Documente Academic
Documente Profesional
Documente Cultură
An Insight
Supply Chain
Material Handling Networks
Customer Warehouse
Manufacture Supplier
Materials
Customer
Customer Customer
Assembly
Components
Manufacture Supplier
Inter-facility Transport
Warehouse
Finished Goods
Assembly
Manufacture
Warehouse
Transportation Networks
Customer Customer
Transportation Networks
Supply Chain is the collection of all components and functions associated with the creation and ultimate delivery of a product or service
Logistics
Retailing Firms
Significance of Logistics
High costs involved in operating a Supply-Chain
Billion USD
A rea of Spending
Significance of Logistics -
Contd...
Transport Cost
Warehouse/Depot Cost
Administration Cost
% 3.2 1.36 2.53 8.16 .37 25.2 2.07 9.41 .45 .65 .96 7.23 .38 3.14
% 10.7 9.77 2.71 2.82 .27 9.1 6.35 2.45 .1 .78 1.08 1.95 1.31 3.73
% .87 .66 .44 .56 .07 7.1 1.53 .02 .29 .09 1.21 .2 .33 .85
Office Equipment Health supplies Soft Drinks Beer Spirits Distribution Cement Automotive parts Gas Supply Computer Maintenance Computer Supply Healthcare Specialist Chemicals Fashion Food Packaging
.05
% 14.77 11.98 5.68 13.74 .81 46.00 9.96 11.98 .88 1.52 3.25 9.87 2.02 7.72
.49
Logistics -
Deregulation - Shift towards a free market industry Global Markets - Business marketplace is getting global in scope Customer Service - Above factors aid for better customer service Environment - Current and future environmental regulations have
significant implications on logistics
Logistics Modeling
Customer
Manufacture
Warehouse
What markets to serve? What level of service? What level of service cost?
Customer Customer
Supplier
Where to acquire materials & components?
Manufacture
Warehouse Customer
Elements of Modeling
Rationalization Linear/Integer Programming Algorithms Logistics Strategy Object-Oriented Data Models Movement Requirement Data Simulation Human Judgement Database Software Client/Server Architecture
Spreadsheets
Heuristics
Modeling Languages
Logistics Strategies
Provide a framework for the type and scope of specific logistics decisions Choosing the right strategy is more significant (from a financial or customer
service standpoint) than optimizing specific lower-level decisions
Ship to a customer from a single warehouse? Ship to a customer from multiple warehouses?
At one level companies must choose smart logistics strategies, implying specific logistics questions to answer.
Shipment Planning
(contd..)
General scope and properties of strategic, tactical, and operational model views.
Strategic
Supply chain design Resource acquisition Broad scope, highly aggregated data Long-term planning horizons (1 year +)
Tactical
Operational
(contd..)
Vehicle Routing
Site Location Site Location Capacity Sizing Sourcing Production Planning Routing Strategy Network Alignment
Fleet Sizing
Bid Analysis Fleet Sizing Consolidation Routing Strategy Strategy Mode Strategy Shipment Dispatching Zone Alignment
Tactical
Load Matching
Possible Strategies
Just-in-Time Freight Consolidation Integration of Inbound & Distribution Fixed & Variable Routes DC Consolidation & Decentralizing DCs Hired Fleet & Private Fleet Fleet/Carrier Routing Material Sourcing
Just-in-Time Logistics
Inventory Costs leaner supply chain reduced inventory levels reduced inventory costs
JIT
Transportation & Service Costs smaller and more frequent shipments increased transportation costs much greater service required from suppliers and the transportation system
E.g.: Made to order Cars, Boilers, Power Plants (Rolls Royce, Alsthom, Wartsila Diesel)
JIT is a shift in thinking from inventory levels to inventory velocity or turns. For a specified time period, the turn rate for a product is calculated by dividing total throughput by the average inventory level.
Freight Consolidation -
Routing
Shipments in the logistics system can be routed and scheduled independently of each other or can be combined to try and achieve transportation economies-of-scale.
Shipments
Vehicle Routes
Vehicle routing: Individual shipments can be combined to share a transportation asset making pickup or delivery stops at different facilities. This type of consolidation is called multi-stop vehicle routing
E.g.: Courier collection (DHL, FedEx...)
Freight Consolidation -
Pooling: Individual shipments can be brought to a central location or pooled, creating large shipments suitable for economy-of-scale transportation modes such as truckload or rail carload
E.g.: Home Delivery of Pizza, Consumable or Provisions
Individual Shipments
Pooled Shipments
Scheduling: Sometimes shipment schedules can be adjusted forward or backward in time so they can be combined with other shipments.
E.g.: Courier collection (UPS, FedEx) (Present Wipro Chennai Bus routes)
P D
P D
Service & Control Costs Regular routes are easier to manage Drivers develop familiarity with customers and territories
E.g.: Collection & Distribution of Govt. diary supply. (Aavin)
Decentralized
Consolidated
Inventory & Facility Costs Reduced facility costs It may be possible to reduce inventory while maintaining equivalent customer service
DC
Consolidation
Transportation & Service Costs Lower volume outbound lanes Increased transportation costs Products further from customers Increased service costs
E.g.: Oil Producers (ADNOC)
Private Fleet
More control over costs & service. But Increased maintenance costs & labor charges
E.g.: Baskin & Robbins, USPost...
For-Hire Fleet
Deadhead
Truckload Shipments
Combine separate trips to increase vehicle utilization Trucking companies offer discounts Drivers and tractors are highly utilized
E.g.: Domestic LTL carriers
Single Sourcing is satisfying all product demand at a location from one supplier.
E.g.: Exclusive Showrooms like Nike, Sony.
Split Sourcing refers to shipping the same product or multiple products from different
origins. E.g.: Super Market Chains (Walmart, Sainsbury...)
Contd..
Shipment Size
Smaller Shipments
Speed
Faster
Ship
Intermodal
Rail
Truckload
LTL
Parcel
Air Premium
Less Expensive
More Expensive
Transportation Cost
Slower More Expensive
Search Process
Transportation executives scan various sources to aid decision making. Sources are experience, carrier records, customers
Choice process
Evaluate performance level through cost studies, audit, on-time pickup & delivery performance
choosing the best option which satisfy customer service requirements at acceptable cost
Evaluating Alternatives
Evaluating Alternatives
What is a logical configuration of the supply chain & transportation infrastructure?
contd...
Benchmark Alternative
How does the supply chain performan compare to industry standards or to a theoretical optimum?
Customer
Manufacture
Warehouse Customer
Supplier
The cost to deliver a unit of product to the customer is the landed customer cost. The cost to get a product to two different customers is almost always different. E.g.:
Automobile (Hyundai Cars)
Generating Alternatives
This phase includes any change to the logistics strategy, supply chain infrastructure, transportation infrastructure, movement requirements, or the relevant operating parameters. The 4 fundamental ways to generate alternatives:
Existing system: If logistics supply chain already exists, then the first
alternative analyzed is the current system, and the analysis proceeds directly to the Evaluating Alternatives phase.
Introduction of High Level languages Development of Network optimization Development of Operations Research
1940s
fifty years.
1950s
1960s
1970s
1980s
1990s
The evolution of logistics decision support tools and architecture over the past
Class Hierarchies
Hierarchical organization of logistics objects of a manufacturing firm
Logistics Supply Chain
Movement Requirements
Transportation Network
Inbound Network
Distribution Network
Transportation Assets
Transportation Infrastructure
Vendors
Plants
DCs
Customers
Products
Equipment
Drivers
Roads
Depots
Higher-level views of a logistics system are found at the top of the hierarchy - one can drill down through the hierarchy for more focused views.
Why?
The scope and complexity of logistics systems/models necessitate the use of computer based decision support systems
Types?
Custom Built for unique situations and Off-the-Shelf systems for more generic use
Custom-Built
E.g. Nike
Off-the-Shelf
E.g.Manhattan Associates, i2, Etc.
Implementation
Operations
Suitable for Logistics Business decisions spanning a range from planning to operations. Planning includes all of the analysis, and design. Operations refer to the actual management and execution of logistics supply-chain.
Distribution:
Management of People - 1
Recruitment or Contracting
Training
Management of People - 2
Driver training
- Safety - Technology - Computer, communication devices - Maintenance - preventive - annual/routine - Government rules & regulations (traffics/law etc)
Driver Benefits
- ATM - Cab CARD - Email from drivers cab unit- messaging - payroll access - Prepaid phone card - family touch - Cash advances
Best Drive r
Management of People - 3
Investigate the temporary staff agencies - (Need not be just the
cheap-set)
Check with other companies about the best agencies and why Key points to be clarified from the agencies are
How are drivers selected? How often are the licenses checked? Are the drivers examined for their understanding of legislation? Are Drivers employment histories and references checked? Are drivers full-time employees of the agency Training provided for their employees?
Management of Assets
Fleet Utilization
Management of Assets
Vehicle Capacity
Vehicle Utilization
Vehicle Utilization
Vehicle Capacity
Available payload should be increased to the maximum within the legal permissible limits.
Fleet Utilization
Fleet Utilization
- Load Utilization
- Time Utilization
150 100 50 0
10-Jan12-Jan14-Jan16-Jan18-Jan20-Jan22-Jan24-Jan26-Jan-
Date
=80%
60 50 40 30 20 10 0 1
Actual Hours
44.13
40.59
12.45
4
Fleet
Vehicle Maintenance
Preventive Maintenance
MAERSK
Condition Monitoring
Breakdown Maintenance
Condition Monitoring
Preventive Maintenance
Overhauling
- Lubrication - Changing of worn-out spares - Refilling Brake and Engine oils
Tyre Pressure
Breakdown Maintenance
Trial Run
Maintenance Management
Service History (E.g..: When & What service was done?) Maintenance Schedule Reports (E.g..: When & What part to maintain?) Spares Stock Inquiry / Reports (E.g..: How many axles?) Supplier Info & PO Generation (E.g..: Where is XY Supplier, Buy 2 Tires?) Vehicle License Renewal (E.g..: Truck TR34 license to be renewed today) Insurance lapse reports, etc. (E.g..: TR12 Insurance elapsed by 12 days) Vehicle Cost Analysis / Driver Cost Analysis Reports to Govt. Fleet costs
Money Management
Why?
- The yearly financial (Profit & Loss) statement is too late for the management to act upon the increasing operational costs.
E.g.: Sudden increase in fuel consumption or vehicle pay-load being unutilized to its fullest capacity.
- The yearly statement doesnt detail upon the financial health of each and every operation which could be vital for controlling costs. - Helps in pricing the product or service (by including the transportation cost)
Costing - Types
Aspects of Costing:
- The recording of actual costs and performance in order to monitor and
- Materials
- Money, and - Minutes
Cost Center
Direct Costs
Indirect Costs
Fixed Costs
Variable Costs
Cost
($000)
15 10 5
Maintenance
- Business Overheads
(E.g.: Salaries and wages of Managers & Schedulers, Cars, telephone, fax, rent etc..)
Company administrative overheads are those costs that are central to the running of business. It has to be apportioned between all the different company departments.
25%
30%
Costing - An example
Costing the operation is done by calculating fixed costs (no. of vehicles
used) and variable costs (mileage traveled by the fleet).
Vehicle costs (Calculated on a daily basis): 2 rigid vehicles @ $75 per day 634KMs @ 20 cents per KM
3 articulated vehicles @ $146 per day 662KMs @ 31 cents per KM Total cost per day Annual Cost ($920 * 240days) Cost per case delivered Cost per kilometer ($920/9863 cases) ($920/1296KMs) $150 $127 $438 $205 $920 $220,800 9.3 cents / case 71.0 cents / km
Vehicle Utilization: Time Utilization actual hrs / available hrs Load Utilization actual cases / max cases
80% 88%
Transportation Regulation
Economic Regulation
Economic Regulation
Entry Regulation
Rate Regulation
Service Regulation
Economic Regulation
Contd..
Entry Regulation
- Controls the Carrier entry and also the markets served by the carriers. - Dictates the region and origin-destination combinations served by each carrier. - Attempts to reduce the cutthroat competitive characteristics in larger markets while safeguarding the service levels of smaller markets. - Its counterparts are exit limitations i.e. a carriers ability to leave a market if it would result in a substantial reduction in service.
Smaller Markets
Economic Regulation
Contd..
Economic Regulation
Contd..
Regulates
- Transport & Handling of Hazardous material - Labor work hours & Wages - Vehicle Safety - Pollution and Environmental issues raising due to vehicular traffic. - Projecting and abnormal Loads - Noise emissions - Speed Limits
Overtime?
Brainstorming Session
Returned Goods
Manufacturer / DC
Goods
Customer
Thank you