizational Design

Characteristics of the design are

Autonomous unites (each unit behaves as external contractors that are bound only by their agreed contracts)

Highly specialized units

Central hubs

Network Design

Strengths of this design are…

cost effective

access to functional specification

geographically diverse

Weaknesses of this network design are…

lack of control

tough coordination

high risk

Productivity

Ratio of what you get to what you put in

Supply chain and logistics systems productivity measure can broadly be classified into two categories

Qualitative and Quantitative measures

Qualitative measures

such as customer satisfaction and product quality

Quantitative Measures

such as order-to delivery lead time, supply chain response time, flexibility, resource utilization, and delivery performance

measures and assessments used to measure performance and compare or track that performance to product delivery and or service provisioning

cycle time, customer service level, inventory levels, resource utilization ability to perform, flexibility, and quality

Cycle Time

is often called the lead time. It can be simply defined as the end to end delay in a business process

includes the order-to deliver process

Order fill rate

is that portion of customer demand that can be easily satisfied from the stock available

Stock out rate

the reverse of the order fill rate and marks the portion of orders lost because of a stock out

Back order level

total number of orders waiting to be filled

probability of on time delivery

the portion of customer orders that are completed on time (within the agreed upon due date)

Inventories divided into four categories

raw materials, work in process, finished goods, spare parts

manufacturing resources

machines, material handlers, tools, etc

storage resources

warehouses, automated storage, retrieval system, etc

transportation resources

trucks, rail transport, air cargo, ocean carriers, etc

human resources

production labor, support staff, scientific and technical personnel, etc

financial resources

working capitol, investment funds, etc

Logistics service quality

is defined into two parts, logistics services and service quality

logistics services

the obtaining, producing and distributing of materials and products in the right quantities to an end user destination

Service quality

refers to a customer’s comparison of service expectations as it relates to an organizations performance

Risk Management

refers to the process by which organizations take strategic steps to identify, assess, and mitigate risks within their end-to-end supply chain network

external risks

come from outside the organization and that means they are harder to predict and typically require ore resources to mitigate

demand risks, supply risks, environmental risks

Internal risks

refers to any factors that are within the organization’s control and can be identified and monitored

manufacturing risks, business risks, planning and control risks, mitigation and contingency risks

The logistics uncertainty pyramid model

identifies potential sources of uncertainty that can affect risk exposure for supply chain and logistics systems activities

The logistics uncertainty pyramid model

This model identifies four types of uncertainty to include…

shipper

customer

carrier

control system

external environment

Inventory Planning and Control

refers to the process that any organization adopts to determine the optimal quantity as well as timing of inventory

sole aim of aligning such plans with the organizations capacity to produce and make sales

directly determines the cash flow

Independent Demand

demand for a finished product

pizza, computer, bike

Dependent Demand

demand for component parts or subassemblies

cheese, sauce, pizza dough

Cycle (base) inventory

inventory needed to satisfy normal demand during an inventory cycle

Safety (buffer) inventory

inventory held in addition to cycle stock to guard against uncertainty in demand or lead time

Pipeline (in transit) inventory

inventory traveling between various fixed facilitates in the supply chain and logistics system such as plants,warehouses, or retail store

Speculative inventory

inventory held for several reasons, including seasonal demand, project price adjustments or potential product shortages

Psychic stock

display inventory for stimulating demand

clothes on mannequins

Inventory cost

includes the cost to order and hold inventory, as well as to administer the related documentation

Holding and setup

____ cost and _____ cost are in fact inverse which results in a tradeoff between the two

Where these two cost intersect is where total costs are minimized

economic order quantity

EOQ stands for

EOQ

is a tool used to determine the volume and frequency of orders required to satisfy a given level of demand while minimizing the cost per order

Simple economic order quantity model

assumptions are as followed

demand is known and is deterministic, constant

the lead time, known and constant

the receipt of inventory is instantaneous

only cost pertinent to the model is the cost of placing the order and cost or storing inventory over time

Economic order quantity discount model

this version of the simple EOQ model pricing discounts are factored into the model when a certain minimum purchase quantities are reached

Economic Order Quantity Production Model

the production order quantity model, as opposed to the basic EOQ model, assumes materials produced are used immediatley

lower hold cost are incurred

considers daily production and demand rates

Fixed order size system

is the arrangement in which the inventory level is continuously monitored and replenishment stock is ordered in previously fixed quantities whenever at hand stock falls to the established re-order point

Fixed order interval system

is a method of inventory control system

stock levels are evaluated and a periodic schedule of fixed order is developed

regular check of the inventory to develop and interval of reordering

Benefits of Inventory Management

keeps track of your inventory and offers a centralized view of stock

controls your costs by making stock reports for analysis of your inventory

improves your delivery by managing stock outs and meeting customer expectations

manages planning and forecasting by analyzing data trends

reduces the time for managing inventory by keeping records in place

A items

very tight control and accurate records

most expensive, little inventory

B items

less tightly controlled items and good records

second most expensive, more inventory

C items

with the simplest controls possible and minimal records

least expensive, most inventory

Inventory turnover ratio

ratio that measures the number of times inventory is sold of consumed in a given period, generally one year

Inventory Record Accuracy (IRA)

measure of how closely official inventory records match the physical inventory

count based not dollar based

inventory accuracy improvements

physical inventory: walk through count

transaction reduction: what you use per process

process improvement: production time

cycle counting: full cycle time

Vendor managed inventory (VMI)

is an inventory management technique in which the supplier of a product takes full responsibility for optimizing and maintaining the inventory held by the buyer

technical to marketing orientation

packaging classifications range from

functions of packaging

primary

seconday

tertiary

primary functions

concern the technical nature of the packaging

secondary functions

are oriented to marketing and communications related with

tertiary functions

relating how packaging materials or packaging containers can be reused once the package contents have been extracted

packaging design

is the connection of form, structure, materials, color, imagery, typography and regulatory information

must reflect what’s inside

building block approach

a very small unit is placed into a slightly larger unit, which is then placed into a larger unit, is often employed.

cube unitization

improved through reduced package size and by eliminating air inside package, and by shipping items un assembled nested and with minimal packing materials

Rigid devices

provide an enclosure within which the carton or loose product are unitized. the premises is that placing the product inside a sealed container will both protect them and facilitate handling

flexible devices

the pallet is the most common type of packaging device

it is the most common base for the unit load

edge crush test

how much weight until the box is crushed

puncture resistance test

thickness size of the box

climate conditioning for different environment test

usually filled with nitrogen or air tight

The vibration test to simulate transit vehicle vibrations test

high sensitivity to movement, how do you want to ship it

Material handling

is the movement, protection, storage and control of materials and products throughout manufacturing, warehousing, distribution, consumption, and disposal

automatic guided vehicles (AGVS)

computer controlled and wheel based, load carriers that travel along the floor of a facility without an onboard operator or driver

automated material handling systems (AMHS)

provide efficient transport of material from one place to another in the manufacturing area within the same department or bay on opposite ends of the manufacturing floor or even in two separate buildings

automated storage and retrieval system

is a combination of equipment and controls that handle store and retrieve materials as needed with precision, accuracy and speed under a defined degree of automation

True

The three types of fragmented structures are basic, progressive, and unified (T/F)