Supply Chain Test 4

4 Main Functions of a DC

Accumulation, Sortation, Allocation, Assortment

Accumulation

serves as a collection point for product coming from multiple origins and provides required transfer, storage, or processing services

Sortation

focuses on assembling like products together for storage in the distribution facility, processing or transfer to customers

Allocation

focuses on matching available inventory to customer orders for an SKU

Assortment

focuses on assembling customer orders for multiple SKUs held in the distribution facility

Distribution Tradeoffs

Warehouse-Transportation
Warehouse-Inventory
Warehouse-Service
Space vs Equipment
Equipment vs People
People vs Space

Space vs. Equipment

Larger the facility and the more space used; the more equipment will be needed

Equipment vs. People

Greater use of equipment to automate materials handling and distribution activity, the lower labor requirements of a facility

People vs. Space

Larger the facility workforce, larger the facility size and throughput possible

Labor Availability Issues

Historically high unemployment rates
Smaller labor pool due to aging workforce
Solution: DC automation and assistive tech

Demand Variation 

Seasonal demand creates space and equipment utilization challenges
Solution: Third party logistics facility use during peak season, shared capacity with seasonal products

Increasing Customer Requirements

Strong desire for value added services
Growing expectations for faster and smaller
Solution: Flexible fulfillment processes

Network Design Issues: Number of Facilities

Determining the number of facilities by evaluating cost tradeoffs with other functional areas

Network Design Issues: Location of DCs

Analysis of DC’s intended function, sources and volume of supply, customer locations and demand patterns

DC Considerations: Size

Typically the more facilities in the distribution network, the smaller they need to be 

Slotting

the placement of product in a facility for the purpose of optimizing materials, handling and space efficiency

Receiving

Schedule carriers, unload vehicles, inspect freight, verify order

Put-Away

identify product, verify location, fill storage/pick slots, direct fill orders (crossdock)

Replenishment

Re-supply pick slots, move pallet quantity orders to shipping dock

Order Picking

Validate SKU and quantity, fill customer orders

Shipping

Schedule carriers, load vehicle, secure freight, complete paperwork

What’s crossdecking?

Goods flow directly from receiving to shipping, eliminating time consuming storage and order picking

Walmart Distribution Network

1st warehouse opened in 1970, Hub and Spoke system

Specialized DCs

Regional General Merchandise (42)
Grocery and Perishables (47)
Fashion (8)

Impact of Technology

Warehouse management systems (WMS), Auto-ID tech (bar codes, RFID tags), wearable tech

5 Modes of Transportation

Water, Rail, Truck, Pipeline, Air

Motor Carriers

Widely used in domestic supply chains or adjacent countries like Canada and Mexico; low fixed cost, high variable cost

Railroads

Long distance movement of low value goods; high fixed cost and low variable cost

Types of Railroads

2 carrier types: linehaul, shortline

Linehaul

server major markets, provides full array of interregional or regional services

Shortline

serves smaller markets, local delivery service, trips that linehaul

Air Carriers

Traditionally expensive, fast delivery times can reduce inventory costs; high variable costs, low fixed costs

Types of Air Carriers

2 carrier types: combination and air cargo

Combination

move freight and passengers and cargo is in the belly of aircraft

Air Cargo

moves more stuff, integrated carriers (FedEx and UPS) provide door to door service, nonintegrated carriers provide air only service

Water Carriers

major facilitator of international trade; high variable costs and low fixed costs

For-Hire Carriers

Liner services: fixed route, published schedule
Charter services: lease ships to customers on a time basis

Specialized ships

Containerships: TEU containers
Bulk carriers: carry cargoes with low value to weight ratios
Tankers: carry largest amount by tonnage
General cargo ships: transport shipload cargoes

Revolutionary Containers

Malcolm McLean is the “Father of Containerization”, importance of standardization

Panama Canal

Original canal opened in 1914 and was given to Panama, can handle containerships with 5K TEU or less

Suez Canal

Opened in 1869, built by French and Egyptians and no locks due to flat land carry 18K TEUs

Pipelines

US has largest network of energy pipelines in the world, mainly moves liquids and gases; high fixed costs

Intermodal

uses 2 or more modes to move products, cost efficiencies

Sustainability

the ability to achieve economic prosperity while protecting the natural systems of the planet and providing a high quality of life 

Scope 1 Emissions

direct emissions from sources owned by the company, like burning fuel in company vehicles

Scope 2 Emissions

Indirect emissions from the generation of purchased energy, like electricity used in company buildings

Scope 3 Emissions

Indirect emissions that occur in the company’s chain like emissions from the company’s vendors, carriers and suppliers

Purchasing/Procurement Group Sustainability Strategies

Prioritize local suppliers, use recycled materials, make sure suppliers have sustainability practices, use intermodal when possible

Manufacturing Group Sustainability Strategies

Reduce water usage, reduce energy consumption, waste reduction, reshore if feasible

Warehousing/Distribution Group Sustainability Strategies

More energy efficient buildings, maximize fill rate, electric handling equipment, build up instead of out

Product Packaging & Design Group Sustainability Strategies

Use recycled material, minimize size, biodegradable packing

Transportation Group Sustainability Strategies

It’s the hardest group to reduce emissions from

California Air Resources Board (CARB)

clean air regulations in California are always more stringent than federal EPA standards and they typically get waivers from the EPA to enforce their laws

Advanced Clean Fleet (ACF)

an act designed to replace all diesal trucks with zero emission trucks by 2045. All large fleets had to register diesel trucks with CARB on Janurary 1st, 2024

Battery Electric Vehicle (BEV) Pros & Cons

Pros: 0 carbon emissions, lower maintenance costs
Cons: Expensive trucks, battery life, access to power

Hydrogen Powered Trucks Pros & Cons

Pros: near 0 carbon emissions, faster refuel and longer range
Cons: More expensive than electric, limited fueling infrastructure

Compressed Natural Gas (CNG) Pros & Cons

Pros: Fast refueling, only 40K more than diesel truck
Cons: Potential methane release, not california compliant

Bio Diesel 

made from vegetable oils, animal fats, algae and recycled cooking oils. Produced by a chemical reaction to an alcohol

Renewable diesel

made from vegetable oils, but is refined like traditional diesel

Natural Gas

abundant and inexpensive but not renewable and not 0 emission

Hydrogen

0 emissions but no distribution infrastructure