Chapter 15 Supply Chain

Logistics

Management functions that support the complete cycle of material flow

6 widely recognized modes of transportation

• Highway

• Water

• Air

• Rail

• Pipelines

• Hand delivery

Warehouse

A facility where goods are sold for future use

Distribution centers

A warehouse that performs additional services for processing orders

Cross-docking

An approach where large incoming shipments are broken down into small shipments for local delivery

Hub-and-spoke systems

Systems that combine the ideas of consolidation and cross-docking. Here the warehouse is referred to as a hub, and its sole purpose is sorting goods

Fulfillment centers

A distribution center designed to handle small, individual orders that are prepared for shipment to individual retail customers

Criteria that influence facility location:

• Proximity to customers

• Business climate

• Local infrastructure

• Quality of labor

• Geopolitical risks, regulations, and government barriers

Trading bloc

A group of countries that agree on a set of special arrangements governing by the trading of goods between member countries

Factor rating system

1. Develop a list of factors

2. Determine the range of possible points to each factor

3. Rate each potential location against each factor

4. Select the location with the most points

Transportation method

Useful for solving problems involving transporting products from several sources to several destinations

Centroid method

A technique for locating singe facilities that considers the existing facilities, the distance between them, and the volumes of goods to be shipped

Common processes within distribution facilities:

• Inventory tracking

• Receiving

• Stowing

• Picking

• Packing

• Shipping

Inventory tracking

Monitors stock levels to record what is in the warehouse and the exact location of an item

Tracking

Maintained for items that are en route and due to arrive in the future and items that have been shipped but not yet delivered

Distribution facility requirements to accurately receive inventory:

• Verifying what is being received

• Checking the quantity and quality of shipment

• Ensuring that all regulatory requirements have been satisfied