OM REVIEW SHEET Logistics 12 11 2014 Concepts and terminology RFID 3PL reverse logistics cross docking etc o Logistics the movement of goods through a supply chain Incoming shipments o Transportation to and from facilities can represents as much as 25 of outsourcing of logistics managements e g o Third Party Logistics 3PL o Reverse Logistics Closed Loop Supply Chain product cost warehousing distribution etc returned to the supply chain e g defective unsold recycled via radio waves to track goods in the supply chain Can package a lot more info than a barcode o Radio Frequency Identification RFID backward flow of goods use of tags that project information o Cross docking o Direct Shipment o Warehousing items shipped directly from suppliers to retail stores items stocked in warehouses aka distribution centers and shipped to stores as required warehouses function as shipping coordination points rather than inventory storage points Items are transferred b w trucks so outbound trucks to retailers have products from multiple suppliers goods screening returned goods to prevent incorrect acceptance of o Gatekeeping Control the rate of returns without negatively impacting customer service o Avoidance finding ways to minimize the number of items that are returned Returns provide valuable info such as how and why failures occurred Improve quality identify sources of customer dissatisfaction o Traffic management overseeing the shipment of incoming and outgoing goods Handles schedules and decisions on shipping methods and times Computer tracking of shipments helps maintain knowledge of current status of shipments o Trade offs transportation cost v inventory cost v customer responsiveness o Key decisions Choice of transportation modes Number and location of warehouses Extent to which orders are aggregated over time before shipping Approaches to order fulfillment ETO MTO ATO MTS o Order fulfillment o Engineer to order ETO specifications the process involved in responding to consumer orders products are designed and built to customer standard product designed production o the final products assembled to customer specifications Used for large scale projects Relatively lengthy fulfillment time o Make to order MTO o Assemble to Order ATO product is linked to the final customer s specifications from a stock and modular components to the customer from finished goods stock o Make to Stock MTS Order fulfillment is immediate Variation e shipping production is based on a forecast and products are sold Advantages and disadvantages of different modes of transportation o Evaluating shipping alternatives Considerations include shipping costs coordination of shipments with other supply chain activities flexibility speed environmental issues Options involve trains trucks planes boats Factors include cost time availability materials environment High costs rule out options Important time cost trade offs Common situation rapid more expensive shipping v slower less expensive alternatives Focus on cost savings Pallets and containers facilitate international trade o Pallets allow shippers to utilize goods Can be moved by forklifts or pallet jacks Highly automated embedded o Containers allow shippers to utilize goods Can be moved from ship to rail to truck intermodal Many small and mid size companies outsource order fulfillment o Order fulfillment o Best approach depends on the degree of customization required and the time the processes used to respond to customer orders the customer is willing to wait o Order fulfillment for online sales More complicated than for the retail channel Process and bill orders from individuals Pick pack ship Location and Layout Center of gravity and factor rating techniques for location o Factor Rating attach numbers to subjective decisions General approach to evaluating locations that includes quantitative and qualitative decisions Provides rational basis for evaluation and facilities comparison among alternatives by establishing a composite value for each alternative that summarizes all related factors Multiply weight by score add total All options can be rejected if they don t meet minimum threshold o Center of Gravity X and Y coordinates of each location For locating a distribution center that minimizes distribution costs Weight for location e g quantity to be shipped Regional community and site location factors o Regional factors South weak unions lower cost of labor north opposite Location of raw materials location of markets cost and availability of labor climate taxes o Community Considerations Taxes and environmental regulations enticements attitude toward type of business quality of life services utilities o Site Related Factors Cost and condition of land soil room for future expansion transportation access roads rail spurts zoning restrictions Process and layout types o Definitions Process selection Deciding how to organize the production of goods or services Process types Project goal within a limited time frame nonrepetitive set of activities directed toward a unique Equipment and skill can range from low to high Job Shop operates on a relatively small scale Processing is intermittent work includes small jobs each with different processing requirements o High flexibility and skilled workers Batch moderate volume of goods or services is desired can handle moderate variety in products Intermittent processing not as high skill required Repetitive assembly line Continuous standardized output high volume standardized very high volume of nondiscrete highly No variety no flexibility Ideal have process capability match product requirements Failure to do so results in inefficiencies and higher than necessary costs o Products often go through life cycles Shift from one process to another to the next Product Layout Sequential Used repetitive processing Advantages o Increase utilization low handling cost o Routine scheduling o Low unit cost Intermittent Processing Nonrepetitive processing o Department functional groupings in which similar kinds of activities are performed Process Layout Functional Fixed Position Layout Used for intermittent processing Designed to process items or provide services that involve a variety of processing requirements o Frequent adjustments to equipment Advantages o Handle variety o Not very vulnerable to failures Product remains stationary and workers materials equipment are moved around as needed Nature of product dictates arrangement Focus on timing of