international logistics & warehouse management
DESCRIPTION
This presentation is designed to take an astute quick look at international logistics and warehouse management, both in terms of today's global supply chain and in the demand flow management process, so you can know how to make the most of this strategically. You've probably heard something about these topics. You may even be somewhat familiar with them. But how much do you really know about their strategic importance? In an international logistics and warehouse management system, cost-to-cost "trade-offs" available through systems analysis are easy to identify. One example is using premium transportation for small, time-phased purchased lots to reduce inventory investment and lower safety stock. Another might be using a distribution center for freight consolidation or Crossdocking to improve customer service levels and avoid material handling inefficiencies. Yet another might be the use of a blanket agreement (with a rolling forecast) with your supplier. By aligning supplier capacity to your customer schedules and your inventory goals, you gain pipeline visibility through automated order tracking and alerts in addition to lowering costs and raising customer service levels. The overall goal, to achieve a fully integrated logistics approach, is to realize maximum trade-offs among basic functional activities such as warehousing. Traditional Logistics and Warehousing channels are indeed changing. As organizations move from mass production and mass distribution to lean manufacturing, postponement, and mass customization, creative approaches are needed in the management of logistics and warehousing. The challenge is always present, because different customers may demand different levels of service. Demand often cannot be forecasted, especially if one must deliver customized products or services exactly where the customer needs them on a global scale at multiple locations. Businesses today must understand that they are competing on the basis of time more than on any other factor. The rigors of international logistics require that you take action to meet your customers’ demand for faster, more frequent, and more reliable deliveries. Your suppliers need to meet increasingly precise inbound schedules. Tomorrow’s customers are more likely to be in another country or continent than they are likely to be from across town, in another state, or in another province. In addition, diverse countries use different formats for weights and other units of measures, as well as many countries and localities have different licensing requirements and charge different duties, value-added taxes (VAT), and fees, which altogether amount to a major content-management challenge for your Global Trade and Logistics IT systems.TRANSCRIPT
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
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.