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Suppose you are asked to argue about why Logisticsis not only
Warehousing and Transportation. What would be your line of
reasoning?
Which could be the activities under the responsibility of a Logistics or
Supply Chain Executive?
_
Logistics is more than transportation and warehousing. Its all about both
distribution, planning, flow of information and tracking of goods.
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 thepoint of origin
and the point of consumption in order to meet customers' requirements.
What is the main idea behind the birth of Logistics as a new
discipline?
_
the integration of transportation, warehousing, and inventory as the future of the discipline. At
that time, physical distribution was just beginning to edge its way into the corporate lexicon and make
its considerable presence felt in the business community
EFFECTIVENESS
EFFIENCY
The right
materials
In the right
quantities
Of the right quality
In the right place
At the right time
The right
PRCE
COST REDUCTION
REVENUE
IMPROVEMENT
the
the
_ the
_ the
_ the
_
_
transportation activities
handling activities
storage activities
use of packaging
administrative tasks (for instance document management)
= REVENUE - COST
CURRENT + FIXED ASSETS
Strategy A
Strategy B
Time-based, (Cycle-time, order cycle-time reduction, pull approach,
Asset-based, (inventory reduction,
Technology-based (equipment utilization)(b2b, RFID, automated
warehouses)
Relationship-based Supply Chain Strategies (third party logistics
services)(integration to SC and collaboration)
TRANSIT POINTS
It aims at optimizing transports to the end customers
(local distribution)
Wharehousing Process
RECEIVING=>
Once there they are inspected for damage and any damage is noted on the carrier receipt
The received goods are compared to the purchase order to check that they are those ordered
STORAGE = >
PICKING =>
The items on the picking list are arranged so as to minimize the distance the picker has to walk through
the aisles
SHIPPING
What are the main performance differences between a single-deep pallet rack
and a drive-in system?
_ Storage systems similar to block stacking, but provided with racks to carry
the unit loads
_ One item per lane
_ Special trucks are required to enter the lanes (width = 1 meter)
_ In Drive-in systems access to the lanes is only from one side, thus implying a
LIFO stock management for the lane, while in drive-through systems it is from
both sides thus permitting a FIFO stock management for the lane
_ Like block stacking, these systems are useful for articles with high inventory
level
_
What could be the relative weight of the functional areas within the
warehouse of an electrical equipment manufacturer? What in a
pharmaceuticals wholesaler distribution center?
_
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Assume you are a cement manufacturer. Which storage system would you
take into account for the temporary storage of the cement bags on pallet loads
that come out of the plant?
_
What is the Access Index (AI)? How can it be calculated? What is its purpose?
Detail the main phases of the design of the storage system within a
warehouse
_
The expected lenght of the path (to the average location and
back) from the I/O position is:
P=U+V P=U/2+V P=2/3U + V
Optimum length of two sides of the storage area U=V
U=2V U=1,5 V
The minimum length of the path (to the average location and
back) from the I/O point can be got by deriving: P= 2U/a + V Uopt= a/2. Vopt
NA = Uopt/ AW + 2D
NC = SC / 2NA.NPB.NL V=NC.W
REAL STORAGE CAPACITY = 2.NA.NC.NPB.NL
T= VT + FT VT = P/SH + S/SV
P=2U/a + V
S=2H.(NL-1)/2
TCtruck = UF.3600/T
How the decoupling of the storage and retrieving activities during a day can
influence the needs of trucks capacity?
_
Try to explain why the design of the storage area in an automated warehouse
affects both the Storage and the Throughput capacity
_
_ Picking/Order Assembly usually accounts for more than 50% of the Warehousing
Costs
Determine the value of the picking stock (how much storage capacity is
dedicated to the picking area) in order to reduce the sum of the picking costs
and the picking area replenishment costs
The FRP decision requires to
_ Determine the storage capacity of the picking area:
_ Forward area: yes or no?
_ Identify the items to be located in the picking area: all or only a part?
_ Choose the replenishment frequency if there is a forward area separated from the reserve
area
_
_ What
3. Management Policies
_ Space allocation for each item (by-product of the FRP
_Set-up time
_ Time to get and read the picking list
_ Time to carry the empty picking box and deliver the loaded picking box
_Travel time
_Retrieval time
_ Read and check the picking list
_ Position in front of the picking location
_ Pick the items from the racks and put them into the box
_(Waiting time: congestion, stock-out, )
What does the travel time is affected by? How can I reduce it?
How does the batching policy impact the picking time? Which are its cons?
Batching policies
Order Picking:
The operator has to fulfill one order per mission only (Picking List = 1 customer
order)
Batch Picking:
The operator has to fulfill more than one order (a batch of orders) per mission
(Picking List = N customer orders =Warehouse Order)
Pros:
_ Increase in the picking density (decrease of the distance between two
consecutive picking locations)
_ Reduction in the average number of lines on the picking list and therefore
reduction in picking stops and picking time if more pieces can be extracted
together
_ (Reduction in the number of missions and hence reduction in the fixed set-up
times)
Cons:
_ Sorting is required
It is a process through which a batch of orders is sorted into single customer
orders
There are two kinds of sorting:
_ sorting concurrent to the picking
_ sorting following the picking:
_ manual sorting
_ automated sorting
_ Information-intensive approach: batching is required (i.e. the formation of
batches)
How does the Access Index based storage impact the picking time? Which
are its cons?
_
How do the routing policies impact the picking time? Which are the main
alternatives we saw?
_
Routing policy: the sequence according to which the items are picked
(=picking mission)
This problem is an instance of the TSP (traveling salesman problem) with the constraint that
the picker has to move within the aisles
1. ORDER BY ORDER
Analyze each order and choose the best picking tour in order to get the minimum travel
(solving the TSP)
PRO:
_ The travel is minimized
CON:
_ A specific picking tour has to be determined per each order
A pattern is chosen once for all and is used for all the orders irrespectively of the specific
travel-minimizing path
PROS:
_ The routing policy is more stable and easy to memorize
_ Easier to apply the storage policies
CON:
_ The travel is not minimized
--Traversal policy
The picker enters the aisle, walks through all its length stopping when
requested and gets out of the other side
--Return policy
The picker enters the aisle, picks on one side first, reaches the farthest
requested pick location, then comes back picking on the other side, getting
out of the same side he entered
The picking area is divided into two parts (through the cut of the working
aisles). In each area the picker adopts a return policy. The picking mission is
completed by two traversal paths (one in the first and one in the last aisle to be
visited)
What should be optimized in the Road FTL transportation? And in road LTL?
Definition: a full truck load (FTL) shipment is a transportation in which a semitrailer (or a trailer) is dedicated to a shipper who fills it with freight for one
destination
Definition: a less than truck load (LTL) transportation is a transportation for
quantities lower (*) than a truck load
MIN of the pick-up and local distribution distances + routing algorithms (the
critical resource is TIME, i.e. how many pick-ups and deliveries can be done in the time
window) should be optimized
_
Main characteristics:
_ Low cost (cost per ton*km is pretty low), especially for long distances and
large shipment quantities (high fixed vs low variable cost structure)
_ Low accessibility: the loading/unloading points must be on the railroad
(exceptionally large production or distribution facilities have rail sidings)
_ Slow speed/High transit times and Low reliability: mainly due to the high and
variable handling times at the consolidation stations (unit trains are an
exception)
_ Damage risk: variable depending on the type of service (unit train vs LCL)
What is intermodal transportation? What are its main advantages? When
piggyback intermodal transportation becomes interesting with the respect to
road only?
_
Assume you are a Fast Moving Consumer Goods manufacturer. Which types
of transportation modes would you recommend to consider for distribution in
Europe? What would drive your choices?
_
Strategic Level :
Number of echelons
Number of warehouses of each echelon
Warehouse location
Typology dimensions and automotion level
in-house or outsourcing
Operational Level
layout, product allocation
storage / handling systems
order marketing
connections
How can a distribution problem be described? What are the main factors
that drive
the choice of the distribution network structure?
_
Strategic planning
_Objective
Identification of the most promising configuration of the distribution network (just a limited
number e.g. 3-5 alternatives)
_Methodologies
Strategic/qualitative methodologies
_Data required
Limited number of aggregate data
Operative planning
_Objective
Best alternative selection and fine tuning
_Methodologies
Quantitative methodologies
_Data required
Huge amount of detailed data
How would you cope with them?
The Network Selection matrixes aims at finding a rough Distribution Network structure that fits
the specific Distribution Problem
y: PRODUCT SERVICE x: SUPPLY - DEMAND
_ Data collection
A determined set of data has to be collected per each distribution problem (a company deals
with more than one distribution problem)
_ Distribution problem representation
It has to be a compact representation of the distribution problem (i.e. a representation that
includes all the drivers at the same time)
_ Positioning on the matrixes
Each distribution problem will be positioned on a set of matrixes depending on the values of
the different drivers
_ Macro-decision on the network structure
The matrixes give the designer some recommendations about the structure of the distribution
network (number of echelon, rough suggestions about the number of warehouses per each
echelon,)
Assume you are a manufacturer of car parts. How would you structure your
European Distribution Network?
_
Which are the main differences between the qualitative and the quantitative
cost models in terms of objectives/field of applications and information
required?
_
They aim at analysing the relationships between the main costs and a specific parameter of
the Distribution Network (e.g. number of warehouses, umber of echelons, etc.) by identifying
the cost curves
(i.e. curves that show how the costs vary by varying the parameter) See the example in the
forthcoming part of the lesson (number of regional warehouses in a two echelon distribution
network)
They aim at calculating the costs of one (or a limited number of) specific Distribution Network
configuration in order to assess the most convenient alternative. They require a huge amount
of data and can be used only after the most promising alternative selection
How would you describe the location problem? And the allocation one?
Where to locate that the number of echelons and the number of warehouses for each echelon
have already been decided, we have to roughly determine the location of each warehouse
(warehouse location) and then to find the its exact position (site selection)
Which are the main models to cope with them? Which are their pros and
cons?
_
CHOICE FACTORS
_ Proximity
to suppliers/plants
_ Proximity to customers
_ Presence of transport infrastructures
_ Cost of the area and of the public utilities
_ Costs of in/outbound transports
_ Cost and reliability of labor
_ Tax relieves/restrictions
_ Proximity to other companies
_ Meteorological conditions / quality of life
Which are the main techniques to deal with the multiwarehouse location?
First Step
Second Step
Constraints
_ Constraints related to the production capacity of the plants (Qi)
_ Constraints related to the operative capacity of the warehouses (Qj)
_ Constraints related to the forecast demand of each customer (Qk)