Supply Chain Management Chapter 8 Summary.docx -...

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Introduction to Operations and Supply Chain Management/ Chapter 8/ Johann Höfer03.05.16Introduction to Operations and Supply Chain ManagementChapter 8Logistics8.1 Why Logistics is criticalLogistics management According to the Council of Supply Chain Management Professionals (CSCMP), “that partof supply chain management that plans, implements, and controls the efficient, effective forward and reverseflow and storage of goods, services and related information between the point of origin and the point ofconsumption in order to meet costumers’ requirements.” Sustainability Performing activities in a manner that meet the needs of the present without compromising theability of future generations to meet their needs.8.2 Logistics Decision AreasTransportationFive widely recognized transportation modes: highway, water, air, rail, and pipeline.Highway transportation is dominant. Several factors account for this:Geographic extension of supply chains. Greater emphasis on delivery speed and flexibility. Highway transportation has stolen market sharefrom slower rail and water systems.Water-based transportation, with one of the lowest ton-mile rates of any mode, helps to hold costs down.Water transportation is ideal for goods with relatively high weight-to-value ratios.Air transportation is ideal for materials with low weight-to-value ratio, especially if delivery speed or deliveryreliability is critical. Rail transportation has cost characteristics similar to those of water transportation, but it is somewhat moreflexible.Selecting a Transportation Mode
Introduction to Operations and Supply Chain Management/ Chapter 8/ Johann Höfer03.05.16Direct truck shipment A shipment made directly with no additional stops changing trucks, or loading ofadditional cargo.Less than truckload (LTL)A smaller shipment, often combined with other loads to reduce costs and improvetruck efficiencies.Multimodal SolutionsMultimodal solutionA transportation solution that seeks to exploit the strengths of multiple transportationmodes through physical, information, and monetary flows that are as seamless as possible.RoadrailerA specialized rail car the size of a standard truck trailer that can be quickly switched from rail toground transportation by changing the wheels.WarehousingWarehousingAny operation that stores repackages, stages, sorts, or centralizes goods or materials.Organizations use warehousing to reduce transportation costs, improve operational flexibility, shorten customerlead times, and lower inventory costs.Consolidation warehousing A form ofwarehousing that pulls together ashipments from a number of sources (oftenplants) in the same geographic area andcombines them into larger and hence moreeconomical shipping loads.

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