module 1&2 Flashcards
the function responsible for the flow of materials from suppliers into an organization, through operations within the organization, and then out to customers.
logistics
Moving materials into the organization from suppliers
inbound or inward logistics
moving materials out to customers
outbound or outward logistics
moving materials within the organization
materials management
2 types of materials
tangible
intangible
are all the things that an organization moves to create its products. These materials can be both tangible (such as raw materials) and intangible (such as information)
materials
consists of the series of activities and organizations that materials move through on their journey from initial suppliers to final customers.
supply chain
– moving materials inwards
upstream
moving materials outwards
downstream
The upstream activities are divided into tiers of ____
suppliers
The downstream activities are divided into tiers of ______
customers
other benefits of well-designed supply chain
Producers locate operations in the best locations, regardless of the locations of their customers.
● producers can get economies of scale.
● Wholesalers are near to retailers and have short lead times.
● Retailers carry less stock as wholesalers provide reliable deliveries.
● Retailers can have small operations, giving a responsive service near to customers.
● Transport is simpler, with fewer, larger deliveries reducing costs.
responsible for the movement and storage of materials as they move through the supply chain
logistics
activities that are normally included in logistics.
● Procurement or purchasing
● Inward transport or traffic
● Receiving
● Warehousing or stores
● Stock control
● Order picking
● Materials handling
● Outward transport
● Physical distribution management
● Recycling, returns and waste disposal
● Location
● Communication
Alongside the physical flow of materials is the associated flow of information. This links all parts of the supply chain, passing information about products, customer demand, materials to be moved, timing, stock levels, availability, problems, costs, service levels, and so on. Coordinating the flow of information can be very difficult, and logistics managers often describe themselves as processing information rather than moving goods. Christopher supports this view by saying that, ‘Supply chain competitiveness is based upon the value-added exchange of information’. The Council of Logistics Management also highlights the combination of materials and information flow in their definition:
communication
Some of the logistics activities can be done in different locations. Stocks of finished goods, for example, can be held at the end of production, moved to nearby warehouses, put into stores nearer to customers, passed on to be managed by other organisations, or a range of alternatives. Logistics has to find the best locations for these activities – or at least play a significant role in the decisions. It also considers related questions about the size and number of facilities. These are important decisions that affect the overall design of the supply chain.
location
Even when products have been delivered to customers, the work of logistics may not be finished. There might, for example, be problems with delivered materials – perhaps they were faulty, or too many were delivered, or they were the wrong type – and they have to be collected and brought back. Sometimes there are associated materials such as pallets, delivery boxes, cable reels and containers (the standard 20 foot long metal boxes that are used to move goods) which are returned to suppliers for reuse. Some materials are not reused, but are brought back for recycling, such as metals, glass, paper, plastics and oils. Finally there are materials that cannot be used again, but are brought back for safe disposal, such as dangerous chemicals.
recycling, returns, and waste disposal
Activities that return materials back to an organisation are called
reverse logistics or reverse distribution.
a general term for the activities that deliver finished goods to customers, including outward transport. It is often aligned with marketing and forms an important link with downstream activities
Physical distribution management
takes materials from the departure area and delivers them to customers (with concerns that are similar to inward transport).
outward transport
moves materials through the operations within an organisation. It moves materials from one operation to the next, and also moves materials picked from stores to the point where they are needed. The aim is to give efficient movements, with short journeys, using appropriate equipment, with little damage, and using special packaging and handling where needed.
materials handling
finds and removes materials from stores. Typically materials for a customer order are located, identified, checked, removed from racks, consolidated into a single load, wrapped and moved to a departure area for loading onto delivery vehicles.
order picking
sets the policies for inventory. It considers the materials to store, overall investment, customer service, stock levels, order sizes, order timing and so on.
stock control
moves materials into storage, and takes care of them until they are needed. Many materials need special care, such as frozen food, drugs, alcohol in bond, chemicals that emit fumes, animals, and dangerous goods. As well as making sure that materials can be available quickly when needed, warehousing also makes sure that they have the right conditions, treatment and packaging to keep them in good condition.
warehousing or stores
makes sure that materials delivered correspond to the order, acknowledges receipt, unloads delivery vehicles, inspects materials for damage, and sorts them.
receiving
actually moves materials from suppliers to the organisation’s receiving area. This has to choose the type of transport (road, rail, air, and so on), find the best transport operator, design a route, make sure that all safety and legal requirements are met, get deliveries on time and at reasonable cost, and so on.
inward transport or traffic
The flow of materials through an organization is usually initiated when procurement sends a purchase order to a supplier. This means that procurement finds suitable suppliers, negotiates terms and conditions, organises delivery, arranges insurance and payment, and does everything needed to get materials into the organisation. In the past, this has been seen as a largely clerical job centred on order processing. Now it is recognised as an important link with upstream activities, and is being given more attention
procurement or purchasing
the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and the related information flows) through the organization and its marketing channels in such as way that current and future profitability are maximized through the cost-effective fulfillment of orders.
logistics management
manages resources that can range from tangible goods (such as materials, equipment and supplies) to food or other consumable items. In doing so, ___ deals with integrating the flow of information and its management tools, materials handling, production packaging, inventory, transportation, warehousing and sometimes security.
logistics management
a subset of the larger supply chain management
logistics management
plans, implements and controls the efficient flow of storage, goods, services and related information from the point of origin to the point of consumption. This is done for the purpose of meeting the requirements of customers.
logistics management
aim of logistics management
to manage the fruition of project life cycles, supply chains and resultant efficiencies.
logistics management in business the focus is twofold:
inbound logistics
outbound logistics
internal functions
inbound logistics
external flow from the point of origin to the point of consumption
outbound logistics
focus on inventory management, purchasing, transportation, warehousing, consultation and the organization and mapping of these processes.
logisticians
four main types of logistics management
- supply management and logistics
- distribution and material movement
- production logistics and management
- reverse logistics and product return
This is about the management of reclaiming materials and supplies from production. For example, on a construction site it involves the removal of excess material and returning those materials to one’s stock. It can also refer to the return of unwanted or unused products from the end customer seeking a refund.
reverse logistics and product return
This manages the stages of combining distributed supplies into a product, such as coordinating what is needed to make or put together something. This involves the staging of materials at the right time to work with the building of a product. This type of logistics management falls in the realm of product management.
production logistics and management
This takes stored materials and transports them to where they need to go. The issues in this involve moving materials; including loading, unloading and transportation, as well as keeping track of the stock and how it is used. This type of management controls the movement of supplies from a central warehouse to the stores that sell the product to the public.
distribution and material movement
This involves the planning, procuring and coordinating materials which are needed at a certain time at a particular place for the production of a task. This includes transportation of the materials as well as a place to store them. Additionally, evaluating the level of supply at the different stages of the process is required to make sure the needs of the customer are met, for example delivering materials to a construction site or parts for a manufacturing plant.
supply management and logistics
various links and points of distribution in a logistics management network
- Factories that manufacture products
- Warehouses that store products
- Distribution centers to receive and return items for clients
- Transport to deliver product
- Retail locations, from small to larger stores to sell product
Logistics management tips
- Have a strong Plan
- Make a Plan B
- Hire a Manager
- Automate
- Learn from mistakes
Like any management, it succeeds or fails on the strength of the plan. The more thorough your plan, the less you’ll have to think on your feet. There will always be issues, and only so much potential risks you can plan ahead for, but planning early and in detail can help mitigate delays and other obstructions to the clear flow of materials and supply.
have a strong plan
No matter how good your initial plan is there can always be something that comes along that it cannot manage. That’s why you need a contingency plan for every element of your logistics plan to respond to unforeseen problems that might arise. But it’s important to also know when to give up the original plan and move on to the secondary one.
make a plan b
It’s critical that this process has a leader who is experienced and able to work with a variety of different parties, all of who are involved in the logistics of the materials and supplies. That means interpersonal skills are a must. They should also have strong industry contacts in order to deal with any last-minute logistics changes in suppliers, etc.
hire a manager
It goes without saying that automation is a built-in way to make workflow more efficient. There are so many processes that can be helped through task automation, from tracking to monitoring delivery to fleet and inventory management software.
automate
This goes for most everything. You’ll take missteps on your journey of managing logistics. That’s a given. What’s not assured is that you’ll learn from those mistakes, so they don’t happen again. Therefore, take time to look back on what you’ve done, where it worked and where it didn’t, and get feedback from your team.
learn from mistakes
Transportations
- Truck: Privately Owned or Third-Party Carriers
- Rail: For Selected Goods
- Waterways
- Pipeline
- Parcel
- Transmission Lines
- Fiber-Optic Cable Networks
- air
The world depends on the flow of information. Information was transported, in the form of bits of electrical energy, through copper lines since the development of the telegraph in the mid-nineteenth century. In the past couple of decades, fiber-optic cables, with their larger carrying capacity and lighter weight, are rapidly replacing the copper lines. These specialized networks represent a fast, low-cost transportation mode with good geographic coverage. In a number of cases, electronic information is replacing physical goods. For example, books can be sold as either a hard copy that requires movement by truck to the retail store or as an electronic download that requires movement by telephone lines to a consumer’s computer.
Fiber optic cable networks
Electricity is an essential resource produced in large generating stations and delivered to the point of use. Some businesses have their own power-generating plants, but they are exceptions. Portable generators can be used for limited power availability in emergency situations. None of the conventional transportation modes described earlier can deliver electricity; this task requires specially constructed transmission lines, substations for reducing voltages, and customized power lines to businesses and houses. As such, transmission lines are a fast way to move electricity, with good geographical coverage. The cost of electricity is more a function of how it is generated, from coal, water, or nuclear sources, as opposed to how it is transported. Indeed, transmission lines are the only known way to move large amounts of electricity. Electricity is an essential part of the supply chain, because it is required to drive equipment at manufacturing plants and a variety of office equipment for service operations. It is also required to move data around the world. There are indications it could become a replacement for fossil fuels, such as gasoline, as a power source for automobiles.
transmission lines
In addition to the U.S. Postal Service, private carriers like UPS and FedEx have grown as carriers of lightweight parcels. All of them stress reliability and speed of their deliveries, along with good geographical coverage. Costs are similar to trucking. This mode will probably see continued growth as providers become increasingly agile in their capabilities. Increased online buying with direct-to-home deliveries will also increase the importance of parcel deliveries. These companies are also expanding their roles as third-party providers in such areas as handling returned goods for repair. One of the more innovative approaches is the proposed use of drones to deliver packages.
parcel
Oil is the principal commodity shipped by pipeline. Where appropriate, pipelines are an economical, fast, and safe way to ship goods. However, these advantages are offset by the limited geographical coverage of using pipelines. At present, pipelines are used primarily for oil, natural gas, and chemicals. Although there have been proposals for carrying alternative goods, none have yet reached a significant stage of development.
pipeline
Shipments by barge on inland waterways and cargo ships on the oceans play an important role. Using waterways as a mode of transportation represents a slow speed, low-cost option, but with obvious geographic limitations. Some cargos, such as crude oil and metallic ores, must be transported from foreign countries. Because of their heavy weight, the only practical way to transport them is by ship or barge. The other driver of increased shipping business is the increase in offshore outsourcing. As companies extend their supply chains into other countries, there will be an increased demand for shipping by sea.
waterways
Air freight for small and expensive goods is becoming more popular. Air is a high-cost, high-speed transportation mode and is offset with limited geographic coverage. Using air transport usually means coupling deliveries with trucks as well. However, it is unlikely heavier cargos will be shipped by air unless there is an emergency. At the present time, companies such as UPS and FedEx are the major cargo air carriers.
air
medium-cost, medium-speed option, with limited geographic coverage. Since the latter third of the nineteenth century, railroads have been a major shipper, largely in heavier freight categories. The primary disadvantage is they lack the convenience of trucks. Only a few suppliers have a rail spur at the side of their facility; almost no modern retail stores do. Consequently, rail shipments usually require multiple loadings. One of the alternatives is the use of intermodal freight transport, often called piggybacking, where truck trailers are loaded onto flat railcars for movement. This arrangement combines the load-carrying capability of the railroad with the convenience of the truck. Railroads may see an increase in their traffic as gasoline prices increase.
railway
Top 10 challenges for the trucking industry
- Fuel costs (current and long term)
- Economy (pressed by increasing regulation, slumping demand, and excess capacity)
- Driver shortage and retention
- Government regulation (safety plus other local regulations)
- Hours of service
- Traffic congestion
- Tolls/highway funding
- Environmental issues
- Tort reform (civil judgments against trucking firms)
- Onboard truck technology (Outsourced Logistics 2008)
become the primary mode of shipping goods domestically. The most obvious advantage is door-to-door convenience. Trucking represents a fast mode of transportation with good geographic coverage. These advantages are offset by the high costs; however, with shorter deliveries, costs do go down due to the direct costs of fuel. The interstate highway system and good side roads make it possible for trucks to pick up and deliver to almost any business or consumer. As the amount of business increases, it becomes more difficult for companies to find qualified and reliable drivers. The increase in fuel costs is causing some businesses to consider other modes of transportation, mainly rail.
truck
