Log 301 Advanced Logistics Management

1. Log 301 Advanced Logistics Management

2. Distribution Overview Module 3 • Define distribution • Identify the modes of transportation • and the attributes of each • Explain how distribution relates to the • other logistics processes, principles, • and functions

3. “Distribution” “Process of synchronizing all elements of the logistics system to deliver the right things to the right place and right time.”

4. KEY TERMS • Distribution • Risk Pooling • Intermodal • Supply Chain • Responsiveness • Order Visibility

5. Factors InfluencingDistribution Network Design Two basic requirements: • Customer service • Responsive ……the right part when needed • Simple …. Easy to order; trust in the system • Cost to provide this service • Economic …..Costs are kept as low as possible “I want it RIGHT NOW . . . Every time” “I can’t afford to provide it RIGHT NOW . . . Every time”

6. Factors InfluencingDistribution Network Design • Elements of customer service influenced by network structure: • Response time • Product availability • Customer experience • Order visibility • Supply chain costs affected by distribution network structure: • Facilities and handling • Inventories • Transportation • Information Supply Distribution Maintenance

7. Different Delivery Options • Centralized Storage with Direct Shipping • Distributor Storage with Follow-On Delivery • Decentralized System

8. Centralized Storage withDirect Shipping Centralized Site TAJI (JRPC, GDC, GTR) MOTOR TRANSPORT REGIMENT MOTOR TRANSPORT REGIMENT LOGISTICS BATTALLION LOGISTICS BATTALLION Customers Product Flow

9. Key Army Locations Al Kasik Bayji Kirkuk 370 KM Tikrit Kirkush Habbaniyah Taji Numaniyah Najaf 445 KM Memona Tallil Shaiba

10. Importance of “Order Visibility” • If the customer is going to pick up from a central site • The customer must be informed if the asset is on hand • That asset has been reserved for issue to the customer • Asset can be easily identified once the customer arrives • The customer experience is more favorable if customers • are close to a pickup site. • Less transportation costs • Less fuel is expended. • Less maintenance is required for the delivery trucks

11. Importance of Prioritizing • Units closer to the centralized storage site have • better access to parts which are in high demand • (but in short supply) • Effective management systems should determine the priority of different customers when parts run low.

12. Distributor Storage withFollow-On Delivery Centralized Site Warehouse Storage by Distributor Customers Product Flow

13. Decentralized System Manufacturer or Repair Facility Site Local Facility Product Flow

14. Central versus Local Facilities (*there are advantages and disadvantages to the customer in each option) * Green indicates the best option for this one factor

15. Discussion Questions • Consider the following supply chains. What are the advantages of centralized and decentralized management, and centralized and local facilities? (response time, product availability, customer experience, order visibility) : • Milk and dairy products • Newspapers • Cars • Jeans

16. What kind of Distribution System? • Milk and dairy products • Great number of local user sites • Frequent demand; fast response time required • The demand rate would like remain fairly constant • Direct shipments from a central site • Central site would manage routine shipments of inventory to customer

17. What kind of Distribution System? • Jeans • Distributed and sold to an intermediate number of retail sites. • Increased centralized management planning required • Many different sizes and styles. • Also, demand (based on price, for example) would be a lot more variable by location . • A few distribution sites strategically located in different regions • Individual stores would order and get supplies from the regional distribution site.

18. What kind of Distribution System? • Cars • Easily the most expensive and most complex items. • Production to meet customer demand is requires more higher level management and centralized planning • The cost will limit how many much inventory is kept on hand for delivery • Customers would probably be willing to travel to the site and make their own delivery. • It would also be acceptable to have a longer response time to the customer • One centralized site. • The aggregated inventory would offer more product availability and a higher probability of meeting customer demand.

19. What kind of Distribution System? • Newspapers • Least expensive items • Response time needs to be fast (can’t sell old news) • Lots of facilities or news stands close to customers • Central site would ship directly to facilities to reduce response time • Only one product to deliver

20. REVIEW Two basic requirements: • Customer service • Responsive ……the right part when needed • Simple …. Easy to order; trust in the system • Cost to provide this service • Economic …..Costs are kept as low as possible

21. More Facilities = Better Response Time……but at a higher cost Cost (IQD) Response Time Small number of Facilities Increased (worse) Response Time Cost (IQD) Large number of Facilities Shorter (better) Response Time *assumes adequate inventory in the warehouse *Number of Facilities

22. Inventory Costs increase as the number of Facilities increases 4 + 4 +4 + 4 = 16 1 1 1 1 1 1 1 1 Inventory Costs 1 1 1 1 1 1 1 1 B C D A . . .to ensure assets are equally available, more assets required at more locations …..Less assets are required as assets are “pooled”. 4 + 3 +2 + 3 = 12 4 3 Number of facilities 2 3

23. Transportation Costs decrease as Facilities increase Small number of facilities results in overall transportation cost increases Transportation Costs Overall transportation cost increases after some point As number of Facilities decreases overall transportation cost decreases Number of facilities

24. “Push” vs. “Pull” System • Pull • Responsibility is on the unit • Unit places requisition • Supply system responds to requisition • Good communication and order visibility is critical • Less inventory is stored • Push • Supplies delivered automatically, on schedule • Not very flexible • More inventory is required

25. Distribution – Modes of Transportation

26. Transportation Mode– Surface Movement • Trucking • Best used for small loads • Point-to-point service • Flexible • More reliable, less damage than rails; more expensive than rails for long distance • Rail • Best used for low-value, high-density, bulk products, raw materials, intermodal containers • not as economical for small loads, slower, less flexible than trucking

27. TAJI General Transport Regiment • Transport vehicles from Umm Qasr to Al Muthana vehicle warehouse • Missions include transporting various classes of supply, including: • Artillery Pieces (Abu Graib, Diyala Province) • Badger (ILAV) Vehicles • Ammunition (Besmaya, Bayji, Najaf) • Personnel – Approximately 850 personnel; Equipment – 150 10T, 70 HETs, 42 HMMWVs Loading Class IX Badger Mission Moving containers -- GDC

28. Iraqi National Railway CAMP TAJI, Iraq (20 Mar 2008) Checking the tracks

29. Transportation Mode– Air Movement Air • most expensive and fastest mode of freight transport • lightweight, small packages <225 kg • high-value, perishable and critical goods • less theft

30. Transportation Mode- Water • Water • low-cost transportation mode • primary means of international shipping • slowest shipping mode • Intermodal • combines several modes of transportation -truck, water and rail • key component is containers

31. Transportation Mode– Pipeline • Pipeline • transport oil and products • in liquid form • high initial capital cost • long life and low operating • cost

32. Modes of Transportation - Review Least to Most expensive Most to Least Accessible Best (and cheapest) for long distance Greatest amount of cargo 36

33. Mode Comparison Mix

34. Role of information technology (IT) in Distribution • The complexity of transportation decisions is improved with the use of IT systems • Iraqi Asset Management Program (IAMP) • IT software can assist in: • Developed delivery schedules • Make the best use of delivery vehicles • Better awareness of problems/better opportunity to react

35. Movement Control • Plan routes and schedules • Balance requirements with capabilities • What material needs to be moved? • When and where will this movement occur? • Can/Should commercial contractors be used? Iraqi Transportation Network drivers securing M1114s for movement

36. Distribution—The Pivot Position • Typically, when maintenance capability goes down—distribution costs go up. • Why? • When distribution costs go up—mission capable rates may go down. • Why?

37. Strategic Distribution • Distribution/Transportation critical to mobilize for contingency operations • Different procedures and priorities may apply The Golan Heights, 1973

38. Summary • “Distribution” • Distribution System design • “modes of transportation” and the • attributes of each • How distribution relates to the other • logistics processes, principles, and • functions

39. KEY TERMS • Distribution • Risk Pooling • Intermodal • Supply Chain • Responsiveness • Order Visibility