Motor Freight
- Speed
- Reliability (trucks rarely get broken)
- Low Damage
- Accessibility
Containers
- 53`
- 40`
- Refrigerator
- Livestock containers
- Tankers
- Linehaul - inter-city trucks
- City trucks
Terminals - Taking products from one truck, sorting them, and moving to another truck. Types of terminals are:
- Pickup/Delivery: Freight is transferred from a city truck to a long-distance linehaul vehicle.
- Cross Docks: Unloading from incoming vehicles and directly loading onto outbound ones, with minimal storage.
- Relay Terminals: Used in long haul transport; one driver swaps with another to rest, allowing freight to move continuously.
Basic operations
- TL - Truckload → all truck, whether you use it or not
- LTL - Less-than-Truckload → a share of the truck for that shipment, paid by weight. Does not always go from origin to destination, but rather by terminals
- Parcel
Flying freight
- Speed
- Capacity
- Accessibility
- Pricey
Air Carriers
- All-cargo → You get whole plane
- Commercial Airline → Paid by volume or weight
Largest costs:
- fuel prices
- delays added by security
Train freight
- Intermodal → Truck for pickup and delivery + rails for interstate
- Cheaper
Containerized freight is seamless to move to train
Why companies need warehouses
- Efficiency, hold inventory when and as much is needed
- Risk pooling - one location than network of stores
- Service is easier
Functions of warehouses
- Movement - Facilitates movement
- Storage - Assortment of product available when needed
- Information - When is coming in, what you have, when it goes out
Benefits of warehouses:
- Speed - get when you need it
- Quality - check item before getting it
- Productivity - Push out as much product as possible
How we should design warehouses?
- Shortest distance to warehouse - more popular items need to be placed as close to shipping dock
- Quality/Redundancy
- Throughput
All is controlled by warehouse management system
Layout:
Inventory management
- Cycle stock - item that goes up or down during regular sales
- Safety stock - just in case we did not anticipate happens. But it’s there when we need it
The future is not always cerain:
- Demand may rise quickly
- Supply may not come on time
When to order inventory (continuous review system)?
s is reorder point
- sQ (Fixed Quantity, order-point-order-quantity system) - It’s simple, predictable, may not be as precise or efficient
- sS (Fixed Interval, order-point-order-up-to system) - very precise, harder to implement
Facilities: How many and where
Facilities are:
- Warehouses
- Terminals
- Retail stores
What are needs for facilities?
- Cost economy
- Fast access for customers
Safety stock - extra quantity of inventory kept on hand to prevent stockouts due to unpredictable changes in demand or supply.
You do not stock equally in every warehouse
Transportation network can be as storage
Factors influencing logistics networks
Dilemma:
- Cost
- Best service
What to look when buying a warehouse:
- Location
- Cost of land
- Cost of interest rates
- Cost of gas
- Commitment to land
- Proximity to home office
- Ability to distribute
Logistics Customer Service
Lead time - time from order submission to delivery
Fill rate - percentage of orders shipped from inventory
7 Rs of logistics
- right product
- right price
- right customer
- right place
- right quantity
- right condition
ABC items
Division of products by priority. A is most important, C is least
The goal of operations
- Cost
- Quality
- Speed
- Flexibility
Lean operations
- Kaizen
- Elimination of waste
Waste management
- Transport
- Inventory
- Motion
- Waiting
- Overproduction
- Overprocessing
- Defects
Lean thinking
- Specity value
- Map value stream
- Make value flow
- Pull back from customer (important)
- Strive for perfection
Theory of constraints
In Goldratt’s book “Goal”
- Inventory
- Throughput
- Operational Expense
Constraints:
- Policies
- Manufacturing
- People
Process (not as in book):
- Identify Constraint
- Elevate Constraint
- Subordinate everything else
- Exploit Constraint
- Eliminate Constraint
System:
- Drum
- Buffer
- Rope
Lean inventory
TODO: Learn Just In Time inventory
- Capital costs (what we could do if we weren’t tied up)
- Inventory costs (taxes, insurance)
- Storage costs (equipment, labor)
- Risk costs (may break, expire, deprecate)
You can lower levels of inventory to reduce the order cost:
- Order submission
- Automation for automatic orders
- Order received
- Automation
- Management
You can remove safety stock:
- Stabilizing sales over time
- Variation among lead time
- Length of the lead time
Kanban inventory system
We have 3-bin Kanban system for supply:
- Where we use it
- Shop backroom/Warehouse
- Supplier
How big bins should be?
- They should be all the equal size
We should have Kanban size of Average Demand * Average Lead time, or 112.39 here.
Economic order quantity (important)
Safety stock calculation
Lead time - time from order to delivery to warehouse
From “Quality is free” to “Six Sigma”
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Supply Chain Planning
Important to predict customers will do.
Simple forecasting methods
Time series
Patterns
- Base level (starting value)
- Trends
- Noise (Random)
- Seasonality (Month, Quarterly, Yearly)
- Cycle (Year usually)
Better to use simpler forecasting models if precision is similar
Naive forecast method
What we sell yesterday - we sell today. What we sell today - We will sell tomorrow.
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