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Midterm Study Guide - SCM 373

by: Danielle Lynch

Midterm Study Guide - SCM 373 SCM 373

Marketplace > Michigan State University > Economcs > SCM 373 > Midterm Study Guide SCM 373
Danielle Lynch
GPA 3.8
Logistics and Transportation Management
J. Macdonald

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About this Document

Everything you need to know for the Midterm. Includes material from the book and lecture.
Logistics and Transportation Management
J. Macdonald
75 ?




Popular in Logistics and Transportation Management

Popular in Economcs

This 9 page Bundle was uploaded by Danielle Lynch on Monday August 17, 2015. The Bundle belongs to SCM 373 at Michigan State University taught by J. Macdonald in Fall 2015. Since its upload, it has received 640 views. For similar materials see Logistics and Transportation Management in Economcs at Michigan State University.


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Date Created: 08/17/15
Questions to focus on at the end of each chapter 1 Chapter 1 21st Century Supply Chains 2 4 6 SQ a 2 What specific role does logistics play in supply chain operations i The work required to move and geographically position inventory Logistics creates value by timing and positioning inventory Logistics is the combination of a firm s order management inventory transportation warehousing materials handling and packaging as integrated throughout a facility network b 4 Compare and contrast anticipatory and responsive business models Why has responsiveness become popular in supply chain strategy and collaboration i Anticipatory Business Model Push 1 Business decisions driven by forecasting firms loosely linked together in a channel of distribution 2 Each firm protecting their own interest 3 Highly risky because of each distribution channel duplicating similar anticipatory process ii Responsive Business Model 1 TIMING is the difference 2 Joins planning and rapid exchange of information between SC participants 3 Less steps Sell buy materials manufacture deliver 4 Time to execute and the degree of potential customization faster 5 Uniquely customize products on smaller orders due to internet a Better search capabilities b Better information on prices c Drive price advantage by virtue of bidsauctions c 6 Define and illustrate cash to cash conversion dwell time minimization and cash spin How do supply chain strategy and structure impact each other i Aspects of financial sophistication 1 Cash to cash conversion The time required to convert raw material or inventory purchases into sales revenue a Higher inventory turn quicker the cash conversion 2 Dwell time The ratio of time that an asset sits idle to the time required to satisfy its designated supply chain mission a Eliminate non value added work and reduce investment in inventory and related assets 3 Cash Spin Reducing assets across a supply chain to free up capital to invest somewhere else where it may have been too risky 2 Chapter 2 Logistics 14 6 SQ 1 CQ a 1 Illustrate a common trade off that occurs between the functional areas of logistics i Lowest cost and highest attainable customer service b 4 Describe the logistics value proposition Be specific regarding customer relationships and cost i Matching operating competency and commitment to key customer expectations and requirements c 6 Discuss uncertainty as it relates to the overall logistical performance cycle Discuss and illustrate how performance cycle variance can be controlled i Demand is the input for a logistical performance cycle Safety stock exists for this It is between nodes that work related to inventory and logistics exists Demand and lead time is often uncertain ii The performance cycle variance can be controlled by using EDI s for order transmission safety stock operational consistency d 1 How has transportation cost as a percentage of total logistics cost tracked since 1980 when transportation was deregulated How do you explain this trend i Transportation cost as a percentage of total logistics cost has decreased because as a result of cost tradeoffs businesses could spend more money on minimizing functional cost ii Motor explained because 1 Entry restrictions for new businesses were relaxed restrictions for types of freight and range services were abolished individual carriers were given the right to price their services trucking industry s collective rate making practices were abolished iii Rail Explained because 1 Provide railroad management with freedom necessary to revitalize the industry rail carriers were authorized to use selective pricing to meet competition and cover operating costs carriers given increased exibility with respect to surcharges contract rate agreements between individual shippers and carriers were legalized rail management given liberal authority to proceed with abandonment of poorly performing rail service 3 Chapter 4 Procurement 3 6 SQ a 3 How does lowest TCO differ from lowest purchase cost i TCO includes purchase price service costs and life cycle costs b 6 Explain how logistics performance is crucial to J IT i Purchased materials and products arrive just at the time they are required for the transformation process ii Reliable logistics is required and eliminates or reduces the need for buffer stocks of materials iii J IT requires more frequent deliveries of smaller quantities of inputs which may require modification of inbound transportation 4 Chapter 8 Transportation 1 3 56 SQ 3 CQ a 1 Compare and contrast the transportation principles of economy of scale and economy of distance Illustrate how they combine to create efficient transportation i Economy of Distance Doesn t start at zero because of fixed costs increases at a decreasing rate tapering principle ii Economy of Weight Doesn t start at zero because of fixed costs for shipment pickup and delivery 3 Railroads have the largest percentage of intercity freight ton miles but motor carriers have the largest revenue How do you explain this relationship i Ton mile is a standard measure of freight activity that combines weight and distance Railroads can efficiently transport large tonnage over long distances 5 Seven economic drivers that in uence transportation cost were presented Select a specific product and discuss how each factor impacts determination of freight rate i Class rate All products transported by common carriers are classified for pricing purposes ii Freight classification rating Products with similar density stowability handling liability and value characteristics are grouped together into a class That class is referred to as rating Products are also assigned classifications based on weight LTL shipments of identical products will have higher ratings than TL 18 truck ratings 31 rail iii Rate Determination Rate per hundredweight is usually determined using origin and destination May be surcharges and minimum charges iv Cube Rates Five cube groupings Four are weight breaks for shipments under 500 pounds and one are for over 500 pounds v Commodity Rules Commodity rates are special or specific rates published without regard to classification Only specified products superseding the class rate Mostly rail vi Exception rates Special rate for an area destination or commodity when justified by competitive or hi gh volume movements 1 Aggregate tender rate when a shipper agrees to provide multiple shipments to a carrier in exchange for a discount or exception from the prevailing class rate 2 Limited service rate shipper agrees to perform selected services typically performed by the carrier vii Special rates and services 1 FAK rates a mixture of different products is transported under a negotiated rating 2 Transit services permit a shipment to be stopped at an intermediate point between initial origin and destination for unloading storage and processing 3 Diversion changing the destination of a shipment prior to arrival 4 Reconsignment change in consignee prior delivery 5 Demurrage Holding railroads longer than 48 hours before unloading the shipment 6 Detention Permitted time is specified in the tariff and normally limited to a few hours d 6 What is the purpose of freight classification Describe the differences between a rate and a rating How do they relate to classification e 3 What in your opinion will be the major impact of Walmart decision to purchase FOB from its suppliers The current stated objective is to reduce transportation costs on freight inbound to Walmart s distribution centers How might the business relationship be impacted if at some future time Walmart decides to bypass its distribution centers and move merchandise direct from suppliers to its retail stores i J IT smaller shipments less inventory 5 Chapter 9 Warehousing 1 2 SQ a 1 Discuss the economic justification for establishing a warehouse i Consolidation and break bulk Low transportation costs and timely and controlled delivery Consolidation many sources combined to one destination ii Sorting l Cross docking Distribution center moves products from many manufacturers to one destination 2 Sorting Distribution center mixing products similar to cross docking at an intermediate location iii Seasonal storage Inventory to meet marketing demand iv Reverse logistics Return remanufacture recycle remarket dispose b 2 Why could a warehouse be described as a necessary evil i Costs a lot but needed for service satisfaction CLASS PRESENTATIONS DISCUSSIONS 6 Warehouse PPT only 6 points from this on Midterm a Tradeoff made often is high customer service needing premium transportation which is often not the lowest cost b Reasons for warehousing i Demandsupplylead time uncertainty ii Manufacturing economies production smoothing iii Transportation economies volume discounts iv Customer service support c Benefits i Economic Benefits Operational strategy to save money by using a storage point all for transportation savings 1 ConsolidationBreak bulk 2 SortingMixingCross Docking 3 Seasonality 4 Reverse logistics ii Service Benefits Operational strategy to add value within the supply chain process 1 Changing product form drop shipping postponement labeling shrink wrapping d Location and Square Root Law i Relationship between inventory and uncertainty when addingdeleting locations e How to determine an effectively run warehouse i Safety ii Cleanliness iii Visual communication with labor iv Verbal communication with labor f Basic challenges facing a warehouse manager i Handling ii Design iii Labor g Storage Practice slotting i ABC divide by SMI med fast first available and fixed area mixed h Understanding labor Performance i ExtravertIntrovert PromotionPrevention i Warehouse Performance Metrics i Design ii Material Handling iii Labor iv WMS 1 Productivity The ratio of the real output of a resource to the real inputs required to achieve that output a Most popular and traditional performance measure 2 Capacity Utilization Ratio of capacity used to total available capacity 3 Top ten On time accurate capacity j Ecommerce dependent on IT i High volumes 500000 lines per day ii Support kitting operations iii Strong emphasis on fulfillment k Risk and Security i Redundancy locations ii Plans iii Carrier security iv Pilferage behavior V Restricted access 1 Public vs Private i Public Standardize service offerings ii Private Flexibility building may be owned or leased 8 Shipping terms Both domestic and INCOTerms a Incoterms International Commercial TERMS i Uniform rules to aid in the interpretation of complex sales language ii Some terms are multimodal some only sea iii Conditions of terms can be added to but the core cannot be changed iv Must go hand in hand with the contract and be part of the negotiation process v Can mean the difference between a profit and a loss internationally vi Determines who pays for the freight who takes the risk who is responsible for the customs process vii Often companies may use a few of the options b Origin Terms EXW i Seller Deliver goods at his premises responsibility ends upon releasing goods to buyer not responsible for loading ii Buyer Take delivery at seller s premises make ALL arrangements to bring goods to final destination c FAS Free alongside ship i Seller Deliver goods alongside ship and provide export clearance provide an alongside receipt ii Buyer Nominate carrier and contact for the carriage and pay the freight iii gt Only used for water traditional term requiring careful proof of delivery since most people are no longer allowed next to vessels good for bulk or charter vessels d Delivered Duty Paid i Seller Deliver goods bear all risks furnish documents enabling buyers takeover provide import clearance maximum seller obligation ii Buyer Take delivery bear all risks afterwards named importer and should remedy any tariff errors 9 Trade offs between supply chain logistics functions a 10 Define and differentiate supply chain and logistics a Logistics Work required to move and geographically position inventory i Creates value by timing and positioning inventory 1 Right product quantity cost quality place time customer condition b SCM Multiple firms collaborating to leverage strategic positioning and to improve operating efficiency 13 5 points from Honeywell Understand the metrics discussions a Why do we measure things i Regulations ii Benchmarking competition iii Goals iv Safety b What do we consider i Relativity ii Reliability iii Accuracy c What measure i Cost ii Delivery iii Quality iv Customer Service d Need Balancing metrics of what I miss in delivery percentage how long until it was delivered i Metrics don t always deliver this scorecard e Consider inventory earning power 14 TOFCCOFC difference a Trailer on atcar Need chassis i Many small non mechanized terminals offered beginning of 1950 s ii Service in general freight trains b Container on atcar Can double stack better i Paralleled the rise of marine containers ii Rise of global trade propelled COFC growth during 1980 s 15 RegulationDeregulation a Regulation i Economic regulation Seeking to make transportation equally accessible and economical to all without discrimination 1 Government infrastructure 2 Prevent carriers from taking advantage of suppliers ii Social regulation Takes measures to protect public safety and environment 1 Active role in hazardous material safety and driver safety 2 Truck driver hours of service rules iii 1800 s rise of steamships and railroads created immense wealth and monopolies iv ICC created in 1887 to oversee regulation of interstate transportation to stop the monopolies v By 1980 ICC had oversight on 100 rail 80 pipeline b Deregulation i Motor Carrier Act of 1980 ii Staggers Rail Act of 1980 17 Motor carrier capacity constraints what and why a Reduced drivers supply i Generous unemployment benefits ii Underground economy iii Part time work is expanding iv Stricter qualifications v Technology vi Retirement vii Private Fleets Other specifics 18 Book Chap 3 page 63 a Total Quality Management Six Sigma Zero Defect i Delivered complete on time at the right location in perfect condition with complete and accurate documentation ii Have good customer service for the defects 19 Book Chap 4 page 80 83 92 93 a Continuous supply I IT supplier development working closely and information sharing access technology and innovation lowest total cost ownership service costs and lifecycle costs i Consider discounts tradeoffs debundling and administrative costs 20 Book Chap 7 page 180 181 a Collaborative Inventory Replenishment i Quick Response Sharing retail sales for specific products between SC recipients to facilitate right product assortment availability When and Where it is required Customer makes the decisions ii Vendor Managed Inventory Supplier makes the decisions by receiving daily transmissions iii Profile Replenishment sophisticated predictor


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