case experience perception the essay prudent assumptions where's the beef high impact writing
TRANSCRIPT
Case Experience
• Perception
• The essay
• Prudent Assumptions
• Where's the Beef
• High Impact Writing
CODE COMMENT1 You are repeating the case facts2 Subdivide the paper for better impact3 Title / Charts should be complete4 I lost your logic trail about here5 Your conclusions are not supported by your logic trail6 Push the numbers!7 Underdeveloped concept / section8 These conclusions tend to be soft (unsupported by numbers)9 Plus other factors10 You have not convinced the reader that this is feasible or necessary11 What are the objectives of the firm?12 Use the information in the case13 What problems are you trying to fix?14 What will the program cost? How long will it take to implement?
15 or ? I don't understand what you are trying to say here
Some Strategic Issues
• Inventory Deployment
• Changing Functionality of
• Technology Integration
warehouse
ALTERNATIVES FOR INVENTORY DEPLOYMENT
InventoryDeploymentOptions
FirmDirected
ThirdParty
OtherStrategies
Centralized
Decentralized
Contract
Public
Flow ThroughCross-Docking
Floating Inventory
Postponement
Consignment
Three Example Strategies of Product FlowFast to market Waves of fresh Low cost assortments
Transportationfrom manufacturerto distribution center(DC)
Distribution centercost
Transportation fromdistribution centerto store
Store operation
Manufacturercost
Trade off some cost for speedand flexibility
Frequently usehighest costtransportation mode(airfreight) to gain speed
Look for speed
Small, fast, and expensivestore deliveries
Full service
Live with longerlead times in orderto drive lower purchase cost
Balance speed and cost using low cost transportation mode tosmall number of regional DCs
Balance speed and cost in handling new productwaves
More cost effectivesmall store deliveries
Full service
Drive lowest purchasecost and off-load as muchwork as possible tomanufacturers
Maximize use of lowestcost transportation modesby establishing many local DCs close to stores
Operate DCs to minimizework done in stores
Most cost effective fulltruckload delivery to stores
Self service
Source: McKinsey Quarterly 1996 Number 2
50
40
25
10
0
10
20
30
40
50
60
1996 1998 2000 2002
Assuming 100% is Completely Automated, Estimate
your Firm’s Level of Warehouse Automation
(median)
Source: 1998 OSU Career Patterns
PERCENTAGE OF SHIPMENTS WHICH ARE POOLED PRIOR TO DELIVERY TO THE
CUSTOMER - ALL INDUSTRIES (N = 196)
14.2
17.8
19.8
22.5
10
12
14
16
18
20
22
24
1994 1996 1998 2000
Source: OSU Career Patterns, 1996
PERCENTAGE OF OUTBOUND FREIGHT THAT WILL FLOW DIRECTLY FROM PLANT TO CUSTOMER - ALL INDUSTRIES (N = 196)
31.1
34.733.0
35.8
0
10
20
30
40
1994 1996 1998 2000
Source: OSU Career Patterns, 1996
Warehouse Operations: 101
• What are the warehouse functions?• What's the difference between a
warehouse/ DC/ Cross Dock?• How do you use technology in the
warehouse/ WMS?
Key Factors Affecting the D.C.
• Cycle compression
• Functional shiftability
• Customer driven requirements
• Technology
812
Storage is the primary differentiator for the processes in warehouses, and many of the activities encountered revolve around putting products into storage and taking them out again, driven by customer orders
Controls are typically applied on both inbound receipts
and outbound orders
Typical Processes - Warehouses
Receiving Putaway Storage Letdown/Replenish Picking Loading/
Shipping
• Inventory management
• Qualityassurance
Inbound Outbound
Company-Operated Warehouse Activities
Receiving Area
Bulk Storage Area
Order PickStorage Area
Packaging Area
Staging Area
Shipping Docks
1
2
3
5
7
4
6
8
9
10
Source: Improving Quality and Productivity in the Logistics Process, Figure B-1. 142
Off
ice
Cost Structure ImplicationsThe different cost structures for these operation types mean that warehouses place more emphasis on space and equipment investments, while distribution
centers place much more emphasis on human resource effectiveness
Warehouse Distribution Center
Labor
Equipment
Facilities
MiscellaneousSource: Andersen Consulting
The process of cross dock has received a great deal of attention recently
Cross docking is used in order to take advantage of transportation opportunitiesA
B
C
D
E
35 36 37 38 39 40 41 42 43 44 45 46 47
OUTOUT
ININ
Cross Dock
Source: Andersen Consulting
Source: Andersen Consulting
Outbound Consolidation
Crossdocking
Distributioncenter
Plant
Customer
Customer
Customer
Customer
Customer
Customer
Customer
Customer
Customer
Customer
Customer
Customer
Customer
Customer1 5432
6
Source: Logistics Information Systems 170
Outsourcing Overview
• Why outsource?
• What are your options?
• What are future directionsfor outsourcing?
Definition:
Outsourcing is the contracting of the
management & operational control of
logistics functions to unrelated
third party companies.
Companies providing contractual Logistics services
are referred to as Third Party Logistics
Providers or 3PL companies.
The Market for Logistics Outsourcing Has
and Will Grow Rapidly
-- U.S. Market for Third Party Logistics --
0
10
20
30
40
50
60
1992 1996 2000
$9B
$50-70B
$25-30B
1992
1996
2000
PotentialMarket
3PL Penetration
$350 B
$500 B
$700 B
2-3%
5-6%
8-10%
Source: Robert Delaney, Cass Logistics
Activities that are not Core Competencies become Candidates for Outsourcing
• Outsource if:
- Equal or higher performing providers are or will be available
- Risks can be managed
- Infrastructure is not available
• Insource & continually improve performance if:
- Current performance is high- Good providers are unavailable- Outsourcing risks cannot be managed- Infrastructure is available
Outsourced Services: Current vs. Future
Source: Ut Excel/ Ernest & Young, 1998
• Outbound Transportation 75 9• Freight Bill Auditing/ Payment 68 11• Warehousing 68 15• Inbound Transportation 61 17• Freight Consolidation/ Distribution 50 23• Cross-Docking 38 11• Selected Manufacturing Activities 33 9• Product Marketing/ Labeling/ Packaging 29 14• Product Returns & Repairs 22 10• Traffic Management/ Fleet Operations 19 16• Information Technology 16 11• Product Assembly / Installation 14 10• Inventory Management 12 11• Order Fulfillment 8 10• Customer Service 6 2• Order Entry/ Order Processing 4 8
Current Future
Customer Evaluation of Outsourcing
Extremelysuccessful
29%
Somewhatsuccessful
54%
Neutral orsomewhat
unsuccessful17%
Source: 1997 Third Party Logistics: Key Market/Key Customer Study,
University of Tennessee’s Center for Logistics Research and Exel Logistics
Four out of five companies that use third-party logistics
providers are satisfied with the third parties’ performance.
Players Have Entered (and are continuing to enter) the Logistics Outsourcing Market from many Directions
Trucking
• Builders Transport• Burnham• CTI• Frans Maas• J.B. Hunt• Logix• Penske Logistics (Leaseway)• Pittsburgh Logistics• Ryder Integrated Logistics• Schneider
Air Freight
• DHL• FedEx LEC&C / Caliber• UPS - WWL
Ocean Carriers
• APL• Nedlloyd
Non-Traditional
• Andersen Consulting• CSC• EDS / A.T. Kearney• GE Capital• IBM
Industry
• Caterpillar Logistics• Fluor Daniel• GATX• W.W. Grainger
Logistics Management
• Menlo• TNT Logistics
Miscellaneous Logistics Services
• Circle• C.H. Robinson• Danzas• Fritz• Hub Group• Kuehne & Nagel• Schenker
Warehousing
• DSC• Exel• Tibbet & Britten• USCO
LogisticsOutsourcing
Many Firms Use a Multiple Source Selection Criteria
• Technology, quality, expertise, leverage - Is this function or business
their core competency?
• Responsiveness, delivery, cost, price - Can this firm improve our
performance (e.g., customer support &/or our bottom lie?
• Reputation, references, track record - Is this firm already expertly
performing this function for other firms?
• Balance sheet, access to capital, resources - Does this firm have the
wherewithal & drive to invest in itself & the partnership over the long
term?
• Corporate culture fit, prospects for partnership, commitment &
flexibility - Can we work comfortably & smoothly with this firm to
achieve our joint strategic objectives?
What to Consider: a ChecklistA contract logistics provider takes on strategic as well as functional responsibility, therefore, the
task of choosing the right provider demands particular care. These are some criteria which should be used in evaluating contract logistics providers:
• Financial Strength- Total annual revenues- Annual revenues in contract- Logistics services- Total assets- Assets employed contract logistics services- Financial rating
• Business experience- Years providing contract logistic services- Depth of management experience- Strength of operating management- Quality of workforce- Labor/management relations
• Business development- Corporate commitment to contract logistics- Overall corporate strategy
- Leading accounts- Trends in business development- Accounts lost
• Support services- Can human resources be phased in & out?- Is the insurance program adequate?- Does the safety program support the insurance strategy?- Are information systems robust?- Are communications state of the art?
• Business arrangements- Open book cost disclosure- Incentives for performance- Recapture of excess profits- Provisions for replacement- Independent financial audits
Source: Robert V. Delaney, Executive Vice President of Cass Logistics, 1996.
Successful Contracts
• Focus on performance and value:
- employ specific measures
- specify performance objectives based on the measure (the
what - not the how) & value
• Emphasize flexibility:
- written cooperative to balance risk
- contain contract adjustment mechanisms
- often provide rewards & penalties tied to performance
- incentive contracts
• Are simple contractual relationships for long-term involvement:
- simply contracts
- active process involvement by both parties
Drivers for Change
• Asset Based vs. Non-Asset Based
• Technology/ Information Integration
• Inventory Velocity Goals
Strategies