Fundamentals logistics
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This document discusses fundamentals of logistics and supply chain management. It addresses key aspects of logistics systems including warehouse management, inventory management, transportation management, and integration with suppliers and customers. Specific areas covered include receiving, putaway, inventory tracking, order fulfillment, shipping, transportation routing and optimization, performance tracking, and questions executives may ask about logistics. The document emphasizes how an integrated logistics platform can increase efficiency, reduce costs, and improve metrics like fill rates and inventory turns.
Fundamentals logistics
- 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 FUNDAMENTALS OF LOGISTICS Powerful embedded analytics and BI Applications that are an asset Simplicity and agility Works the way you need it to Simple to use Get the right data to decision makers Complete industry- specific solutions Manufacturing Distribution Retail Services Public Sector Tailored to meet your needs
- 5. Broader View of Supply Chain/Logistics FUNDAMENTALS OF LOGISTICS Company
- 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 Increase Revenue Increase Asset Utilization Increase Profit Margins Financial Objective Increasing Shareholder Value Corporate Objective Opportunity 10-20% Fill Rate Improvement 1-3% Increase in Service Level 10-15% Increase in Revenue 2-4% Margin Improvement 30-40% Increase in ROA 10-15% Inventory Reduction 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 FUNDAMENTALS OF LOGISTICS % of Total Logistics % of Sales Transportation 43% 3.44% Warehouse 25% 2.09% Inventory Carrying Cost 29% 2.32% Administration 3% 0.24% TOTAL 100% 8.09%
- 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 FUNDAMENTALS OF LOGISTICS Shipping 20% Storage 15% Receiving 10% Picking 55%
- 15. Key Questions Example (Value Mapping) FUNDAMENTALS OF LOGISTICS COGS What % of COGS is logistics costs? CFO, CLO, COO, VP Dist. COGS Is COGS in line with expectations? How does your compare with competitors? CFO, CLO, COO Logistics What metrics do you use to measure logistics performance? How does your current performance compare with company goals? CFO, CLO, COO, VP Dist. Logistics What metrics do you wish you could track but cannot? Why? CFO, CLO, COO, VP Dist. Fill Rate What is your order fill rate, and how does it compare with company goals? CFO, CLO, COO, VP Cust. Serv., VP Dist., VP Sales Fill Rate How do you measure the impact of unfilled orders on revenue? CFO, CLO, COO, VP Cust. Serv., VP Dist., VP Sales Growth Can your logistics capabilities handle all existing and planned channels? If not, why? CFO, CLO, COO, VP Dist. On-Time What is your on-time delivery %, and how does it compare with company goals? VP Cust. Serv., VP Dist., VP of Trans., Director of Dist., Director of Transp. Inventory How do your inventory turns and inventory accuracy compare to company goals? What are the reasons for the differences? CLO, CPP, VP of Distr., Director of Dist. Inventory Could safety stocks be lowered with better inventory accuracy (knowing what you have, where it is, especially when needed)? Chief Logistics Officer, VP of Distribution, Director of Distribution Labor How do you track labor productivity? Are your tracking capabilities sufficient? VP of Distribution, Director of Distribution Charge backs Do you incur chargebacks from customers? What are the primary violations? VP of Distribution, Director of Distribution Inv. Accuracy What is your current inventory accuracy (perpetual and location level)? How does this compare with company goals? VP of Distribution, Director of Distribution Inv. Accuracy How does inaccurate inventory affect your business (warehouse productivity, order fill rate, inventory turns)? VP Distr., Director of Dist. Physical Cost Do you perform an physical inventory? How long does it take and what are the total costs associate with a PI? Director of Distribution Trading Partner Do you have a compliance program with suppliers? How effective is it? CLO, VP of Dist. Order Accuracy What is the cost to correct an order filled incorrectly? What makes up those costs? VP Cust. Serv., VP Dist., VP of Trans., Director of Dist., Director of Transp.
- 16. KEY ITEMS OF LOGISTICS SYSTEMS
- 17. Key Items GENERAL Embedded RF Configurable Workflow Work Creation Location Zones Stocking Limits License PlateControlled Labor Tracking
- 18. Warehouse Location Profile FUNDAMENTALS OF LOGISTICS • Location Profiles – Dimensions & Capacity – Mixed SKU – Mixed Lots – License Plate Controlled – Check Digit Controlled – Permanent vs. Dynamic – Stocking Limits – Zones
- 20. Integrated RF
- 21. License Plate Tracking Receiving / Putaway LicensePlatetrackedthroughentireoperation Systemgeneratedlabel ,blind label,orASNlabel maybeutilized Inventory Management LocationControlledLicensePlateTracking(optional) Transfer/ AdjustbyLicensePlate SupportforLicensePlatesin multiple statusesin asingle location Shipping PickbyLicensePlate Abilitytoallocatelicense platesandtrackto initialreceipt AbilitytoRF confirmpicklicense plates
- 22. Key Concept • Ability to deal with concepts separately: –Where – Selecting the optimal putaway/picking location –How – Best way to perform the work
- 23. Order Picker’s Time (non-WMS) - Typical PRESENTATION TITLE Travel 50% Search 20% Setup 10% Extract 15% Other 5%
- 24. Different Zones for Different Purposes FUNDAMENTALS OF LOGISTICS Pick Zone Locate Zone
- 25. 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
- 26. Pick / Pack Catch Weight FlowLTL Batch Case Pick Workflow Pick Catch Weight Print Label Stage Load Pick Stage Pallet Build Dock Check Load Group Pick VAS Labeling Pack by Order Example Configurable Workflow based on Criteria…
- 27. Labor and Task Tracking FUNDAMENTALS OF LOGISTICS
- 28. Key Items INBOUND Supplier Management InboundContainer Management ASN Receiving Disposition RF Receiving / Putaway Rules Driven Locating Cross-Docking Appointment Scheduling
- 29. Supplier Management THIRD PARTY LOGISTICS / FREIGHT FORWARDERS TRANSPORTATION PROVIDERS Small Domestic International Contract In-House Large Domestic FACTORIES SUPPLIERS DISTRIBUTION Branded Warehouse International Retail Cross-Dock/ Flow Through Business Manufacturing INBOUND SUPPLY CHAIN VISIBILITY End-to-End Event Management DIRECT DELIVERY Purchase Order Shipment ASN PO Confirm (Qty, Price, Dates) Customs Documents Shipment Status
- 30. Shipment Packing Wizard – Automated Shipment Creation – Carton / Pallet Packing Wizard – Container Nesting – Compliant Pallet / Case Label Printing – ASN Generation
- 31. Key Items INVENTORY InLocation Quarantine Real-time Cycle Count Hierarchical Item Classifications Lot / Serial NumberControl Automated Replenishment RF ProductionMoves RF Report as Finished
- 32. Inventory Status Configurable Inventory Status. InLocation Quarantine!
- 33. 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
- 34. Replenishment Automatic Replenishment • Identify Replenishment needs – Automatic Schedule – Manual – Min – Max Capacity – Allocation Rules • Replenishment Work – RF Work Execution – Priority Driven Pick LocationsReserve Locations
- 35. Key Items OUTBOUND Wave / Load Planning Deferred Reservation Whs/Siteat OrderEntry Location at Wave LP at Picking Rules based Allocation Work Creation RF Picking / Staging / Loading Pick & Pack ConfigurableWorkflow
- 36. Wave Output Wave Processing Wave Planning Prioritized WorkLocation Allocation
- 37. Load Planning • Load Planning Workbench – Automated / Manual Load Building – Order / Line / Partial Line Selection – Order Splitting – Pack Quantity Override PO-1 PO-3PO-2
- 38. Key Items TRANSPORTATION Embedded Rating Engines Routing / Route Guides Delivery Schedules Freight Apportionment TL, Rail, Ocean,LTL, Parcel Load Planning Compliance Labeling
- 39. Integrated WMS / TMS NOINTERFACES… Printshipping labelswith carrierinfo/tracking # uponorderrelease(eliminate backend process) Integratedweight check andmanifesting LaborPlanningandLoadPlanningconstraint modeling Sharedcustomerandorderinformation Improved sortationandspaceutilizationat shipping dock Closed loopFreight Charge/ Invoice • Rate shopping • Order consolidation • Load planning Cartons, weights Selected orders Planned loads, tracking #’s Freight charges, manifest Weigh ‘Wave’ Process Pick/Pack Manifesting Close Load Close Shipment Shipping Documentation Outbound Optimization
- 40. Routing Least Cost Carrier Best Way Pre-assigned Route Manual Routing Routing Guide Intermodal Routing Constraints Transit Times Delivery Dates Item / Carrier Item / Mode Carrier / Customer Mode / Customer Carrier / Hub Zone / Hub
- 41. Routing Guide
- 42. Rate Shop
- 44. Dock Management Shipping Dock Workflow Controlled… • Shipment Staging • Quality Checks • Pallet Building • Dock Door Assignment • RF Loading • Ship Confirm
- 45. 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)
- 46. Freight Reconciliation • Automate the Freight Bill Match and Pay process • Electronic Freight Bill Invoice (210) from carriers • Match Rules with Tolerance – Match down to Accessorial Charges – Proof of Delivery prior to Pay • Payment Rules – GL Coding – Freight Accrual and Apportionment Valid Shipment? Duplicate? Cost within Tolerance? Accessorial Fees Valid? Delivered on Time?
- 47. Key Items MHE Pick toLight Conveyor/Sortation ASRS Voice Carousel Etc.
- 48. MHE – Made to Reduce Travel, Space or User Input FUNDAMENTALS OF LOGISTICS
- 49. SUMMARY
- 50. 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
- 51. Key Questions Example (Value Mapping) FUNDAMENTALS OF LOGISTICS COGS What % of COGS is logistics costs? CFO, CLO, COO, VP Dist. COGS Is COGS in line with expectations? How does your compare with competitors? CFO, CLO, COO Logistics What metrics do you use to measure logistics performance? How does your current performance compare with company goals? CFO, CLO, COO, VP Dist. Logistics What metrics do you wish you could track but cannot? Why? CFO, CLO, COO, VP Dist. Fill Rate What is your order fill rate, and how does it compare with company goals? CFO, CLO, COO, VP Cust. Serv., VP Dist., VP Sales Fill Rate How do you measure the impact of unfilled orders on revenue? CFO, CLO, COO, VP Cust. Serv., VP Dist., VP Sales Growth Can your logistics capabilities handle all existing and planned channels? If not, why? CFO, CLO, COO, VP Dist. On-Time What is your on-time delivery %, and how does it compare with company goals? VP Cust. Serv., VP Dist., VP of Trans., Director of Dist., Director of Transp. Inventory How do your inventory turns and inventory accuracy compare to company goals? What are the reasons for the differences? CLO, CPP, VP of Distr., Director of Dist. Inventory Could safety stocks be lowered with better inventory accuracy (knowing what you have, where it is, especially when needed)? Chief Logistics Officer, VP of Distribution, Director of Distribution Labor How do you track labor productivity? Are your tracking capabilities sufficient? VP of Distribution, Director of Distribution Charge backs Do you incur chargebacks from customers? What are the primary violations? VP of Distribution, Director of Distribution Inv. Accuracy What is your current inventory accuracy (perpetual and location level)? How does this compare with company goals? VP of Distribution, Director of Distribution Inv. Accuracy How does inaccurate inventory affect your business (warehouse productivity, order fill rate, inventory turns)? VP Distr., Director of Dist. Physical Cost Do you perform an physical inventory? How long does it take and what are the total costs associate with a PI? Director of Distribution Trading Partner Do you have a compliance program with suppliers? How effective is it? CLO, VP of Dist. Order Accuracy What is the cost to correct an order filled incorrectly? What makes up those costs? VP Cust. Serv., VP Dist., VP of Trans., Director of Dist., Director of Transp.
- 52. 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
- 53. THANK YOU – QUESTIONS?