Comprehensive Logistics, Production, and Facility Location Key Concepts

Facility Location Considerations

Labor, infrastructure, laws, resources, climate, transportation, trade agreements, taxes, currency, political stability.

Labor Considerations

Wages, technical skills, work ethic, culture, language.

Established Channels of Distribution

Long-standing network of organizations moving products to customers.

Established Supplier Base

Group of companies with which it has developed a working relationship, perhaps worked together for many years

Business Cluster

Geographic concentration of competing firms in one industry.

Hypercompetitive Market

Region with intense competition that drives innovation.

Strategic Decisions

Long-term decisions about markets, products, and business direction.

Design Decisions

Decisions that seek to satisfy a target market in a particular product or service category.

Operating Decisions

Daily operational decisions.

Line Flow Strategy

Works well in producing end item that have relatively high demand and requires very little customization. Work centers are located in a linear path.

Flexible Flow Strategy

Each work station performs a single function, a large degree of variation is possible at each workstation. Works well for producing end items that have relatively low demand levels and that may require a high level of customization.

Hybrid Strategy

Mix of line and flexible flow. Products may pass through a layout in a linear fashion, but each workstation would have the ability to allow for some level of customization.

Assembly Line

Linear production process that can stop without ruining product.

Continuous Flow System

Production that must run continuously to completion.

Fixed Position Layout

Movement of the end product is very limited; therefore, the workers and machines often come to the worksite and move around the massive item as needed. Used for very large and hard-to-move items, like airplanes, cruise ships, office buildings.

Assembly Line Goals

Meet demand, quality, efficiency, flexibility, worker care.

Bottleneck

A section of a supply chain or production process that limits the overall output of the system. The slowest and/or weakest workstation

Precedence Diagram

Helps managers see task time for any work element. It aids in putting together workstations without violating precedence relationships.

Work Element

Task. Smallest unit of work that must be accomplished to complete an end item on the assembly line

Task Time

Time allotted for one task.

Total Task Time

Sum of all task times.

Workstation

The collection of one or more work elements

Cycle Time

The pace at which products must move through the assembly line in order for the assembly line to keep pace with demand,

Theoretical Minimum Workstations

Minimum possible workstations (TM= total task time/ cycle time)

Line Balancing

Equitably group precedence diagram tasks into the fewest number of workstations and to meet demand.

Cycle Time Rule

A workstation must have a total task time equal to or less than the calculated cycle time

Precedence Rule

All tasks in a workstation must not violate the precedence relationships illustrated in the precedence diagram

Idle Time

The amount of time that is not utilized at each workstation

Assembly Line Efficiency

Worked time ÷ available time.

Effective Cycle Time

Actual pace set by bottleneck.

Make-to-Stock

Produce before orders.

Make-to-Order

Produce after order.

Assemble-to-Order

Assemble standard parts after order.

Materials Handling Devices

Conveyors, monorails, bins.

Logistics

A branch of the supply chain responsible for developing the transportation itinerary and for finding the appropriate transportation and storage business partners to successfully navigate the flow of materials from the point of origin to the final destination

Transportation

The logistics function that is responsible for the effective and efficient movement of goods from one location to another

Reverse Logistics

The management of products that flow backward in the supply chain (upstream), away from the consumer and back in the direction of manufacturers

Order Fulfillment

Delivering the right order (product and quantity) to the right place (location and customer), at the right time, in the expected condition, with the appropriate documentation

Bulk Cargo

Cargo that is loose and free-flowing. Typically loaded and unloaded by being pumped, scooped or shoveled

Containerized or Breakbulk Cargo

General or packaged cargo, often containerized and measured in TEUs. Examples: bagged or boxed rice, canned goods

Neo-Bulk Cargo

Typically, these are large items that do not fit into either bulk or breakbulk categories. Examples: vehicles, logs, livestock

Cube

Amount of space in a container or package available for cargo

Cubing Out

The container is completely filled with cargo, but the maximum weight limit has not been reached.

Weighing Out

The maximum weight limit is reached in the container, but space is still available.

Intermodal Transportation

Cargo is moved from one vehicle or vessel to another vehicle or vessel without any direct handling of the cargo.

Road Transport

Strengths: Fast (2nd fastest), high flexibility

Weaknesses: Weather, traffic, crime. fuel

When to use: Shipped rather quickly, at a reasonable cost, directly into the hands of customer

Rail Transport

Strengths: Low-cost for heavy, long-distance shipments, works well in conjunction with ocean/rail

Weaknesses: slow, not as easily accessible, loss/damage due to vibrations

When to use: good for heavy/bulky shipments that do not need speedy delivery. Good for items with low value/weight ratio

Ocean Transport

Strengths: Lowest cost for international bulky cargo; works well in conjunction with rail and/or road transport

Weaknesses: very slow; cargo has more exposure to the elements

When to use: large and bulky international shipments that require low transportation costs but do not need quick shipment

Air Transport

Strengths: Fastest, minimal exposure to elements, thieves, and hazard risks, works well when linked with road transport

Weaknesses: extremely expensive, cannot accommodate standardized containers, requires airports on both ends of shipment

When to use: items that have a high value/weight ratio, short lead time, useful when security and damage are significant concerns

Pipeline

Used only for liquids or items that can be shipped in a slurry

TOFC

a truck trailer is placed directly on a rail flatcard

COFC

a standardized container is placed directly on a rail flatcar

Double Stack

Two containers stacked on railcar.

Infrastructure

The physical structure within a region that is available for the movement and distribution of goods through a supply chain. It also includes the organizational structure that provides standard procedures, laws, maintenance, oversight, and even human resource education and development for a given region

Warehouse

Used to store inventory for long periods of time (weeks, months, or even years). Storage is the primary function

Distribution Center

Focus on efficiently getting items to retail and/or wholesale outlets.

Picking and Packing

Certain facilities store items for online retailers and then quickly pick, pack, and label a shipment

Postponement

Wait until orders are received to do customizations like paint colors.

Quality Inspection

Additional services designed to catch quality issues before they impact the final customer.

Central Return Center

A facility that performs a number of reverse logistics functions typically related to returned consumer products.

Fulfillment Center

A facility that specializes in receiving customer orders and then picking the ordered items from the shelves, packing the items into a box and labeling the orders so the order is ready for shipment.

Cross-Docking

The fast and efficient distribution of goods from an upstream supplier to a downstream customer through a distribution center. No items stay behind as storage

Last Mile

Portion of the supply chain between the final inventory holding facility and the end customer

Packaging

Secures the item, makes it easy to move, it allows the customer to see and make judgements about the item, and in some cases it fulfills legal requirements

Dunnage

Protective cushioning. Example: bubble wrap, styrofoam, small inflatable airbags

Pallet

A platform upon which large amounts of cargo can be securely placed for easy movement.

Shipping Label

A label attached to inventory that contains information about the shipment

Primary Packaging

In contact with the item (plastic bag, can, bottle)

Secondary Packaging

Contains an end item and primary packaging (box, case, drum, shrink wrap)

Tertiary Packaging

Contains several items which are in secondary packaging (crate, pallet, shrink wrap)

Standardized Container

Steel boxes that can be loaded with cargo

High Cube

A container that is 1 foot taller than the standard 40’ container

Controlled Atmosphere Container (Reefer)

Refrigerated container controlling environment.

Garmentainer

Has a rod or cable that allows for easy and secure movement of clothing on hangers

Ventilated Container

Used for products that require ventilation while in transport. Example: livestock

Open Top Container

Allows bulk cargo to be poured into the container. can also allow for heavy and bulky items to easily be craned into the container

TEU

Twenty-foot equivalent unit.

Truckload (TL/FTL) or Container Load (CL/FCL) Shippers

Specialize in moving large amounts of goods, enough goods to fill an entire truck or multiple trucks

Less-than-Truckload (LTL) Shipper

A company has a reasonable amount of goods going through a single location, but not enough goods to fill an entire truck or container.

Small Package Shipper

Ships parcels under ~150 lbs.

Planogram

Schematic drawing that illustrates product placement to maximize use of shelf space and drive sales

Reasons for Packaging

Protection, marketing, information, preservation, handling, legal.

Competitive Labeling

Shipment/product identification.

Warehouse vs Distribution Center

Warehouse stores; DC moves inventory from warehouses

Downstream Activities

Storage and consolidation/sotring, picking and packing, value added activities

Upstream Activities

Reverse logsitics activites, recovery and disposal, recycling, repairs, restock

Additional services offered by storage and distribution centers

Picking and packing, assembly, postponement, quality inspection, management of packaging materials, disposal, and repair or refurbishing of defective products.

Bulk Carrier

Oil tankers, ore carriers, LNG carrier, dry bulk carriers

Container Ships

primarily carry breakbulk cargo, container vessels, general cargo vessel

Multimodal

Use of more than one mode of transportation during a single shipment

Traditional Distribution Model

Has distribution, buffer stock, and full trucks

Outbound Consolidation

Assembly and/or packaging of end item, used when end item is made up of multiple components produced at separate locations.

Neo-bulk ships

Used to ship cargo like lumber, vehicles, large machinery. RORO: roll on, roll off

New Product Design Considerations

New product design meeting

Design stage: generate ideas, create prototypes

Product Development: designers, engineers, supply chain, finance, marketing

Relationship between: Marketing, Design, SCM, Engineering

Marketing identifies a target market

Designers and engineers work to develop products that satisfy the needs of the target market

Supply chains must then buy parts, manufacture hundreds or thousands of those end items, and then deliver them into the hands of the customer

In modern companies, coordination and integration are vital to long-term success

Outsourcing Decisions

Location, infrastructure, process design and management, material, services, human elements, finance, and accounting