Chapter 2 Flashcards
INTEGRATED LOGISTICS AND THE SUPPLY CHAIN
aims to treat the many different elements that come under the
broad category of distribution and logistics as one single
integrated system.
TOTAL LOGISTICS CONCEPTS (TLC)
For example, delivery transport and storage, need to be considered within the context of the broader supply chain.
Thus the total system be considered and not just an individual element or subsystem in isolation.
TOTAL LOGISTICS CONCEPTS (TLC)
A SIMPLE, PRACTICAL EXAMPLE HELPS TO
EMPHASIZE THE POINT:
A company produces __________ that are packaged in cardboard boxes.
These boxes are packed on to ______________ that are used as the basic unit load in the warehouse and in the transport vehicles for delivery to customers.
plastic toys
wooden pallets
A SIMPLE, PRACTICAL EXAMPLE HELPS TO
EMPHASIZE THE POINT:
A study indicates that the _____________ is an unnecessary cost because it does not provide any significant additional protection to the quite robust plastic toys and it does not appear to offer any significant marketing advantage.
cardboard box
A SIMPLE, PRACTICAL EXAMPLE HELPS TO
EMPHASIZE THE POINT:
Thus, the ____ is discarded, lowering the unit cost of the toy and so providing a potential advantage in the marketplace.
Box
A SIMPLE, PRACTICAL EXAMPLE HELPS TO EMPHASIZE THE POINT:
One unforeseen result, however, is that the toys, without their boxes, cannot be stacked on to _________, because they are unstable, but must be stored and moved instead in special trays.
These ____ are totally different to the unit load that is currently used in the warehouse and on the vehicles (ie the wooden pallet).
The additional cost penalty in providing special trays and catering for another type of unit load for storage and delivery is a high one – much higher than the savings made on the product packaging.
wooden pallets
trays
A SIMPLE, PRACTICAL EXAMPLE HELPS TO EMPHASIZE THE POINT:
The additional _________ in providing special trays and catering for another type of unit load for storage and delivery is a high one – much higher than the savings made on the product packaging.
cost penalty
- is a situation that involves losing one quality or aspect of something in return for gaining another quality or aspect.
TRADE OFF
FOUR DIFFERENT LEVELS OF TRADE-OFF:
- Within distribution components
- Between distribution components
- Between company functions
- Between the company and external organization
those trade-offs that occur within single functions. ( e.g. warehousing)
Within distribution components –
One example would be the decision to use random storage locations compared to fixed storage locations in a depot.
The first of these provides better storage utilization but is more difficult for picking; the second is easier for picking but does not provide such good storage utilization.
Within distribution components –
those trade-offs between the different elements in distribution.
Between distribution components
One example is the trade-off between optimizing production run lengths and the associated warehousing costs of storing the finished product.
example, a company might increase the strength and thus the cost of packaging but find greater savings through improvements in the warehousing and storage of the product (ie block stacking rather than a requirement for racking).
Between distribution components
there are a number of areas of
interface between company functions where trade-offs can be made.
Between company functions
One example is the trade-off between optimizing production run lengths and the associated warehousing costs of storing the finished product.
Long production runs produce lower unit costs (and thus more cost-effective production) but mean that more product must be stored for a longer period (which is less cost-effective for warehousing).
Between company functions
– where a trade-off may be beneficial for two companies that are associated with each
other.
For example, a change from a manufacturer’s products being delivered direct to a retailer’s stores to delivery via the retailer’s distribution depot network might lead to a cheaper solution overall for the two companies
Between the company and external organization
___________ should be undertaken according to a certain hierarchy
that reflects different planning time horizons.
Planning
___________– a set of procedures for making decisions about the
organization’s long-term goals and strategies.
Strategic
Involves making decision about the organization’s long-term
goals and strategies.
Planning
_________________ have a strong external orientation and cover major portions of the organization.
Strategic plans
Medium to long-term horizon, 1to5 year (plus) time span, overall
‘structural’ decisions, trade-offs between company functions, trade-offs with other organizations, corporate financial plans and policies, policy decisions
developed into strategic plan.
Strategic
a set of procedures for translating broad strategic goals and plans into specific goals and plans that are relevant to a distinct portion of the organization, such as a functional area like marketing.
Tactical
focus on the major actions a unit must take to fulfil its part of the strategic plan.
Tactical plans
Short to medium-term horizon, six-month to 1year (plus) time-
span, subsystem decisions are made – should not impose on other logistics components, Annual budgets provide finance/cost basis, corporate financial plans and policies, the strategic plan detail is made into an operational plan.
Tactical
the process of identifying the specific procedures and processes required at lower levels of the
organization.
Operational
The planning model we have been describing is a hierarchical one, with top-level strategies flowing down through the levels of the organization into more specific goals and plans and an
ever-more-limited timetable.
Operational
day-to-day decision making, operations controlled against
the standards and rules, control via weekly/monthly reports. The
implementation of the operational plan.
Operational
is about ensuring that the operation is set up to run properly
Planning
– it is ‘doing the right thing’ or preparing for and planning the operation ‘effectively.
Planning
is about managing the operation in the right way –
Control
it is ‘doing the thing right’ or making sure that the operation is being run ‘efficiently’.
Control
customer service, channel of distribution, supply points,
production locations, location and size of depots, transport modal
choice, third party or own account, direct delivery and stock level
Strategic
vehicle types/sizes/numbers, contract hire, delivery schedule, design and layout, space allocation, handling methods,
stock location and control, and documentation.
Tactical
goods receipts and checking, bulk storage, order picking, stock replenishment, order marshalling, load scheduling, returns, and vehicle maintenance.
Operational
– system-wide management of entire logistics chain as a single entity, instead of separate management of individual logistical functions.
Integrated logistic
To support the need to develop more integrated operations there
have been a number of developments in logistics and distribution systems that have the concept of total logistics as their basis.
INTEGRATED SYSTEMS
First, realization of the importance, cost and complexity of logistics.
Second, is the progress made in the field of information technology, which has enabled the development of sophisticated
information systems to support and enhance the planning and
management of logistics operations, whereby very detailed data collection and analysis can be undertaken that was previously
impossible.
INTEGRATED SYSTEMS
is a technique of allocating all of the appropriate costs and allowances to a given product.
Direct product profitability (DPP)
_________ techniques can identify the costs of specific products to individual customers and so provide invaluable
information for effective marketing strategies.
Direct product profitability (DPP)
are systems have been developed as sophisticated, computerized planning tools that aim to make the necessary materials or inventory available when needed.
Materials requirements planning (MRP) and distribution requirements planning
(DRP)
is a system for calculating the materials and components needed to manufacture a product.
Material requirements planning (MRP)
It consists of three primary steps:
taking inventory of the materials and components on hand, identifying which additional ones are needed, and then scheduling their production or purchase.
Material requirements planning (MRP)
is an integrated information system used by businesses.
Manufacturing resource planning( MRP II)
It evolved from earlier ________________________ systems by including the integration of additional data, such as employee and financial
needs.
materials requirement planning (MRP)
is a process of determining the right amount of manufactured goods to be shipped to each distribution center or warehouse in order to satisfy customer demand.
DRP- Distribution requirements planning
originated as a new approach to manufacturing and has been successfully applied in many industries such as the automotive industry.
Just-in-time (JIT)
The overall concept of _______ is to provide a production system that eliminates all activities that neither add value to the final product nor allow for the continuous flow of material – in simple terms, that eliminates the costly and
wasteful elements within a production process.
Just-in-time (JIT)
The objectives of JIT are vitally linked to distribution and logistics, including as they do:
- the production of goods the customer wants;
- the production of gods when the customer wants them;
- the production of perfect-quality goods;
- eliminating waste (labor, inventory, movement, space, etc.)
is the monitoring and optimization of the production
and distribution of a company’s products and services.
Supply chain management (SCM)
It seeks to improve and make all
processes involved in turning raw materials and components into final products more
efficient and getting them to the ultimate customer.
Supply chain management (SCM)
Effective _______ can help streamline a company’s activities to eliminate waste, maximize customer value, and gain a competitive advantage in the marketplace.
Supply chain management (SCM)
5 Phases of Supply Chain Management (SCM)
- Planning
- Sourcing
- Manufacturing
- Delivery
- Returns
The supply chain is viewed as a ______ entity rather than a _______
of fragmented elements such as procurement, manufacturing, distribution, etc.
This is also how logistics is viewed in most forward-looking companies. The real change is that both the suppliers and the end users are included in the planning process, thus going outside the boundaries of a single organization in an attempt to
plan for the supply chain as a whole.
single–series
Supply chain management is very much a ________________________, with a particular emphasis on strategic decision making
rather than on the operational systems.
strategic planning
process
provides for a very different
approach to dealing with inventory.
Traditionally, inventory has been used as a safety valve between the separate components within the pipeline, thus leading to large and expensive stocks of products.
Supply chain management
aims to alter this perspective
so that inventory is used as a last resort to balance the integrated
flow of product through the pipeline.
Supply chain management
Central to the success of effective ________________________ is
the use of integrated information systems that are part of the
whole supply chain rather than merely acting in isolation for each
of the separate components.
These enable the visibility of product demand and stock levels through the full length of the pipeline.
This has only become a possibility with the recent advances in
information systems technology.
