Logistics Exam 1 Flashcards by Blake Unknown

Logistics

Part of supply chain management that plans, implements, and controls the efficient, effective, forward, and reverse flows and storage of goods, services, and related information between the point of the origin and the point of consumption to meet customer’s requirements

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Logistics Customer Perspective

Getting the right product
To the right customer
At the right time
In the right condition
In the right quantity
At the right place
At the right cost

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Logistics vs. Supply Chain

Logistics: Single company focus - deals with product movements, product storage, inventory control
Supply Chain: Multi firm focus - deals with purchasing, demand management, customer relationships (subset of supply chain)

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Logistics Cost Evolution

Lower costs in recent years - inventory efficiency, technology/automation/ transportation rate competition

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Transportation

Mode selection and carrier selection, generally the largest logistics area

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Storage

Where inventory is kept

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Inventory tradeoffs with transportation

Slow transportation requires greater inventory
Inconsistent delivery requires greater inventory

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Packaging

Protects the product during the shipment process

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Packaging materials and factors

Corrugated, shrink wrap, banding, palletizing

Ocean shipments must be water resistant
Rail shipments must accommodate a rough ride

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Materials handling

Mechanical equipment used for short distance movements

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Inventory control

Maintain adequate inventory levels to support planned and unplanned business activity levels

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Order fulfillment

Dependent on many other logistics activities

Order taking -> Logistics systems
Inventory allocation -> Inventory accuracy
Order picking -> Material handling
Order shipment -> Network design
Delivery -> Transportation

Forecasting, facility location, returns processing, customer service

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Economic utility

Perceived value
Form (what), Place (where), Time (when), Quantity (how much), Possession (by whom)

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Logistics Static Analysis

Analysis for a one time event

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Logistics Costs Dynamic Analysis

Analysis that changes in cost given quantity growth over time

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Push

Make product based on long term forecast and then try to push it out to your customers

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Pull

Only make what is needed as it is needed - when you sell something make its replacement

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Planning Based Fulfillment

Fulfillment strategy in which every company in a supply chain independently forecasts demand of their downstream partner, and react to situations when these forecasts are incorrect

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Lean Fulfillment

The fulfillment strategy in which the company replenishes depleted DC stocks as they are consumed

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Make to Stock

The strategy of producing a variety of products to stock in inventory holding locations according to forecasts and to replenish as these products are consumed, according to actual demand

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Agile Fulfillment

Fulfillment strategy in which the company initiates and quickly completes the making of an order and then without losing any time the goods are sent to the customer directly from the manufacturing plant using expedite shipping

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Leagile Fulfillment

The fulfillment strategy in which the company pushes semi-finished inventory to DC’s where products get customized according to specific customer orders after the orders come in

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Known-Known

Events with a track record that occur frequently

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Known-Unknown

Events you know can happen like a global pandemic but with no consistent pattern

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Unknown-Unknown

Conceivable but unusual and unexpected

Risk Heat Map

Risks are positioned on the map based on likelihood and severity

Failure Mode and Effects Analysis

Lets companies assess the priorities of things that could go wrong (failure modes) by factoring in likelihood, severity, and detectability of each failure mode

A-B-C Classification

A Class: Major profit generating customers B Class: Medium profit generating customers C Class: Minor profit generating customers

Grid Technique

Sweep Method

What Customers Care About

Product availability Timeliness of delivery Transparency Failure recovery Optional efficiency

Sales vs. Cost Matrix

Cost of Stockouts

Amount is almost always underestimated Difficult to gauge potential size of future sales impact Every lost sales forces customer to investigate other options

Performance

The evaluation of how well previously established goals have been met

Performance Measurement

Create understanding and motivate behavior

Smart Goals

Specific, Measurable, Achievement, Relevant, Time Base

Measure

Raw, quantifiable data point (Restaurant served 200 customers today)

Metric

Combination of measures contextualized (utilization of capacity is 75% of restaurant seating)

Key Performance Indicators

Measure a company's success versus target or industry peers

Quantitative Metrics

Can be expressed as an objective value

Stretch Goals OK

Ambitious targets set okay when tied to incremental progress rewards

Need to raise bar metrics

Keeping pace with improving competition, last year's performance could be failure today

Encourages appropriate behavior metrics

Rewards productive behavior tied to compensation

Customer POV Important Metrics

External goal not completely under control of supply chain

Visible Metrics

Effects of the measure are publicly posted

Multi-Dimensional Metrics

Performance covers many aspects and may involve tradeoffs

Economical To Create Metrics

Must have a greater benefit than cost to create/determine

Must Adapt Metrics

As business evolves, eliminate unimportant metrics periodically

Balanced Scorecard: Goals/Business Processes

What must we excel at?

Balanced Scorecard: Customer

How do our customers see us?

Balanced Scorecard: Improve/Learn

How can we continue to improve and create value?

Balanced Scorecard: Financial

How do we look to shareholders?

Efficiency: How well resources expended are utilized Providing the required service for the lowest cost Financially based and cost oriented Total landed cost, inventory turnover, order cycle time, fulfillment cost per order, transportation cost per shipment, returns processing cost per customer

Effectiveness: Gap between customer expectations and customer perceptions of the quality of service

SC Inventory Days of Supply

Total number of inventory required to support the chain form raw materials to final customer acquisition

Cash to Cash Cycle Time

Time required to convert a dollar spent to acquire raw materials into a dollar collected for finished product

Perfect Order Old Times: Internally generated goals of fill rate and inquiry handling time

Perfect Order New Times: Soft and perceptual goals of customer satisfaction.

95% Accuracy Problem

In a 7 step supply chain with 95% success at each step, only 69% of orders are perfect

Perfect Order

Percentage of orders that are delivered perfectly to the customer

Customer Inquiry Resolution Time

Average time elapsed to completely resolve a customer inquiry

On Shelf In Stock Percentage

Percent of time a product is available whenever a customer expects to find it

Financial Analysis Tradeoffs

Balance of Supply Chain and Level of Service Emphasis on cost reduction increases may cause service to suffer An emphasis on service enhancement increases may cause low cost performance goals to suffer

Profit Leverage Effect

Reducing costs (operating, supply chain, logistics, etc) has a more significant effect on profit than increasing sales by the same amount

Inventory Turnover

Number of times per year a business is able to use and sell off complete inventory of raw materials and finished goods

Logistics Costs Location in Financial Statements

Income Statement: Operating Expenses

Raw Materials Costs Location in Financial Statements

Income Statement: COGS

Inventory Location In Financial Statements

Balance Sheet: Current Assets

Conveyor System Location in Financial Statements

Balance Sheet: Fixed Assets

Strategic Profit Model

What if analysis can be used to model the impact of business changes