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Cristina Rodriguez and Youssef Marun PROF. PEREGO - 2021LOGISTIC MANAGEMENTRESUMEContenido1. Introduction to Logistics and Supply Chain Management............................................................................................. Introduction to Logistics and Supply Chain Management..........

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LOGISTIC MANAGEMENT RESUME

Cristina Rodriguez and Youssef Marun PROF. PEREGO - 2021

Contenido 1.

Introduction to Logistics and Supply Chain Management.............................................................................................2

2.

Logistics Management Strategy.....................................................................................................................................3

3.

Warehouses................................................................................................................................................................... 4

4.

Warehouse Management..............................................................................................................................................6

5.

Automated Warehouse.................................................................................................................................................8

6.

Picking...........................................................................................................................................................................9

7.

Picking: Management policies.....................................................................................................................................11

8.

Transportation Management.......................................................................................................................................12

9.

Road Transportation....................................................................................................................................................13

10.

Distribution Network...............................................................................................................................................14

11.

Logistics Outsourcing...............................................................................................................................................17

12.

Basic Inventory Planning..........................................................................................................................................18

13.

Advanced Inventory Planning..................................................................................................................................19

14.

Logistics and B2C e-commerce................................................................................................................................20

1. Introduction to Logistics and Supply Chain Management Logistic management is that par of supply chain management that plan, implement, and control the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption to meet customer requirements. Distribution Term employed in manufacturing and commerce to describe the broad range of activities concerned with efficient movement of finished products and sometimes raw materials. Efficient cost reduction Material management Focus on single company, is the distribution of end products and raw materials and aim to reduce distribution or supply/production cost. SUPPLY CHAIN Raw material suppliesRaw material storageManufacturingFinished good storageMarket Supply chain management include all inter-company processes and focus on: Supplierssupplyproductiondistributioncustomers Supply chain-based competition is a strategy approach where competitiveness of one company is impacted by action of the others supply members, so competitiveness is between different supply chain, making companies in the same supply chain resort on collaboration between supply members through integration and collaboration 3 Stack of logistic management 1. Operational: focus on logistic execution is the lowest level and the base for the other stacks include design and management of the processes that support material flow. 2. Tactical: focus on logistic planning is in charge of made operational capacity adjustment and execute operational activities linking demand and supply side, integrated customers with suppliers through management of: Demand planninginventory planningdistribution planningproduction planningprocurement planning 3. Strategic: focus on logistic system design and strategy define logistic network, transportation modes and make or buy policies

Logistic and supply chain management is important because represent about 5-25% of revenues have a substantial impact on assets affect top line of profit an loss and are non-discretionary activities.

2. Logistics Management Strategy Logistic and marketing mix: objective is to plan implement and control the efficient and effective forward of the reverse flow of good, services and related information from the point of origin to the point of destination. Value can be through:

Increase in revenues - effectiveness in serving market Reduction cost- leveraging resources Impact on ROA (RETURN ON ASSET)

Better customer service so increases in revenues less logistic cost at the same time lower inventory and less resources and infrastructure Sources of Value 1. Reduction of logistic cost: increasing efficiency in transportation and logistic process 2. Increasing the revenue: Improve customer service 3. Reducing current asset: reducing inventories and cash to cash cycle time this is average time to turn dollar investment of raw material into dollar from a customer 4. Reducing fixed asset: by better logistic reduce variability and possibility of decrease in transportation asset, personal staff, and warehouse capacity 5. Manging trade-off between the different sources of value: for example improve productivity through investment in fixed capital Classes of indicators Product range: if high also supply chain complexity Fill rate    

Order fill rate Item fill rate Stockout opposite to fill rate Order completeness

Time related indicators   

Order cycle time Punctuality on time Delivery frequency

Accuracy   

Order compliance Document compliance Packaging compliance

 Combination of indicators measure the performance of the whole logistic Compound of indicators- organization Supply chain strategy method 1. Know your supply chain: know the uncertainty in your demand and supply side there are demand factors like: product variety, price elasticity, obsolescence risk, competition level, number of echelons downstream and penetration of new markets. There are supply side factors like: stability of supply base

level of dependency of supply contracts, quality required, evolution of raw materials and number of echelons upstream 2. Chosse your supply chain strategy:  You choose lean if both have low uncertainty that aims to maximizes ROA, have policies like: Not value adding activities elimination and focus on economies of scale  If you have low demand side uncertainty and high supply side uncertainty you choose risk hedging that aim to reduce risk of supply disruption, have policies like: back up suppliers, ICT adoptin, risk management orientation  If you high hign demand side uncertainty and low supply side you choose responsive supply chain that aim to mitigate risk of changes in the demand their policies are: postponement, extra cacity, short lead times.  If both side have high uncertainty that aim to reduce risk of both side is like combination of risk hedging and responsive supply chain 3. Define your strategy 4. Review your strategy overtime

Time based strategy: Cycle time reduction, pull approach postponement or time reduction logistic initiatives crossdocking Asset productivity strategies: Inventory reduction crossdocking or collaborative planning, equipment utilization or outsourcing Technology based strategy: Ecommerce, automated identification projects and automated warehouses. Relationship based strategy integrated supply chain processes also collaboration

3. Warehouses 1. FUNCTIONS

a. Storing inventories: To keep inventory from asynchronous processes (cycle stock) and to ensure service level due to demand and lead time variability (safety stock). b. Managing inventories flow: Change unit loads. c. Handling materials: Prepare orders, pack, unpack, etc. 2. TYPES a. WAREHOUSES b. TRANSIT POINTS: Their main function is to manage and optimize inventories flows and reduce transportation cost. No inventories are kept. Only in transit stock. Also used to re-pack orders (receive from different suppliers, pick, and then send to customers) and cross docking (receive and deliver transport units from different suppliers). 3. ACTIVITIES TRADITIONAL ACTIVITIES: INBOUND FLOW: Receiving  Put away  Storage OUTBOUND FLOW: Storage  Picking  Shipping VALUE-ADDING ACTIVITIES: Customization, technical support and return management. 4. AREAS OF THE WAREHOUSE: Receiving, storage, picking and shipping area. 5. STORAGE SYSTEMS STORAGE SYSTEMS PARAMETERS DESIGN PARAMETERS: Storage Capacity and Throughput Capacity (TC for Input and TC for Output). DESCRIPTIVE PARAMETERS: Area Utilization Rate, Volume Utilization Rate, Capacity Utilization Rate, Selectivity and Saturation Coefficient of Storage Capacity. COST INDICATORS: Handling cost and Storage cost. 6. STORAGE SYSTEM TYPOLOGIES FOR BIG UNIT LOADS CHARACTERISTICS ADVANTAGES  Not expensive.  No infrastructure.  Simple.  Constrained by the width of the truck, the weight a UL can stan and stability.  LIFO system.  For high inventory level.  For high  High AUR. DRIVE IN (one access) inventory level. AND DRIVE THROUGH (two access) RAIL RACKS

BLOCK STACKING

DISADVANTAGES  Low AUR.  Low selectivity.  Saturation Coefficient of SC low.



Great investments (Special truck and



SELECTIVE PALLET RACKS



LIFO and FIFO.

FLOW RACKS

 

FIFO. For high inventory level.

 

racks). Low selectivity (specially for drive in).

High selectivity. Cheap.  

Low selectivity. Expensive.

FOR SMALL UNIT LOADS (CALLED PICKING SYSTEMS)   

MINILOADS CAROUSELS VERTICAL AS/RS

7. a. b. c.

PALLET HANDLING TRUCKS WALKIE STACKERS (Counterbalance Truck and Pallet Jack) FRONT LOADING FORKLIFT TRUCKS (Counterbalance Forklift Truck and Straddle Reach Trucks) SIDE LOADING FORKLIFT TRUCKS (Side Loader and Swing Fork Turret Truck) H max (m)

WALKIE STACKERS Counterbalance Forklift Truck Straddle Reach Trucks Side Loading Fork. Truck

0 6

Aisle Width min (m) 3,0 2,5

10 14

Cost ($) 15.000 30.000

2,5 1,5

8. IMPACT OF HANDLING SYSTEMS IN STORAGE SYSTEMS Handling system impacts the AUR since this defines the maximum height and the aisle width.

4. Warehouse Management 1. MANAGEMENT POLICIES

30.000 45.000

1.1 MANAGEMENT OF THE OPERATIVE CYCLES a. Types of operative cycles  Single command cycle  Dual command cycle Advantages of dual command cycle: More efficient than the single command due to: better utilization of time, movement of more unit loads Disadvantages of dual command cycle: More complex, more planning, activities are not always concurrent. b. Types of time requirements  Fixed times (Waiting for data, manouvres and curves, positioning in front of UL and load/unload).  Variable times (Transfer time with/without load and lifting or descent with/without load)

-

1.2 ALLOCATION POLICIES Allocation policies are based on two different criteria:  Retrieving index



Access index

AI determines the density of access and therefore which product should be closer to the entrance. ALLOCATION POLICIES: i. ii. iii.

Randomized storage Dedicated storage Class-based storage

For the allocation of products AI is used for both case ii and iii.

2. STORAGE SYSTEM DESIGN PRINCIPLES 1. 2. 3. 4. 5. 6. 7. 8.

Cluster items according to the storage system (to meet technical, environmental or safety reasons). Define the required performance for each storage system (SC and TC). Define the constraints (urban, economical, technical or safety). Select storage systems. Pre-design the storage area. Modeling and simulation. Technical and economical check and assessment. Design.

3. STORAGE SYSTEM DESIGN METHOD The design of a conventional* storage system consists in three phases: 1) Identify design parameters: Storage Capacity and Throughput Capacity. 2) Design the layout: To reach the storage capacity. 3) Design the handling system: To reach the Throughput Capacity. Conventional* means we have info about SC, TC, has single deep selective racks, PLs, counterbalance forklift truck and no picking activities in storage area. 1) Identify design parameters Storage Capacity  Inventory Analysis (Depends on allocation policy). Throughput Capacity  Physical Flow Analysis (Absolute flows, Flows scheduling and Flows interaction with handling system). 2) Design the layout (5 steps) 1. Choice of layout typology (Longitudinal or Transversal). 2. Position of the input/output point (Corner, along or in the middle a=2,3,4 respectively). 3. Determination of the storage area. Requires: Determine the bay, the unitary module (um), number of levels and required area with the AUR. 4. Determination of the optimal shape.

5. Design of the storage area. Requires: capacity.

Number

of

aisles,

number of

3) Design the handling system (4 steps) 1. Determination of the ASCCT (Average Single Command Cycle Time). 2. Determination of the TC of 1 truck. 3. Determination of number of trucks for the planed TC. 4. Determination of the real TC.

5. Automated Warehouse 1. TECHNICAL FEATURES 2. SYSTEM CONFIGURATIONS

columns and real storage

3. MANAGEMENT POLICIES 4. AUTOMATED WAREHOUSE DESIGN METHOD The objective is to minimize the number of aisles. Doing so, we reduce the systems cost. The design of a conventional* storage system consists in three phases: 1) Identify design parameters: Storage Capacity and Throughput Capacity. 2) Design the layout: To reach the storage capacity. 3) Assessment of Throughput Capacity To verify the Throughput Capacity is at least equal or higher than the required one. Conventional* means we have info about SC, TC, has single deep selective racks, PLs, the automated handling system uses one AS/RS machine per aisle, and this only has a couple of forks. 4) Identify design parameters Storage Capacity  Inventory Analysis (Depends on allocation policy). Throughput Capacity  Physical Flow Analysis (Absolute flows, Flows scheduling and Flows interaction with handling system). 5) Design the layout (2 steps) 1. Determination of the storage area. Requires: Determine the bay and the unitary module (um). 2. Design of the storage area. Requires: a. b. c. d. e. f.

Maximum number of levels. Maximum number of columns. Minimum number of aisles. Real number of columns. Real storage capacity. Dimensions of racks.

3. Throughput capacity assessment 1. Determination of the ASCCT (Average Single Command Cycle Time) or ADCCT. 2. Determination of the TCSCCT per aisle. 3. Determination of TC of system. (We must multiply by number of aisles).

6. Picking 1. GENERAL FEATURES

Picking is the core activity of the and order assembly process it is carried out when there are differences from unit loads in the input and output (e.g customer requiring cases and not PLs). Labour intensive process with high impact on warehouse costs and customers service level. Difficult to automate. Triggered by the delivery of the picking list. Picking can be done from General Stocks (standard storage area) or Forward Stocks (stock specially for picking operations stored in either standard storage area or forward area). 2. PICKING DESIGN AND MANAGEMENT PRINCIPLES 1) Select the picking system a. Segment the problem: Most relevant picking problems are Item size, order profile (lines or volume per order) and item profile (flow or inventory turnover ratio ). b. Identify the possible solution: Assess performance of different types of picking systems. 2) Define the picking system storage capacity and its design parameters 3) Define the management policies (Storage, batching and routing) 3. PARAMETERS AND KPIS PARAMETERS: Storage capacity and throughput capacity (. KPIs: Costs and service level. Costs: 1. Picking Costs (Labour, equipment, space and information system costs). 2. Sorting Costs. 3. Replenishment Costs. Service level: 1. OCT. 2. Accuracy. 3. Flexibility. 4. TYPES OF PICKING SYSTEMS (Generally if order size > 0.5 pickers to part is preferred) LABOUR COSTS PICKING SYSTEMS

CRITERIA INVESTMENT COSTS

___

___

+++

+++

ACCURACY AND SPEED ___

++

++

__

__

+

+

__

_

+

++

Pick to box

+

_

__

+

+/_

Automated picking systems

+++

+++

___

___

+++

Picker to parts Parts to picker Pick and sort

SPACE COSTS

FLEXIBILITY

5. AUTOMATION OF MANUAL PICKING SYSTEMS Automatic identification of items, radio frequency communication, display and lights on picking locations and scales. 6. FORWARD RESERVE PROBLEM

The FRP consists in determine the storage capacity of the forward storage (picking area) in order to minimize picking costs and replenishment costs. The FRP requires to: 1) Determine the forward stock Storage Capacity. We need to understand if: a. Forward storage area is required or not. b. If so, what items should be stored there. c. If so, what should be its replenishment frequency. 2) Allocate the right forward Storage Capacity to the different items (SAP). 6.1 SPACE ALLOCATION PROBLEM The SAP consists in determine (space for the location of item i out of the total space S) minimizing R, the total amount of replenishments from the reserve storage to the forward storage.

Increasing S decreases the number of replenishments but increases the picking costs. R = Number of replenishments, F = Total product flow and S = Space in WH. 3 DIFFERENT CRITERIA: a. EQUAL TIME SUPPLY In this case R is constant and defined, meaning that the overall capacity depends on the replenishment frequency. Advantages: Easy to optimize replenishment process. Disadvantages: Complex to allocate space and design the layout. b. EQUAL SPACE SUPPLY In this case all items have same designated space Si, therefore the replenishment frequency is different for every item. Advantages: Easy to allocate space and design the layout. Disadvantages: Difficult to optimize the replenishment process. c. OPTIMAL ALLOCATION POLICY

This criteria minimizes the number of required replenishments combining both space and equal time supply criteria.

7. Picking: Management policies 1. GENERAL FEATURES Management policies are used to improve the effectiveness and efficiency of picking activities. 2. BATCHING POLICIES

We could have order picking or batch picking. Batch picking works with the principle of increase picking density. Advantages: Reduce travel time and retrieval time to pick one order and reduce the distance between one pick and the other. Disadvantages: Sorting costs, operational complexity, and warehouse lead time. Sorting For sorting we can do so...