international logistics & warehouse management

International Logistics/ Warehouse Management:

International Logistics/ Warehouse Management:

An Overview Presentation

for NAPM-San Antonioby Thomas L. Tanel, C.P.M., CTL, CCA

CATTAN Services Group, Inc.College Station, TX

cattan@cattan.com

979 260-7200

© 2004 CATTAN Services Group, Inc.

Domestic versus Global—Which Is Which?

Logistics Management is:that part of Supply Chain Management that plans, implements, and controls 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 in order to meet customer’s requirements.

Logistics Management is:that part of Supply Chain Management that plans, implements, and controls 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 in order to meet customer’s requirements.

Source: CSCMP formerly CLM

Definition of Logistics Management

World-Class LogisticsCustomer Focus

Delight the Customer• Perfect orders• Responsive• Very short OTD cycle time• On-time delivery• Tailored logistics systems• Easy to do business with

Focus on Growth• Partnerships• Tailored programs• Product availability• “Mutual” success

Provide Shareholder Value

Minimize Asset Base• Asset consolidation• Cross-docking, flow-through• In-transit merge• Greater use of third parties• Worldwide contracting• Network optimization• Replace inventory with information

Understand True Logistics Cost• Activity-based costing• Net landed cost vs. functional

lowest costs• External partner linkage• Competitive cost index

Enable and Exploit Information Technology

Integrate Systems• Common applications• Decision support tools• Leverage capabilities of suppliers• Real-time tracking• Reverse logistics

World-Class Infrastructure• Internal and external resources• Training• World-class people• Constant upgrade of capabilities• “Interest in change”

The Logistics Process

ManufacturingWarehousing

Production PlanningInventory

Management

Raw MaterialOrder Processing

Traffic Management

Transportation

Customer Seller

Deliver to Customer

Supply Chain Management:encompasses the planning and management of all activities involved in the sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.

Supply Chain Management:encompasses the planning and management of all activities involved in the sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.

Source:CSCMP formerly CLM

Definition of Supply Chain Management

The type of solver technology used is dependent on the characteristics of the planning applications, including where, what, when, and how the work is to proceed.

Supply Chain Activities

Source: I2 Technologies

The 4 P’s-Logistics and SCM Focus

Purpose:Clarify your mission to generate

passion, enthusiasm, action, innovation, pride and a feeling of

empowerment.

The 4 P’s-Logistics and SCM Focus

Partnering:Work closely with suppliers, contractors, carriers, vendors,

intermediaries, and customers to create a higher sense of quality and service, trust and openness, and a sense of shared risk and

cooperation.

The 4 P’s-Logistics and SCM Focus

Paradigms:Shift your views to open up new

possibilities, opportunities, and solutions. It’s dangerous to believe you will remain

successful simply by doing the same things that once brought success.

The 4 P’s-Logistics and SCM Focus

Process:The human qualities that bring success involve innovations and risks. Focus on risk optimization rather than risk minimization.

It’s not systems and technology that dictate process but support it.

• Intermodal

• INCOTERMS

• Banking

• Customs

• Export Packing

• Licensing

• IFF/CHB Links

• Sales Terms

• Security

Send anywhere . . .to anywhere—"Whatever it takes!"

Global Warehousing & Distribution

Distribution Centers & Warehouses Base Data

WHAT IS IT?WHAT IS IT?• The use of an outside logistics company to perform all or part of a company’s material management or product distribution function.

• It is the integration of information, inventory, warehousing, and transportation services.

Third Party Logistics

3PL Functions—View from Cadre Technologies

What Is Fourth Party Logistics?A Fourth Party Logistic

(4PL) provider is a supply chain integrator that

assembles and manages the resources, capabilities, and technology of its own organization with those of

complementary service providers to deliver a comprehensive supply

chain solution.

Fourth Party Logistics (4PL)A New Way to Collaborate

4PL Forward Logistics Supply Network

Synchronization

TransportationCarriers

CUSTOMER

EventMgmt &

SCP/E

Visibility

Communication

SCM

4PLLead

Logistics Provider

WarehousesDCs

ContractManufacturers

BrokersForwarders 3PLs

OrderFulfillment

Domestic versus International Requirements

NAFTANAFTA

FMCFMC

GATTGATT

WTOWTONVOCCNVOCC

CHBCHB

IFFIFF

FREIGHT FREIGHT BROKERBROKER

EXPORTEXPORT IMPORT IMPORTDOMESTICDOMESTIC

Boosting Supply Chain Agility for a Competitive Edge

Source: Sam Cassis, VP of Marketing at Exemplary, a web based provider of applications

“There are two ways to improveSupply Chain agility:

speed production cycle times once new demand information works its way down the supply chain, or reduce

the time it takes for that information to arrive.”

“There are two ways to improveSupply Chain agility:

speed production cycle times once new demand information works its way down the supply chain, or reduce

the time it takes for that information to arrive.”

InboundInboundTranspTransportort

ManufacturingManufacturingDistributionDistribution

SupplierSupplier OutboundOutboundTransportTransport

UltimateUltimateCustomerCustomer

Supply Chain Information Systems RequirementsSupply Chain Information Systems Requirements

Where is my stuff?

• Via the IFF/CHB

• Via the IMC

• Via the carrier

• Via the internet

• Via proprietary software

Global Pipeline Visibility

Supply Chain Digest’s View of the Supply Chain

Source: Supply Chain Digest’s White Paper –Getting Global Sourcing Right

WAREHOUSEWAREHOUSE

ORDERPROCESSING

ORDERPROCESSING

IMPORTEXPORTTRAFFIC

PURCHASING

FORECASTING

DRP

FIXED ASSETS

ACCTS PAYABLE

GEN LEDGER

PLANPLAN EXECUTEEXECUTE MANAGEMANAGE

MRPMRP

Supply Chain Information Systems

ACCTS RECEIVABLE

Supply Chain Planning and Execution—Global Trade Management

Capacity, schedules, status receipts

Service, capacity, schedules, routes, receipts

Capacity, schedules, status receipts, inventory

Goods characteristics, capacity, availability, status

Demands goods, requests services, requests receipts

ADC in the Supply Chain

HQ

Advanced PlanningSystems

Host ERP

Operations ManagementSystems

SCP/SCM and CRM

Warehouse's WMS

Distribution Center's WMS

Plant'sMES

Customer Base/ERP

Wholesaler Distributor

Supplier Base/ERP

Transportation Carriers

Transportation Carriers

Integrated Supply Chain Links

Collaboration—Logistics and Supply Chain Costs

Collaborative initiatives between supply chain partners and Collaborative initiatives between supply chain partners and alliances to reduce uncertainty will serve to reduce the cost alliances to reduce uncertainty will serve to reduce the cost

of risk. Such actions must focus on cost preventionof risk. Such actions must focus on cost preventionthat address, both the supply chain pipeline’s and the demand that address, both the supply chain pipeline’s and the demand chain stream’s, security and sustainability without expensive chain stream’s, security and sustainability without expensive

redundancy. This means reduce waste, non-value added redundancy. This means reduce waste, non-value added activities, and duplicative work and move towards activities, and duplicative work and move towards true true

inter-organization collaborative relationships.inter-organization collaborative relationships.

Collaborative initiatives between supply chain partners and Collaborative initiatives between supply chain partners and alliances to reduce uncertainty will serve to reduce the cost alliances to reduce uncertainty will serve to reduce the cost

of risk. Such actions must focus on cost preventionof risk. Such actions must focus on cost preventionthat address, both the supply chain pipeline’s and the demand that address, both the supply chain pipeline’s and the demand chain stream’s, security and sustainability without expensive chain stream’s, security and sustainability without expensive

redundancy. This means reduce waste, non-value added redundancy. This means reduce waste, non-value added activities, and duplicative work and move towards activities, and duplicative work and move towards true true

inter-organization collaborative relationships.inter-organization collaborative relationships.

Logistics—Big Picture Benefits• A typical $100 million business that

switches over can realize a savings of 2.4 million.

• Integrated logistics functions translate into various profit contributions:– Total logistics costs shaved by 20%– Pretax contribution is 2.4% higher

• A typical $100 million business that switches over can realize a savings of 2.4 million.

• Integrated logistics functions translate into various profit contributions:– Total logistics costs shaved by 20%– Pretax contribution is 2.4% higher

More Profit Potential--$$$

Any “cost saving” that can be made in total logistics reflects savings at the rate of the company’s cost of capital and frees up that capital for other business purposes.

1.Logistics can have a dramatic impact on whether a company’s profit picture will be colored red or black.

2.Logistics (other than Purchases) may account for more than 15% of a company’s sales dollars, and improvements of 5-25% in the various logistics functions are within reason.

Any “cost saving” that can be made in total logistics reflects savings at the rate of the company’s cost of capital and frees up that capital for other business purposes.

1.Logistics can have a dramatic impact on whether a company’s profit picture will be colored red or black.

2.Logistics (other than Purchases) may account for more than 15% of a company’s sales dollars, and improvements of 5-25% in the various logistics functions are within reason.

The Puzzle of Logistics and SCM Infrastructure

Advanced Planning Systems

Collaborative Planning, Forecasting,

& Replenishment

Customer Relationship Management

Purchasing, Procurement, Acquisition & Contracting

Supply Chain Planning, Execution & Management

Strategic Sourcing

Reverse Auctions

EDI & E-Com

OMS

PMS

WMS &

TMS

ERP

Extended Enterprise Management

Business Intelligence

SOP

MES

E-Procurement

RFID

ADC

SCEM

BPO

General Pagonis and Logistics

A decade after taking the job of VP of Logistics at Sears, Pagonis said, “People just don’t pay attention to logistics, and I try to use whatever

technique I can get visibility for it to show that good logistics equals sales

and profits.”

A decade after taking the job of VP of Logistics at Sears, Pagonis said, “People just don’t pay attention to logistics, and I try to use whatever

technique I can get visibility for it to show that good logistics equals sales

and profits.”

The Importance of Logistics

Orders Filled Complete

On-Time Delivery

Responsive Production

Rapid Order Fulfillment

Reduce Transportation Costs

Reduce Manufacturing Costs

Reduce waste and obsolescence

Increase turnover

Reduce inventory

Network optimization software contains advance planning engines to synchronize and optimize the supply chain channel for supplier/carrier selection, production sourcing, and inventory pre-build decisions.

Synchronized Supply Chain Management

The ultimate objective of the warehouse is to hold the minimum operational inventory that contributes the most profits

--as long as that level is consistent with your customer service requirements and ordering and planning philosophy.

The Warehouse’s Ultimate Objective

Demand Chain—Pull Vs Push

SUPPLY

DEMAND

Forecasted

Demand

Actual

Demand

PULLPULL

PUSHPUSH

INVENTORY

PHYSICAL

TOBOOK

REPLENISHMENT

VS

Warehouse Cutout View—Various Configurations

Warehousing Equipment Diversity

Standard Racking Double Deep Narrow Aisle

Mobile Racking Drive in Rack Live / FlowSource: ATLET

Microsoft Business Solutions—ABC Layout by Location

Source: Microsoft Business Solutions—Winning Strategies for Distribution

Warehouse Layout-Combo Storage Methods

Crossdocking and Logistics

No stock!

Customer Order

Receipt Ship

Storage!

Cross-Docking

• Cross Docking Helps to achieve the key logistics objectives of:• Stock reduction• Fixed resource reduction• More responsive operating systems

Warehouse Layout--Crossdocking

USING MULTIPLEUSING MULTIPLEMODES OFMODES OFTRANSPORTATIONTRANSPORTATIONFOR ONE FOR ONE CONTINUOUSCONTINUOUSMOVEMENTMOVEMENT

Intermodalism

Comparison of Distribution Costs and Time from National Warehouses—Example

versus

FINANCIALFINANCIALINSTRUMENTSINSTRUMENTS

CARRIER TYPES:CARRIER TYPES:Usage, CostsUsage, CostsDependabilityDependability

LICENSES

IMPORTIMPORT EXPORTEXPORT

DRAWBACKS LANDED COST

International Transportation and Distribution

Common Characteristics:Hub and Spoke Concept

Where Have We Been?—Survival of the Fittest

Darwin is often misquoted by people who say, “Only the strong survive.” What Darwin actually said is that it is not the strongest of the species or the most intelligent that will survive—it is the

ones who are most responsive to change.

Supply Chain Compass-Five StagesSource: Manugistics

The Fundamentals

Cross-Functional

Teams

Integrated Enterprise

Extended Supply Chain

Supply Chain Communities

Business Pain Cost of qualityUnreliable order

fulfillmentCost of customer

serviceSlow growth,

margin erosionNon-preferred

supplier

Driving Goal Quality and costCustomer

service

Profitable customer

responsivenessProfitable growth

Market leadership

Organizational Focus

Independent departments

Consolidated operations

Integrated supply chains

(internal)

Integrated supply chains

(external)

Rapidly reconfigurable

Process Change

Standard operating

procedures

Cross-functional communication

Cross-functional processes

Customer-specific

processes

Reinvented processes

MetricPredictable

costs and rates

On-time, complete delivery

Total delivered cost

Share of customer

Net worth

IT Focus Automated Packaged Integrated Interoperable Networked

Key Tools/Planning

Spreadsheets Point toolsEnterprise

supply chain planning

Point-of-sale supply chain

planning

Synchronized supply chain

planning

ExecutionMRP and other

homegrown applications

MRP II ERPCustomer

management systems

Network-centric commerce

Aligning worldwide distribution strategies

around sourcing/selling business models

Reengineering the movement of product to improve availability and lower net landed cost

Synchronizing processes across all

regions/markets

Key Requirements Key Performance Measures Key Organizational Processes

• Centralized management/worldwide integration

• Customer service options• Sourcing initiatives and alliances• Procurement/supplier integration• Global network optimization• Process-driven information systems

Shareholder Measurements• Inventory turns• Asset utilization• Operating costs• Customer satisfaction• Loss management (asset protection)Customer Measurements• Product availability• Flexibility• On-time performance• Speed• Responsiveness• Consistency• Quality

Planning and Control• Configuration and scheduling• Demand management and

communication• Sourcing strategy• Manufacturing strategy• Supply chain integration• Product life cycleSupport• Infrastructure• Information and technology• Key performance indicators

Global Logistics Strategy Source: Coopers & Lybrand Consulting

Lord Kelvin on Measures

When you can measure what you’re speaking about and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind.---Lord Kelvin

When you can measure what you’re speaking about and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind.---Lord Kelvin

Measuring Up – A Best Practice Model for Evaluating Supply Chain PerformanceSource: Arthur D. Little

Goal Measure DefinitionImproved customer-order fulfillment

Fill ratePortion of custom orders (either external or internal) that are on time and accurate as the customer would determine

Improved customer satisfaction

SurveySystematic feedback obtained directly from customer (external or internal); likely using a sampling survey

Better procurement/supplier management

Supplier order fulfillment

Portion of supplier orders that are on time and accurate

Supplier quantityNon-conforming or defective items or services divided by total at supplier interface

Procurement effectiveness

Year-over-year cost reduction on like items (i.e., by commodity family)

Inventory

Days of supply on hand

Inventory investment on hand (in dollars) divided by daily ship rate (in dollars)

Inventory turnsCost of Goods Sold (COGS) divided by average annual inventory investment

Timing Cash-to-cashElapsed time from payment of suppliers to collection of payment from customers

Quality QualityNon-conforming or defective items or services divided by total at customer interface

Operational integrity Productivity lossOperational productivity lost due to supply chain non-conformance

Ability to view the big picture

Grasp of supply chain concepts

Understand the key performance indicators of logistics/warehousing

Use of information, enablers, and technology

Control of the Supply Chain

What It Means to You Personally

CATTAN Services Group, Inc.

THANK YOU FOR COMING

© 2004 CATTAN Services Group, Inc.