Supply Chain Management

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Supply Chain Management DELIVER Transportation: Supply Chain Management
DELIVER
Transportation
Two categories of factors influencing transportation costs: 1. product-related
2. market-related
product related factors: - density
- stowability
- ease or difficulty of handling
- liability
market related factors: - degree of competition
- location of markets
- government regulation
- freight traffic into and out of a market
- domestic vs. international movement
basic modes of transportation: 1. motor carriers
2. railroads
3. air carriers
4. water carriers
5. international water carriers
6. pipelines
- low cost of entry and low fixed costs but high variable costs - characterized by a large number of small firms - do not own their rights-of-way: motor carriers
advantages of motor carriers: - high accessibility
- transit times faster than rail or water
- small vehicle size coincides with lower inventory strategies and quick replenishment
disadvantages of motor carriers: - relatively high cost compared to rail and water
- reliability can be affected by weather
advantages of railroads: - cost effective for long haul, large volume products
- own rights-of-way
- intermodal now permits seamless dock-to-dock service by one company
disadvantages of railroads: - high fixed costs
- accessibility can be a problem
- transit times are spotty and generally long
- a few large carriers earn about 90% of the revenue - per ton ile revenue is 18 times hgher than rail; twice that of motor carriers - cost structure is highly variable - do not own rights-of-way - best for goods with a high value to: air carriers
advantages of air carriers: - speed: fastest tranist time of modes
disadvantages of air carriers: - highest rates
- accessibility is low
- capacity is low
- reliability subject to weather more than other modes
- available along atlantic, gulf and pacific coasts - mississippi, missouri, tennessee and ohio river systems and great lakes - do not own rights-of-way: water carriers
advantages of water carries: - relatively low cost mode
- high capacity
- cost effective for long distance move of low value, bulk-type mineral, agricultural and forest products
disadvantages of water carriers: - long transit times
- low accessibility
types of international water carriers: 1. genergal cargo ships
2. bulk carriers
3. tankers
4. container ships
5. RO-RO (roll on-roll off)
6. other
- large high capacity cargo holds - engaged on a contract basis - moany have self-contained cranes for loading/unloading: general cargo ships
- specially designed to haul minerals - can handle multiple cargoes: bulk carriers
- specially designed for liquid cargo - largest vessels afloat, some VLCCs at 500k+ tons: tankers
- high speed for ships; increasingly more common and important - larger vessels can handle up to 5,000 containers: container ships
- basically a large ferry that facilitates the loading and unloading process by using drive on/off ramps - may also have the capacity to haul containers: RO-RO
- multipurpose carriers - barges (not transoceanic): other
- very specialized - some attempts to transport minerals in a liquid medium, but nother than slurried-coal, no real success - cost structure is highly fixed with low variable costs - own rights-of-way much like rail: pipelines
advantages of pipelines: - most cost effective way to transport high volume of liquids over large distance
disadvantages of pipelines: accessibility is very low
the use of two or more modes of transportation cooperating on the movement of a shipment by publishing a through rate: intermodal transportation
biggest advantage of intermodal transportation: carriers are reluctant to participate
well developed combinations of inermodal transportation: - rail/water
- motor/rail
- motor/water
- motor/air
goods are placed in a large box on ship, where they remain untouched until they arrive at consignee's unloading dock: container-on-flat-car (COFC)
COFC reduces 4 things: 1. theft
2. damage
3. multiple handling costs
4. intermodal transfer time
COFC is estimated to reduce costs from ___ to ___ %: 10 to 20 %
for international shipments where oceans are separated by a large land mass: land bridge
- over the road trailers ride on special rail cars - takes advantage of motor carrier's flexibility and rail's long haul economic advantage: - trailer-on-flat-car (TOFC)
- "piggyback"
- evolved to carry small, irregular shipments - fast service, premium rates: small-package carriers
provider of logistics services such as warehousing or transportation and logisitcs: Third Party Providers (3PLS)
Supply Chain Management DELIVER Distribution & Site Location: Supply Chain Management
DELIVER
Distribution & Site Location
includes warehouses, production facilities, retailers, and the inventory that flows between them: distribution network
configuring the network requires decisions related to:: - location of warehouses and production facilities
- where production should take place
- how much inventory should be kept, and where
- how to transport inventory from one place to another
goal of distribution network: maximize value and minimize cost
configuration of network must meet both ______ and ______ needs: current & future
most important factor in real estate: LOCATION!
the process of identifying the best geographic location for a service or production facility: facility location
primary location factors: - proximity to
1. suppliers
2. customers
3. labor
secondary location factors: - community considerations
- site considerations
- quality-of-life issue
- other considerations
potential advantages for firm going global: - inside track to foreign markets
- avoid trade barriers
- gain access to cheap labor
potential disavantages for firm going global: - political risks may increase
- loss of control of porprietary technology
- local infrastructure may be inadequate
- high inflation
other issues for going global: - language barrier
- different laws and regulations
- different business cultures
location analysis methods follws this three step process: 1. identify dominant location factors
2. develop location alternatives
3. evaluate location alternatives
five methods for determining locations: 1. factor rating
2. load-distance
3. center of gravity
4. break-even analysis
5. transportation
LOOK AT FACTOR RATING EXAMPLE IN NOTES (MAYBE ESSAY???): LOOK AT FACTOR RATING EXAMPLE IN NOTES (MAYBE ESSAY???)
LOOK AT OTHER EXAMPLES AS WELL IN NOTE PACKET: LOOK AT OTHER EXAMPLES AS WELL IN NOTE PACKET
3 different approaches to moving products: 1. warehousing
2. direct shipment
3. cross-docking
holding inventory reveived from suppliers in warehouses until it is needed by retailers: warehousing
advantage of warehousing: reduced inbound costs because all shipmets are going to the same place
disadvantage of warehousing: likely to ship full truckloads inbound, but may ship less than full truckloads outband
one of the advantages of warehousing strategy is: risk pooling
inventory is held in our warehouse to service a large number of retailers: risk pooling in warehousing
advantages of direct shipment from suppliers to retailers: eliminates warehousing costs
disadvantages of direct shipment from suppliers to retailers: - less likely to ship full truck loads
- each retail store will require higher levels of inventory and safety stock
continuous shipment from suppliers to warehouses where goods are redirected and delivered to retailers in continuous shipments: cross-docking
advantages of cross-docking: - very cost effective
- typically used in high-volume supply chains that have sophisticated information systems (Wal-Mart)
disadvantages of cross-docking: requires...
- excellant communication links
- very reliable transportation system
- accurate demand forecasts are critical
Supply Chain Management INFORMATION TECHNOLOGY Project Management: Supply Chain Management
INFORMATION TECHNOLOGY
Project Management
any endeavor with objectives, multiple activities, defined precendent relationships, ad a specific time period for completion: project
five project life cycle phases: 1. conception
2. feasbility analysis or study
3. planning
4. execution
5. termination
identify the need: conception
costs, benefits, and risks: feasibility analysis or study
who, how long, what to do: planning
doing the project, performance and tracking: execution
ending the project: termination
two network techniques for planning, each uses a different estimate of activity time: PERT and CPM
things considered in PERT and CPM: project on schedule, budget, rousources, least amount of time to complete project if necessary
- developed to manage the polaris missile project - many tasks pushed the boundaries of science and engineering: Program Evaluation & Review Technique
- developed to coordinate maintenance project in the chemical industry - a complex undertaking, but individual tasks are routine: Critical Path Method
we more or less know exactly how long it will take: deterministic
rough estimate of how long it will take: probabilistic
- graphically display the precedence relationship & sequence of activities - estimate the project's duration - identify critical activities that cannot be delayed without delaying the project - estimate the amount of slack associated w: Both PERT and CPM
- uses nodes to represnt the activity - usees arrows to represent precedence relationships: Activity-on-Node
the six steps commmon to PERT and CPM: 1. define the project and prepare the work breakdown structure
2. develop relationships among the activities
3. draw the network connecting all of the activities
4. assign time and/or cost estimates to each activity
5. compute the longest time path through the network
6. use the network to help plan, schedule, monitor, and control the project
the longest time path through the network: critical path
LOOK AT STEP EXAMPLES IN PACKET: LOOK AT STEP EXAMPLES IN PACKET
the earliest finish of the immediately preceding activity: earliest start
the ES plus activity time: earliest finish
Latest start and latest finish depend on whether or not the activity is on the: critical path
the activity's late finish minus its early finish: slack
all activities on the critical path have __ slack: zero
slack deines how long _________ activities can be delayed without delaying the project: non-critical
advantages of PERT and CPM: - especially useful when scheduling and controlling large projects
- straightforward concept and not mathematically complex
- graphical networks aid perception of relationships among project activities
- critical path and slack time analysis help pinpoint activities that need to be closely watched
- project documentation and graphics point out who is reponsible for various activities
- applicable to wide variety of projects
- useful in monitoring schedules and costs
limitations of PERT and CPM: - assumes clearly defined, independent and stable activities
- specified precedence relationships
- activity times follow beta distribution
- subjective time estimates
- over-emphasis on critical path
a _____ is a unique, one time event of some duration that consumes resources and is designed to achieve an objective in a given time period: project
each project goes through a five-phase cycle:: 1. concept
2. feasibility study
3. planning
4. execution
5. termination
reduceing the length of a project: crashing
to crash the project, we need to know the ________ of the project and the _______: critical path
cost of reducing individual activity times

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