Supply Chain Logistics Management

Chapter 14: Material Handling and Packaging

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Material Handling Systems

• Mechanized

• Semi-automated

• Automated

• Information directed

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Mechanized Systems

• Moderate fixed cost, variable cost and flexibility• Examples

– Forklift– Walkie-Rider pallet trucks– Towlines– Tow tractors– Conveyors– Carousels– Pick-to-light

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Semi-Automated Systems

• High fixed, low variable, low flexibility

• Examples– AGVS

– Sortation systems

– Robotics

– Live racks

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Automated Systems

• High fixed, lower variable, low flexibility

• Examples– Order selection systems

– ASRS

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Information Directed Systems

• Moderate fixed and variable cost, high flexibility and utilization

• Examples– PC directed forklifts– RF controls

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Packaging Factors Influencing Material Handling

• Product characteristics– Cube utilization

• Unitization– Rigid containers (Containers)– Non-rigid containers (Pallets, slipsheets,

shrinkwrap)– Flexible containers (Knock down)– Unit load building

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Role of Packaging

• Consumer packaging (Marketing emphasis)

• Industrial packaging (Supply chain emphasis)– Unitization

– Handling

– Security

– Stowability

– Information

– Protection

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

INTEGRATED LOGISTICS SERVICES

• Mission-Provide services to meet all or significant part of a shipper’s total logistical requirements

• Titles-Third party logistics, contract logistics, logistics utilities, and integrated logistics service providers

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Defining Contract Logistics

Types and Categories of 3PL’s• Asset-based Asset-based • Data-basedData-based• Exclusive Service ProviderExclusive Service Provider

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Drivers of Logistics Outsourcing

Debt reduction

Strategic focus of ...Financial resources

Human resources

Information technology

CompetitionFaster (agility)

Better (quality)

Cheaper (low cost provider)

Investment Rationing

Defining Contract Logistics

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Advantages

•Less asset investment

•Lower operating costs

•Focus on core competence

•Gain management skills

•Provide higher service level

•Increased flexibility

•Entry mode to new markets

Disadvantages

•Switching costs

•Unseen “hidden” costs

•Less customer contact

•Dependency

•Loss of control

Defining Contract Logistics

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Implementation

Steps to Outsourcing• Strategic decision to outsource• Determine the first impact area clearly• Define the objectives of outsourcing activity• Supplier selection process• Contractual issues• Work the project• Review the operating plan and budget• Implementation plan• Frequent feedback - CIP• Partnering

Supply Chain Logistics Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

CONCLUSION

• Warehouse strategy is evolving to more focused and flexible

• Technology and expertise are key warehouse alternative determinants

• Operating and industry synergies are more important factors