Integrating the Warehousing and Trucking Functions of the Supply Chain—A Pull Model

1. Integrating the Warehousing and Trucking Functions of the Supply Chain—A Pull Model Investigator: Scott J. Mason, Ph.D. Graduate Scholar: P. Mauricio Ribera

2. Providers of leading edge logistics solutions, including • Software (Warehouse Management System, Pull System Design/Modeling Tool, and several other best in breed applications) • Consulting • Implementation services. • Offers a complete suite of logistics solutions that incorporate design input from the top logistics experts in the country.

3. Research Direction • In today’s industry, warehousing and transportation segments are often optimized in isolation. • Since the two operations are critically linked, this research will focus on what advantages can be gained by utilizing a pull system through incorporation of the transportation segment.

4. Supply Chain Costs • Transportation cost: • 30% total logistics cost • Terminal expenses • Activities done at each component touch point • Influenced by global inventory visibility • Line-haul expenses • Shipment cost per unit volume or distance • Hard to influence by global inventory visibility • Warehouse (overhead cost) & inventory cost: • Together account for 70% of the total logistics costs • Strongly influenced by global inventory visibility

5. Global Inventory Visibility (GIV) • Real-time, full knowledge of asset locations across the supply chain • Key component of today’s competitive supply chain activity management • Enables companies to service customer demands with accuracy and speed • Crucial to warehousing, trucking and manufacturing strategies like just-in-time deliveries, vendor-managed inventory, and cross docking

6. Virtual Warehouse • Global Concepts Inc. pioneered the concept of the virtual warehouse (VW) for maintaining real-time GIV for logistics assets • The VW relies on real-time information and real-time decision algorithms to provide operating efficiencies and global information visibility comparable to that achieved in a single-class warehouse • VW is supported by a real-time decision support system that is capable of planning, operating, and adapting to the dynamic nature of the supply chain

7. Supply Chain Inventory • The task of controlling inventory levels is a significant part of supply chain management • Inventory exists at every stage of the supply chain as raw material, semi-finished or finished goods • Inventory can also be in process between locations (i.e. during transportation) • Causes for high inventory levels (IL) and lead-times (LT) • Forecast inaccuracies, lack of supply chain information exchange, excess paper work, transportation delays, and ineffective decision support systems • To compensate, companies often hold as much as 15% to 50% of excess inventory or safety stock

8. Literature Review Summary • The task of controlling inventory levels starts by integrating warehousing and trucking functions of the supply chain, as they are key factors to reduce lead-times across the supply chain • The only way to handle more shipments is by knowing items’ characteristics a priori, such as item dimensions, location, and destination • In order to stay ahead of the competition, real-time information of the product flow becomes the tiebreaker for both sides of the business equation in terms of trading off transportation and warehouse inventory costs

9. Proposed Research • We propose to investigate the effects of global inventory visibility on yard management system effectiveness in terms of reducing inventory levels and lead times in the supply chain.

10. The Need for Yard Management • In a truck yard, many things are happening simultaneously • Trucks are arriving to the gate, then dispatched to either an open dock or the yard to wait for an available dock • Once a dock becomes available, the truck is assigned to the dock, engages the dock, has its cargo unloaded, potentially gets re-loaded with additional cargo, and then departs the yard • With multiple trucks present on the yard at all times, there is typically no way to know where specific trailers and/or products are and where they need to be going

11. Trailer Yard Management • To produce a schedule/task list with minimum cost and maximum yard throughput, companies need yard management systems that comprehend available, dynamically changing information about the yard’s • Docks • Operators • Trucks • Temporary storage area

12. Project Approach • Determine the impact of GIV on the effectiveness of yard management systems to develop effective decision support techniques • Develop a robust approach to scheduling/sequencing the trucks in the yard subject to varying order/delivery priorities, dock capacity, yard capacity, operator capacity, and demurrage costs