Logistics Operations Chapter 5 Sections: Introduction to Logistics

Logistics Operations Chapter 5 Sections: Introduction to Logistics
Transportation Operations Material Handling Analysis of Material Handling Operations Chapter 5 Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Four Categories of Workers
Logistics workers Move things Human components of logistics system Logistic system = work system Production workers Service workers Knowledge workers Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Introduction to Logistics
Origins in military science Procurement, transportation, and maintenance of military supplies, equipment, and personnel Business logistics Acquisition, movement, storage, and distribution of materials and products, as well as the planning and control of these operations to satisfy customer demand May also involve movement of people Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Two Categories of Logistics
External logistics = transportation and related activities that occur outside of a facility Movement of materials between different geographical locations Five traditional modes of transportation: rail truck, air, ship, and pipeline Internal logistics = material handling and storage within a facility Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Logistics Workers – Job Titles
Transportation operations Air traffic controller, bus driver, parcel service dispatcher, railroad train conductor, ship captain, teamster Material transport in a facility Airport baggage handler, crane operator, forklift truck operator, material handler Material storage Crane operator in an AS/RS, inventory control manager, order picker, shipping clerk, tool crib stores clerk Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Work Activities Various combinations of physical labor and information processing Physical labor Moving materials, work-in-process, and finished products Information processing Planning, coordinating, and controlling the physical movement Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Importance of Logistics
Sometimes viewed as non-value-adding By comparison, manufacturing and assembly activities add value by physically transforming materials Logistics does not alter the product However, logistics operations create a time and place value for customers Having the materials and products available and getting them to customers when needed or wanted Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Logistics Objectives - Metrics
Accuracy – deliver exactly what the customer orders Availability – have items in inventory when the customer needs or wants them Orders shipped complete - every item ordered included in shipment Speed of delivery – time to delivery Returns and error recovery – how well are these problems coped with Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Business Logistics Objectives
Provide a specified level of customer service Deliver that level of service at the lowest possible cost Increased customer service means higher cost Guaranteed availability for every item means high inventory Savings in inventory costs means higher stock-out frequency Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

The Logistics System Consists of five components:
Facilities – production plants and storage centers Inventory – raw materials, work-in-process, finished products Transportation and material handling – means of moving inventory Information system – integration function Logistics workers - they make the system work Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Supply Chains Defined as the set of activities that is concerned with the flow of materials and products from raw materials through production and distribution of finished goods to customers. Supply chain management = the planning, coordination, and administration of the flow of materials and products in the supply chain Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Supply Chain Block diagram depicting participants and activity sequence in a supply chain Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Basic Logistics Functions
Procurement Acquisition and movement of materials from suppliers to manufacturing and/or assembly plants Logistical support for manufacturing Making raw materials available for processing and moving work-in-process Distribution Moving finished goods to customers Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Functions in Logistics Operations
Model indicating three functional areas in logistics operations Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Warehousing A warehouse is a facility for storing three types of inventory: Raw materials in the procurement process Maintaining work-in-process for manufacturing support Making finished goods available for distribution Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Warehousing Functions
Receive – unload incoming materials, inspect the materials, record receipt Store – put the materials into storage and record the storage location Pick (“order picking”) – retrieve materials from storage in response to customer orders Ship – pack materials for shipment and load the carrier vehicle Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Distribution Center Operations
Different combinations of products are shipped from suppliers to outlets through the DC Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Improvements in Warehousing
Automated and mechanized storage systems – reduce labor costs, speed the storage and retrieval of materials Cross-docking – incoming items are sorted and shipped without being placed in storage Warehouse management systems – for maintaining inventory records, managing transportation operations, optimizing storage locations, and reporting labor performance Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Transportation Operations
External logistics Transportation expenses consume between one-third and two-thirds of the total costs of logistics Freight transportation industry in the U.S. represents approximately 6% of gross domestic product Approximately $500 billion Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Five Basic Modes of Transportation
Rail Truck Air Ship Pipeline Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Transportation Infrastructure
Transport vehicles Planes, trains, and trucks Rights-of-way Airways, RR tracks, roads and highways Industrial organizations that provide transportation services Government agencies that oversee the transportation industry Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Transportation Terms Carrier – company that provides the transportation service Shipper – company that engages the services of a carrier Consignee – company that receives the shipped materials Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Rail Transport Efficient movement of large tonnage over long mileage
Disadvantage – slow mover Applications: Raw materials located away from waterways (coal, ore, lumber) Low value manufactured goods (paper, wood products) Intermodal freight Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Improvements in Rail Transport
Elimination of work rules that resulted in high labor costs Consolidation of companies Abandoning unprofitable railway lines Unit trains for mass transport of bulk commodities (coal) Double-stack rail cars for intermodal containers Tri-level automobile cars Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Trucking Operations Deregulation of the trucking industry
Motor-Carrier Act of encouraged competition, improved efficiencies Higher intercity tonnage movement than any other transportation mode Suited to high-value finished products and semi-finished items over short and medium distances Movement of merchandise Delivery of components/ subassemblies Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Truck Transportation Advantages
Door-to-door delivery Service availability and frequency Speed of delivery Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Trucking Operations Truckload (TL) Loads greater than 15,000 lb
Direct shipper to consignee Lower total cost to shipper Less-than-truckload (LTL) Loads less than 15,000 lb Stops along the route result in longer delivery times Higher per ton-mile rates Cheaper for small load sizes Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Improvements in Truck Transport
More efficient scheduling Optimized routing for LTL operations Mechanized handling equipment Tandem trailers Intermodal operations – combination truck and rail Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Air Transport Air passenger travel most visible
Freight service also available Major airlines provide freight service UPS and FedEx specialize in movement of Packages Large containerized loads Suited to delivery of high-value items over long distances and time is a factor Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Air Transport Advantage Speed of delivery over long distances
Disadvantages Airports not conveniently located Delivery times include local delivery times: Shipper-to-airport Airport-to-consignee High per ton-mile costs Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Air Transport Operational Approaches
Strategic planning of routes and schedules Optimizing assignment of planes to routes Optimizing the number and locations of hubs Scheduling of crews Adequate coverage Minimum labor costs Optimizing aircraft maintenance schedules Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Water Transport Dominant mode of freight transportation in global trade Ships Rivers and canals: flat barges Coastal waters and Great Lakes: deep-water vessels Domestic transport: very large shipments Time: slowest Cost: lowest Supplemental transport usually required Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Improvements in Water Transport
Containerized cargo Mechanized material handling equipment to speed loading and unloading Satellite navigation (primary importance for oceangoing vessels Autopilot technology Sonar and radar Improvements in ice-breaking equipment Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Pipelines Disadvantages
Limited in types of materials that can be moved (e.g., gases, liquids, slurries) Slow (e.g., 4 mi/hr in Alaska pipeline) Advantages Material moves 24 hours per day Not affected by weather conditions No empty containers or vessels Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

A portion of the Alaska pipeline near Fairbanks (photo by author)
Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Other Forms of Distribution
Intermodal operations - combinations of the five basic modes Parcel delivery services Transportation agencies Internet and similar communication-based distribution modes Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Intermodal Operations
Rail and truck (piggyback) Containerships Truck and ship (fishyback) Train ship Truck and air Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Giant cranes unload containers from a cargo ship in Vancouver, B. C
Giant cranes unload containers from a cargo ship in Vancouver, B.C., Canada (photo by author) Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Parcel Delivery Services
Specialty services: Deliver small packages (<150 lb) Charge a premium price Provide fast transport Demand for these special services has increased as commerce over the Internet has grown (e.g., companies like Dell Computer and Amazon.com) Operations are basically intermodal Sortation hubs are required Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Transportation Agencies
Provide specialized transportation services Intermediaries between shippers and carriers Purchase high-volume, low-cost rates from shippers and sell the transportation service to small-lot shippers at fees the shipper would not be able to obtain Consolidate small lots into large shipments Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Categories of Transportation Agencies
Freight forwarders – consolidate small shipments from multiple shippers into large shipments Shippers’ associations – non-profit freight forwarders who serve member companies Transport brokers – provide a coordinating and matching service between shippers and carriers Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Internet and Similar Distribution Modes
Airplane tickets – electronic ticketing Digital distribution of music – Apple iTunes Satellite radio – subscribers avoid commercial interruptions Video-on-demand High-speed Internet access Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Material Handling Defined as “the movement, storage, protection and control of materials throughout the manufacturing and distribution process including their consumption and disposal” (The Material Handling Industry of America) Estimated to represent 20-25% of total manufacturing labor cost in US Internal logistics Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Material Handling Objectives
To move materials within a facility Safely Efficiently At low cost In a timely manner Accurately Without damage Material handling is often an overlooked issue in industry Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Material Handling Equipment
Material transport Storage Unitizing equipment Identification and tracking systems Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Material Transport Equipment
Five categories: Industrial trucks Automated guided vehicles Monorails and other rail guided vehicles Conveyors Cranes and hoists Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Industrial Trucks Two basic categories: Non-powered
Human workers push or pull loads Low volume Short distances Powered Self-propelled Larger loads Greater distances Common example: forklift truck Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Forklift Truck Forks are used to move pallet loads

Automated Guided Vehicle Systems
Material handling system that uses independently operated, self-propelled vehicles guided along defined pathways in the facility floor Types of AGV: Driverless trains Pallet trucks Unit load AGVs Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Automated Guided Vehicle
A unit-load automated guided vehicle Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Rail-Guided Vehicles Fixed rail system
Overhead monorail - suspended overhead from the ceiling On-floor - parallel fixed rails, tracks generally protrude up from the floor Powered by electrified rail Routing variations: switches, turntables, and other special track sections Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Conveyor Systems Non‑powered
Materials moved by human workers or by gravity Powered Power mechanism for transporting materials is contained in the fixed path, using chains, belts, rollers or other mechanical devices Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Conveyor Types Roller: can be powered or non‑powered Skate‑wheel Belt
In‑floor towline Overhead trolley conveyor Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Roller Conveyor Common conveyor type Can be powered or unpowered

Cranes and Hoists Cranes Used for horizontal movement of materials
Used for vertical lifting of materials Cranes usually include hoists so that the crane-and-hoist combination provides Horizontal transport Vertical lifting and lowering Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Storage Systems Function – to store materials (e.g., parts, work-in-process, finished goods) for a period of time and permit retrieval when required Used in factories, warehouses, distribution centers, wholesale dealerships, and retail stores Important supply chain component Automation available to improve efficiency Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Conventional Storage Methods
Bulk storage Storage in an open floor area Rack systems Permits vertical stacking of materials Shelving Steel shelving comes in standard sizes Drawer storage Modular storage units are available Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Automated Storage Systems
Mechanized and automated storage equipment to reduce the human resources required to operate a storage facility Significant investment Level of automation varies In mechanized systems, an operator participates in each storage/retrieval transaction In highly automated systems, loads are entered or retrieved under computer control Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Reasons to Use Automated Storage
Increase storage capacity Increase storage density Recover factory floor space Improve security and reduce pilferage Reduce labor cost & increase labor productivity Improve safety Improve control over inventories Improve stock rotation Improve customer service Increase throughput Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Types of Automated Storage Systems
Automated storage/retrieval systems Carousel storage systems Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Automated Storage/Retrieval System
Abbreviated AS/RS Consists of: One or more storage aisles (S/R) machine for each aisle Storage racks – where loads are stored Input/output stations (P&D) Manually operated Automated – interfaced to automated material handling system (e.g., AGVS) Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Carousel Storage System
Series of bins or baskets suspended from overhead chain conveyor in the form of an oval loop Operation similar to systems used in dry-cleaning shops to bring clothes on hangars to front of store Bins are positioned at pick & deposit station at one end of loop where human worker loads and unloads Carousel systems can be horizontal or vertical Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Carousel Storage System

Applications of AS/RS and Carousels
Unit load storage and handling (usually associated with AS/R systems) Order picking Work‑in‑process storage Kitting – components to be used in assembly are gathered from storage into a “kit” (usually associated with carousel systems) Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Unitizing Equipment: Containers
Containers used to hold individual items during handling Equipment used to load and package the containers Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Unitizing Equipment for Packaging
Palletizers and Depalletizers Unit Load Principle Simultaneous handling of multiple items Number of trips reduced Reduction in loading and unloading times Higher operating efficiency Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Identification and Tracking Systems
Automatic Identification and Data Capture (AIDC) Bar codes Magnetic stripes Radio frequency tags (RFID) The trouble with manual data collection & entry Error rate Time factor Labor cost Work Systems and the Methods, Measurement, and Management of Work by Mikell P. Groover, ISBN ©2007 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

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