International Logistics & Warehouse Management
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International Logistics & Warehouse Management

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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......

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.

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  • Warehouses are always different from each other, even within the same company!
    This is due to the diversity of warehouse locations, Inventory Racks, Fork Lift Trucks and current ways of working in the warehouse, and of course, each Industry works differently

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  • 1. International Logistics/ International Logistics/ Warehouse Management: Warehouse Management: An Overview Presentation for NAPM-San Antonio by Thomas L. Tanel, C.P.M., CTL, CCA CATTAN Services Group, Inc. College Station, TX cattan@cattan.com 979 260-7200 © 2004 CATTAN Services Group, Inc.
  • 2. Domestic versus Global— Which Is Which?
  • 3. Definition of Logistics Management Logistics Management is: Logistics Management is: that part of Supply Chain Management that plans, that part of Supply Chain Management that plans, implements, and controls the efficient, effective forward implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and and reverse flow and storage of goods, services and related information between the point of origin and the related information between the point of origin and the point of consumption in order to meet customer’s point of consumption in order to meet customer’s requirements. requirements. Source: CSCMP formerly CLM
  • 4. World-Class Logistics Customer Focus Delight the Customer Focus on Growth • • • • • • • • • • Provide Shareholder Value Minimize Asset Base 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 World-Class Infrastructure • • • • • • • • • • Perfect orders Responsive Very short OTD cycle time On-time delivery Tailored logistics systems Easy to do business with Asset consolidation Cross-docking, flow-through In-transit merge Greater use of third parties Worldwide contracting Network optimization Replace inventory with information Common applications Decision support tools Leverage capabilities of suppliers Real-time tracking Reverse logistics Partnerships Tailored programs Product availability “Mutual” success Internal and external resources Training World-class people Constant upgrade of capabilities “Interest in change”
  • 5. The Logistics Process Order Processing Seller Inventory Management Production Planning Warehousing Customer Raw Material Manufacturing Traffic Management Deliver to Customer Transportation
  • 6. Definition of Supply Chain Management Supply Chain Management: Supply Chain Management: encompasses the planning and management of all encompasses the planning and management of all activities involved in the sourcing and procurement, activities involved in the sourcing and procurement, conversion, and all Logistics Management activities. conversion, and all Logistics Management activities. Importantly, it also includes coordination and Importantly, it also includes coordination and collaboration with channel partners, which can be collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, suppliers, intermediaries, third party service providers, and customers. In essence, Supply Chain and customers. In essence, Supply Chain Management integrates supply and demand Management integrates supply and demand management within and across companies. management within and across companies. Source:CSCMP formerly CLM
  • 7. Supply Chain Activities 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. Source: I2 Technologies
  • 8. The 4 P’s-Logistics and SCM Focus Purpose: Clarify your mission to generate passion, enthusiasm, action, innovation, pride and a feeling of empowerment.
  • 9. 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.
  • 10. 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.
  • 11. 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.
  • 12. Global Warehousing & Distribution • Intermodal • Licensing • INCOTERMS • IFF/CHB Links • Banking • Sales Terms • Customs • Security • Export Packing Send anywhere . . . to anywhere— "Whatever it takes!"
  • 13. Distribution Centers & Warehouses Base Data
  • 14. Third Party Logistics 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.
  • 15. 3PL Functions—View from Cadre Technologies
  • 16. Fourth Party Logistics (4PL) A New Way to Collaborate 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.
  • 17. 4PL Forward Logistics Supply Network CUSTOMER Warehouses DCs Synchronization Event Mgmt & SCP/E Visibility Order Fulfillment Communication Brokers Forwarders SCM 4PL Lead Logistics Provider Contract Manufacturers Transportation Carriers 3PLs
  • 18. Domestic versus International Requirements NVOCC CHB IFF WTO EXPORT IMPORT DOMESTIC FREIGHT BROKER GATT NAFTA FMC
  • 19. Boosting Supply Chain Agility for a Competitive Edge “There are two ways to improve “There are two ways to improve Supply Chain agility: Supply Chain agility: speed production cycle times once new speed production cycle times once new demand information works its way demand information works its way down the supply chain, or reduce down the supply chain, or reduce the time it takes for that the time it takes for that information to arrive.” information to arrive.” Source: Sam Cassis, VP of Marketing at Exemplary, a web based provider of applications
  • 20. Global Pipeline Visibility Where is my stuff? • Via the IFF/CHB • Via the IMC • Via the carrier • Via the internet • Via proprietary software Supplier Inbound Transport Manufacturing Distribution Outbound Transport Supply Chain Information Systems Requirements Ultimate Customer
  • 21. Supply Chain Digest’s View of the Supply Chain Source: Supply Chain Digest’s White Paper –Getting Global Sourcing Right
  • 22. Supply Chain Information Systems PLAN PLAN EXECUTE EXECUTE MRP MRP ORDER ORDER PROCESSING PROCESSING MANAGE MANAGE ACCTS RECEIVABLE WAREHOUSE WAREHOUSE FIXED ASSETS FORECASTING IMPORT EXPORT TRAFFIC ACCTS PAYABLE DRP PURCHASING GEN LEDGER
  • 23. Supply Chain Planning and Execution —Global Trade Management
  • 24. ADC in the Supply Chain Goods characteristics, capacity, availability, status Capacity, schedules, status receipts Capacity, schedules, status receipts, inventory Demands goods, requests services, requests receipts Service, capacity, schedules, routes, receipts
  • 25. Integrated Supply Chain Links Supplier Base/ERP Wholesaler Distributor HQ Advanced Planning Systems Transportation Carriers Transportation Carriers Host ERP Operations Management Systems Plant's MES Customer Base/ERP SCP/SCM and CRM Warehouse's WMS Distribution Center's WMS
  • 26. 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 prevention of risk. Such actions must focus on cost prevention that 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 true activities, and duplicative work and move towards true inter-organization collaborative relationships. inter-organization collaborative relationships.
  • 27. Logistics—Big Picture Benefits •• A typical $100 million business that A typical $100 million business that switches over can realize a savings of switches over can realize a savings of 2.4 million. 2.4 million. •• Integrated logistics functions translate Integrated logistics functions translate into various profit contributions: into various profit contributions: – Total logistics costs shaved by 20% – Total logistics costs shaved by 20% – Pretax contribution is 2.4% higher – Pretax contribution is 2.4% higher
  • 28. More Profit Potential--$$$ Any “cost saving” that can be made in total Any “cost saving” that can be made in total logistics reflects savings at the rate of the logistics reflects savings at the rate of the company’s cost of capital and frees up that company’s cost of capital and frees up that capital for other business purposes. capital for other business purposes. 1.Logistics can have aadramatic impact on whether aa 1.Logistics can have dramatic impact on whether company’s profit picture will be colored red or black. company’s profit picture will be colored red or black. 2.Logistics (other than Purchases) may account for 2.Logistics (other than Purchases) may account for more than 15% of aacompany’s sales dollars, and more than 15% of company’s sales dollars, and improvements of 5-25% in the various logistics improvements of 5-25% in the various logistics functions are within reason. functions are within reason.
  • 29. The Puzzle of Logistics and SCM Infrastructure PMS EDI & E-Com Purchasing, Procurement, Acquisition & Contracting OMS ADC Customer Relationship Management Advanced Planning Systems Business Intelligence MES BPO RFID EProcurement Collaborative Planning, Forecasting, & Replenishment SCEM Extended Enterprise Management ERP Reverse Auctions Supply Chain Planning, Execution & Management Strategic Sourcing WMS & TMS SOP
  • 30. 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.”
  • 31. The Importance of Logistics
  • 32. Synchronized Supply Chain Management 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. Reduce Transportation Costs On-Time Delivery Reduce Manufacturing Costs Orders Filled Complete Responsive Production Increase turnover Reduce waste and obsolescence Rapid Order Fulfillment Reduce inventory
  • 33. The Warehouse’s Ultimate Objective 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.
  • 34. Demand Chain—Pull Vs Push PHYSICA L TO BOOK REPLENISHMENT S U P P L Y Forecasted Demand I N V E N T O R Y Actual Demand PULL VS PUSH DEMAND
  • 35. Warehouse Cutout View—Various Configurations
  • 36. Warehousing Equipment Diversity Standard Racking Double Deep Mobile Racking Drive in Rack Source: ATLET Narrow Aisle Live / Flow
  • 37. Microsoft Business Solutions— ABC Layout by Location Source: Microsoft Business Solutions—Winning Strategies for Distribution
  • 38. Warehouse Layout-Combo Storage Methods
  • 39. Crossdocking and Logistics No stock! Storage! Customer Order Ship Receipt Cross-Docking • Cross Docking Helps to achieve the key logistics objectives of: • Stock reduction • Fixed resource reduction • More responsive operating systems
  • 40. Warehouse Layout--Crossdocking
  • 41. Intermodalism USING MULTIPLE MODES OF TRANSPORTATION FOR ONE CONTINUOUS MOVEMENT
  • 42. Comparison of Distribution Costs and Time from National Warehouses—Example
  • 43. International Transportation and Distribution CARRIER TYPES: Usage, Costs Dependability FINANCIAL INSTRUMENTS versus DRAWBACKS IMPORT LANDED COST LICENSES EXPORT
  • 44. Common Characteristics: Hub and Spoke Concept
  • 45. 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.
  • 46. Supply Chain Compass-Five Stages Source: Manugistics The Fundamentals CrossFunctional Teams Integrated Enterprise Extended Supply Chain Supply Chain Communities Cost of quality Unreliable order fulfillment Cost of customer service Slow growth, margin erosion Non-preferred supplier Quality and cost Customer service Profitable customer responsiveness Profitable 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 Customerspecific processes Reinvented processes Predictable costs and rates On-time, complete delivery Total delivered cost Share of customer Net worth Automated Packaged Integrated Interoperable Networked Key Tools/ Planning Spreadsheets Point tools Enterprise supply chain planning Point-of-sale supply chain planning Synchronized supply chain planning Execution MRP and other homegrown applications ERP Customer management systems Network-centric commerce Business Pain Driving Goal Metric IT Focus MRP II
  • 47. Global Logistics Strategy Source: Coopers & Lybrand Consulting Aligning worldwide distribution strategies around sourcing/selling business models Key Requirements • Centralized management/worldwide integration • Customer service options • Sourcing initiatives and alliances • Procurement/supplier integration • Global network optimization • Process-driven information systems Reengineering the movement of product to improve availability and lower net landed cost Key Performance Measures 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 Synchronizing processes across all regions/markets Key Organizational Processes Planning and Control • Configuration and scheduling • Demand management and communication • Sourcing strategy • Manufacturing strategy • Supply chain integration • Product life cycle Support • Infrastructure • Information and technology • Key performance indicators
  • 48. Lord Kelvin on Measures When you can measure what you’re When you can measure what you’re speaking about and express it in speaking about and express it in numbers, you know something about it; numbers, you know something about it; but when you cannot measure it, when but when you cannot measure it, when you cannot express it in numbers, your you cannot express it in numbers, your knowledge is of a meager and knowledge is of a meager and unsatisfactory kind.---Lord Kelvin unsatisfactory kind.---Lord Kelvin
  • 49. Measuring Up – A Best Practice Model for Evaluating Supply Chain Performance Source: Arthur D. Little Goal Measure Definition Improved customerorder fulfillment Fill rate Portion of custom orders (either external or internal) that are on time and accurate as the customer would determine Improved customer satisfaction Survey Systematic feedback obtained directly from customer (external or internal); likely using a sampling survey Supplier order fulfillment Portion of supplier orders that are on time and accurate Supplier quantity Non-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) Days of supply on hand Inventory investment on hand (in dollars) divided by daily ship rate (in dollars) Inventory turns Cost of Goods Sold (COGS) divided by average annual inventory investment Timing Cash-to-cash Elapsed time from payment of suppliers to collection of payment from customers Quality Quality Non-conforming or defective items or services divided by total at customer interface Operational integrity Productivity loss Operational productivity lost due to supply chain nonconformance Better procurement/ supplier management Inventory
  • 50. What It Means to You Personally • 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
  • 51. THANK YOU FOR COMING CATTAN Services Group, Inc. © 2004 CATTAN Services Group, Inc.