synchronizing global commerce h. donald ratliff executive director of the logistics institute...
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Synchronizing Global CommerceSynchronizing Global Commerce
H. Donald Ratliff
Executive Director of The Logistics Institute
Regents & UPS Professor of Logistics
Georgia Tech
H. Donald Ratliff
Executive Director of The Logistics Institute
Regents & UPS Professor of Logistics
Georgia Tech
Industry OutreachIndustry Outreach
GlobalizationGlobalization Research & Graduate Education
Research & Graduate Education
Professional & Executive Education
Professional & Executive Education
The Logistics InstituteThe Logistics Institute
Vision of Synchronized CommerceVision of Synchronized Commerce
Just-In-Just-In-TimeTimeLeaLea
nn Perfect Perfect OrdersOrders
““creating precision and unity across the creating precision and unity across the supply chain”supply chain”
Synchronization Hurdles Synchronization Hurdles
• Variability Requirements and/or resources change over time
• Uncertainty Future events and/or present status is unknown
• Service Do not run out of product
• Efficiency Minimize inventory and transportation cost
• Variability Requirements and/or resources change over time
• Uncertainty Future events and/or present status is unknown
• Service Do not run out of product
• Efficiency Minimize inventory and transportation cost
plant
supply
DC
demand
- understand, reduce, mitigate
- understand, reduce, mitigate
- rationalize
- rationalize
Inventory
Transit timeOrder
Inventory 101Inventory 101
• Estimate run-out point
• Estimate transit-time + make time
• Estimate run-out point
• Estimate transit-time + make timeRun-out
point
Make time
Inventory 101Inventory 101
• Over estimate lead-time– Increase average inventory
• Over estimate lead-time– Increase average inventory
• Under estimate lead-time– Cause stock outs
• Under estimate lead-time– Cause stock outs
•0 •3 •6 •9 •12
•0 •3 •6 •9 •12
• Small cycle times result in more stock outs
Synchronizing Global CommerceSynchronizing Global Commerce
port
port
rail ramp
rail ramp
Transportation Management
plant
DC
Supply Management
Demand Management
Transportation Management Transportation Management
• Transportation availability and cost
• Transit-time– When will a dispatched shipment arrive?
– When should the next shipment be ordered?
• Transportation availability and cost
• Transit-time– When will a dispatched shipment arrive?
– When should the next shipment be ordered?
Average Time (Days)
0-5 Days
5-10 Days
10-15 Days
15-20 Days
20+ Days
Atlantic Container Transit-timesAtlantic Container Transit-times
Ocean Transit Times
0
5
10
15
20
25
30
1 2 3 4
Day
s
Min
Ave
85%
90%
95%
99%
•Livorno/NY
•Livorno/Sav
•Genoa/NY
•Genoa/Sav
Causes of Transit-time VariabilityCauses of Transit-time Variability
• Equipment shortages– Containers, chassis, drivers
• Transportation schedules– Frequency & routing
• Capacity limitations– Ports, rail, canals
• Inspections
• Equipment shortages– Containers, chassis, drivers
• Transportation schedules– Frequency & routing
• Capacity limitations– Ports, rail, canals
• Inspections
• Weather– Storms
• Labor issues– Strikes
• Security– Attacks
• Mistakes
• Weather– Storms
• Labor issues– Strikes
• Security– Attacks
• Mistakes
plantport
port
rail ramp
rail ramp
DC
Requirements for Managing Transit-timesRequirements for Managing Transit-times
• For each element of the global supply chain– Accurate estimates of transit-times
– Accurate estimates of transit-time variability
• Identification of causes of variability & uncertainty
• “Causal” models to predict transit-time variability and uncertainty
• Understand the options
• For each element of the global supply chain– Accurate estimates of transit-times
– Accurate estimates of transit-time variability
• Identification of causes of variability & uncertainty
• “Causal” models to predict transit-time variability and uncertainty
• Understand the options
Georgia Tech EffortGeorgia Tech Effort
• Pooling of data
• Knowledge sharing
• Develop common transit-time prediction models
• Improve shared network performance
• Pooling of data
• Knowledge sharing
• Develop common transit-time prediction models
• Improve shared network performance
Barriers to Managing Transit-timesBarriers to Managing Transit-times
• Insufficient “available” transit-time data
• No clear perception of value
• Reluctance of logistics providers to share data
• Reluctance of shippers to collaborate
• Ongoing data collection requirement
• Compartmentalized knowledge
• Lack of technology
• Insufficient “available” transit-time data
• No clear perception of value
• Reluctance of logistics providers to share data
• Reluctance of shippers to collaborate
• Ongoing data collection requirement
• Compartmentalized knowledge
• Lack of technology
Value of Transit-time ManagementValue of Transit-time Management
• Decrease risk
• Set expectations
• Inventory optimization
• Network design
• Contingency planning
• Anticipate problems
• Decrease risk
• Set expectations
• Inventory optimization
• Network design
• Contingency planning
• Anticipate problems
Transit-time ConcernsTransit-time Concerns
• Increasing globalization
• Transportation infrastructure– Rail
– Truck
• Security
• Outsourcing
• Silos
• Cost
• Increasing globalization
• Transportation infrastructure– Rail
– Truck
• Security
• Outsourcing
• Silos
• Cost
RecommendationsRecommendations
• Get good at transit-time management
• Get prepared for transportation bottlenecks
• Develop a data sharing strategy– Transportation transit-times
– Transportation costs
• Join the Ga Tech effort or start your own
• Get good at transit-time management
• Get prepared for transportation bottlenecks
• Develop a data sharing strategy– Transportation transit-times
– Transportation costs
• Join the Ga Tech effort or start your own
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