1. Purchasing Logistics Services Marketing 3860 – Purchasing July 27, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations Management Middle Tennessee State University

2. What effects do JIT purchasing, global sourcing, and outsourcing have on logistics decisions?

3. Transportation Elements  Ways  Terminals  Vehicles

4. Transportation Modes  Rail – More efficient than road, good for bulk items, ways are expensive  Road – Most flexible, relatively inexpensive vehicles, highest operating cost  Air – Fastest, best for high-value, light weight products, expensive  Water – Very efficient, slow  Pipeline – emphasis on ways, no vehicle  Intermodal – emphasis on terminals

5. What are the advantages and disadvantages of each transportation mode?

6. Transportation Modes  Water – most efficient for all products except those that can flow in pipelines, vehicles are expensive, slow – with variable transit times  Pipeline – if appropriate, the most inexpensive, ways are very expensive, not appropriate for most products though some solids (e.g., coal) can be transported in a slurry

7. Transportation Modes  Rail – More efficient than road, good for bulk items, ways are expensive  Road – Most flexible, relatively inexpensive vehicles, highest operating cost  Air – Fastest, best for high-value, light weight products, expensive

8. Under what circumstances would you choose air? Water? Rail?

9. Motor Carriers  Less-than-Truckload (LTL) Carriers (also, Less-than-Carload (LCL))  Truckload Carriers (also, Carload (CL))  Small parcel ground

10. Motor Carriers Why are close to 80% of the transportation costs in the U.S. (1999 figures, see pg.412) due to highway traffic? What might this high percentage indicate for the future?

11. Third Party Logistics (3PL) Providers Firms that act as intermediaries between trading partners, for example, shippers and carriers.

12. Third Party Logistics (3PL) Providers What circumstances favor the use of 3PL’s? When would companies choose NOT to use 3PL’s?

13. Logistics Security  Theft – “Only 25%” of $7 trillion = $140 billion! (The problem is only $30 billion annually in the U.S.)  Homeland security – Container Security Initiative

14. Logistics Security –CSI Rationale  About 90% of the world's trade is transported in cargo containers.  Almost half of incoming U.S. trade (by value) arrives by containers onboard ships.  Nearly seven million cargo containers arrive on ships and are offloaded at U.S. seaports each year.

15. Logistics Security -CSI  Using intelligence and automated information to identify and target containers that pose a risk for terrorism  Pre-screening those containers that pose a risk at the port of departure before they arrive at U.S. ports  Using detection technology to quickly pre- screen containers that pose a risk  Using smarter, tamper-evident containers

16. Purchasing Logistics Services Marketing 3860 – Purchasing July 27, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations Management Middle Tennessee State University