CHAPTER 1: INTRODUCTION TO LOGISTIC AND DISTRIBUTION

Definition of Logistics

Logistics is the management of the flow of goods between the point of origin and the point of consumption in order to meet some requirements, of customers or corporations. The resources managed in logistics can include physical items, such as food, materials, animals, equipment and liquids, as well as abstract items, such as time, information, particles, and energy. The logistics of physical items usually involves the integration of information flow, material handling, production, packaging, inventory, transportation,warehousing, and often security. The complexity of logistics can be modeled, analyzed, visualized, and optimized by dedicated simulation software. The minimization of the use of resources is a common motivation in logistics for import and export.

Definition of Distribution

The movement of goods and services from the source through a distribution channel, right up to the final customer, consumer, or user, and the movement of payment in the opposite direction, right up to the original producer or supplier.

CHAPTER 3: CUSTOMER SERVICE & LOGISTICS

Show how the one of example for the big company such as FEDEX to do the operation in their company everyday in term of the customer service and logistics part.

CHAPTER 14: SECURITY & SAFETY IN DISTRIBUTION

CHAPTER 14:      SECURITY & SAFETY IN DISTRIBUTION

INTRODUCTION

Unfortunately terrorist attacks and crimes against vehicles and property have become almost an everyday feature of life today’s world. The costs associated with the disruption caused by these events are difficult to quantify but are all too real to the victims. Management time, replacement of assets, service failure, increased insurance costs, legal costs and general upheaval are some of the consequences.

The aim of this chapter is to provide an outline of the measures that should be considered when planning logistics security. The most common area s and equipment will be briefly described, but any specialist requirement will not be covered. Vehicles, distribution centre and personnel security will be examined. A section on safety in distribution centres has also been included. International measures to combat terrorist attacks will be briefly described, and supply chain vulnerability will be discussed.

INTERNATIONAL SECURITY MEASURES

·         US cargo security measures

·         Custom-Trade Partnership against Terrorism (C-TPAT)

·         Free and Secure Trade (FAST)

·         Container Security Initiative (CSI)

·         Advanced Manifest Regulation (AMR)

US CARGO SECURITY MEASURES

Given that the United States is the largest economy in the world and was the victim of the 11 September attacks, it seems appropriate to look in more detail at some of the measures the United State has put in place to avoid any further attacks.

TACTICAL SECURITY

Some tactical measures to help ensure vehicle, personnel and distribution centre security were covered. These included:

·         Vehicles immobilization

·         Vehicle alarms

·         A guide to dos and don’ts for driver

·         Distribution centre location

·         Distribution  centre fecing and gates

·         Closed circuit television

·         Personnel and security guards

·         Satellite tracking

Some key issues relating to health and safety in the distribution centre and warehouse also are highlighted.

CHAPTER 13: BENCHMARKING

CHAPTER 13:      BENCHMARKING

 

INTRODUCTION                                                           

·         The process of continuously measuring and comparing one’s business performance against comparable processes in leading organizations to obtain information that will help the organization identify and implement improvement

·         The continuous process of measuring our products, services and business practices against the toughest competitors and those companies recognized as industry leaders

WHY SHOULD AN ORGANIZATION ENGAGE IN BENCHMARKING?

·         The simple answer is to remain competitive

·         The process of institutionalizing benchmarking leads to the organization having a better understanding of its competitive environment and its customers need

REASONS FOR BENCHMARKING

Objective	Without Benchmarking	With Benchmarking
Becoming competitive	Internally focused Evolutionary change	Understanding of competitive Ideas from proven practices
Industry best practices	Few solutions Frantic catch-up activity	Many options Superior performance
Defining customer requirement	Based on history or gut feeling Perception	Market reality Objective evaluation
Establish effective goals & objectives	Lacking external focus Reactive Pursuing pet projects	Credible, unarguable Proactive Solving real problem
Developing true measures of productivity	Strengths and weakness Routes of least resistance	Understanding outputs Based on industry best practices

 

HOW TO CONDUCT A BENCHMARKING EXERCISE

·         This section will describe a framework for conducting a benchmarking project

·         Given the diversity of organization and processes, it will not be possible to go into great detail

·         The Japanese are credited with starting the benchmarking approach to continuous improvement

·         At a very simple level , employees are seconded to other companies in order companies in order that they may learn new ways of working

·         This practice is called Shukko

XEROX APPROACH TO BENCMARKING

The Xerox approach to benchmarking is as follows:

·         Planning

·         Analysis

·         Integration

·         Action

·         Maturity

ALCOA APPROACH TO BENCHMARKING

The Alcoa approach to benchmarking is as follow:

·         Decide what to benchmarking

·         Plan the benchmarking

·         Understanding own performance

·         Study others

·         Learn from the data

·         Use the findings

CHAPTER 12: COST AND PERFORMANCE MONITORING

CHAPTER 12:      COST AND PERFORMANCE MONITORING

INTRODUCTION

Recent advances in information technology have focused attention on the importance of good information system to support logistics and distribution activities. This requirement for information has always existed, nut the computer has enable the development of more sophisticated means of data storage, processing and presentation. A typical framework illustrating the planning and control cycle. This framework emphasizes the cyclical nature of the planning and control process:

1.       Where are we now?

2.       Identify the objectives of the distribution process

3.       The process that include the development of appropriate strategic and operational plans

4.       Need for monitor and control procedures

WHY MONITOR?

To establish an effective system for cost and performance monitoring and control to ensure the strategy always on track. Typical aims might be:

1.       To enable the achievement of current and future business objective

2.       To facilitate the effective provision of logistics services

3.       To enable the efficient operation of logistics resources

4.       To support the planning and control of an operation

5.       To provide measures that focus on the real outputs of 6the business

DIFFERENT APROACHES TO COST AND PERFORMANCE MONITORING

A number of different approaches feo developing a monitoring and control system were outlined. These included:

1.       The balance scorecard

2.       The SCOR model (supply chain operations reference model)

3.       Integrated supply chain

4.       An operational approaches

WHAT TO MEASURE AGAINTS?

Several different means of identifying suitable goals were:

1.       Measuring cost and performance against historical data

2.       Measuring against a budget plan

3.       Developing physical or engineered standard

4.       Benchmarking against ‘best practice’

The major factors related to these alternatives were discussed, together with the relative advantages and disadvantages of the different approaches. Finally, an operational planning and control system was described, with the emphasis on the need to identify and measure what deviations had occurred and why they had occurred. This should specifically consider changes in:

1.       Levels of activity

2.       Efficiency or performance

3.       Price or cost

GOOD PRACTICE

 A number of key areas of goof practice were considered. These were deemed essential in developing the detail of an effective monitoring and control system. Most of the main principles associated with an effective system are based on sound common sense. They can be used to provide distinct guidelines for the development of an approaches new control system as well as to help identify reasons why an existing system is not functioning satisfactorily. They include:

1.       Accuracy

2.       Validity/completeness

3.       Hierarchy of needs

4.       Targeting of the correct audience

5.       User ownership

6.       Reactivity to changes in business activity

7.       Timeliness

8.       Ease of maintenance

9.       Cost-effectiveness

The element of good practice that come under the category of content have almost all been covered in previous sections, and they are as follows:

1.       The need for clear cost categories, with careful identification of fixed and variable costs

2.       The use of flexible budgeting

3.       The use of variance analysis

4.       The clarification of controllable and non-controllable element

5.       The use of reference points against which the monitored elements can be measured, these might include:

·         Budget

·         Forecast

·         Trends

·         Targets

·         Comparative league tables

The final aspect of good practice concerns the type of output of the system produce. This is the information on which any form of action is based. It has already been emphasized that this information must be relevant and useful. The major output-characteristics are:

1.       Reports can vary. They may be summary, exception, and detailed

2.       Reports should be made to a standard format

3.       Data should be presented in whatever means is most appropriate to the eventual use of the data

Different types of data output are as follows:

1.       Trend data

2.       Comparative data

3.       Indices

4.       Ratio

5.       Graphs

Five key areas for measurement were identified:

1.       Volume

2.       Efficiency

3.       Cost-effectiveness

4.       Quality

5.       Stability

LOGISTICS AUDIT

A periodic examination of the status of logistics activities. Audit information is used to establish new reference points against which reports are generated and to correct errors that can result from the performance of certain logistics activities due to misinformation.

TOTAL FUNCTION AUDIT

The purpose of the total function audit is to investigate how logistics function is managed wholly. This is carried out through an evaluation of all personnel, the organization structure and the overall network design. Substantial changes in demand may indicate the need for strategy revision. These changes are changes in demand, customers service, product characteristics, logistics costs and pricing policies.

INVENTORY AUDIT

Inventory audits are essential in inventory systems. A typical inventory control system makes adjustments to inventory record due the demand depletions, replenishments, returns to plant and product obsolescence. Disparities due to theft, customer returns, damages goods and errors in various inventory reports. From time to time requires physical count of inventories. Adjustments are then made to inventory records to provide more accurate tracking of inventory levels.

FREIGHT BILL AUDITS

It is quite common for the incurring extra expenses due to freight bill. Error in rates, product description, weights and routing are among the ways that errors may creep into billing. It requires checking on freight billing.

OTHER AUDITS & BENCHMARKING TO OTHER FIRMS

Other audits can be carried out on irregular basis such as warehouse space utilization, customers service levels, transportation fleet utilization and inventory policy performance. Benchmarking is carried out for comparison, but with caution.

REPORTS

Various types of reports are routinely produced internally such as stock status reports, warehouse and truck fleet utilization reports and warehouse and transportation cost reports. Ro achieve overall logistics function control, reports on cost service statements, productivity report and graphic performance chart will benefit the control exercise very much.

CHAPTER 11: MANUFACTURING & MATERIALS HANDLING

CHAPTER 11:      MANUFACTURING & MATERIALS HANDLING

INTRODUCTION

There is extensive literature available on a variety of inventory management practices, referred to as MRP I (materials requirement planning), MRP II (manufacturing resources planning), JIT (just-in-time), and the Japanese concept called Kanban. Although these are related to production scheduling, only two of them (MRP I and externally oriented JIT) are true concerns of logistics managers.

KANBAN

·         An internal production control technique for minimizing the capital invested in in-process parts inventories

·         Prevent accumulation of components that are defective

·         Reflects the deep concern of Japanese management with quality control

·         The cost savings possible from minimizing rejects

·         Frequently termed JIT

·         Control by production manager

MATERIALS REQUIREMENTS PLANNING (MRP I)

·         The preparation of a master production schedule for some period into the future

·         The preparation of a bill of materials for each item to be produced

·         The explosion of the units on the master production schedule into a component-by-component requirement schedule, in terms of both quantities and dates needed

·         The scheduling of component inventory replenishment according to necessary lead times and economic order, buying, or shipping quantities to conform with the requirement schedule rather than average demand over time

MANUFACTURING RESOURCES PLANNING (MRP II)

·         Embodies planning issues related plant capacity

·         Not the direct responsibility of the logistics manager

·         It involve the interest of logistics management when inputs on production materials availability are solicited to enable decisions concerning production materials

·         Decision regarding investment in added production facilities or reduction in plant capacity are normally made by corporate management

·         The resulting plant capacity will govern the decisions of the logistics manager concerning the materials provisioning required to support the projected production schedule

JUST-IN-TIME (JIT) SCHEDULING

·         The Japanese concept of externally oriented JIT is that shipments of materials for the production lines should arrive

·         The goal of JIT is to minimize inventories of production materials

·         Recently received a considerable amount of management attention and emphasis in the United States

QUANTITTIVE APPLICATIONS TO INVENTORY MANAGEMENT

·         The elementary methods used for analytical application to inventory management encompass considerations of cost optimization, essentiality, and confident based on predictability of demand patterns

·         The following are confidence based on predictability total inventory costs, economic order quantities, and inventory levels for consumable and reparable components

TOTAL INVENTORY COST

·          Inventory-level decisions would be relatively simple if users organized their requirements so that an equal number of all items were needed each day and if the time required to schedule, produce, and transport replenishment stock were known and constant

·         The two major factors affecting the order quality of a product are the cost of placing an order and the cost of carrying inventory

·         The cost of placing an order or setting up a production run is assumed to be constant regardless of the size of order

ECONOMIC IMPLICATIONS OF INVENTORY

·         The economic focus on the inventory manager of a commercial enterprise is the costs of inventory and the profitability of the inventory policy

INVENTORY COSTS

·         The predominant elements of inventory costs are

1.       Order processing or production setup costs

2.       Investment costs

3.       Warehousing costs

4.       Inventory risk

5.       Stock-out costs

ORDER PLACEMENT OR SETUP COSTS

·         Order placement costs are generated at a distribution center and in thye plant purchasing activity

·         The equivalent type of cost in the production process is the cost of setting up a machine or a production line to produce an items

INVENTORY INVESTMENT

·         Investment in an inventory item include the purchase price

·         To this must be added any costs of transportation to distribution centers where other inventories may be located for subsequent shipment to customers

·         The most significant impact of inventory investment takes the form of opportunity costs

WAREHOUSING COSTS

·         Warehousing costs, or inventory holding cost, include storage (facilities) cots, property taxes, and insurance costs, but not the costs of moving goods into and out of  warehouse

·         Unless capacity limits are being reached, the incremental cost of storing more inventory may be very small

·         Once capacity limit reached, the incremental cost could markedly increase

INVENTORY RISK

·         Costs of spoilage, damage, obsolescence, and pilferage are difficult to analyze and vary significantly by type of product

·         Spoilage or damage can result in the total loss of a product

·         The reworking of defective products, or the reallocation of a product from one distribution point to another

·         Inventory losses from pilferage have two adverse effects

·         Represent a financial loss

·         The pilfered goods may continue to be carried in the inventory as phantom assets and noted as available for sale until the loss is discovered

STOCK-OUT COSTS

·         Cost easy to count

·         Hard stock-out costs that are comparatively easy to assess include the costs

·         It is not abnormal to find such costs amounting to double or triple the costs for processing of a routine stock order

·         The soft costs of stock-outs, which are seldom analyzed and nearly impossible to measure, are those of lost selling time and profit

Chapter 9 Transportation regulation

C9.

Transportation regulation

Transportation regulation functions

Transportation regulatory agency are primarily concerned with oversight and appropriate jurisdictional administration of the economic and safety of their assigned sector of the transportation industry.

Miscellaneous rate modification

Value rate: The carrier is liable for the value of goods lost or demage while in its custody.

Guaranteed schedule rates: A carrier is normally responsible only for exercising ”reasonable dispatch” which permits greater latitude than a guaranteed delivery schedule.

Space-available rate: To achieve higher capacity utilization after regular cargo have been loaded.

Measurement rate: rate that reflect weight- density ratio are used in the delivery in ocean transportation.

Agreed rate: Agreed rate are loyalty incentive rate, granted in exchange for the shipment of a specific of a specific % share of total annual shipment.

Governmental rate: provide the general rule making need not apply to shipment made by government agencies.

Multimodal rate: Most multimodal rate are quoted by the service and are generally base on carrier cost.

Accessorial service and terminal charges

Accessories service. Is type of service, often considered as privileges by the providing carrier, result from special needs the shippers and competition among carrier. The more significant of such service are described below:

Diversion and reconsignment- Mean is change in the routing of the shipment.

Protective service- Are offered for goods that could be affected by environment.

Special equipment- This part sometime assed for the use of equipment that meets special shipper needs of extra charges.

Transit privileges- This facilitate the flow of goods that requirement some handling or processing at an intermediate point.

Stop-off privileges- This type of transit privilege the shipper or receiver to stop a shipment to partially load or unload it at an intermediate point.

Split delivery- Is an additional service provided by highway carrier and the permits and unlimited number of segment of a large shipment to delivery within the limit of a split- delivery area.

Pickup and delivery- Certain carrier commonly quote rate on a terminal-to-terminal basis.

UTILIZATION OF AUTOMATED LOGISTICS INFORMATION TEHNOLOGY

The efficacy of the logistics system has been significantly enhanced by the introduction and utilization of a number of forms of information technology (IT). Among the more exemplary and useful form of the new technology is Radio Frequency identification to be addressed in this section.