Logistics - PROC 5850 Walden Logistics - PROC 5850 Joe Walden [email protected].

Logistics - PROC 5850 Walden

Logistics - PROC 5850

Joe Walden

[email protected]


•Personal Background•Educational Background•Books, Articles, Presentations•Contact: Joe Walden [email protected] (760) 447-3651

mailto:[email protected]


Syllabus• Class 1: Aug 20 – Chapters 1 & 2, Supply

Chain Security• Class 2: Aug 27 – Chapter 3 & 4• Class 3: Sep 3– Chapters 5 & 6 • Sep 10 – no class• Class 4: Sep 17 - Chapters 7 & 8• Class 5: Sep 24 – Chapters 9 & 10• Class 6: Oct 1 – Chapters 11, 13• Class 7: Oct 8 - Chapter 15 and Reverse

Logistics


Class Slides and Information

• www.supplychainresearch.com

• Slides will be posted/updated week prior to class – therefore the slides currently on the website may change as new stuff comes available

http://www.supplychainresearch.com/


Grading

• Mid term 35%

• Final exam 35%

• Case Study 15%

• Paper 15%

CHAPTER 1

Logistics’ Role in the Economy and the

Organization


Importance of Supply Chain Management and The Art of War

• “War is a matter of vital importance to the state; the province of life or death; the road to survival or ruin. It is mandatory that it be thoroughly studied.”

• Supply Chain Management is a matter of vital importance to the company – the road to survival or ruin for the company. It is mandatory that it be thoroughly studied.


Business Logistics/Supply Chain—A Vital Subject

The supply chain is simply another way of saying “the whole process of business.”


Logistics DefinedLogistics is the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods and related information from the point of origin to point of consumption for the purpose of conforming to customer requirements. Council of Supply Chain Management

Practitioners

Supply Chain Management DefinedSCM is the integration of all activities associated with the flow and transformation of goods from raw materials through to end user, as well as information flows, through improved supply chain relationships, to achieve a sustainable competitive advantage.

Handfield and Nichols


Logistics and Supply Chain Importance

• >$1 Trillion annually on supply chains in US

• ~$600 Billion on transportation alone in US

• 70% of all goods in US are transported at some point in supply chain by trucks


Costs are high About 10.5% of GDP domestically About 12% of GDP internationally A range of 4 to 30% of sales for individual firms, avg. about 10% 70-80% of sales if purchasing and production are included

Customers are more demanding of the supply chain Desire for quick response Access to information and ordering online Desire for mass customization

An integral part of company strategy Generate revenue Improve profit Up to $12 dollars of increase in sales to = $1 saved in supply chain

Logistical lines are lengthening Local vs. long distance supply – global supply chains

Logistics is a key to trade and an increased standard of living Law of comparative economic advantage applies

Logistics adds value Time and place utilities

Significance of Logistics


Chapter One: Logistics Role in the Economy and Organization

To identify how logistics affects the economy and

the performance of organizations

To briefly explore how logistics has developed over time

To understand how logistics contributes to value

creation (value-added)

To understand the concept of the systems approach

as it relates to logistics and marketing, the total cost

concept and profitability

To show how to recognize areas in which logistics

performance can be improved


Table 1-1: The Cost of the Business Logistics System In Relation to Gross Domestic Product (GDP) In $ Billion

Year Inventory Carrying

Costs

Transportation Costs

Administrative Costs

Total U.S. Logistics

Cost

Logistics As a Percentage of

GDP

1960 31 44 3 78 14.7

1965 38 64 4 106 14.7

1970 56 91 6 153 14.7

1975 97 116 9 222 13.5

1980 220 214 17 451 16.1

1985 227 274 20 521 12.4

1990 283 351 25 659 11.4

1995 302 441 30 773 10.4

2000 377 590 39 1,006 10.1Source: R. Wilson and R. Delaney, Twelfth Annual State of Logistics Report, 2001


Category Percent of sales $/cwt.

Transportation 3.34% $26.52

Warehousing 2.02 18.06

Order entry 0.43 4.58

Administration 0.41 2.79

Inventory carrying 1.72 22.25

Total 7.65% $67.71

Physical Distribution Costs

Add one-third for inbound supply costs

Source: Herb Davis & Company

Logistics cost are about 10% of

sales w/o purchasing costs


Logistics: the right product, in the right quantity,in the right condition, at the right time, at the right place. These are the components of the Logistics metric for perfect order fulfillment.


Components of Logistics Management

Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Management actions

Planning Implementation Control

Raw materials

In-process inventory

Finished goods

Natural resources

Human resources

Financial resources

Informationresources

Time and place utility

Efficientmovement to customer

Proprietary asset

Competitive advantage

Logistics management

Suppliers Customers

Inputs into logistics

Outputs of logistics

Customer serviceDemand forecastingInventory managementLogistics communicationsMaterial handlingOrder processingParts and service support

Plant & warehouse site selectionProcurement PackagingReverse logisticsTraffic and transportationWarehousing and storage

Logistics activities


Customer serviceDemand forecastingInventory managementLogistics communicationsMaterial handlingOrder processingParts and service support

Plant & warehouse site selectionProcurement PackagingReverse logisticsTraffic and transportationWarehousing and storageSecurityCustoms Clearance

Logistics activities


Marketing/Logistics Management Concept

Customer satisfaction

Integrated effort Company profit

•Suppliers•Intermediate customers•Final customers

•Maximize long-term profitability•Lowest total costs given an acceptable level of customer service

•Product•Price•Promotion•Place (distribution)


Cost Trade-offs in Marketing and Logistics

Product

Order processing and information

costs

Inventory carrying costs

Place/customer service levels

Order processing and information

costsPrice

Lot quantity costs Warehousing costs

Transportation costs

LO

GIS

TI C

SM

AR

KE

TIN

G


Relationship of LogisticsActivities to Logistics Costs

• Customer service levels

• Transportation costs

• Warehousing costs

• Order processing/information systems costs

• Lot quantity costs

• Inventory carrying costs


Key Logistics Activities

• Customer service• Demand forecasting• Inventory

management• Logistics

communications• Material handling• Order processing• Packaging

• Parts and service support

• Plant and warehouse site selection

• Procurement• Reverse logistics• Traffic and

transportation• Warehousing and

storage


Flow through the Supply Chain

Customer

Customer

Customer

Customer

Customer

Customer

Supplier

Supplier

Supplier

Distribution center

Distribution center

Manufacturingsite

Carrier

Carrier

Carrier

Carrier

Carrier

Carrier


Future Challenges and Areas for Performance Improvement

• Supply Chain Management

• Strategic Planning

• Total Quality Management

• Just-in-Time

• Quick Response

• Efficient Consumer Response

• Logistics as a Competitive Weapon


Future Challenges and Areas for Performance Improvement (cont.)

• Accounting for logistics costs• Logistics as a boundary-spanning activity• Global logistics• Increasing skill requirements• Logistics information systems• Strategic alliances, partnerships, and

outsourcing• Green marketing and reverse logistics

CHAPTER 2

Supply Chain Management


•To show how supply chain management can

play a key role in achieving corporate success

• To familiarize with the concept of supply

chain management

•To describe the factors that influence supply

chain network structure, supply chain business processes,

and supply chain management components

• Supply Chain Security issues

Goals of this chapter:



The integration of key business processes from end user through original suppliers, that provides products, services, and information that add value for customers and other stakeholders.


Demand forecasting

Purchasing

Requirements planning

Production planning

Manufacturing inventory

Warehousing

Material handling

Packaging

Finished goods inventory

Distribution planning

Order processing

Transportation

Customer service

Strategic planning

Information services

Marketing/sales

Finance



Logistics

Purchasing/Materials

Management

PhysicalDistribution

Activity fragmentation to 1960 Activity Integration 1960 to 2000 2000+

Demand forecasting

Purchasing

Requirements planning

Production planning

Manufacturing inventory

Warehousing

Material handling

Packaging

Finished goods inventory

Distribution planning

Order processing

Transportation

Customer service

Strategic planning

Information services

Marketing/sales

Finance



Logistics

Purchasing/Materials

Management

PhysicalDistribution

Activity fragmentation to 1960 Activity Integration 1960 to 2000 2000+

Evolution of Supply Chain Management

CR (2004) Prentice Hall, Inc.


Su

pp

ly C

hai

n B

usi

nes

s P

roce

sses

Tier 1Supplier

Tier 2Supplier

SUPPLY CHAIN MANAGEMENTIntegrating and Managing Processes Across the Supply Chain

LogisticsPurchasing Marketing & Sales

R&D

Customer Consumer/End-user

CUSTOMER RELATIONSHIP MANAGEMENT

CUSTOMER SERVICE MANAGEMENT

DEMAND MANAGEMENT

ORDER FULFILLMENT

MANUFACTURING FLOW MANAGEMENT

PROCUREMENT

PRODUCT DEVELOPMENT AND COMMERCIALIZATION

RETURNS

PRODUCT FLOWProduction Finance

Manufacturer

Information Flow

Source: Douglas M. Lambert, Martha C. Cooper, Janus D. Pagh, “Supply Chain Management: Implementation Issues and Research Opportunities”, The International Journal of Logistics Management, Vol. 9, No. 2, 1998, p. 2.


Supply Chain Network Structure

Members of the Focal Company’s Supply Chain

n

n

n

n

n

n

n

Con

sum

ers

/ E

nd

-Cu

sto

me

rs

Tie

r 3

to

n c

ust

ome

rs

1

2

1

1

2

n

1

2

Initi

al S

upp

liers

Tie

r 3

to

n s

up

plie

rs

1

2

3

1

2

1

2

3

1

Focal Company

Tier 1Customers

Tier 2Customers

Tier 3 toConsumers/

End-CustomersTier 2

SuppliersTier 1

Suppliers

Tier 3 toInitial

suppliers

n

1


Types of Business Process Links

• Managed Process Links – important from company perspective

• Monitored Process Links – not as critical• Not-Managed Process Links – not

actively involved – often overlooked and may cause problems

• Nonmember Process Links – part of supply chain but not direct supply chain


Underlying Process Vision

Customer Relationship Management

Procurement

FulfillmentCustomer

Service Management

Manufacturing FlowManagement

Demand Management

Customer

Source: 3M

Supply Chain Management Vision

The key to achieving an integrated flow of product and information throughout the supply chain is to create a focused customer interface, a focused supplier interface, and an integrated, process-oriented, supply chain which is driven by the customer.


Customer Relationship Management

• Customer service teams develop and implement customer partnering programs.

• Product/service agreements are established.

• New customer interfaces lead to improved communication and better predictions of customer demand and improve the way customers are serviced.

• Teams identify and eliminate sources of production variability.

• Key performance evaluation criteria (both level of service and customer profitability) are used to measure results.

• Similar to first step in Six Sigma process


Customer Service Management

• Provides a single source of customer information, a point of contact for administration of the product/service agreement.

• Conveys real-time information through interface with product and distribution operations.

• Requires an on-line/real-time product and pricing information to assist customers with inquiries, order placement, and after-sales service.

• Includes front line technical service that assists customers with product applications and recommendations.


Customer Order Fulfillment

• “Customer need dates” and requirements drive the process.

• Manufacturing, distribution, and transportation plans are integrated.

• Strategic alliances with key supply chain members and carriers are formed to meet requirements and to reduce total-delivered-cost to customers

• Key metrics: Required Delivery Date; Time Definite Delivery; On time delivery rates; perfect order fulfillment


Perfect Order Fulfillment

• Right product

• Right Place

• Right Quantity

• Right time

• Right condition

• Is 99% good enough?



• Right Product % x Right Place % x Right Quantity % x Right Time % x Right Condition %

• Example: 99% x 99% x 99% x 99% x 99% = 95% Perfect Order Fulfillment

• 95% = 77.37% Perfect Order Fulfillment


Manufacturing Flow Management

• Product is pulled through the plant based on customer needs.

• Manufacturing processes must flexibly respond to market changes with rapid changeover capabilities for mass customization.

• Minimum lot sizes are planned to move toward a make to order environment.

• Production priorities are driven by required delivery dates.

• Managers concentrate on keeping setup/changeover costs very low.


Procurement

• Strategic plans of suppliers and company are aligned to focus resources on holding down costs and developing new products.

• Supplier categorization and management is implemented on a corporate global basis, with purchasing in a strategic contracting role.

• Purchase order transactions are integrated with the supply process to improve productivity and all areas of supplier performance.


Product Development

• Design what the customer wants/needs

• Create a need for the product – 3M/iPod


Reengineering SCM Process Flow Chart

Assess:• Culture

• Strategies• Practices

• Processes

Assess:• Culture

• Strategies• Practices

• Processes

Mission statementMission statement

Business requirementsBusiness requirements

Implement business solution in supply chain

Implement business solution in supply chain

New enterprise design for integrated processNew enterprise design for integrated process

Revise/reengineerRevise/reengineer

Strategic partnerships

Strategic partnerships

Organizationstructure

Organizationstructure

Humanresource

capabilities

Humanresource

capabilities

Informationsystems

Informationsystems

Acceptable

Not acceptable

Source: Douglas M. Lambert, Larry C. Guinipero, and Gary J. Ridenhower, “Supply Chain Management: A Key to Achieving Business Excellence in the 21st Century,” unpublished manuscript. All Rights reserved.


IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENT

Information Architecture, Data Base Strategy, Information Visibility

Technical Logistics Purchasing Finance &Accounting

Sales &Marketing

BusinessProcesses

Typical Functions

Silos

Manufac-turing

CUSTOMERS

DemandManagement

NetworkPlanning

CapabilityPlanning

SourcingDemandPlanning

CustomerRelationshipManagement

RequirementsDefinition

ManufacturingStrategy

SourcingStrategy

CustomerProfitability

AccountManagement

RequirementsDefinition

Customer ServiceManagement

PerformanceSpecifications

CoordinatedExecution

AccountAdministration

TechnicalService

Manufacturing FlowManagement

ProductionPlanning

IntegratedSupply

ManufacturingProcessStability

Fulfillment DistributionManagement

PlantDirect

SelectedSupplier(s)

DistributionCost

SpecialOrders

ProductDevelopment andCommercialization

ProcessSpecifications

MaterialSpecifications R & D Cost

ProductDesign

BusinessPlan

MovementRequirements

PriorityAssessment

CostTo Serve

TradeoffAnalysis

ProcessRequirements

EnvironmentalRequirements

PackagingSpecifications

PrioritizationCriteria

SUPPLIERS

Procurement IntegratedPlanning

SupplierManagement

MaterialsCost

MaterialSpecifications

OrderBooking

InboundFlow

Cost

Note: Process sponsorship and ownership must be established to drive the attainment of the supply chain vision and eliminate the functional barriers that artificially separate the process flows.


Overview Presentation

Supply Chain Operations Reference-model

(SCOR)


• The SCC is an independent, not-for-profit, global corporation with The SCC is an independent, not-for-profit, global corporation with membership open to all companies and organizations interested in membership open to all companies and organizations interested in applying and advancing state-of-the-art supply chain management applying and advancing state-of-the-art supply chain management systems and practices.systems and practices.

• Over 800 Company Members Over 800 Company Members

• Cross-industry representation Cross-industry representation

• Chapters in Australia/New Zealand, Brazil, Europe, Japan, Chapters in Australia/New Zealand, Brazil, Europe, Japan, North America, Southern Africa, and South East Asia with North America, Southern Africa, and South East Asia with petitions for additional chapters pending.petitions for additional chapters pending.

•The Supply-Chain Council (SCC) has developed and endorsed the The Supply-Chain Council (SCC) has developed and endorsed the Supply Chain Operations Reference-model (SCOR) as the cross-Supply Chain Operations Reference-model (SCOR) as the cross-industry standard for supply chain managementindustry standard for supply chain management


SCC Organization - Chapters and Staffing

Australia/New Zealand Chapter Australia/New Zealand Chapter Sydney, AustraliaSydney, Australia

Australia/New Zealand Chapter Australia/New Zealand Chapter Sydney, AustraliaSydney, Australia

South East Asia Chapter South East Asia Chapter SingaporeSingapore

Venture Inc.Venture Inc.

South East Asia Chapter South East Asia Chapter SingaporeSingapore

Venture Inc.Venture Inc.

Japan Chapter Japan Chapter Tokyo, JapanTokyo, Japan

NECNEC

Japan Chapter Japan Chapter Tokyo, JapanTokyo, Japan

NECNEC

SCC Global Headquarters SCC Global Headquarters Pittsburgh, Pennsylvania, Pittsburgh, Pennsylvania,

USAUSA

DisneyDisney

SCC Global Headquarters SCC Global Headquarters Pittsburgh, Pennsylvania, Pittsburgh, Pennsylvania,

USAUSA

DisneyDisney

EuropeEurope

Oslo, NorwayOslo, Norway

Modus MediaModus Media

EuropeEurope

Oslo, NorwayOslo, Norway

Modus MediaModus Media

Southern Africa Southern Africa Johannesburg, South AfricaJohannesburg, South Africa

UTiUTi

Southern Africa Southern Africa Johannesburg, South AfricaJohannesburg, South Africa

UTiUTi

North America North America ChapterChapter

North America North America ChapterChapter

Brazil ChapterBrazil Chapter

Effective 9/1/03Effective 9/1/03

Brazil ChapterBrazil Chapter

Effective 9/1/03Effective 9/1/03


Supplier

Plan

Customer Customer’sCustomer

Suppliers’Supplier

Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliver

Internal or External Internal or External

Your Company

Source

SCOR is structured around five distinct management processes

SCOR Model SCOR Model

Return Return ReturnReturn Return Return Return Return

Building Block Approach

Processes Metrics

Best Practice Technology


Performance Attribute

Performance Attribute Definition Level 1 Metric

Supply Chain Delivery Reliability

The performance of the supply chain in delivering: the correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer.

Delivery Performance

Fill Rates


Supply Chain Responsiveness

The velocity at which a at which a supply chain provides products to the customer.

Order Fulfillment Lead Times

Supply Chain Flexibility

The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage.

Supply Chain Response Time

Production Flexibility

Supply Chain Costs

The costs associated with operating the supply chain.

Cost of Goods Sold

Total Supply Chain Management Costs

Value-Added Productivity

Warranty / Returns Processing Costs

Supply Chain Asset Management Efficiency

The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital.

Cash-to-Cash Cycle Time

Inventory Days of Supply

Asset Turns

Linking Supply Chain Performance Attributes and Level 1 Metrics


Just In Time - Logistics or Supply Chain?


Just -in-Time

According to APICS Dictionary:

“A philosophy of manufacturing based on

planned elimination of all waste and on

continuous improvement of productivity.”


Just in Time

• The process is important not the actual “zero inventory” concept

• First Step - document the existing flow of products or services - see the actual flow and determine which are value added

• Second Step - determine the reasons for variations in flow and why a new flow may be needed

• Implement change

• Mistake proof

• Start again at step 1


7 Wastes• Waste of overproduction

• Waste of waiting

• Waste of transportation

• Waste of Stocks

• Waste of motion

• Waste of making defects

• Waste of processing - when product should not be made or process not used

• (added by Walden) Waste of Meetings

Source : Just-in-Time: Making it Happen


Supply Chain Security



What’s the cost of 9/11 to the Supply Chain?

Fortune Magazine - $50-80 billion a year

• inefficient supply chains• higher transportation costs• increased inventory


Efficient supply chain

• Economical production runs

• Finished goods inventories

• Economical buy quantities

• Large shipment sizes

• Batch order processing

Responsive supply chain

• Excess capacity

• Quick changeovers

• Short lead times

• Flexible processing

• Premium transportation

• Single order processing

Supply-to-stock

Supply-to-order

Choosing the Right Supply Chain Strategy


Supply Chain SecurityAnd Homeland Defense


Recent Headlines

• “New Budget includes $10.2 Billion for Border Security.”

• “Battling the Bad Guys: 2005 Was a Tough Year” Dec 2005 Baseline Magazine

• “Major Data Theft Leads to Major Legal Problems” Baseline Magazine

• “Polo Ralph Lauren – Lost Point of Sale Data”

• “No One Stop Shopping to Stop Database Pilferages” E-Week, Dec 21, 2005


Recent Headlines

• GAO Report: “Container Security – Expansion of Key Customs Programs Will Require Greater Attention to Critical Success Factors”

• “Security and Risk Strategy Become Integrated” – Top Trends for 2006, CIO Magazine, January 2006

• “Computer Security Becomes More Critical” CIO Magazine, January 2006

• “Supply Chain and Security Remain in the Forefront”

• “ISO Publishes Supply Chain Security Guidelines” Plant Engineering Magazine, Sep 06

• New Budget Includes $10.2 Billion Increase for Border Protection


• “Supply Chain Security Poses Opportunities, Obstacles” E-Week, Sep 23, 2005

• “Supply Chain Risks Threaten the World’s Biggest Companies” Logistics Today – “Financial executives at some of the world’s biggest companies believe supply chain risks post the top threat to companies revenues.”

Recent Headlines


Examples

• Major Distributor, Dec 2006

• Locks on trucks

• SAFE Port Initiative

• Scanning of Containers

• C-TPAT

• ISO Standards for Supply Chain Security


Terrorism Risk Insurance

U.S. Terrorism Risk Insurance Act (TRIA) – Our property and casualty insurance experts are helping clients with interests in the United States make informed decisions about terrorism coverage.

U.S. President George W. Bush signed the Terrorism Risk Insurance Act (TRIA) into law in November 2002 to stimulate business investment that had slowed to a trickle after the events of September 11, 2001. The law creates a three-year federal program that backs up insurance companies and guarantees that certain terrorist-related claims will be paid.

TRIA is a short-term measure designed to give the insurance market time to recover and develop new solutions.



“We have proved to our management that good security is good business.”— Ann Lister of Texas Instruments


Risk

Supply Chains are inherently complex, dynamic, and fluid, characterized by uncertainty, ambiguity, and friction. These characteristics cloud the operating environment: they create risks


Important?

• September 11, 2001 - $2 billion per day lost

• Longshoremen Strike, 2002 – 300-500 ships backed up

• Potential loss of attack to major port - $20 billion estimate


Problem?• Terrorism• Obsolescence• Pilferage• Information Breach• Proprietary Data – Camera Phones; Thumb Drives• Cyberspace Security• RFID Data Security• 66% of Sealift Containers arrive at 20 Major Ports• >58 % of all inbound containers come through New

York/New Jersey, Los Angeles, Long Beach• ~44% through Los Angeles/Long Beach in 2003• Lengthening of Supply Chains – coupled with

Globalization• Top 5 “Hottest Global Markets”: China, Mexico, Eastern

Europe, Southeast Asia, India


Purpose of Risk Assessment

Identify those areas of the supply chain that are vulnerable to interruptions of support flow.

• People• Processes• Technologies• External events


Risk Assessment

• Terrorism• Port Security – over 12 million

containers annually to the US; 200 million world wide

• Port Security – 300 US Ports• Longshoremen Strike – 2002• Potential Airport Attack – LAX;

MPS; LGA


How do you identify Supply Chain Risks?

• You have to know your processes

• Process maps• Understanding processes• Understanding where risks are• Internal Risks• External Risks


What are Supply Chain Hazards?

• Theft/Pilferage• Competition• Information Systems• Cell Phones• Thumb Drives• Camera Phones• Disgruntled Employees• Lack of Training


What is a Catastrophic Risk?

• Inaccurate receipts?• Customer Satisfaction?• Sloppy Warehousing?• National Emergency?• Hurricane?• Or, Only when it makes it to

CNN?


New Problem?

• “There were no ‘secure’ rear areas.” General Joseph Heiser on

Vietnam Logistics• Sun Tzu – Chapter 1, The Art of War• Native Americans• American Civil War – Great Train

Chase• Pirates of the Caribbean


• Supply Chain Security must protect the path from the supplier to the customer.

• End to End Security • End to End Visibility – RFID• Information Security• Personal Daily Obligation• Operational Security• Security and Velocity




A Global Perspective


Top 5 European Ports

• Rotterdam – 9.287 million TEUs in 2005

• Hamburg – 9.088 million TEUs

• Antwerp – 6.488 million TEUs

• Bremen – 3.735 million TEUs

• Giora Tauro – 3.161 million TEUs

• LA/Long Beach – 7.485 mil TEUsSource: Logistics Today, Feb 07, p.1, 20


Other Key Ports

• Singapore – 23.2 million TEUs

• Hong Kong – 22.602 million

• Shanghai – 18.080 million

• Shenzhen – 16.2 million

• Pusan – 11.94 million


Rotterdam

• > 900 intermodal barge moves daily to 72 locations

• > 200 rail moves

• 220 million people within 600 miles of Rotterdam


Rail

• > 15% of cargo to Germany via rail

• ~ 13% of Belgium cargo

• ~ 14 of French cargo

• US Rail – 4 major bridges over the Mississippi River


Other issues

• 9000 distribution centers in the Netherlands

• 2000 - $64.4 billion USD in logistics and distribution in The Netherlands


Containers

• Cost to X-Ray containers

• Manpower

• Delays

• Radiation


Why should you care about SC Security?

• Is it a US problem?

• Global Problem

• Heathrow Airport delays Superbowl weekend 2005

• RFID – is this the solution?

• ISO Guidelines for SC Security

• Terrorism Insurance


Transportation Worker Identification Credentials

• Port Employees

• Long Shoremen

• Unescorted access personnel


HR 1

• Air Cargo Bill – phase in inspection of all air cargo

• Sea Cargo – safe seal – shippers of >75K TEUs to US have 3 years to comply


C-TPAT

• Security Freight Initiative

• Inspection of high risk containers @ >50 ports


Other issues

• theTruecosts.com – costs of piracy and fakes

• Rotterdam – 19% of all European Volume

• Amsterdam – 440 million metric tonnes

• www.HIDC.com – Holland International Distribution Council


Orlando International Airport

• No staffing of doors for employee entrance to baggage claim areas

• Guns smuggled into planes by employees• “no requirement for us to staff those doors” OIA

Spokesperson; TSA – “not my job!”• Identified as security issues in 2004• 2006 – ½ of TSA Screeners failed test that

measured how well employees could identify explosives, guns and other weapons on the scanner – but can identify bottles of mouthwash and toothpaste

Source: Mike Thomas, Orlando Sentinel, Mar 15, 2007, p. B-1


Air Cargo World 2/07

• Bans on Russian Flights to Georgia

• Unfit Antonovs – on list published by the International Civil Aviation Organization – 462 aircraft considered not air worthy

• Not a terror threat but still a SC Threat

• Mostly used throughout Africa


International BioTerrorism

• Peter Pan Peanut Butter – e coli – 2007• E-coli from fresh Spinach – 2006• Chi Chi’s e-coli – from green onions – 2003• Taco Bell – e coli 2005• None were terrorist attacks but impacted supply

chains• US Salmonella/e-coli scare 2008• Salmonella epidemic 2009 - >3825 separate items

recalled


Risk Assessment

“If you do things the way you’ve always done them, you’ll get the same things you’ve always got.”

-Darrell Waltrip

This is not your Dad’s Supply Chain!Security is an integral part of the Supply Chain and Homeland Defense


Leadership and Security

RISKMGMT

ASSESSMENT/

TRAINING

LEADERSHIP

VISION/DIRECTION

PURPOSE/MOTIVATION

SCSECURITY


Summary

• Direct link between supply chain security and homeland security

• Logistics costs are large part of manufacturing costs

• Savings in supply chain costs to bottom line

• Logistics

• Supply Chains


Next Class

• Chap 3 & Chap 4

Logistics - PROC 5850 Walden Logistics - PROC 5850 Joe Walden [email protected].

Documents

Transcript of Logistics - PROC 5850 Walden Logistics - PROC 5850 Joe Walden [email protected].