Intro to Supply Chain, Chapter 9, Rutgers

Logistics

The part of supply chain management that plans, implements, and controls the flow of goods, services and information between the point of origin and the final customer.

Logistics is necessary to

- Inbound logistics

- Material Handling

- Outbound Logistics

Inbound Logistics

Move goods and materials from suppliers to buyers

Material Handling

Move goods and materials between sites

Outbound Logistics

Move finished goods to the customer

Warehousing Importance

Having the right product at the right time.

Provides time and place utility; the availability necessary to give materials true value.

Warehouse

facility used to store purchases, work-in-process (WIP), and finished goods inventory.

Warehousing

function that allows a company to receive, store, breakdown, repackage, and distribute items to a manufacturing location, or finished products to a customer

Receiving

A Primary function of a warehouse.

Physical receipt of material, identification, inspection for conformance with the purchase order (quantity and damage), put-away, and preparation of receiving reports

Storage

A primary function of a warehouse

The safe and secure retention of parts or products for future use or shipment.

Picking

A primary function of a warehouse.

Withdrawing components from stock to make assemblies or finished goods, or to ship to a customer.

Packing

A primary function of a warehouse.

Placing one or more items of an order into an appropriate container for safe shipping , and marking and labeling the container with customer shipping destination data, and other information that may be required.

Shipping

A primary function of a warehouse.

Outgoing shipment of parts, components, and products. Includes packaging, marking, weighing, and loading for shipment.

Quality Inspections

A secondary function of a warehouse.

Incoming and outgoing.

Repackaging (Small definition)

A secondary function of a warehouse.

For specific customer orders.

Assembly Operations

A secondary function of a warehouse.

Warehouse operation that puts products together with other items/components before shipping them out to the final customer.

Warehouse Ownership Types

Public Warehouses

Contract Warehouses

Private Warehouses

Public Warehouse

A classification of ownership

A business that provides storage and related warehouse functions to companies on a short or long-term basis, generally on a month-to-month basis for a fee.

Think of it as a hotel for inventory.

Contract Warehouse

A classification of ownership

A variation of public warehousing that handles the warehouse functions on a fixed contract basis

Think of renting an apartment for inventory.

Private Warehouse

A storage facility that is owned by the company that owns the goods being stored in the facility.

Think of buying a house for inventory.

Types of Warehouses

consolidation

break-bulk

cross-docking

Consolidation Warehouse

Warehouse operation that receives products from different plants or suppliers, sorts them, and then combines them with similar shipments from other plants or suppliers for further distribution.

Break-Bulk Warehouse

Warehouse operation that divides full truckloads of items from a single source or manufacturer into smaller, more appropriate quantities for use or further distribution.

Cross-Docking Warehouse

The logistics practice of unloading materials from an incoming truck or railcar and loading these materials directly onto outbound trucks or railcars, with little or no storage in between to reduce inventory investment and storage space requirements.

Warehouse Network

the number of, and the relationship between, the warehouses that a company has in their organizational structure

Warehouse networks

single

multiple

hybrid

Warehouse network strategies

1. Market Positioned Strategy

2. Product Positioned Strategy

3. Intermediately Positioned Strategy

Market Positioned Strategy

Close to customers to maximize distribution services and improve delivery.

Few suppliers

many customers

Product Positioned Strategy

Close to supply source to collect goods and consolidate before shipping products out to customers.

many suppliers

few customers

Intermediately Positioned Strategy

Midway between supply source and customers, when distribution requirements are high and product comes from various locations

Relatively equal number of suppliers and customers

Cross Docking

§A LEAN concept because it eliminates the need to store inventory, and reduces some transportation, which are both wastes.

third party logistics

An outsourced provider that manages all, or a significant part, of an organization's logistics requirements for a fee.

Advantages of 3PL

Cost: Eliminates the need for a company to invest in warehouse space, technology, and staff to execute the logistics process.

Logistics Expertise: Knowledgeable of industry best practices and the latest developments in technology.

Efficiency: 3PL's can leverage relationships and volume discounts, which result in lower overhead and the fastest possible service.

Disadvantages of 3PL

-Control: A company will not have direct control over the logistics operation.

-Dependency: Outsourcing logistics creates a dependency on the 3PL.

-Pricing: The company is locked into the pricing model specified in the contract

Fourth Party Logistics

an interface between the client company and multiple logistics service providers

Transportation

The function of planning, scheduling, and controlling activities related to the mode, carrier, and movement of inventories into and out of an organization.

Transportation Company Classifictions

1. Contract Carriers

2. Private Carriers

3. Common Carriers

4. Exempt Carriers

Contract Carriers

Person or company who transports freight under contract to one or a limited number of shippers.

Common Carrriers

person or company that transports its own cargo as a part of a business that produces, uses, sells or buys the cargo that is being hauled.

Private Carriers

Person or company who transports freight for a fee that can be hired by anyone to transport goods.

Exempt Carriers

Person or company specializing in services or transporting commodities exempt from regulation by the Interstate Commerce Act.

Modes of Transportation

truck

rail

pipeline

air

water

Truck Transportation

Most Flexible form of transportation

Less Than Truckload (LTL)

is the transportation of relatively small freight, i.e., the freight does not require the entire space of a truck.

Full Truckload (FTL)

is the transport of goods that fill up a full truck, or a partial load shipment occupying an entire truck.

Rail Transportation

Competes for transportation when the distance is long and the shipments are heaving or bulky.

slow and inflexible, but it has the most capability

Pipeline Transportation

§Most Reliable form of transportation

§Lowest Per unit cost for transportation

§Materials are transported in a liquid or gaseous state petroleum, natural gas, drinking water, gasoline

Air Transportation

§Generally the fastest mode of transportation.

§Most expensive mode of transportation

§Cannot carry extremely heavy or bulky cargo. Ideally, items with a high cost to weight ratio

Water Transportation

§Inexpensive

§Very slow and inflexible

§Primarily used for heavy, bulky, & low value materials like coal, grain, sand, and petroleum.

Best Ranked Transportation

Truck

Worst ranked transportation

Water

Intermodal Transportation

is sometimes referred to as the sixth mode of transportation, but it is really the use of multiple modes of transportation

Free on Board (FOB) Origin

§Seller places goods Free On Board with the carrier at the seller's location, and buyer pays freight costs.

§Ownership of the goods passes to the buyer when the public carrier accepts the goods from the seller.

§Buyer assumes the risk for in-transit loss or damage

Free on Board (FOB) Destination

§Seller places goods Free On Board to the buyer's place of business, and the seller pays freight costs.

§Ownership of the goods remains with the seller until the goods reach the buyer.

§Seller assumes the risk for in-transit loss or damage.

Fright Forwarder

§Consolidates LTL shipments into FTL shipments.

Reverse Logistics

Reverse logistics involves the process of moving a product from the point of customer receipt back to the point of origin to recapture value or ensure proper disposal.

Backwards flow of goods from customers in the supply chain

The Five R's of Reverse Logistics

1. Returns

2. Recalls

3. Repairs

4. Repackaging

5. Recycling