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Logistics Systems and Analytics > Lecture Summary > Flashcards

Lecture Summary Flashcards

Preparation for the exam

1
Q

When to choose private vs public warehouse?

A

Private:

  • Stable demand
  • Dense market area
  • Control

Public

  • Requirement for no or limited capital
  • Flexibility
    • Space need for shorter or longer periods
    • Location flexibility (immediately expand to new market areas without fixed costs)
  • Third party operators may provide distribution management services
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2
Q

Purpose of supply chain execution systems?

A

Manage inventory, space, material handling equipment, labor and transportation resources
in real time
to assure timely, error-free fulfillment, delivery, and visibility of order status
throughout the supply chain.
It matches information and material flow.

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3
Q

Purpose of Warehouse Management System?

A

Manages warehouse inventory, space, equipment, and labor resources to direct the flow of materials and information from receiving and putaway to light assembly, order picking, value added processing and shipment. WMS functions consists of receiving, putaway and picking & shipping.

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4
Q

Mobility as a service? Why?

A

Possibility to buy different types of transportation with single price. Possible to tailor it for different needs and you only pay for what you use.

Advantages in a nutshell:

  • More time
  • Less pollution
  • More room for life
  • Less trouble (insurance, repairment)
  • More freedom
  • High quality commuting
  • Less unnecessary traveling
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5
Q

What is Finnish transport agency and what are its duties?

A

Agency in ministry of transport and communications. The Finnish Transport Agency’s domain comprises the entire transport system and all modes of transport, except for aviation. The Agency’s duty is to ensure that Finland has an effective, safe, energy-efficient and environmentally friendly transport system.

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6
Q

What is the benefits from a web service (SOAP XML) based system integration compared to the traditional one used between Finnlines and its customers?

A
  • No delays
  • Full control
  • Transparency
  • ShapeEasy to Use
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7
Q

Describe WTO/WCO and its key functions (14-15, 16-17 slides)

A

WTO (98% of trade) sets global rules of trade, handles negotiations to reduce obstacles of international trade, handles dispute settlements to secure members’ rights

WCO (world customs org) stimulates legitimate growth and enhances protection. Simplify and harmonize customs, tariffs.

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8
Q

Main challenges of customs and tools used to tackle these?

A
  1. Smooth flow of trade
  2. Necessary controls
  3. Guarantee safety and security for community

Tools:

  • Modern customs procedures ), E-communication (paperless)
  • Control methods
  • Union Customs Code
  • EU-Wide IT systems

Global agreements (WTO), regional arrangements (EU), geographically homo., regional alliances, bilateral agreements. CUSTOMS is the watchdog

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9
Q

3 types of EU trade agreements?

A

Customs Unions (eliminate customs duties, joint tariffs to foreign import)

Association Agreement, free trade agreement, economic partnership agreement
Remove or reduce tariff in bilateral trade

Partnership & Coop agreement: Framework for bilat econ relations, leave tariffs as they are

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10
Q

What is the basic definition of Yield Management?

A

The action taken to maximize profit by understanding and influencing consumer behaviour. Yield management can only be applied for resources that are fixed and perishable, which means that their count cannot be altered, and they cannot be stored for later use.

Maximizing yield happens through pricing, inventory management and selling strategy. A good example of a yield management application is a hotel that wants to reserve a maximum number of rooms to higher-paying, less price-sensitive business customers while making sure that none of the rooms end up being empty at the time of accommodation.

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11
Q

The four “rights” of yield management?

A

Selling the right product
To the right customer
At the right time
For the right price

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12
Q

What are application areas of yield management?

A

Traditional areas: air industry, hotel industry, car rental, rail, tour operators, cargo, cruise.
Non-traditional: energy, broadcast, healthcare, manufacturing, apparel, restaurants, golf etc.

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13
Q

What are the reasons behind different prices?

A

Economies of scale, high-value demand pays for high-cost seats and vice versa. Both groups benefit from sharing fixed costs.

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14
Q

Where and why firms practice yield management (5 characteristics)?

A
  • It is expensive or impossible to store excess resource
  • Commitments need to be made when future demand is uncertain
  • The firm can differentiate among customer segments, and each segment has a different demand curve
  • The same unit of capacity can be used to deliver many different products or services
  • Producers are profit-oriented and have broad freedom of actions, meaning that they do not suffer from consequences of customer segmentation
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15
Q

What is booking limit in yield management?

A

Booking limit is the maximum number of product / service that may be sold at the discount price.

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16
Q

What is protection level in yield management?

A

Protection level is the number of products / service we will not sell to first segment of customers because of the possibility that second segment might book / buy later in time for bigger price.

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17
Q

Formula for calculating protection level F(Q) (critical ratio)

A

Given that we have a Q number of rooms/seats/etc. reserved to low-fare customer and a Q+1:th customer wants to book, we want to calculate the expected value of that unit being sold to a high-fare customer. This is done by multiplying the high-fare price by it’s the respective probability that it will actually be sold. If the expected value is greater than the low-fare price, it is not worth it to sell the unit at a lower price.

18
Q

Describe overbooking + optimal level calculation

A

For example, in an airline flight, there is a possibility that a certain number of customer will not show up to the flight, leaving their seats unused. This creates a loss to the airline company due to opportunity cost of not being able to sell the seats again to customers. The only way of benefiting from absent customers is to predict their share from the total number of customers, and by using that calculation, selling “too many” tickets to the flight, or overbooking. Thus, in an optimal solution the actual amount of absent customers matches up with the amount of overbooked seats, and the plane leaves with every seat in use.

The risk is that the airline company has to turn down some customers in an event where there is too much customers showing up to the gate, leading to the company having to turn down some customers.

Calculation: given B as the price of a ticket and C as the net cost of having to “bump” or turn down a passenger, we can use the formula of critical ratio B / (B + C) to get a value that we can use to estimate the number of ticket to overbook, using for example a normal distribution of customers who book a flight but never show up.

19
Q

Which megatrends will have an impact on Logistics and transportation?

A
  • Digitization of logistics: AI/ML, autonomous driving
  • Cost Pressures due to geo-political instability, de-globalization and sustainability requirements
  • New technology firms are entering the industry at rapid pace
  • Socio-economic factors create increasing demand from customers
20
Q

What is the digitalization of Transport Documents and how can it be achieved?

A
  • Transport Documents are interchanged digitally and automated between players in the supply chain
  • Lowers the operational and administrative complexity, increases supply chain efficiency
  • common transport documentation, data standards and exchange have to be established
  • Message structures need to be harmonized to a common standard
21
Q

What are potential benefits from utilizing logistics data?

A

Better cooperation between supply chain actors due to:

  • Better supply chain visibility
  • Realt-time management of traffic and cargo flows
  • Simplification of administrative burden
  • Improved utilization of logistics resources and assets while improving operational efficiency and decreasing cost
22
Q

What are the key problems preventing industries from fully utilizing digitalization of transport documents?

A

To leverage benefits electronic data should flow seamlessly through supply chains. Standardization of Data models and harmonization of digital data exchange is key! Even though standards have been established and technology has been developed, integration is advancing at slow pace because:

  • People do not trust each other
  • Logistic information Systems need to be changed, little incentive to do so
  • Benefit sharing in the supply chain (benefit not primarily for the one introducing new system)
23
Q

Describe the DBE core concept

A

From their website: The Digital Business Ecosystem is an open development platform that aims to create new value by integrating supply chain processes and data. DBE brings an easy solution for digital information exchange. The goal is to get all of our stakeholders to move towards standardised integration of business transactions and collaboration processes. We started with the Finnish process industry, and we’re aiming to grow the ecosystem across industries globally. DBE Core enables the integration of business processes by the aid of API integration. It can be widely used in the areas of sales, sourcing, procurement, logistics and transaction based financing.

24
Q

What do increased activities in urban logistics imply for cities and how do they affect the livability?

A

Growing number of trucks in the urban areas imply more congestion, pollution and noise, also increased energy consumption and impacts on development of Local Retail. These factors have an impact on traffic safety, quality of life and urban economic competitiveness.

25
Q

How can last mile distribution be improved such that the negative impacts are improved?

A

On the one hand, Improvement in Vehicles, e.g. Using alternative fuels as hybrids and electrical, or even change the type of vehicle, e.g. cargocycles and autonomous vehicles. On the Other hand, improvements in supply chain logistics. On a strategical level, network design can be adapted so that distances traveled are lower. On a tactical level, equipment and infrastructure management can be improved (vehicle capacity), so that less vehicles are required. And on an operational level, using policies and information systems the delivery efficiency can be increased (higher vehicle filling ratio, less distance travelled).

26
Q

Name some strategies for improving the last mile distribution in urban areas and evaluate their advantages and disadvantages.

A

Urban Consolidation Centers: UCC (Urban Consolidation Centers) allow to bundle freight and carry out a more efficient last-mile distribution for a specific area. Large trucks are replaced by alternative vehicles, improving the environmental conditions.
+ Public sector is satisfied
– Difficult to carry out without public grants
– More expensive deliveries for private sector

OHD (Off-hour distribution) allows to reduce peak time deliveries improving the efficiency on freight distribution operations within cities. Simpler schemes and routes are possible. Special interest for supermarkets and big businesses.
+ Efficient logistics
+ Better working conditions
– Noise Problems

Logistic operators create pick-up point networks in order to avoid door to door distribution but offering shipments close to the desired addresses. The delivery process is finished at the first try avoiding multiple trips.
+ avoids multiple trips, delivery finished at first try

27
Q

Give some examples on future innovations and how they may contribute to improve last mile logistics?

A
  • Electric Vehicles: Less noise, pollution. Repetitive routes, so it might work for electric vehicles. But public sector is needed, benefits are basically for citizens
  • Cargocycles: Less vehicles, so less noise, pollution, congestion. Alternative to deal with strong restrictions in complex urban areas. Point-to-point parcel delivery.
  • Shared Economy / Crowdsourcing: Less vehicles, so less noise, pollution and congestion. Low investment requirements, less vehicles, but problems with legal and liability concerns
  • Autonomous Transportation Vehicles: Smaller vehicles, not interfering with traffic (drones)
  • 3D Printing: pretty ambitious, completely cuts the delivery of products
28
Q

5 major elements of DDMRP?

A

5 Major Elements

  1. Strategic Inventory Positioning ​
  2. Buffer Profile and Levels​
  3. Dynamic Adjustments​
  4. Demand Driven Planning ​
  5. Visible and Collaborative Execution ​
29
Q

Describe the DDMRP system.

A
  1. Determine where decoupling points are placed. The guideline here is “the closer the better” in order to flatten out volatility and increase responsiveness. ​
  2. Determine the protection size at the decoupling points ​ 3. Determine how levels react to changes in operating parameters, market changes and events ​
  3. Generate supply orders through demand driven planning ​
  4. Condition of supply must always be visible upstream and downstream. The cone with its traffic light system which we introduced earlier is a main tool here.
30
Q

Describe the different kinds of stocks that make up the Target Stock in DDMRP.

A

Cycle Stock = Supplies the average demand during production Cycle
Lead Time Stock = Supplies the average demand during Leadtime
Safety Stock = Protects stock from volatility in demand & supply, usually determined as some Measure of Safety by setting a factor on Cycle + Lead Time Stock

31
Q

Which effect can be reduced through DDMRP’s visualization/information generalization tool? Explain the effect.

A

Bullwhip effect

32
Q

What are the main differences between eCommerce and Airfreight?

A 
Airfreight : 
- High value  
- Few items per shipment
- High transport Cost  
. Limited product variety

eCommerce:

  • Low value
  • Lots of items per shipment
  • Low margins
  • High product variety
33
Q

What are the main challenges for eCommerce? Which tool might solve a major challenge for eCommerce? Describe the tool.

A
  • Data level doesn’t match with authority or customer requirements
  • Airmail is the main method to transfer eCommerce shipments; new security profiling requirements will be mandatory from 2020; effects unclear
  • Airfreight lacks transparency, process is to heavy and pricing doesn’t support high demands
  • IoL (= Internet of Logistics = One Record) will probably solve the data level issue

ONE Record (=IoL)

  • Data sharing based
  • Paperless by design
  • Clear data ownership
34
Q

What is the outlook for the airfreight market?

A

Market Development: weakest industry outcome in more than seven years; annual decline in volumes; all of the key international freight routes recorded negative year-on-year growth

Market Drivers: tariff increases b/t US & China; signs of slowing global economy

Influences: Trade War; Brexit; Capacity > Demand; Fuel; E-Commerce; Regulatory & Security; Sanctions

35
Q

Describe the different modes for AirCargo.

A

Airmail: one leg of its journey being by air; arrive more quickly, cost more; easy to handle, long lasting contracts, stable flow

Courier: speed, security, tracking, signature, specialization and individualization of express services; full service from door to door; full supply chain by one company

eCommerce: travel via all modes; Change: eCommerce providers own transportation; new data models at airfreight supports item level; data transparency allows new operators coming to market (e.g. Uber Freight); customer requirements tighten

36
Q

Identify the entities of PCN (5):

A

Process chain: a sequence of steps with an identifiable purpose

Process entity: an entity that participates in the process chain

Value: the satisfaction of process entity needs

Specific beneficiary: an entity that participates to have need met by specific competencies in the process chain

Generic beneficiary: an entity that participates to acquire generic resources (money) to meet needs from other process chains

37
Q

Describe the processes and domains of PCN (5):

A

Process domain: portion of the process chain that falls under an entity’s control and responsibility

Process regions: areas of a process domain for steps of a particular type

Direct interaction: steps involving person-to-person interaction between entities

Surrogate interaction: steps involving interaction with non-human resources of another entity (e.g. technology or information)

Independent processing: steps that are processed independent from other entities in the process chain network

38
Q

Process complexity vs. process divergence (4):

A

Low complexity, low divergence: serving drinks

Low complexity, high divergence: responding to a flight system malfunction

High complexity, low divergence: building aircraft

High complexity, high divergence: designing an aircraft

39
Q

Identify the three methods of measuring and assuring quality (3):

A

Customer failure prevention

Service recovery

Dealing with problem customers

40
Q

Independent vs. interactive processing:

A

Independent processing: use of inventory, high resource utilization, Activity Based Costing, advertising

Interactive processing: queues, low resource utilization, Inactivity Based Costing, experimental marketing

41
Q

Identify the five regions of managing the value proposition in a service setting (5):

A

Internal operations (independent processing): efficiency, engineered specifications

The back-office (surrogate interaction): quick & accurate response to customer requirements

Personal interactions (direct interaction): empathy, understanding of customer needs

Self-service (surrogate interaction): robustness, clear customer roles

DYI (independent processing): match between customer capabilities and resource features

Logistics Systems and Analytics (1 decks)

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