D470 Transportation, logistics, and distribution study guide

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Total Logistics Concept (TLC)

aims to treat the many different elements that come under the broad category of distribution and logistics as one single integrated system

What size businesses benefit from Economic Order Quantity?

Small/medium

Build-to-stock

Inventory replenishment is used to anticipate future demand requirements

Push

Build-to- stock

Actual demand for a product is used

Pull

Decoupling Point

Process moves from build-to-forecaat to build-to-order (push to pull)

How can a company save significant amounts?

When companies in the same supply chain collaborate, share info, and build trust that allows them to confidently reduce stock

Supply Chain Mapping

Enables a company to map the amount of inventory it is holding in terms of length of time that the stock is held

Bullwhip / Forrester Effect

Surge in demand up supply chain as each inventory location adjusts to the demand increases

Economic Order Quantity (EOQ)

Estimates the best order quantity bt balancing the conflicting costs of holding stock and placing replentishment orders

What is a key measure of success?

Return on Investment (ROI)

What is a reason to Outsource?

significantly reduces fixed assets

What objectives need to be balanced to add value to the customer?

Level of service and cost

What are transaction related components?

Pretransaction, transaction, post transaction

Multifunctional Dimensions

Time, dependability, communications, flexibility

Service quality GAP

Difference in customer expectations and actual experience

GAP analysis

Determines detailed service requirements

Quick Wins

Easily changed service requirement

Brainstorming

Identifies appropriate remedies or solutions for improving key elements of service

Steps to identifying key customer service components:

1. Identify main elements of service and Identify suitable market segments

2. Determine the relative significance of each service element

3. Establish company competitiveness at current service levels

4. Identify distinct service requirements for different market segments

5. Develop specific customer service packages

6. Determine monitoring and control procedures

Main approaches to cost/service balance:

Cost minimizing approach where specific service objectives are laid down and met at minimum cost

Service maximized approach where distribution budget is fixed and “best” service is supplied within cost constraint

Service level Agreement (SLA)

Customer/client relationship. Contact between suppliers and end-users defining the level of service that is agreed upon and expected

Business-to-Customer (B2C)

Bypasses shops. Products are typically music or films that can be transferred online

Business-to-Business (B2B)

Product goes from manufacturer/supplier → endpoint (usually factories)

Trading / Transaction Channel

Product goes straight to customer.

Concerned with non-physical aspects, sequence of negotiation, buying and selling, and ownership

Indirect Channels of Distribution

Retailers, wholesalers, and distribution

Direct Distribution Channels

Manufacturer → customer

Consolidation Center

Goods from various manufacturers and suppliers are consolidated into shelf-ready loads for dispatch direct to stores.

Generally ran by retail organizations and use 3rd party delivery vehicles to deliver full loads

Central Distribution Center (CDC) / Regional Distribution Center (RDC)

Transported in line-haul trucks to sites where they are stored and broken into individual orders that are delivered to retail stores on suppliers retail delivery vehicles

Generally ran by supplier.

Objections to 3rd party distribution:

High distribution costs

Why would a company not have its own storage and transport facilities?

It’s too expensive

Reasons to outsource:

Reduce costs

Concentrate on core competencies

Improve service

Reduce assets/warehouses/vehicles

Employee capital more effectively

New geographic markets

Reasons to NOT outsource:

Logistics is a core competency

No savings

Loss of control

Over dependency

Loss of key skills

Distribution Order Management (DOM)

Array orders across multi systems and processed utilized by those involved in replenishing orders

Determined shipping locations and available stock levels

Blockchain

Digital stored records across distributed/decentralized network of computers

Crowd Shipping

Citizens using social networking collaboratively to act as couriers for local distribution of small parcels

What helps eliminate upstream supply chain?

3D printing

What is forecasted to worsen with automotive deliveries and is unavoidable?

Traffic congestion

What product is involved in agile approach?

Shorter life cycle products

Agile Approach

Postponement

Replenishment is driven by actual sales data / finished goods are sent directly to the customer

What type of inventory is held during postponement?

Low levels of work-in-progress inventory

Why would a company chose not to use 4PL?

It’s expensive

Advantages of 4PL:

Saves time, has single point of contact, expertise, capital is mainstreamed/core-selling assets, risk avoidance

What areas are controlled by 3PL?

Warehouse, transport, and fright management

What areas are controlled by 4PL?

Logistics and supply chain process

What is a closed-loop supply chain?

Involves outbound and reverse material flow

Omnichannel approach

Seamless approach to customer experience through available shopping channels

Uses software to track customers across all channels. All channels share the same data base

SWOT Analysis

Allows a company to review its position within marketplace concerning products, demand, service offered, and position of competitors

Analysis strengths, weaknesses, opportunities, and threats

What type of analysis should be used to identify a company’s key logistical variables?

SWOT analysis

Competitive Strategy

Competing as a service or cost leader (or both)

Tries to gain advantage by providing several key added-value service elements that differentiate it from its competitors in terms of what it offers to the customer

Cost leaders try to utilize its resources by offering the product at the lowest possible price (productivity advantage)

What is the best way to ensure that logistics is an integral part of a corporate plan and that factors related to these functions are used in the overall planning process?

Linking logistics or distribution plan directly with the corporate plan

Logistics Process Design

Ensures that business methods are aligned and organized to operate across the traditional company functions and become supply-chain oriented

Logistics Network Design

Aspects related to physical flow of the product through a company’s operation

Volume-to-Weight Ratio

Low volume-to-weight = efficient

High volume-to-weight ratio = less efficient

Companies measure logistics cost by weight rather than volume

Value-to-Weight Ratio

Low value-to-weight- lower holding unit costs

Higher value-to-weight- higher holding unit costs

Product introduction (life cycle)

Steady growth

Growth stage of product (product life cycle)

Trade-offs between services and cost are realized

Sales are more predictable

Steepest incline on product life cycle curb?

Growth stage

What is a unit load?

Pallet or shipping container

What is an important choice concerning unit load?

Type and size

Segmentation Framework

uses a combination of demand and supply factors

lean support chain principles - predictable demand

Agile Policies

unpredictable demand

can only have shorter lead times

How are goods held when considering product postponement?

in-progress

example of lean approach:

predictable goods sourced from low-cost suppliers in distant parts of the world

Example of agile approach:

unpredictable goods sourced locally, where lead times are shorter

What approach should be used for base products?

lean

What approach should be used for surge demand?

agile

What categorization of market segments is relevant to the supply chain and market segmentation?

Geographic location

Pareto

classifies product as fast or slow moving

Decoupling Point

the point at which discrete product orders are received

What is the paramount importance when determining the number, size, and location of facilities?

service and cost factors

stock held at distribution centers and warehouses

finished goods

Primary Transport

the supply of bulk products (full loads) to the distribution centers from the centeral finished goods warehouse or production point

Delivery Transport

delivering orders from the Distribution centers to the customer

Stems

the distance to and from a delivery zone/ distribution center

Drop

the distance travelled once a drop or delivery zone has been reached (starting from the first drop point and finishing at the final drop point)

Service Costs

stock management and insurance costs

Cost of servicing the inventory

customer service

Risk Costs

pilferage, deterioration of stock, damage, and stock obsolescence

Information System costs

information and communication requirements ranging from order processing to load assembly lists

What are trade-offs in logistics?

Cost and service

Sourcing Analysis

assessment of the different patters of product flows

What is the most common reason logistics networks are out of balanace?

intertia because of the great amount of work and effort required to make changes

Is logistics strategy from a corporate business plan quantitative or qualitative?

quantitative

MRPII

rough-cut capacity planning technique. Considers the overall requirements for key resources

Economic Footprint

the physical boundary the facility can serve

larger economies of scale/ longer shelf life = larger economic footprint

smaller economies of scale/ shorter shelf life= smaller economies of scale

What is used to calculate the major elements trade-offs for a logistics operation?

cost of raw materials, production rates, capacities, and approximate logistic costs across geographicial areas

Set-up

changeover times for certain products

Heuristics

rule-of-thumb- experience and common sense

Simulation

what-ifs questions to be asked to test alternative strategies

Clustering techniques

used to reduce the complexity of the problem; all customers in close geographic proximity are clustered together

Logistics Strategy Simulation / Optimization Model

simulate the cost of operation for a particular configuration

Mission Management / Process-driven Organizational Structures

based on the concept of the management of systems or flows. Concerned with material and monetary flows and the associated information flows, often from raw material through various processes, storage, and movement to the final customer

Matrix Management

product or flow is planned and managed by a flow or logistics manager, while the traditional functions provide the necessary inputs as they are required

What does Mixed/ Matrix approach reconize as important to retain?

specialists at the operational level to ensure the efficient running of operational functions such as transport and warehousing

Mission Management

acts directly across traditional functional boundaries

Matrix Management

emphasizes both planning and operational elements

Daywork

method of payment based entirely on the hours attended at work

Piecework

payment entirely related to the amount of work undertaken

Payment by the resultes

mixture of daywork and piecework. provides basic wage plus a bonus based on work undertaken

Measured Day work

consists of a basic attendance wage plus a bonus for achieving a given level of work performed