Synchronizing Global Commerce H. Donald Ratliff Executive Director of The Logistics Institute Regents & UPS Professor of Logistics Georgia Tech H. Donald Ratliff Executive Director of The Logistics Institute Regents & UPS Professor of Logistics Georgia Tech

Industry Outreach Globalization Research & Graduate Education Professional & Executive Education The Logistics Institute

Vision of Synchronized Commerce Just-In- Time Lean Perfect Orders “creating precision and unity across the supply chain”

Synchronization Hurdles Variability  Requirements and/or resources change over time Uncertainty  Future events and/or present status is unknown Service  Do not run out of product Efficiency  Minimize inventory and transportation cost Variability  Requirements and/or resources change over time Uncertainty  Future events and/or present status is unknown Service  Do not run out of product Efficiency  Minimize inventory and transportation cost plant supply DC demand - understand, reduce, mitigate - rationalize

Inventory Transit time Order Inventory 101 Estimate run-out point Estimate transit-time + make time Estimate run-out point Estimate transit-time + make time Run-out point Make time

Inventory 101 Over estimate lead-time –Increase average inventory Over estimate lead-time –Increase average inventory Under estimate lead-time –Cause stock outs Small cycle times result in more stock outs

Synchronizing Global Commerce port rail ramp Transportation Management plant DC Supply Management Demand Management

Transportation Management Transportation availability and cost Transit-time –When will a dispatched shipment arrive? –When should the next shipment be ordered? Transportation availability and cost Transit-time –When will a dispatched shipment arrive? –When should the next shipment be ordered? Average Time (Days) 0-5 Days 5-10 Days Days Days 20+ Days

Atlantic Container Transit-times Livorno/NY Livorno/Sav Genoa/NY Genoa/Sav

Causes of Transit-time Variability Equipment shortages –Containers, chassis, drivers Transportation schedules –Frequency & routing Capacity limitations –Ports, rail, canals Inspections Equipment shortages –Containers, chassis, drivers Transportation schedules –Frequency & routing Capacity limitations –Ports, rail, canals Inspections Weather –Storms Labor issues –Strikes Security –Attacks Mistakes plant port rail ramp DC

Requirements for Managing Transit-times For each element of the global supply chain –Accurate estimates of transit-times –Accurate estimates of transit-time variability Identification of causes of variability & uncertainty “Causal” models to predict transit-time variability and uncertainty Understand the options For each element of the global supply chain –Accurate estimates of transit-times –Accurate estimates of transit-time variability Identification of causes of variability & uncertainty “Causal” models to predict transit-time variability and uncertainty Understand the options

Georgia Tech Effort Pooling of data Knowledge sharing Develop common transit-time prediction models Improve shared network performance Pooling of data Knowledge sharing Develop common transit-time prediction models Improve shared network performance

Barriers to Managing Transit-times Insufficient “available” transit-time data No clear perception of value Reluctance of logistics providers to share data Reluctance of shippers to collaborate Ongoing data collection requirement Compartmentalized knowledge Lack of technology Insufficient “available” transit-time data No clear perception of value Reluctance of logistics providers to share data Reluctance of shippers to collaborate Ongoing data collection requirement Compartmentalized knowledge Lack of technology

Value of Transit-time Management Decrease risk Set expectations Inventory optimization Network design Contingency planning Anticipate problems Decrease risk Set expectations Inventory optimization Network design Contingency planning Anticipate problems

Transit-time Concerns Increasing globalization Transportation infrastructure –Rail –Truck Security Outsourcing Silos Cost Increasing globalization Transportation infrastructure –Rail –Truck Security Outsourcing Silos Cost

Recommendations Get good at transit-time management Get prepared for transportation bottlenecks Develop a data sharing strategy –Transportation transit-times –Transportation costs Join the Ga Tech effort or start your own Get good at transit-time management Get prepared for transportation bottlenecks Develop a data sharing strategy –Transportation transit-times –Transportation costs Join the Ga Tech effort or start your own

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