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Fundamentals logistics

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  • 1. FUNDAMENTALS OF LOGISTICS BILL DUCAT| FEBRUARY 12, 2013
  • 2. PITCH
  • 3. Dynamics AX is Beyond ERP…the Next Evolution • • • • • Business process platform End to end capabilities A platform to defeat competitors Consortium of domain experts Next evolution of solutions… FUNDAMENTALS OF LOGISTICS
  • 4. Dynamics as the Process Platform Applications that are an asset Simplicity and agility Complete industryspecific solutions Powerful embedded analytics and BI Manufacturing Distribution Retail Services Public Sector Works the way you need it to Simple to use FUNDAMENTALS OF LOGISTICS Tailored to meet your needs Get the right data to decision makers
  • 5. Broader View of Supply Chain/Logistics Company FUNDAMENTALS OF LOGISTICS
  • 6. RF, DATA COLLECTION AND BARCODING ≠WMS/TMS
  • 7. Radio Frequency Can Actually Hurt Productivity • Order picker with paper can be faster than Radio Frequency Picker – Some gains on searches, errors, etc. • Key: Strategies that leverage technology like RF, but reduce labor and travel time – Multi-order picking – Work flow (Walk paths) – Material handling integration – Zone picking – Pick/sort – Integrated transportation – Value added services – Etc. FUNDAMENTALS OF LOGISTICS
  • 8. AWAKE ISSUES DIFFERENTIATION, TRUST, VALUE
  • 9. Stakeholder Value Proposition Corporate Objective Financial Objective Opportunity Increase Revenue Increasing Shareholder Value 10-20% Fill Rate Improvement  1-3% Increase in Service Level  10-15% Increase in Revenue Increase Profit Margins  2-4% Margin Improvement  30-40% Increase in ROA  10-15% Inventory Reduction Increase Asset Utilization  5-10% Lower Fulfillment Cost  15-25% Lower Labor Cost  10-20% Transportation Savings  Improved Operating Efficiencies
  • 10. Supply Chain Benefits (Broader) FUNDAMENTALS OF LOGISTICS
  • 11. Logistics Cost Breakdown - Typical % of Total Logistics % of Sales Transportation 43% 3.44% Warehouse 25% 2.09% Inventory Carrying Cost 29% 2.32% Administration 3% 0.24% 100% 8.09% TOTAL FUNDAMENTALS OF LOGISTICS
  • 12. Fuel Costs Rising FUNDAMENTALS OF LOGISTICS
  • 13. Supply Chain Solutions Benefits Examples • Reduction of Inventory Carrying Costs – 8 to 15% Increased Inventory Turns – Source: Gartner Group • Eliminate Some Safety Stock – For a $100 Million dollar company, a 3% reduction in inventory achieves $500,000 in savings. – Source: APICS • Reduction in Customer Returns – 11 to 25% – Less Picking Errors – Source: Gartner Group FUNDAMENTALS OF LOGISTICS
  • 14. Warehouse Cost Breakdown - Typical Picking 55% Shipping 20% Storage 15% FUNDAMENTALS OF LOGISTICS Receiving 10%
  • 15. Key Questions Example (Value Mapping) CFO, CLO, COO, VP Dist. COGS What % of COGS is logistics costs? COGS Is COGS in line with expectations? How does your compare with competitors? CFO, CLO, COO Logistics Logistics Fill Rate Fill Rate Growth On-Time What metrics do you use to measure logistics performance? How does your current performance compare with company CFO, CLO, COO, VP goals? Dist. What metrics do you wish you could track CFO, CLO, COO, VP but cannot? Why? Dist. CFO, CLO, COO, VP What is your order fill rate, and how does it Cust. Serv., VP Dist., compare with company goals? VP Sales CFO, CLO, COO, VP How do you measure the impact of unfilled Cust. Serv., VP Dist., orders on revenue? VP Sales Can your logistics capabilities handle all CFO, CLO, COO, VP existing and planned channels? If not, why? Dist. VP Cust. Serv., VP Dist., VP of Trans., What is your on-time delivery %, and how Director of Dist., does it compare with company goals? Director of Transp. How do your inventory turns and inventory accuracy compare to company goals? What CLO, CPP, VP of Distr., Inventory are the reasons for the differences? Director of Dist. FUNDAMENTALS OF LOGISTICS Chief Logistics Officer, Could safety stocks be lowered with better VP of Distribution, inventory accuracy (knowing what you have, Director of Inventory where it is, especially when needed)? Distribution VP of Distribution, How do you track labor productivity? Are Director of Labor your tracking capabilities sufficient? Distribution VP of Distribution, Charge Do you incur chargebacks from customers? Director of backs What are the primary violations? Distribution Inv. Accuracy What is your current inventory accuracy VP of Distribution, (perpetual and location level)? How does this Director of compare with company goals? Distribution Inv. Accuracy How does inaccurate inventory affect your business (warehouse productivity, order fill rate, inventory turns)? Physical Cost Do you perform an physical inventory? How long does it take and what are the total costs Director of associate with a PI? Distribution Trading Partner Do you have a compliance program with suppliers? How effective is it? Order Accuracy What is the cost to correct an order filled incorrectly? What makes up those costs? VP Distr., Director of Dist. CLO, VP of Dist. VP Cust. Serv., VP Dist., VP of Trans., Director of Dist., Director of Transp.
  • 16. KEY ITEMS OF LOGISTICS SYSTEMS
  • 17. Key Items Embedded GENERAL RF Configurable Workflow Work Creation Location Zones Stocking Limits License Plate Controlled Labor Tracking
  • 18. Warehouse Location Profile • Location Profiles – Dimensions & Capacity – Mixed SKU – Mixed Lots – License Plate Controlled – Check Digit Controlled – Permanent vs. Dynamic – Stocking Limits – Zones FUNDAMENTALS OF LOGISTICS
  • 19. Integrated RF
  • 20. License Plate Tracking Receiving / Putaway  License Plate tracked through entire operation  System generated label , blind label, or ASN label may be utilized Inventory Management  Location Controlled License Plate Tracking (optional)  Transfer / Adjust by License Plate  Support for License Plates in multiple statuses in a single location Shipping  Pick by License Plate  Ability to allocate license plates and track to initial receipt  Ability to RF confirm pick license plates
  • 21. Key Concept • Ability to deal with concepts separately: –Where – Selecting the optimal putaway/picking location –How – Best way to perform the work
  • 22. Order Picker’s Time (non-WMS) - Typical Setup 10% Extract 15% Other 5% Search 20% Travel 50% PRESENTATION TITLE
  • 23. Different Zones for Different Purposes Pick Zone Locate Zone FUNDAMENTALS OF LOGISTICS
  • 24. Units of Measure Matter • Each unit of measure means different equipment, labor, etc. • Unit picking should not be done out of the same location as pallet picking • Items may need to live in multiple bin locations • Reservations, putaway logic, replenishment, etc. need to be smart about UOM • Different channels drive different behaviors (direct to consumer vs. B2B) PRESENTATION TITLE
  • 25. Workflow Example Configurable Workflow based on Criteria… LTL Batch Case Pick Pick / Pack Catch Weight Flow Pick Stage Group Pick Pick Catch Weight Dock Check Pallet Build VAS Labeling Stage Print Label Pack by Order Load Load
  • 26. Labor and Task Tracking FUNDAMENTALS OF LOGISTICS
  • 27. Key Items Supplier Inbound Management Container Management ASN Receiving Disposition INBOUND RF Receiving / Putaway Rules Driven Locating Cross-Docking Appointment Scheduling
  • 28. Supplier Management INBOUND SUPPLY CHAIN VISIBILITY FACTORIES DISTRIBUTION SUPPLIERS DIRECT DELIVERY Purchase Order Branded International Retail PO Confirm (Qty, Price, Dates) International Contract In-House Warehouse Large Domestic Shipment ASN Business Customs Documents Small Domestic Shipment Status Cross-Dock/ Flow Through THIRD PARTY LOGISTICS / FREIGHT FORWARDERS TRANSPORTATION PROVIDERS End-to-End Event Management Manufacturing
  • 29. Shipment Packing Wizard – Automated Shipment Creation – Carton / Pallet Packing Wizard – Container Nesting – Compliant Pallet / Case Label Printing – ASN Generation
  • 30. Key Items In Location Quarantine Real-time Cycle Count Hierarchical INVENTORY Item Classifications Lot / Serial Number Control Automated Replenishment RF Production Moves RF Report as Finished
  • 31. Inventory Status Configurable Inventory Status. In Location Quarantine!
  • 32. Cycle Count Processing • Cycle count creation – Item, Location characteristics – Manual or system generated • Exception driven cycle counts – Short Pick – Damaged Product – Putaway Exceptions • Real-time Cycle count – RF cycle count execution – Immediate inventory updates, or hold for approval – Does NOT freeze location for pending count
  • 33. Replenishment Automatic Replenishment • Identify Replenishment needs – Automatic Schedule – Manual – Min – Max Capacity – Allocation Rules • Replenishment Work – RF Work Execution – Priority Driven Reserve Locations Pick Locations
  • 34. Key Items Wave OUTBOUND / Load Planning Deferred Reservation Whs/Site at Order Entry Location at Wave LP at Picking Rules based Allocation Work Creation RF Picking / Staging / Loading Pick & Pack Configurable Workflow
  • 35. Wave Planning Wave Processing Order Selection Load Planning Allocation Work Creation Wave Output Location Allocation Prioritized Work Documents Work Release
  • 36. Load Planning • Load Planning Workbench – Automated / Manual Load Building – Order / Line / Partial Line Selection – Order Splitting – Pack Quantity Override PO-1 PO-2 PO-3
  • 37. Key Items Embedded Routing TRANSPORTATION / Route Guides Delivery Freight TL, Rating Engines Schedules Apportionment Rail, Ocean, LTL, Parcel Load Planning Compliance Labeling
  • 38. Integrated WMS / TMS „Wave‟ Process Outbound Optimization Selected orders Planned loads, tracking #‟s Pick/Pack • Rate shopping • Order consolidation • Load planning Cartons, weights Manifesting Weigh Freight charges, manifest Close Load Close Shipment Shipping Documentation  NO INTERFACES…  Print shipping labels with carrier info/tracking # upon order release (eliminate back end process)  Integrated weight check and manifesting  Labor Planning and Load Planning constraint modeling  Shared customer and order information  Improved sortation and space utilization at shipping dock
  • 39. Routing Constraints Transit Times Intermodal Routing Least Cost Carrier Best Way Delivery Dates Item / Carrier Item / Mode Routing Guide Pre-assigned Route Carrier / Customer Mode / Customer Manual Routing Carrier / Hub Zone / Hub
  • 40. Routing Guide
  • 41. Rate Shop
  • 42. Multi-Carrier and Mode
  • 43. Dock Management Shipping Dock Workflow Controlled… • • • • • • Shipment Staging Quality Checks Pallet Building Dock Door Assignment RF Loading Ship Confirm
  • 44. Post Freight – Landed Cost – Cost of Goods • • • • Post freight costs to invoice Configurable posting to G/L Freight accrual/expense Freight revenue (bill to customer)
  • 45. Freight Reconciliation • Automate the Freight Bill Match and Pay process • Electronic Freight Bill Invoice (210) from carriers Valid Shipment? • Match Rules with Tolerance – Match down to Accessorial Charges Duplicate? – Proof of Delivery prior to Pay • Payment Rules – GL Coding – Freight Accrual and Apportionment Cost within Tolerance? Accessorial Fees Valid? Delivered on Time?
  • 46. Key Items   MHE Pick to Light Conveyor/Sortation  ASRS  Voice  Carousel  Etc.
  • 47. MHE – Made to Reduce Travel, Space or User Input FUNDAMENTALS OF LOGISTICS
  • 48. SUMMARY
  • 49. C-Level Executive Value Proposition/Questions • What if we could reduce your warehouse labor cost (usually one of, if not the single highest cost to do business) by 20%? Would that enable you to do more business with the same staff, or reduce staff to save costs?” • “How many Physical Inventories do you complete per year and at what cost?” “2 per year, and they cost $20K each • Equipment that is needed can be utilized longer due to better cube utilization and flow of goods design (less run time = longer life). • What would it mean to your company to reduce your inventory cost by 1%?” FUNDAMENTALS OF LOGISTICS
  • 50. Key Questions Example (Value Mapping) CFO, CLO, COO, VP Dist. COGS What % of COGS is logistics costs? COGS Is COGS in line with expectations? How does your compare with competitors? CFO, CLO, COO Logistics Logistics Fill Rate Fill Rate Growth On-Time What metrics do you use to measure logistics performance? How does your current performance compare with company CFO, CLO, COO, VP goals? Dist. What metrics do you wish you could track CFO, CLO, COO, VP but cannot? Why? Dist. CFO, CLO, COO, VP What is your order fill rate, and how does it Cust. Serv., VP Dist., compare with company goals? VP Sales CFO, CLO, COO, VP How do you measure the impact of unfilled Cust. Serv., VP Dist., orders on revenue? VP Sales Can your logistics capabilities handle all CFO, CLO, COO, VP existing and planned channels? If not, why? Dist. VP Cust. Serv., VP Dist., VP of Trans., What is your on-time delivery %, and how Director of Dist., does it compare with company goals? Director of Transp. How do your inventory turns and inventory accuracy compare to company goals? What CLO, CPP, VP of Distr., Inventory are the reasons for the differences? Director of Dist. FUNDAMENTALS OF LOGISTICS Chief Logistics Officer, Could safety stocks be lowered with better VP of Distribution, inventory accuracy (knowing what you have, Director of Inventory where it is, especially when needed)? Distribution VP of Distribution, How do you track labor productivity? Are Director of Labor your tracking capabilities sufficient? Distribution VP of Distribution, Charge Do you incur chargebacks from customers? Director of backs What are the primary violations? Distribution Inv. Accuracy What is your current inventory accuracy VP of Distribution, (perpetual and location level)? How does this Director of compare with company goals? Distribution Inv. Accuracy How does inaccurate inventory affect your business (warehouse productivity, order fill rate, inventory turns)? Physical Cost Do you perform an physical inventory? How long does it take and what are the total costs Director of associate with a PI? Distribution Trading Partner Do you have a compliance program with suppliers? How effective is it? Order Accuracy What is the cost to correct an order filled incorrectly? What makes up those costs? VP Distr., Director of Dist. CLO, VP of Dist. VP Cust. Serv., VP Dist., VP of Trans., Director of Dist., Director of Transp.
  • 51. Dynamics as The New Evolution of Systems • The Power of One • The Power of Experience Domain Experts • Beyond ERP • Beyond Four Walls FUNDAMENTALS OF LOGISTICS
  • 52. THANK YOU – QUESTIONS?