Chapter 2 Supply Chain Management

the design and administration of systems to control movement and geographical positioning of raw materials, work-in-process, and finished inventories at the lowest total cost
Goal of logistics management
satisfy customer expectations for delivery of products or services at the lowest total cost
having inventory to meet the customers demand
Operational performance
the time required to deliver the order, delivery speed, consistency pg 24
Service reliability
includes the quality attributes to logistics
logistics becoming one of the most exciting and challenging operational areas of supply change management called renaissance since it is both old and new
Logistical value
propostion service and cost minimization basic logistic service: describes the level of service a firm provides all established cutomers
involves having inventory to consistently meet customer material or product requirements
Operational performance
deals with the time required to deliver a customer’s order involving delivery speed and consistency can be viewed in terms of flexibility
how well a company can accommodate unusual and unexpected customer requests
concerned with the probability of logistical performance failure
Recovery time
how long it takes to fix malfunction
key to it is accurate measurement of availability and operational performed
Logistics value propostioion
a unique commitment of a firm to an individual or selected customer groups
Pareto principle
80/20 rule less than 20% of all products marketed account for more than 80% of total profit
the operational area of logistics it can be satisfied in 3 basic ways a private fleet of equipment may be operated, contracts may be arranged with dedicated transport specialists, may engage the services of a wide variety of carriers that provide different transportation services shipment basis
Cost of transport
payment for shipment between two geographical locations and the expenses related to maintaining in-transit inventory
Speed of transportation
time required to complete a specific movement
Transportation consistency
refers to variations in time required to perform a specific movement over a number of shipments reflects the dependability of transportation
Facility network design
concerned with determining the number and location of all types of facilities required to perform logistics work
Customer accommodation
the movement of finished product to customers
Manufacturing support
the what when and where products will be manufactured
purchasing and arranging inbound movement of materials parts and/or finished inventory from suppliers into manufacturing or assembly plants, warehouses, or retail stores
a firms ability to satisfy customer requirements in a timely manner ideally inventory isn’t deployed until a customer commits
Variance reduction
the elimination of system disruptions
results from failure to perform any expected facet of logistical operations as anticipated
Inventory reduction
objective is to reduce and manage inventory to the lowest possible level while simultaneously achieving overall supply chain performance objectives
Shipment consolidation
requires innovative programs to combine small shipments for timely consolidated orders (general rule the larger the shipment and the larger the distance it is transported, the lower is the cost per unit)
fundamental operational objective, if quality is not present then it costs extra and those costs generally can not be made up due to fact: logistical costs, once expended, cannot be reversed or recovered
Life cycle support
reverse logistics? Requires cradle to cradle
to-cradle- aftermarket service, product recall and product disposal
Echelon systems
utilize warehouses to create inventory assortments and achieve consolidation economies associated with large volume transportation shipments utilize either break-bulk or consolidation warehouses
Direct distribution
typically uses the expedited services of premium transport combined with info technology to rapidly process customer orders and achieve delivery performance limited by high costs and potential loss of control
Combined logistical arrangement
has benefits of both echeloned and direct logistic structures (general rule- slower the part turnover is the more erratic the demand is and therefore the greater the benefit of centralized inventory
Flexible operations
preplanned contingency strategies to prevent logistical failures
Master facilities
often used to describe inventory strategies that designate larger facilities for backup support of smaller restricted facilities
docks- involves multiple suppliers arriving at a designated time at the handling facility and is typically deployed in situations where storage and materials handling can be avoided growing in popularity in retail industry
Integrated service providers
specialists are used to avoid storage and handling of slow-moving products through the mainstream of the echeloned logistics structure and they can also provide important value-added services
Supply chain synchronization
multi-firm operational integration across a supply chain
Dwell time
the ratio of time inventory sits idle in comparison to the amount of time it is being productively moved to a desired location in the supply chain
the operational locations that are linked by information and transportation are referred to as these
Base stock
inventory held at a node and is typically one-half of the average shipment size received
Safety stock
exists to protect against variance in demand or operational lead time it is at and between supply chain nodes that work related to logistics is performed
Input to performance cycle
demand typically an order that specifies requirements for a product or material
Supply chain Output
the level of performance expected from the combined logistical operations
to the extent that operational requirements are satisfied
measure of resource expenditure necessary to achieve such logistical effectiveness