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  1. Logistic smanagers must find ways to:
    • - communicate how logistics capabilities provide value,
    • - support corporate strategy and succes in financial terms
  2. Logistics resides..
    at the functional level of the organization
  3. Functional units must translate...
    corporate and business unit strategies into discrete action plans
  4. 3 generic strategies that can be pursued by an organization
    - cost leadership strategy, - differentiation strategy, - focus strategy
  5. Cost leadership strategy
    requires an organization to pursue activities that will enable it to become a low-cost producer in an industry for a given level of quality
  6. Differentiation strategy
    entails an organization developing a product/ and/or service that offers unique atttributes that are valued by customers and that the customers perceive to be distinct from competitor offerings
  7. Focus strategy
    concentrates an organization's effort on a narrowly defined market to achieve either a cost leadership or differentiation advantage
  8. Functional level strategies exist in:
    - marketing, - finance, - manufacturing, - logistics
  9. Logistic strategy decisions involve:
    - determining the number and location of warehouses, - selecting appropriate transportation modes, - deploying inventory, - investments in technology that support logistics activities
  10. Logistics strategy is directly influenced by strategic decisions in functional areas of:
    - marketing, - manufacturing
  11. Marketing
    product availability, desired customer service levels, and packaging design directly influence logistics decisions
  12. Manufacturing
    strategic decisions by manufacturing to implement just-in-time system would influence logistics decisions in warehousing, transportation and inventory management
  13. Logistics function can positively
    affect the financial outcome of an organization by designing a strategy to optimally support the requirement of the business
  14. Income statement shows for a period of time:
    - revenues, - expenses, - profit. also known as a profit and loss statement
  15. Revenues
    also referred to as sales, provide a dollar value of all production and/or services an organization provide to its customers duringa given period of time
  16. Expenses
    also referred to as costs, provide a dollar value for the costs incurred in generating revenues during a given period of time
  17. Profit
  18. Balance sheet refelcts at any given point in time:
    - assets, - liabilities, - owner's equity
  19. Assets
    are what a company owns and come in two temporal forms: - current assets, long-term assets
  20. Current assets
    that can be easily converted to cash sucha s stock
  21. Long-term assets
    have a useful lifeof more than a year such as company owned warehouse
  22. Liabilities
    are the financial obligations a company owes to another party. Similar to assets also comes in 2 temporal forms: - current liabilities, - long-term liabilities
  23. Current liabilities
    which need to be paid in less than a year
  24. Long-term liabilities
    which are due over an extended period of time
  25. Owner's equity
    is the difference between what a company owns and what it owes at any particular point in time
  26. Strategic profit model
    - provides a framework for conducting ROA analysis, - incorporates revenues and expenses to generate net profit margin, - include assets to measure asset turnover. Look at Fig 3-3
  27. Strategic profit model
    - issues with reporting financial figures without appropriate context, - many financial measures reported as ratios, profitability analysis is useful in assessing logistic sactivities
  28. Returns on investment (ROI)
    is a common measure of organizational financial success
  29. Return on net worth (RONW)
    measures profitability of funds invested in the business
  30. Returns on assets (ROA)
    provides insight on how well managers utilize operational assets to generate profits
  31. SPM
    - provides a way for managers to examine how a proposed change to their logistics system influences profit performance and ROA
  32. SPM fails to...
    - consider the timing of cash flows, - subject to manipulation in the short run, - rails to recognize assets dedicated to specific relationships
  33. Net profit margin
    = net profit/sales
  34. Multiple ways in which net profit margin can be influeced by managerial decisions; categories include:
    - sales, - cost of goods sold, - total expenses
  35. Asset turnover
    = total sales/total assets
  36. Inventory is...
    the most relevant logistics assets
  37. Logistics decisions...
    can influence speed at which invoices are paid - accounts receivable
  38. Balance ScoreCard (BSC)
    is a strategic planning and performance management system used in industry, government, and nonprofit organizations
  39. Management should evaluate their their businesses from 4 perspectives:
    - customers, - internal business processes, - learning and growth, - financial. - forces managers to look beyond traditional financial measures (more holistic approach)
  40. Common logistic measures
    - transportation, - warehousing, - inventory, - design and implementation of measures
  41. Logistic measurement systems include information on 5 types of performance
    - asset management, - costs, - customer service, - productivity, - logistics quality
  42. Demand management
    can be defined as the creation across the supply chain and its markets of a coordinated flow of demand
  43. Demand (sales) forecasting
    - refers to an effort to project future demand, - is a key component i ndemand management, - is helpful in make-to-stock situations and make-to-order situtations
  44. Make-to-stock situations
    when finished goods are produced prior to receiving a customer order
  45. Make-to-order situations
    when finished goods are produced after receiving a customer order. ex: custom components
  46. 3 basic types of demand forecasting models
    - judgemental, - time series, - cause and effect (associative)
  47. Judgemental forecasting
    involves using judgement or intuition and is preferred in situations where there are limited or no historical data, such as with a new product introduction. techniques include; surveys and analog techniqes, questionnaires
  48. Time series forecasting
    future demand is solely dependent on past demand. techniques include: simple moving averages and weighted moving averages
  49. Cause and effect (associative) forecasting
    assumes that one or more factors are related to demand and that the relationship betweencause and effect can be used to estimate future demand. ex: simple and multiple regression
  50. Demand forecasting issues
    - selection of forecasting techniques depends on many factors, - selecting an inappropriate technique will reduce forecast accuracy, - forecast accuracy can have important logistical implications, - computer forecasting software unable to completely eliminate forecast errors
  51. Order management
    is the activities that take place in the period between the time a firm receives an order and the time a warehouse is notified to ship the goods to fill that order
  52. Order management
    refers to the management of various activities associated with the order cycle
  53. Order cycle
    (replenishment cycle or lead time) refers to the time from when a customer places an order to when goods are received, - some organizations include order to cash cycle in their order management model
  54. 4 stages of the order cycle
    - order transmittal, - order processing, - orde picking and assembly, - order delivery
  55. Order transmittal
    is the series of events that occur between the time a customer places or sends an order and the time the seller receives the order
  56. Methods in order transmittal
    - in person, - mail, - telephone, - fax, - electronically
  57. Order processing
    refers to the time from when the seller receives an order until an appropriate location (i.e. warehouse) is authorized to fil lthe order
  58. Order processing includes:
    - checking for completeness and accuracy, - a customer credit check, - orde rentry into the computer system, - marketing department credits salesperson, - accounting department records transaction, - inventory department locates nearest warehouse to customer and advises them to pick the order, - transportation department arranges for shipment. Look at fig 7-1
  59. Order picking and assembly
    includes all activities from when an appropriate location is authorized to fill the order until goods are loaded aboard an outbound carrier
  60. Order picking and assembly
    - often represents the best opportunity to improve the effectiveness and efficiency of an order cycle, - can account for up to 2/3 of a facility's operating coast and time
  61. Examples of order picking and assembly technology
    - handheld scanners, - radio-frequency identification, -video-based order picking, - pick-to-light
  62. Order delivery
    is the time from when a carrier picks up the shipment until it is received by the customer
  63. Customer service
    is the ability of logistics management to satisfy users in terms of time, dependability, communication and convenience. - customer services is much more difficult for competitors to imitate than price cuts or other competitive strategies
  64. 4 Dimensions of customer service
    - time, - dependability, - communication, - convenience
  65. Time
    refers to the period between successive events, and clearly the order cycle is an excellent example of th time dimension of customer service
  66. Dependability
    refers to the reliability of the service encounter and consists of three elements: consistent order cycles, safe deliver, and complteted delivery
  67. Order fill rate
    the percentage of orders tha tcan be compleely and immediately filled from existing stock, is one way of measuring the completeness of delivery
  68. Communication
    should be a two way exchange between seller and customer with the goal of keeping both parties informed
  69. Convenience
    focuses on the ease of doing business with a seller
  70. Multichannel marketing systems
    spearate marketing channels to serve customers ex:a retailer can provide customer products through stores, web or television
  71. 4 Specific customer service considerations
    - customer profitability analysis (CPA) , - establishing customer service objectives, - measuring customer service, - service failure and recovery
  72. Customer profitability analysis (CPA)
    refers to the allocation of revenues and costs to customer segments or individual customers to calculate the profitabiliy of the segmetns or customers. suggests different customers consume different resources
  73. CPA
    - suggests that different customers consume differing amounts and types of resources, - recognizestha tall customers are not the same and some customers are more valuable than others to an organization, - can halep to identify when an organization should pursue different logistical approaches for differnt customer groups, - has been facilitaed by the acceptance of activity based costing
  74. Establishing customer service objectives
    tend to be broad generalized statemetns regarding the overall result that the firm is attempting to achieve
  75. Establishing customer service objectives:
    - specific, - measurable, - achievable, - cost effective
  76. Measuring customer service
    - you can't manage what you can't measure, - must determine data sources to be used, - must determine what factors to measure, - organizations must resist excessive measurement
  77. Service failure and recovery
    - situations where actual performance does not meet the customer's expected performance (service failure)
  78. Examples of order related service failures
    - lsot delivery, - late delivery, - early delivery - damaged delivery, - incorrect delivery quantity
  79. Service recovery
    - process for returning a customer to a state of satisfaction after a service or product has failed to live up to expectations, - is often costly, - may lead to increases custoemr loyalty, - unsatisfactory service recovery magnifies the initial failure
  80. Benchmarking
    refers to a process that continuously identifies, understands an adapts outstanding processes found inside and outside an organizatio. - runs against competitors and best in class organizations
  81. Activity based costing
    a technique that seeks to better understand the cost of a product by identifying what acitivities drive particular costs related to CPA
  82. Order triage
    refers to classifying orders according to preestablished guidelines so that a comopany can prioritize how orders should be filled. associated with order processing
  83. Voice based order picking
    refers to the use of speech to guide order picking activities
  84. Pick to light technology
    in which orders to be picked are identified by lights placed on shelves or racks
  85. Collaborative planning, forecasting and replenishment
    concept where supply chain partners hare planning and forecasting data to better match up supply and demand. suggests that partners will be working off collectively agreed single number forecast rather than working on their own specific forecast
  86. Inventory
    refers to stocks of goods and materials that are maintained for many purposes, the most common being to satisfy demand patterns
  87. Inventory management
    - decisions drive other logistic activities, - objectives can differ for different functional areas of an organization, - must consider carrying costs, ordering costs and stock out costs
  88. Inventory classifications
    - cycle or base stock, - safety or buffer stock, - pipleine or in transit stock, - speculative stock and - psychic stock
  89. Cycle or base stock
    refers to inventory taht is needed to satisfy normal demand during the course of an order cycle
  90. Safety or buffer stock
    refers to inventory that is held in addition to cycle stock to guard against uncertainty in demand or lead time
  91. Pipeline or in-transit stock
    is inventory that is en route between various fixed facilities in a logistics system such as a plant, warehouse or store
  92. Speculative stock
    refers to inventory that is held for several reasons, including seasonal demand, projected price increases, and potential shortages of a product
  93. Psychic stock
    is inventory carried to stimulate demand(retail)
  94. Inventory costs
    - inventory cost in the twenty first century represent approximately one-third of total logistics costs, - inventory cost should factor into an organizations inventory mangaement policy
  95. Inventory costs include
    - carrying costs, - ordering cots, - stock out costs
  96. Inventory carrying (holding) cots
    are the cost associated with holding inventory
  97. Components of carrying costs
    - obsolescence, costs, - inventory shrinkage, - storage costs, - handling costs, - insurance costs, - taxes, - interest costs
  98. Obsolescence costs
    - perishable items, - items that gradually lose their value over time a box of pencils
  99. Inventory shrinkage
    refers to the fact that more items are recorded entering than leaving warehousing facilities. Caused by damage, loss or tehft
  100. Storage costs
    refers to those costs associated with occupying space in plant, storeroom, or warehousing facility
  101. Handling costs
    invovle the cost sof employing staff to receive, store, retrieve, and move inventory
  102. Insurance costs
    insures inventory against fire, flood, theft and other perils
  103. Taxes
    calculated on the basis of the inventory on hand on a particular date; try to reduce inventory as low as possible
  104. Interest costs
    take into account the money taht is required to maintain the invenstment in inventory
  105. Ordering costs
    refer to those costs associated with ordering inventory, such as orde rcosts and setup costs
  106. Examples of order costs
    - costs of receiving an order (wages), - conducting a credit check, - verifying inventory availability, 0 entering orders into the system, - preparing invoices, - receiving payment
  107. Trade off Ordering costs
    = number of orders per year * ordering cost per order
  108. Trade off Carrying costs
    = average inventory * carrying cost per unit
  109. Stockout cost
    is an estimated cost or penalty that is realized when a company is out of stock when a customer wants to buy an item, - involves an understanding of a customers reaction to a company being out of stock
  110. General reules regarding stockout costs
    - the higher the average cost of a stockout, the better it is for the company to hold some amount of inventory (SS) to protect against stockouts, - the higher the probabilty of a delayed sale, the lower the average stockout costs and the lower the inventory that needs to be held by a company
  111. Trade-off between carrying and stockout costs
    - higher inventory levels (higher carrying costs) results in lower chances of a stockout (lower stockout costs)
  112. When to order
    - fixed order quanitty system, - fixed order interval system, - reorder (trigger) point
  113. Fixed order quantity
    ordered at a fixed amount of inventory
  114. Fixed order interval
    orders can be placed at fixed time intervals
  115. Reorder point
    level of inventory at which a replenishment order is placed.
  116. ROP
    = DD * RC under certainty, = (DD * RC) + SS under certainty; DD - daily demand, RC - length of replenisihment cycle, SS - safety stock
  117. Economic order quantity
    deals with calculating the proper order size with respect to two costs: the costs of carrying the inventory and the costs of ordering the inventory
  118. EOQ
    = sqrt2DB/IC , EOQ - most economic order size in units, A - annual demand in units, B - adminstrative costs per order of placing the order, I - dollar value of the inventory, per unit
  119. EOQ assumptions
    - continuous constant and known rate of demand, - constant and known replenishment or lead time, -constant purchase price that is independent of the order quantity, - all demand is satisfied no stockouts are allowed, - no inventory in transit, - only one item in enventory , - an infinite planning horizon, - unlimited capital availability
  120. Inventory flow
    safety stock can prevent against two problems: increased rate of demand, longer than normal replenishment, - when fixed order quantity systems like EOQ is used, time between orders may vary, - when reorder point is reached, fixed order quantity is ordered
  121. ABC analysis of inventory
    recognizes that inventories are not of equal value to a firm and as such asll inventory should not be managed in the same way; A - Important (expensive) , B - not as important (moderate), C- not important (cheapest)
  122. Dead inventory (dead stock)
    is a fourth category to ABC analysis which refers to product for which there is no sales during a 12 mothh period
  123. Invenetory turnover
    refers to the number of times that inventory is sold in a one-year period (compare iwth compeittors or benchmarked companies). Inventory turnover = cost of goods sold/average inventory
  124. Complementary products
    are inventories athat can be used or distributed together ex:razor blades with razors
  125. Substitute products
    refers to products that can fill the same need or want as another product
  126. Contemporary appraoches to managing inventory
    - lean manufacturing, - service parts logistics, - vendor managed inventory
  127. Lean manufacturing
    focuses on the elimination of waste and the increase of speed and flow, uses JIT to eliminate waste of inventory
  128. JIT
    seeks to minimize inventory by reducing if not eliminating SS, as wells as by having hte required amount of materials arrive at the production location at the exact time that they are needed
  129. Service parts logistics
    involves designing a network of facilities to stock service parts, deciding upon inventory ordering policies, stocking the required parts, and transporting parts from stocking facilities to customers
  130. Vendor managed inventory
    the size and timing of replenishment orders are the responsibility of the manufacturer, allows manufacturers to have acces to distributors inventory data and etc...
  131. Facility location
    refers to choosign the locations for distribution centers, warehouses and production facilities to facilitate logistical effectiveness and efficiency
  132. Fig 9-1
    shows companies location advantage
  133. Factors that can influene the facility location decisions include:
    - cost considerations, - customer service expectations, - location of customer or supply markets
  134. Locavore strategy
    that is purchasing locally grown or produced foods desirable from a sustainability perspective because it reduces carbon footprints
  135. Determining # of facilities
    - facilities are generally added when service levels become unacceptable, - software packages exist to help in determing the number and location of facilities
  136. Key issues in determining # of facilities
    - time it takes to get from facility to majority of the U.S (or target) population, - movign from 2 to 5 facilities saves 1 day lead time, moving from 5 to 10 facilities saves 1/2 day lead time
  137. General factors influencing facility location
    - natural resources, - population characteristics market for goods, - population characteristics labor, - taxes and incentives, - transportation considerations, - proximity to industry clusters, - trade patterns
  138. Natural resources
    - pure materials, - weight losing products, - weight gaining products
  139. Pure materials
    materials that lose no weight in processing and processing point will be be near raw material source
  140. Weight losing products
    materials lose considerable weight in processing processing point is near to where it was harvested. ex: sugar beets
  141. Weight gaining products
    raw materials gain weight in processing processing point should be close to market ex:bottled water
  142. Population characterisitcs labor
    - maquiladoras, - sweatshops, - right to work laws, - expatriate workers
  143. Maquiladoras
    assembly plants located just south of hte U.S - Mexican border
  144. Sweatshops
    which can be viewed as organizations that exploit workers and that do not comply with fiscal and legal obligations towards employees present in countries with low cost labor
  145. Right to work laws
    which means that an individual cannot be compelled to join a union as a condition of employment
  146. Expatriate workers
    or those employees who are sent to other countries for extended periods of time
  147. Taxes and incentives
    - inventory tax, - incentive packages
  148. Inventory tax
    analogous to personal property taxes ppaid by individuals. - based on the value of inventory taht is held on assessment date
  149. Incentive packages
    - tax grants, - more money, - job development grants, - extra road widening, - transportation benefits
  150. Transportation considerations
    - intermodal comeptition, - intramodal competition
  151. Intermodal competition
    refers to the number of transportation modes available to prospective users, - using a container that can be transferred from thevenhicle of one mode to a vehicle of another and with the movement covered under a single bill of lading
  152. Intramodal competition
    refers to competitions among carriers within a particular mode
  153. Proximity to industry clusters
    - agglomeration or industry cluster, - supplier parks
  154. Agglomeration
    refers to the net advantages which can be gained by a sharing of common locations by various enterprises
  155. Supplier parks
    key suppliers locate on or adjacent to automobile assembly plants which helps to reduce shipping sots and inventory carrying costs
  156. Quality of life considerations
    intent is to incorporate nonbusiness factors into the business decisions of where to locate a plant or distribution facility ex: cost of living, crime rates, educational opportunities, employment opportunities, weather
  157. Locating in other countries
    must consider governemtn, legal stystem, political staiblibyt, corruption, bureaucratic red tape, protectionism, nationalism, privitazation
  158. Specialized location characteristics
    - current zoning of the land, - local unions, - title search, - engineers examine site for proper drainage, - brownfields, - weather, - free trade zone
  159. Brown fields
    locations that contain chemicals or other types of industrial waste which are often desirable locations
  160. Free trade zone
    nondomestic merchandise may be stored, exhibited, processed or used in manufacturing operations without being subjected to duties and quotas until the goods or their products enter the customs territory of the zone country
  161. Finding thelowest cost location
    - grid systems, - center of gravity approach
  162. Grid systems
    are checkerboard patterns that are placed on a map and the gird is numbered intwo directions; horizontal and vertical
  163. Center of gravity approach
    can be used for locating a single facility so that the distance of existing facilties is minimized
  164. Facility relocation
    - occurs when a firm decides that it can no longer continue operations in its present facility and must move operations to another facility to better serve suppliers or customers. ex: - lack of room for expansion at current site
  165. Facility closing
    occurs when a company decides to discontinue operations at a current site because the operations may no longer be needed or can be absorbed by other facilities
  166. Examples leading to facility closure:
    - eliminating redundant capacity in mergers and acquisitions, - improving supply chain efficiency, - poor planning, - insufficient volume of business
  167. Warehousing
    refers to that part of the firm's logistics system that stores products (raw materials, part, good-in-process, finished goods) at an between points of origin and point of consumption
  168. Warehousing management has evolved to include value-adding services
    - custom labeling, - promotional pack, - grouping and sorting of products, - kitting for production, - display building and packaging, - price making
  169. Warehousing management
    warehousing and transportation are substitutes for each other with warehousing having been referred to as transportation at zero miles per hour, - warehousing serves to match different rates or volumes of flow hen patterns of production and consumption do not coincide
  170. Fig 10 -1
    adding a warehouse
  171. Regrouping function
    this function invovles rearranging the quantities and assortment of products as they move through te supply chain
  172. 4 forms of regrouping function
    - accumulating, - allocating, - assorting, - sorting
  173. Accumulating (bulk making)
    invovles bringing together similar stocks from different sources, as mighth be done by a department store that buys large quantities of mens suits from several different producers
  174. Allocating (bulk breaking)
    involves breaking larger quantities into smaller quantities; continuing with our suit example where as the department store might buy 5k suits in size 42 short an individual store might only charry 15 of that size
  175. Assorting (buiilding up a variety of products)
    refers to building up a variety of different products for resale to particular customers; our department stoer example might want to supply individual stores with a number of different suit sizes
  176. Sorting
    refers to spearating products into grades and qualities desired by differnt target markets. ex: $1k suits in high income areas and $600 dollar suits in lower income areas
  177. Warehouses
    - emphasize the storage of products, - primary purpose is to maximize the usage of available storage space
  178. Distribution centers
    emphasize the rapid movement of products through the facility
  179. Throughput
    is the amount of product entering and leaving a facility in a given time period
  180. Cross-docking
    can be defined as the process of receiving product and shipping it out the same day or overnight without putting it into storage, - increased emphasis on time reductions in supply chains has led to growth of cross-docking
  181. Fig 10-2
    pure supplier consolidation
  182. Public warehousing
    serves all elgitimate users and has certain responsibilities to those users
  183. Public warehouses
    - serves all legitimate users, - require no capital investment on the users part, - allows users to rent space as needed, - can be rented on a month to month basis, - offers more location flexibilty , - may provide specialized services
  184. Potential drawback of public warehouses
    - lack of control by the user
  185. Occupational safety and health administration (OSHA)
    - regulatory issues and warehousing labor safety practices in the U.S are monitored by OSHA, - can be quite costly
  186. Private warehousing
    - is owned or occupied on a long-term lease, - offers control to owner, - assumes both sufficient demand volume and stability so that warehouse remains full
  187. Potential drawbacks of private warehouses include:
    - high fixed cost, - necessity of having high and steady demand volumes, - may reduce an organizations flexibility
  188. Contract warehousing
    has been devined ina number of different ways in this text it refers to a long term mutually beneficial arrangement which provides unique and specially tailored warehousing and logistics services exclusively to one client where the vendor and client share the risks associated with the operation
  189. Contract warehousing
    - 3PL warehousing is a long term arrangement providing unique warehousing services to one client, - both vendor and client share the risks associated with the warehousing, - less costly than private warehousing and more costly than public warehousing
  190. Multiclient warehousing
    - mixes attributes of contract and public warehouses, - services are more differentiated than those in a public facility, - services are less customized than those in a private facility, - services aare purchased through minimum 1 year contracts, - are attractive to smaller organizations
  191. Design considerations in warehousing
    - general considerations, - trade-offs
  192. General considerations
    - quantity and character of goods must be known - product profiling, - know the purpose to be served: - storage, - distribution, - cross docking
  193. Trade offs
    - fixed vs variable slot locations for merchandise, - build out versus build up, - order picking vs stock replenishing functions, - two dock vs single dock layout, conventional, narrow or very narrow aisles, - paperless warehousing vs. traditional paper oriented warehousing operations, - other spacing needs
  194. Fixed slot location
    each stock keeping unit (SKu=U) has one ore more permanent slots assigned to it ex: parking garage with assigned parking spots
  195. Variable slot location
    invovles empty storage slots being assigned to incomping products based on space availability ex: closest distance shortest travel
  196. Build out vs Build up
    cheaper to build up than build out, building out requires more land
  197. Order picking vs stock replenishing functions
    organizations must decide whether worker who pick outgoing orders and those who are restocking storage facilties hsould work at hte same time or in the same area
  198. Two dock layout
    has receiving docks on one side of a facilty and shipping docks on the other side with goods moving between them
  199. One dock system
    each and every dock can be used for both shipping and receiving, typically receiving product at one time of the day and shipping it at another time
  200. Narrow aisles
    9.5 - 12 feet wide
  201. Conventional aisles
    more than 12 feet wide
  202. Very narrow aisles
    less than 8 feet wide can store 40-50 percent more product tha nconentional aisles
  203. Paperless warehousing
    facility generates and uses few or no paper documents and instead relies on some type of technology, such as bar codes or radio-frequency identification to accomplish many of the relevant tasks
  204. Traditional paper oriented warehousing
    require picked orders to be manually entered into a computer system, verified at order staging area and can delay shipping
  205. Other space needs
  206. Warehousing operations
    - warehousing productivity analysis, - safety considerations: - regulated by OSHA, - warehouse safety categories include: - employee, - property, - motorvehicles
  207. Warehousing productivity analysis
  208. Property
    dunnage - material that is used to block and brace products inside carrier equipment to prevent the shipment from shifting in transit and becoming damage
  209. Motor vehicles
    mainly focused on forklift operations and trucks
  210. Employee
    it costs more to recruit train and replace a worker than to privde a safe environment, - workers are injured improper lifting procedures, failing to observe proper hand clearances
  211. Fig 10-3
    workplace safety issues
  212. Warehousing operations
    - hazardous materials, - warehousing security, - cleanliness and sanitation issues
  213. Hazardous materials
    is any item or agent (biological, chemical, phsical) which has the ptoential to cause harm to humans, animals or the environment either by itself or through interactions with other factors. ex: explosives, flammable liquids
  214. Warehousing security
    focuses on 2 primary issues namely: protecting products and preventing their theft
  215. Cleanliness and sanitation issues
    are of paramount importance in many industries such as the food service industry where clean and and sanitary warehouses reduce the likelihood of food-borne illnesses
  216. Fig 104
    theft resistant warehouse
  217. Transportation
    is the movement of good sand people between two points
  218. Transportation influences or is influenced by the following logistics activities:
    - transportation costs are affected by node location, - inventory requirements are influenced by mode, - packaging requirements are dictated by mode, - materials handling equipment and design of the docks are dictated by mode, - maximum consoidation of loads achieved with order-management technology reduces costs, - customer service goals influence carrier choice
  219. Rail gauge
    the distance betweent he inner sides of two parallel rail trucks is also enlightening
  220. Transportation infrastructure
    - wide disparities in the various infrastructures exist between highly populated countries, - lack of infrastructure makes it difficult to use that mode domestically
  221. Attractiveness of a transportation mode depends on the following attributes
    - cost, - speed, - reliability, - capability, - capacity, - flexibility
  222. Ton miles
    mainly used to measure railroads, the number of tons multiplied by the number of miles transported and revenues in the U.S from the 19th to the 20th century
  223. 5 types of transportation modes
    - air, - motor carrier (truck) , - pipeline, - rail, - water
  224. Airfreight
    - generally the fastest mode, - expensive, - accessorial service if needed adds costs and time, - best suited for high-value lower volume urgent perishable or time specific deliveries, - dimensional weight used for rates
  225. Examples of products that move by air
    - autoparts and accessories, - cut flowers and nursery stock, - electronic or electrical equipment ipods, - fruits and vegetables, - machinery and parts, - metal products, - photographic equipment parts and film, - printed matter, - wearing apparel
  226. Airfreight reliability problems due to
    - weather, - congestion and reultant delays with air passengar transportaion (belly freight)
  227. Line-haul
    terminal to termina lmovement of freight or passengers
  228. Consignees
    receivers of freight, not located at an airport, required transportation from the shipper to hte origin airport as wella sfrom the destination airport to the consignee
  229. Accessoiral service
    transportation service that is supplemental to the line-haul adds to both transportation costs and transit time and also increases the number of times a shipment is handled thus increasing handling costs and opportunities for loss and damage
  230. Dimensional weight
    which considers a shipments density the amount of space occupied in relation to actual weight ot determine a shipments billable weight
  231. Motor carriers
    - most improtant business user of the interstate highway system, - primary advantage is flexibility, - cost is generally lower when compared to airfreight, - LTL vs. TL
  232. Less than truckload (LTL)
    - 150 to 10,000 pounds, - too big to be handled manually, to small to fill a truck, - LTL trucks carry shipmetns from many shippers, operates through terminals,
  233. Prominent LTL carrier include
    - ABF freight system, - FedEx freight, - UPS freight, - YRC (formerly yellow freight and roadway)
  234. LTL process
    - local pick up, - origin terminal used to load aboard line haul, - line haul to terminal near destination, - destination local delivery on smaller trucks, - consignee receives
  235. Pipelines
    - only mode without vehicles, - most reliable mode, - tend to be the slowest mode, - accommodates only liquid, liquifiable or gaseous products, - capable of transporting large product volumes, - high fixed costs but relatively low cost per unit due to large product volume
  236. Slurry systems
    allow bulk commodities to become liquefiable by grinding the solid material to a certain particle size, mixing it with a liquid to form a fluid muddy substance, pumping that substance through a pipeline and then decanting the liquit and removing it, leaving the sold materials
  237. Railroads
    - U.S dominated by 4 carriers: - burlington northern (BN), CSX, Norfold southern (NS), union pacific, - domation limits service and pricing options
  238. Railroads
    - neither best or worst on any six attributes, - superior to air, motor and pipeline but inferior to water when transporting different kinds of products, - less flexibilty but more when compared to air,water and pipeline, - superior to air and motor with regards to volume, but inferior to piepeline and water, - less expensive than air and motor, but more expensive than piepline and water, - faster than pipeline and water, but slower than air and truck
  239. Barge
    flatboard boat used to transprot heavy products = 1750 tons
  240. Water
    - relatively inexpensive, - focus on lower value bulk commodities handled by mechanical means, - many different kinds of products can be carried, - carry greater volumes than rail or truck, - slow average speeds, - somewhat unreliable
  241. Waterway lock system
    a lock reaises or lowers barges so they can meet the river's level as they move upstream or downstream also contributes to transport unreliability
  242. Inter modal transportation
    refers to transportation when using a container or other equipement that can be transferred from the vehicle of one mode to the vehicle of another mode without hte contents being reloaded or distrubed, - two or more modes are employed to utilize advantage sof each while minimizing their disadvantage s
  243. Piggyback transportation
    Fig 12-2
  244. Piggyback transportation
    that is either truck trailer on flatcar or container on flatcar to take advantage of rails low transportation costs on the line haul along with trucks ability to provide door to door service
  245. Containers
    - large reusable steel boxes used for intermodal shipments, - provides significant reduction in freight handling costs, - are interchangeable among rail, truck and water carriers, - airfreight containers (ULDs) are designed specifically for fuselage, - are measured by TEU's, - allowed for land bridge services
  246. Unit load devices
    are constructed of lightweight metals and come in different sizes, have irregular shapes dictated by contours of hte fuselage into which they must fit
  247. TEU
    which stands for 20 foot equivalent unit and volumes of intermodal traffic are commonly expressed as so many TEUs meaning they would fill that many 20 foot containers
  248. Land bridge services
    involve the use of surface transportation usually rail transportation between the origin and destination port
  249. Freight forwarders
    are not modes but from the shippers viewpoint htey are analogous to other carriers
  250. Freight forwarders
    - buy space at TL (truckload) rate and sell at somewhat less than LTL rate, - pick up and deliver motor carrieres or railroads do line haul
  251. 2 types of domestic freight forwarders
    - surface, - air thought of as consolidators of freight
  252. Surface carriers
    - give volume discounts to customers shipping large quantities of freight at one time
  253. Air forwarders
    - consolidates shipments, - tender to airlines in containers ready for leading, - forwarders provide retailing function, - airline provides wholesaling function
  254. Shipper's associations
    - similar to air and freight forwarders but are not for profit organizations, - primarily focused on achieving the lowest rates for members
  255. Brokers
    - a facilitator who brings together a buyer and seller, - may consolidate LTL shipmetns and then give to truckers, forwarders, or shippers associations
  256. 3PLs
    - find clients with complimentary needs to maximize equipment utilization
  257. Parcel carriers
    - parcels are packages weighing up to 150 pounts, - parcel carriers are companies that specialize in transporting parcels
  258. Parcel carrier sinclude:
    - USPS, - UPS, - FedEx, - Greyhound package express
  259. Transportation regulation
    - five modes are influenced by federal state and local government regulations. ex: - mandatory retirement age for pilot sin U.S, - placement of lighting on truck trailers
  260. Regulation
    - costs money, - needs to be codified, - is enforced by government agencies
  261. Level and degree of regulation vaires from country to country
    - industrialized countries tend to have more stringent transportation equipment emissions regulations when compared to those of less industrialized countries
  262. Logisticians must understand
    - relevant transportation regulations, - cost and service implications of regulations
  263. Environmental regulation
    - Environmental Protection Agency (EPA) is the federal regulatory agency established to protect human health and the environment. Current concerns include: - noise and air pollution, - resource conservation
  264. Safety Regulation
    - Department of transportation, - Federal aviation administration, - Federal motor carrier safety administrationa, - Office of pipeline safety, - Federal railroad administration, - U.S coast guard
  265. Depatment of transportation (DOT)
    - is the federal agency responsible for transportation safety regulations for all five modes
  266. Federal aviation administration (FAA)
    - has primary responsibility for air transportation safety
  267. Federal motor carrier safety administration ( FMCSA)
    - is focused on reducing crashes, injuries, and fatalities involving large trucks and buses s
  268. Office of pipeline safety (OPS)
    - is responsible for safety considerations for natural gas and liquid pipelines
  269. Federal railroad administration (FRA)
    - has primary responsibilty for safety in the U.S railroad industry
  270. U.S coast guard (USCG)
    - has safety regulation responsibilties for marine safety considerations
  271. Economic regulation
    - refers to control over business practices and activities such as entry and exit, pricing, service, accounting and financial issues and mergers and acquisitions, - regulation began in the 1870s due to a belief that transportation companies would not act in the publics best interest without government regulation
  272. Economic
    - Interstate commerce commission, - Civil aeronautics board, - Surface transportation board
  273. Interstate commerce commission (ICC)
    has authority over rail, motor inland water and oil pipelines
  274. Civil aeronautics board (CAB)
    has authority over air transportation
  275. Surface transportation board (STB)
    - the new ICC, - affiliated with DOT, - responsible for resolving railroad rate and service disputes and reviewing potential rail mergers and continues to have jurisdiciton over motor carriers, water transportation and rates and services of pipelines
  276. Economic deregulation
    - CAB was eliminated, - ICC turned into STB, - economic deregulation has allowed greater freedom with respect to pricing and service options
  277. Classification is important..
    because different levels of economic regulation are applicable to different carriers
  278. Classification of transportation carriers
    For hire: - common, - contract, - exempt. - Private
  279. Common carrier
    common carrier has agreed to serve the general public
  280. Contract carrier
    offers a specialized service to customers on a contractual basis, and the contract specifies the compensation to be received, the services to be provided and the type of equpmetn to be used among others
  281. Exempt carriers
    are for hire carriers that have been exempted from economic regulation through provisions in various pieces of legistlation; the appropriate ratesa nd services must be negotiated directly between the carrier and user
  282. Private carriers
    which are exempt from any economic regulation are companies whose primary business is other than transportation and provide their own trasnportation service by operating trucks, railcars, barges, ships, or airplanes

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