Ch. 15 - SCMT - EXAM 2 - Logistics, Distribution, & Transportation

logistics

is up to 60-70% of overall cost to deliver product

logistics definition

the art and science of obtaining, producing, and distributing materials and products in the proper place and in the proper quantities (& time) need all 3

international logistics

managing these functions when the movement is on a global scale

third-party logistics company

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

________ containers on 1 ship

20,000

(can take months to unload)

transporting materials

multimodal solutions are the norm

plane = fastest but expensive (#1 efficiency)

#2 = ships → high capacity & low cost (very slow)

#3 = train (low cost but slow & variable)

truck → great flexibility but very costly, spend more $ on this than any other transport

pipeline

highly specialized and limited to liquids, gases, and solids in slurry form

medication bc of theift

cross-docking

large shipments are broken down into small shipments for local delivery in an area. minimizes inventory in warehouse

• lean zero inventory items (maintaining little inventory bc want it in customers hands

hub-&-spoke system

sole purpose of the warehouse (the hub) is sorting goods to consolidations areas, where each area is designed for shipment to a specific location

ex: ATL airport = hub, CSTAT airport = spoke

facility location issues

• proximity to customers

• business climates

• total costs

• infrastructure

• quality of labor

• suppliers

• other facilities

• free trade zones

• political risk

• government barriers

• trading blocs

• environmental regulation

• host community

• competitive advantage (be differentiated)

understand both internal & external conflict

facility rating system

most widely used method

steps:

1. list of factors is developed

2. range of possible points (range of importance) is assigned to each factor

3. each site is rated against each factor

4. the sums of assigned points for each site are computed

5. the site with most points is selected

linear programming

(transportation 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

• more complicated

• point is to match shipping supply to demand @ decrease $

centroid method

• physically balancing the movement of products based on volume & distance

• used for locating single facilities that considers existing facilities, the distances btwn them, & the volumes of goods to be shipped btwn then

• involves formulas used to compute the coordinates of the 2 dimensional point that meets the distance and volume criteria

• assumes inbound & outbound costs equal AND does not include special shipping costs for less than a full load

service facility

• new service facilities far more common than new factories and warehouses (service facilities are much less expensive)

• marketing to max profit

• location matters (closely tied to the market selection decisions)

• different from manufacturing (which focuses on min cost)

• multiple linear regression as model for locating where the max long-term profitability will be

factors affecting service locations

demographic:

• employment

• income

• population

physical

• accessibility

• traffic, etc.

when choosing variables that matter…

• look at correlation of profitability (& choose variables that are highly correlated) → run a regression line

results to action

• important/correlated to