Supply Chain Management final exam Rutgers

Inbound logistics

Move goods and materials from suppliers to buyers

Material Handling

Move goods and materials between sites (internal and external)

Outbound logistics

Move finished goods to the customer

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

Functions of a Warehouse

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

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

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

Packing: 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: Outgoing shipment of parts, components, and products. Includes packaging, marking, weighing, and loading for shipment. [Does Not include Transportation]

Secondary Functions of a Warehouse

Quality Inspection- incoming and outgoing.

Repackaging- for specific customer orders.

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

Public Warehouse

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.

Contract Warehouse

A variation of public warehousing that handles the shipping, receiving, and storage of goods on a contract basis for a fee.

Private Warehouse

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

Consolidation Warehouse

Warehouse operation that receives products from different or suppliers, stores 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 to reduce inventory investment and storage space requirements.

Warehouse Network

A warehouse network is simply the number of, and the relationship between, the warehouses that a company has in their organizational structure.

Trade-offs that will determine how many warehouses the company needs and where they should be located are:

The level of customer service the company wants to provide

The amount of inventory the company is willing to invest in

Warehouse Network : Hybrid Approach

One hybrid network is a "hub and spoke" where there is a centralized warehouse (i.e., the "hub") which holds most of the inventory linked to a series of smaller geographically dispersed warehouses (i.e., the "spokes") which hold only a small amount of inventory to support their local area in the immediate time frame

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

LEAN Warehousing

Warehouses and distribution centers are continuing to develop their LEAN capabilities

Cross Docking

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

Reduced Lot sizes and shipping quantities

By reducing lot sizes and shipping quantities, a company can increase velocity in the warehouse, and get shipments out faster. Faster throughput is a LEAN concept.

Increased Automation

Companies are using automated systems like pick to light, voice picking, conveyor systems, automatized guided vehicles (AGV's), and robotics to improve efficiencies and throughput times in the warehouse.

Green Warehousing

One of the more sustainable goals for a green warehouse is to make it a net zero energy user.

Third Party Logistics (3PL)

A Third Party Logistics (3PL) company is an outsourced provider that manages all, or a significant part, of an organization's logistics requirments for a fee.

Fourth Party Logistics (4PL)

Fourth-party logistics (4PL) is an interface between the client company and Multiple logistic 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.

Objectives of transportation

To maximize the value to the company through price negotiations

To make sure service is provided effectively

To satisfy customers' needs

Contract Carriers

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

Private Carrier

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.

Common Carrier

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

Exempt Carrier

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

Mode

refers to the way in which goods are transported

Carrier

refers to the company that transports the goods

Truck

Most flexible mode of transportation

General Fright Carriers

A trucking company which handles a wide variety of commodities in standard trailers. Freight is generally palletized.

specialized

A trucking company which handles the movement of cargo that requires specialized equipment for transportation because of the shipment's size, weight and shape.

Less-Than-Truckload (LTL)

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

Full-truckload (FTL)

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

Rail

Rail is slow and inflexible but it has the most capability

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

Pipeline

Most reliable form of transportation

Lowest per unit cost for transportation

Air

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

inexpensive

Very slow and inflexible

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

Intermodal Transportation

Intermodal is sometimes referred to as the sixth mode of transportation, but it is really the use of multiple modes of transportation to execute a single transport shipment.

Rail and Motor Carriers (trucks)

Offer point-to-point pickup and delivery service known as Trailer-on-Flatcar (TOFC)

Rail and Water Carriers

Offer point-to-point pickup and delivery service known as Container-on-Flatcar (COFC)

Roll-On/Roll-Off Ship

specifically designed to allow trucks to be driven directly on and off the ship without the use of cranes.

Interstate Commerce Act of 1887

created the Interstate Commerce Commission (ICC).

ICC Termination Act of 1995

The Interstate Commerce Commission (ICC) was eliminated

Regulation Pro's

Tends to assure adequate transportation service throughout the country.

Protects consumers from monopoly pricing, safety, and liability.

Regulation Con's

Discourages competition

Does not allow prices to adjust based on demand or by negotiation

Cost of Service Pricing

is the setting of a price for a service based on the costs incurred in providing it.

Value of Service Pricing

is a pricing strategy which sets prices based on the value perceived by the customer, i.e., "priced at what the market will bear".

Combination Pricing

price is set at a value between cost-of-service minimum and value-of-service maximum. Most carriers use some form of combination pricing. Common in highly volatile markets and changing competitive situations

Net-Rate Pricing

Established discounts and accessorial charges are rolled into one all-inclusive price. Pricing is tailored to the individual customer's needs

Free on Board (F.O.B.) 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 (F.O.B.) 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.

Freight Forwarder

Consolidates LTL shipments into FTL shipments.

Load or Transportation Broker-

Bring shippers and carriers together

Shippers' Association

Nonprofit cooperatives which arrange for members' shipping

Intermodal Marketing Company

Purchase blocks of rail capacity and sell it to shippers

Warehouse Management Systems (WMS)

Track and control the flow of goods from receiving dock to outbound shipment. New technologies, such as RFID tags, facilitate tracking.

Transportation Management Systems (TMS)

Used to select the best mix of transportation services and pricing.

Global Trade Management Systems (GMT)

Provides global visibility, standardization, and documentation to comply with international trade regulations.

Reverse Logistics

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.

Five R's of Reverse Logistics

Returns, Recalls, Repairs, Repackaging, Recycling

Return of Unsold Stock

This acts as an incentive for downstream members to carry more stock, because the risk of obsolescence is borne by the upstream supply chain partner.

Reverse Logistics cost

cost 4 - 5 times as much as forward logistics and requires on average 12 times as many processing steps.

Offshore Factory

A factory set up for manufacturing or assembly in a country where labor and/or raw materials are less expensive, for eventual import back into the manufacturer's home country.

Source Factory

Manufactures products at low cost but with skilled workers and significant managerial resources

Server Factory

A factory set up to take advantage of government incentives, and/or reduced tax/tariff barriers, to meet regional or local market needs

Contributor Factory

Focused on product development and engineering for products that they manufacture

Outpost Factory

Factory set up in an area with an abundance of advance suppliers, competitors, research facilities, etc.

Lead Factory

Source of product and process innovation and competitive advantage across the entire organization (world-class)

Taxes and incentives

Several levels of government must be considered when evaluating potential locations.

Tariffs are federal taxes that are designed to protect local businesses.

Countries with high tariffs discourage importing goods into the country and encourage multinational corporations to produce locally.

Currency Stability

Impacts business costs and consequently location decisions.

Access and proximity to markets

The trend in manufacturing is to be within delivery proximity of your customers.

In the service industry, proximity to customers is even more critical.

Labor issues

Labor availability, productivity, and skill.

Unemployment / underemployment rates

Wage rates; turnover rates; labor force competitors.

Right-to-Work Laws

28 states have laws protecting the right of employees to decide whether or not to join or support a union.

Access to suppliers and cost

Supplier proximity influences the delivery of materials and the effectiveness of the supply chain.

Utility Availability and cost

Supply of electricity has not always kept pace with the high speed of development.

Environmental Issues

Global warming, air pollution, and acid rain are debated as being the price of industrialization.

Trade liberalization creates the need for environmental cooperation

Land Availability and Costs

As land and construction costs in big cities continue to escalate, the trend is to locate in the suburbs and rural areas.

Quality-of-life issues

You will need people to work at these locations - so consider the following Quality-of-Life issues in terms of maturity, sophistication, robustness, etc., in each location, and do a comparison/evaluation

Business Clusters

Geographic concentrations of interconnected companies and institutions.

World Trade Organization (WTO)

deals with the global rules of trade between nations. Its main goal is to ensure that trade flows as smoothly, predictably and as freely as possible.

The Weighted-Factor Rating Model

Compares the attractiveness of several locations along a number of quantitative and qualitative dimensions.

Break Even Model

Useful location analysis technique when fixed and variable costs can be determined

Operating your supply chain globally can present opportunities

Increased revenue through global business (i.e., more customers) and economic opportunities

Increased Sourcing options with more potential sources of supply to choose from including potential economic opportunities

International Freight Security

Transportation across national boundaries introduces added complexity, particularly security.

U.S. Department of Homeland Security

The Department's first priority is to prevent the entry of terrorists and the instruments of terrorism, while simultaneously ensuring the efficient flow of lawful traffic and commerce

When a shipment reaches the US

importer of record (i.e., the owner, or purchaser) must file entry documents at the port of entry.

Goods are not legally entered into US commerce until

The shipment has arrived within the port of entry

Delivery to the shipping destination has been authorized by CBP (following submission and review of required documentation)

Estimated duties have been paid.

Foreign Trade Zones (FTZ's)

Physical areas inside the US supervised by U.S. Customs and Border Protection that are considered to be outside of the U.S. territory Usually located at or near a port of entry.

Free Trade Zones Permitted activities

exhibition,

inspection,

salvage,

destruction,

reclassification,

manufacturing,

processing,

storage,

testing,

relabeling,

repackaging

Deemed Export

the release of technology or source code that is subject to the Export Administration Regulations, to a foreign National (i.e., non-US citizen) located in the United States.

An intentional or unintentional export of controlled technology can easily occur within the walls of your company, even if located within the borders of the united states

The release can be visual, oral, through on the job training, or via systems access, etc

Criminal Penalties

Substantial Fines (and/or)

10+ years imprisonment

Civil Penalties

Substantial fines per occurrence

Individual and/or company sanctions

Statutory Sanctions

Seizure and forfeiture of items in violation, including the vessels and aircraft carrying the items.

Loss of import and/or export privileges for a business unit, division, or for the entire company.

Detailed inspections of every single shipment, and delayed release by US Customs & Border Protection.

Customs brokers

Move global shipments through customs and handle documentation.