Logistics 3380 Midterm

Strategic Alliance

a formal agreement between organizations to pursue objectives that combine their complementary strengths, such as technology, market access, and expertise (more strategic and highly relational) (ex. Starbucks and B&N)

Partnership/ Collaborative

Coca-Cola and Heinz pooling their R&D resources to develop a new sustainable container, A collaborative relationship in which two or more organizations share goals, risks, and resources over an extended period.(crocs and mcdonalds lasted a month)

Lead time

time that elaspses from when a customer places an order until they receive that order

CTPA

US and Colombia

time utility

economic value added to a good or service by having it at the demand point at a certain time; timing campaigns so items are ready when demand is expected (ex. Store staying open late during holidays)

place utility

moving goods from production point to demand area, transportation

Quantity utility

ex. GM needs 4000 tires to complete 1000 cars on a specific day/time

possession utility

promotion or sales of a good, advertising

form utility

Manufacturing and assembly, combining components to a high value good or into new good in general

How does absolute advantage affect the potential gains from trade between two nations?

Both nations can benefit if each specializes in goods where they have an absolute advantage. 

fulfillment

a core logistics component

Materials management

upstream portion of the supply chain and are mainly concerned with suppliers and inbound logistics., Coordinating the planning, sourcing, purchasing, and inventory control of the materials a company needs for production

physical distribution

work-in-progress becomes finished goods and moves towards the customer (downstream)

Supply chain

A set of three or more organizations linked directly by one or more of the upstream or downstream flows of products, services, finances, or information from a source to a customer.

friendshoring

shifting operations to allied countries with similar political systems to reduce geopolitical risk

nearshoring

relocating production to a country that is geographically close to the customer’s market, often to shorten supply chains and delivery times

outsourcing

obtaining a good or service from an outside or foreign supplier (just has to be outside) 

offshoring

Basing a process or service overseas (going to foreign supplier or moving completely) 

Reshoring

reintroducing domestic manufacturing

Engineer-to-order (ETO)

A demand-driven approach to manufacturing where the requirements and specifications are not known until the order has been placed; the product is almost 100% customizable; long time between order and delivery (ex. Stadium. Jumbotron, nuclear power plant)

Assemble-to-order (ATO)

limited customization, Quickly create product (ex. Subway, personal computers, automobiles)

Build-to-order (BTO)

Moderate lead time, moderately customizable (ex. Buy a private jet, computer servers)

Apple reading

• Because of its volume, and ruthlessness, Apple gets big discounts on parts, manufacturing capacity, and air freight

• spend exorbitantly wherever necessary, and reap the benefits from greater volume in the long run

• focus on a few product lines, and to do little in the way of customization

• prepayments to key suppliers but strings attached 

Iran war disrupts the circuit board supply chain

• printed circuit boards (PCB) have components that are becoming more expensive, like copper, because of the wars in the Middle East

• Manufacturers scramble to find raw material supplies

Formula 1

• logistics managers for these teams used to take up to 18 months to coordinate an event, but COVID forced them to do it in weeks

• Time utility

• Boeing 777 freighters for international and trucks for regional travel

• Sea freight has lower cost, but it could be detrimental if there are global backlogs, extensive delays, or geopolitical issues

Colombian Roses

• U.S.- Colombia Trade Promotion Agreement largely successful, ex. Colombian flowers gaining permanent duty-free access to the U.S. market

• Colombian labor cheaper than U.S. labor and can move the flowers quickly, especially during peak weeks

Ford’s Order Based System

• Ford Wants More Buyers to Order Online and Wait, Rather Than Pick Off the Lot

• U.S. car business has long operated on a flood-the-zone system

• Pros: build-to-order model, unsellable cars don't sit in lot, cut inventory costs

• Cons: could lose customers who go somewhere else, could lose dealer’s jobs

General Electric

• invest $150 million into U.S. based suppliers 

• Reshoring

AI and Luxury Resale

• AI is being used to authentic goods 

• accuracy a major concern, and customer confidence

• lower-risk items to move through the system more efficiently while directing higher-risk items to expert review.

• Athena (AI) as a decision-support and routing tool instead of a full replacement for human authenticators

1PL

in-house logistics, shippers and receivers of product moved through the supply chain (thepeachtruck)

2PL

offers 1 logistics service, asset-based logistics providers that physically move product through the supply chain (ex. mom-and-pop shop that own 10 refrigerating trucks)

3PL

firms that manage and/or provide logistics services on behalf of their clients and customers, most of these organizations are non-asset based (fedex, DHL)

4PL

firms that provide a broader scope of services to help manage elements of the supply chain, and typically may be more strategically involved than 3PLs would be (manages the services done by the 3PLs, consulting, no-assets)

last period demand calculation

pick the demand number from the month before

exponential smoothing

Weight you place on the most recent observation

Economies of distance: tapering rate principal

Nonlinear transportation rates: meaning the biggest cost is unloading/loading the truck not so much the actual driving time

Economies of distance: blanket rates

does not increase as distance increases, the rate remains the same for all points in the blanket area (ex. USPS forever stamps)

Cross-stocking

raw materials from 4 different origins go to transit hub and are mixed around and sent out to distribution

omni-channel

Concept can be defined as “anytime, anywhere, anyhow, and any device.” (ex. warby parker)