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Transcript

  • 1. Load Driven Distribution Systems
    • Do not run on a schedule
    • Wait for the vehicle to fill
    • Most examples are unfamiliar
      • Retail industry -- like DCs in our case
        • trucks don’t depart to cross docks until they are full
      • Some manufacturing settings
        • Auto industry finished vehicle delivery
    • Cost of poor equipment utilization significant
  • 2. Objectives
    • Use Cross Docks to consolidate
      • What effect does this have on inventory
      • What effect does this have on time to delivery
    • This pass, we will focus on inventory
    • Later, in the guise of “trailer fill” we will look at service or time to market.
  • 3. Use an Example
    • Ford’s new vehicle delivery
    • Motivation
      • Successful example
      • Regular loads - 15 vehicles per railcar
  • 4. Inventory and Ford’s New Car Distribution
    • Plants in the East
      • Norfolk
      • Atlanta
      • Louisville
      • St. Louis
      • Kansas City
    • Ramps in the West
      • Laurel
      • Orillia
      • Portland
      • Benicia
      • Mira Loma
      • El Mirage
      • Belen
      • Denver...
  • 5.  
  • 6. How it worked
  • 7. Tri-level Rail Cars
  • 8. The Loose Car Network
  • 9. Car Hauler
  • 10. 12 Days Enroute
    • 4.3 million vehicles in North America in ‘98
    • Estimates
      • 2 million to western ramps
      • $20,000 per vehicle
    • Average car spends 12 days in pipeline inventory or 12/365 = .033 yrs
    • On average about 66,000 vehicles in pipeline
    • Value of pipeline inventory: $1.32 billion
  • 11. Other Costs
    • Customer service
    • Tracking shipment
    • Managing shipments
      • Bills of lading
      • Shipping invoices
      • ….
    • Real estate at the plant
  • 12. Inventory at the Plant
    • Load driven system
      • When there’s a load, send it.
    • Each plant keeps inventory for each ramp
      • Average number of vehicles per load lane?
    • With 16 ramps
      • Average number of vehicles per plant?
    • We could be doing other things with that land...
  • 13. Observation
    • Inventory in a load-driven distribution system depends on
      • The capacity of the transportation units and
      • ...
  • 14. The Old Model % b b b b % % % %
  • 15. The New Model % b b b b % % % % g Mixing Center Plants Ramps
  • 16. Advantages
    • At the plant
      • Average inventory of west bound vehicles?
      • Space required
    • Between the plant and the mixing center
      • Larger volume of shipments supports faster unit trains -- no stopping at switching yards
    • Between the mixing center and the ramp
      • Larger ramps also support unit trains
    • To the customer: Faster delivery!
  • 17. Disadvantages
    • Additional handling at the mixing center
      • Every vehicle unloaded from one railcar and loaded onto another
      • Additional opportunity to damage vehicle
    • Additional capital investment
    • Vehicles move farther
      • but generally faster
  • 18. Inventory at the Mixing Center?
    • Minimum Inventory Strategy
      • Rail cars come in with mixed loads
      • Empty the rail cars into load lanes
      • Re-load full load lanes
      • Bring in empty rail cars if necessary
    • How much inventory?
      • At most
        • 16 ramps*(14 cars per lane) = 224 vehicles
      • On average
        • 16 ramps*(7 cars per lane) = 112 vehicles
  • 19. Inventory at the Mixing Center?
    • Simple Strategy
      • Rail cars come in with mixed loads
      • Empty the rail cars into load lanes
      • Re-load full load lanes
      • Only if empty rail car is available
    • How much inventory?
      • Claim: 210 vehicles!
  • 20. Inventory under the Simple Strategy
    • Mixing center has 210 vehicles
      • [210 = (16-1)*(15-1)]
    • A rail car arrives with 15 more vehicles
      • That makes 225 = 16*(15-1)+1 vehicles
    • We can re-load the rail car. WHY?
    • That leaves us with 210 vehicles again.
    • Can you generalize this?
  • 21. Time Enroute cut to 8 days
    • Effect on inventory:
      • 12 days = $1.32 billion in inventory
      • 8 days = $ 880 million in inventory
    • Savings of $440 million can go to pay for capital and operating expenses at the mixing center. Right?
  • 22. Wrong!
    • Reducing inventory by $440 million doesn’t create $440 million in new wealth, it just gives us the use of that money.
    • We don’t have to borrow $440 million.
    • Savings is the interest: $110 million per year.
  • 23. When we look at network design...
    • How many mixing centers should we have?
    • Where should they be?
    • Who should use them?

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