SCM 3010 Study Guide: Supply Chain and Logistics Concepts

Supply Chain Management

Working together to co-create great customer value.

Logistics

Logistics adds value to the economy, to organizations, and to your life.

Value of Logistics

Time & Place utility - logistics makes sure goods and services are available when and where you need them.

Seven Rights of Logistics

Getting the right product to the right customer at the right time in the right condition in the right quantity at the right place for the right cost.

Logistics Activities

Logistics creates value through movement, storage, and processing.

Movement in Logistics

Transportation.

Storage in Logistics

Warehousing, In-transit.

Processing in Logistics

Flow of information, Tracking & visibility, Value-added activities.

Third Party Logistics (3PL)

A firm would use a 3PL to manage logistics functions.

Asset vs Non-Asset 3PLs

Asset-based owns their own trucks and warehouse, non-asset-based do not own and instead act as intermediaries.

Value-Added Services

Processes that enhance the value of a product or service to the customer, and increase their satisfaction.

Logistics Tradeoffs

Product value versus inventory cost, transportation cost, and packaging cost.

Low Cost, High Service

A winning equation in logistics.

Importance of Transportation

Transportation's portion of order lead time affects both customer satisfaction and other logistics costs like inventory.

Last Mile Problem

The challenges and inefficiencies associated with the final stage of delivery in a supply chain, from a warehouse or hub to the customer's doorstep.

Modal Choice

What type of vehicle will be used to meet customer expectations.

Carrier Selection

Who is your partner going to be? (ie. FedEx, UPS).

Transportation Routing

Pick your routes based on shortest distance, shortest time, or your mode of transportation.

Outsourcing in Logistics

Hire someone else to manage the process for you.

Modes of Transportation

Identify the five modes of transportation and understand their operating and service characteristics, pros/cons.

Truck Transportation

Great access, high performing and reliable, most products go on a truck at some point.

Truckload

Offers direct door-to-door service between two locations for a single shipper and consumes most of the trailer.

Less-than-truckload

Consolidates smaller loads from multiple customers and are typically less than 15000 pounds.

Rail transportation

Tremendous cargo growth in the U.S but not the rest of the world, must buy and maintain own rights of way-rail track, large volume, long distance, popular for intermodal movement.

Water transportation

Barge: inland waterways, mainly bulk, cheap, and slow. Ocean: huge growth in 20 years, container ship carries most common goods, move 90% of the world's manufactured goods.

Air transportation

Dedicated and in the belly of passenger flights, fast, expensive, secure, high-value, or VERY time-sensitive products.

Pipeline transportation

For fluid commodities like oil and gas, tends to be privately owned, slow but very reliable and secure when underground.

Intermodal transportation

Combining two or more modes for a single delivery.

Economies of scale

Refer to the reduction in per-unit cost as volume increases and operational efficiencies are achieved.

Weight

Weighing out.

Volume

Cubing out.

Distance

Tapering rates cover fixed costs and is also a factor with small package shippers.

Product characteristics

Weight, density, stowability, ease of handling, value, liability.

Market characteristics

Nature and extent of regulation, location: urban vs. rural and domestic vs. international, distance, competition, balance and timing of flow.

Freight terms

Tell us about the responsibilities of buyers and sellers, e.g., FOB origin (buyer), FOB destination (seller), prepaid (seller), collect (buyer), charged back (buyer), allowed (seller).

Challenges in transportation management

Aging infrastructure, congestion, driver shortage, sustainability, risk management/complexity, insourcing versus outsourcing, improved information technology.

Transportation Management Systems (TMS)

A sophisticated information system used to plan, optimize, and execute transportation operations.

Collaborative Transportation Management (CTM)

Helps participants drive inefficiencies out of transport planning and execution process, aiming to eliminate inefficiencies in the transportation component of the supply chain.

Importance of warehousing

Critical in the supply chain and society, allowing for production and transportation economies.

Production economies

You can produce in large lots, storing product until customers want to use it.

Transportation economies

You can ship in full truckloads, with inbound shipments stored at the warehouse while outbound shipments are shipped at the warehouse.

Basic warehouse functions

Protect inventory, break bulk, mix, make transport more economical.

Value-added services

Customization, postponement.

Types of warehouses

Omni-channel, bonded, on-demand.

Bonded warehouse

Secure storage facility where imported goods can be stored without immediately paying import taxes and duties.

On-demand warehouse

Platform where warehouse space providers can rent out their excess space to others, similar to Airbnb.

Warehouse management systems (WMS)

Technologies that assure efficient flow of goods through a warehouse.

Private Warehousing

Owned and operated by a single company, providing exclusive control over storage and logistics operations.

Public Warehousing

Owned and operated by a third-party provider, offering shared storage space and services to multiple clients.

Warehouse-location decision

Selecting the right location for a warehouse based on various determinants.

Location determinants for warehouse placement

Freeway access, labor climate, availability of transportation, proximity to markets, traffic congestion.

General principles of warehouse layout

Effective storage plan, straight line or direct-flow of goods, minimize aisle space, one-story facility, make use of facility height, use efficient material handling equipment.

Productivity measures

Orders per hour picked/packed, lines and items per hour, cost per order, cost as a % of sales.

Quality measures

On-time delivery, order fill rate, order accuracy, line accuracy, order cycle time, perfect order completion.

Safety measures

Safety talk, days of work missed due to injury, number of injuries, days injury free.

Risk management

The systematic process of identifying, assessing, and mitigating potential disruptions and vulnerabilities within a company's end-to-end supply chain.

Sources of supply chain disruptions

Factors that lead to declines in operating performance, sales growth, inventory, customer satisfaction, and competition.

Issues that increase supply risk

Complexity, interconnectedness, and vulnerability to emerging global and local threats.

Top 5 supply risks

Quality, inventory, natural disasters, supplier financial distress, transit loss.

Risk management strategies

Supplier selection, monitoring, segmentation, contract language, hedging, near-sourcing, and postponement.

Risk reduction strategies

Diversifying suppliers, increasing inventory, developing flexible transportation options, and establishing strong supplier relationships.

Risk identification

The process of recognizing potential risks that could affect an organization's operations.

Benchmarking

Measuring and comparing performance against industry standards or competitors to identify areas for improvement.

Process mapping

Visually representing the steps of a process, highlighting potential bottlenecks and inefficiencies.

Risk monitoring

The ongoing process of tracking identified risks and their impact on the organization.

Disruption assessment

Evaluating the potential impact of disruptions on operations and supply chains.

Risk probability

The likelihood of a risk occurring.

Risk consequence

The potential impact or outcome if a risk occurs.

Risk exposure

Calculated as risk probability times risk consequence.

Risk mitigation

Strategies to reduce or eliminate risks.

Triple bottom line

Every decision has environmental, social, and financial implications.

Social responsibility bias

The tendency to prioritize social responsibility in decision-making.

Three Ps

People, planet, and profit.

Supply chain sustainability

The scope of practices that ensure supply chains operate in an environmentally and socially responsible manner.

Logistics footprint

The environmental impact of logistics operations.

Environmental product lifecycle concept

The relevance of a product's environmental impact throughout its lifecycle to logistics and supply chain management.

Lifecycle management

Designing a product to minimize its impact on the environment over its lifetime, including end-of-life considerations.

Design for environment

Practices that focus on energy efficiency, materials innovation, and design for recyclability and reuse.

Cradle to cradle

Creating a circular system where materials are designed to be either recycled or reused, rather than ending up as waste.

Ecological Footprint

The amount of the environment necessary to produce the goods and services necessary to support a particular lifestyle.

Greenhouse Gas Protocol

A framework for measuring and managing greenhouse gas emissions.

Scope 1 emissions

Emissions your company directly produces.

Scope 2 emissions

Emissions from purchased energy such as electricity and heating and cooling.

Scope 3 emissions

Emissions from everything else in the organization and its supply chain.

OSCM strategy principles

Customer Focus, Systems Design, Resource Integration, Value Creation.

Game changers in OSCM

Factors such as technology and resources that will influence OSCM practice.

Logistics value creation

Primary ways in which logistics adds value include movement, storage, and processing.