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  • LeanATL 11:48 pm on November 20, 2017 Permalink | Reply  

    Mind Maps for Visual Learning 

    APICS_CLTD2017_v1_0We kicked off another CLTD workshop in Atlanta recently. In the workshops we offer tools, tips and strategies for successfully studying for and passing the APICS CLTD exam. One strategy we recommend to all students is creating a mind map of the CLTD learning system.

    A mind map is a diagram used to visually organize information. A mind map is hierarchical and shows relationships among pieces of the whole. It is often created around a single concept, drawn as an image in the center of a blank page, to which associated representations of ideas such as images, words and parts of words are added. Major ideas are connected directly to the central concept, and other ideas branch out from those.

    When I studied for the CLTD exam, I used Coggle, a free online mind mapping tool.

    First, I summarized the learning system by module and section, and highlighted the total number of pages within each section. I then created a separate mind map for each section and listed terms and/or concepts associated to the section, along with a page reference in the learning system. This allowed me to easily summarize key terms and concepts and link them to a topic.

    The end result was multiple pages of mind maps I was able to quickly reference. More importantly, the process of developing the mind maps helped engrain the core learning concepts I felt relevant to better understanding CLTD.

    You can send us a note and we will gladly send you the mind maps we have, but the real learning occurs when you create your own mind map and being to identify terms and concepts and associate them to sections and topics in the learning system. After all, while there are short cuts to learning, the best path to understanding is doing.

     

     

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  • LeanATL 2:30 am on November 12, 2017 Permalink | Reply  

    Break Bulk Warehouse 

    Break Bulk Warehouse 2

    Source: https://www.slideshare.net/amit8181/warehouse-3043976

    Last post, we discussed a tool for distribution facility network design. Another factor potentially influencing network design is the role of the warehouse. For example, will all facilities be pure distribution centers, storing inventory and distributing to customers? Or will facilities be specialized, serving different purposes.

    Within a supply chain, it is common to have multiple warehouses serving specific roles to improve customer service levels, reduce transportation costs, or both. For example, a break bulk warehouse will allow a company to leverage inbound transportation truck loads which are typically better rates than smaller less than truck load rates. The warehouse in this case serves the purpose of receiving bulk shipments through economical long distance transportation from plant and breaking of these into small shipments for local delivery to various customers. This enables small shipments in place of long distance small shipments.

    The APICS Dictionary, 15th edition, defines break bulk (warehouse) as:

    ‘dividing truckloads, railcars or containers of homogeneous items into smaller, more appropriate quantities for use…’

    Another source, http://logisticssupplychainforum.blogspot.com/2010/03/logistics-warehouse-management-part-i.html presents economic benefits of various warehouse roles and defines the benefits of break bulk a receiving bulk shipments through economical long distance transportation from plant and breaking of these into small shipments for local delivery to various customers. This enables small shipments in place of long distance small shipments.

     

     
  • LeanATL 12:35 pm on October 4, 2017 Permalink | Reply  

    Center-of-Gravity (modeling) Approach 

    Michael Jackson Lean 3

    Effective facilities planning and network design can result in both a strategic competitive advantage (serving customers quicker) and low cost differentiation. A good project will look at the location of facilities relative to customers and suppliers, and the types of facilities to help improve customer service while lowering costs.

    Click here to read an example, with results, of a network design project.

    Facility location decisions involve many logistics variables. Your job as a supply chain professional is to balance and compare these variables to optimize service levels, costs and flexibility. You have many modeling tools available ranging from simple to complex.

    One approach of interest to an APICS CLTD candidate is the Center-of-Gravity Approach.

    The APICS Dictionary, 15th edition, defines a center-of-gravity approach as:

    ‘a methodology for locating distribution centers at approximately the location representing the minimum transportation costs between the plants, the distribution centers, and the markets, in order to maximize revenue …’

    The Center of Gravity Approach seeks to compute geographic coordinates for a potential single new facility to minimize costs. The main inputs considered are:

    • Markets
    • Volume of goods shipped
    • Shipping costs

    This method is beneficial because it’s (1) Simple to compute, (2) Considers existing facilities, (3) and Minimizes costs.

    Click here to read more about using the center-of-gravity approach.

    Bonus…

    You may think the National Archives is an unlikely place to learn about center of gravity and the secrets of Michael Jackson’s dance moves — but you’re wrong!

     
    • Shaida Allen Wilson 1:05 pm on October 4, 2017 Permalink | Reply

      Great information! Thanks

      Like

  • LeanATL 3:44 pm on September 17, 2017 Permalink | Reply  

    Why CLTD? ‘Those who know how will always work for those who know why’ 

    In 2016 APICS introduced the new Certified in Logistics, Transportation and Distribution (CLTD) certification. The CLTD certification is earned by passing one comprehensive exam, focusing on eight modules covering critical areas in logistics, transportation, and distribution:

    • Logistics and Supply Chain Overview
    • Capacity Planning and Demand Management
    • Order Management
    • Inventory and Warehouse Management
    • Transportation Management
    • Global Logistics Considerations
    • Logistics Network Design
    • Reverse Logistics and Sustainability

    Achieving CLTD certification will help you:

    • Master the essential knowledge needed for the logistics, transportation and distribution industry
    • Expand your outlook on the logistics field and enable you to bring new ideas to your organization
    • Remain current with global logistics trends and developments
    • Boost your confidence with recognition as a logistics expert
    • Provide you with the tools you need to help reduce costs and increase customer satisfaction

    Chris Barnes, a supply chain professional and long-time friend of APICS achieved the CLTD certification late 2016. He recently sat down with Amanda Luton, owner of The Magnolia Marketing Group and social media marketing manager for APICS Atlanta, to discuss the CLTD certification and provide readers with tips on how to successfully study and pass.

    Amanda: You achieved CLTD. What other certifications do you have?

    Chris:  Yes, I achieved CLTD in December 2016. I also hold the original CPIM designation at the fellow level and added CSCP a few years ago.

    Amanda: What are the other certifications and how do they work together?

    Chris: CPIM or Certified in Production & Inventory Management has been around for over 60 years and is the industry standard for inventory management and sales and operations planning professionals. CSCP or Certified Supply Chain Professional is the middle child and has been around for several years. I was glad to see the new CLTD certification come along as a complement to the other two. CPIM focuses on the Plan, Source, Make processes of the supply chain with emphasis on materials planning, materials management, purchasing and forecasting. CSCP took a more holistic view of the supply chain with emphasis on all SCOR processes. CPIM was at the ground level view while CSCP was at the 10,000 feet view. CLTD is similar to CPIM being at a ground level view but is focused on the outbound side of the supply chain (Deliver and Return).

    Amanda: How have these certifications helped you?

    Chris: I will give you my personal examples but I encourage readers to understand each person and career is different. I am unique to APICS in my career. As a sales professional with classical training roots in industrial engineering my use of the APICS credentials is what I say, less than applicable. For example, I am not buying, planning, producing or moving things through the supply chain as a practitioner. However, the CPIM certification has helped establish me as a trusted advisor with prospects and customers, making my job easier. On many occasions, I’ve noticed something APICS related in a person’s office I was interviewing, and inserted my APICS involvement into the discussion. It was an instant credibility builder.

    In recent years, my focus has been on helping companies improve their warehouse operations. As a result I was suspect getting the CLTD certification would benefit me much. But, I quickly learned there is more to outbound logistics than an efficient warehouse. CLTD opened my eyes to the complexities of a global supply chain and best practices around managing transportation and reverse logistics. It added to my arsenal as a trusted advisor. I am now better able to discuss transportation issues with my prospects and customers. Issues like understanding the impact of the Chinese New Year on supply lead times, what harmonized tariff codes are and why they matter and the perfect order is not perfect until the customer has it.

    The CSCP certification helped me in a surprising way and opened my eyes to another passion I now have, training and coaching. When I achieved CSCP I was with a global ERP publisher (don’t know what ERP is? Get certified and find out). With the new certification in hand, management approached me and asked if I would put together a CSCP review series for employees and partners around the world. I accepted and helped many people with their career development by coaching them on CSCP certification. As a result of this experience I now coach individuals during their certification processes and advise another company, Talent Stream Leadership Academy, to help companies develop internal workshops and certification review sessions.

    Amanda: As one of the first CLTD certificants, what advice do you have for anyone pursuing CLTD certification?

    Chris: At a high level, I have three suggestions. One, set aside the time to study and make it a priority. This is especially true if you opt for self-study. The exam schedules are flexible and you sign up for an exam slot that fits your personal schedule, for example 3 or 6 months out. You then have a pace to maintain leading up to your exam date. As with any other learning exercise, cramming creates stress and tends to focus on the result (passing) over the means (learning).

    Forget what you already know. I expect this sounds odd but I am a living example of why I bring this up. As mentioned, I have been a warehouse professional for several years and think I have a good grasp on warehouse concepts and practices. As I studied CLTD and completed the practice exams I saw my scores were lower in the warehousing section. This was the result of me skimming the warehousing sections, rather than reading, and missing subtle concepts discussed in the participant guide. I was guessing on answers, many of which were guessed wrong. Key take away’s; 1) understand the examples discussed in the participant guide and 2) know the APICS terms and definitions. There is a long-standing adage with APICS, ‘the correct answer is not always the right answer, it’s what APICS says is correct that is the right answer.’ Reminds me of the golden rule ‘whomever owns the gold, makes the rules.’

    Know your learning style and study to that style. For example, APICS offers class-room sessions for people to take or you can pursue self-study. I did a combination class room/self-study driven by the amount of time I had and the experience I had with the subject. Early in my career, I worked in a manufacturing plant and could reasonably know I would be available every Wednesday evening. I also needed an active class discussion with other students to allow me to learn from their experiences and put more examples around the concepts. As my career evolved, and I gained more hands on experience I did not have the luxury of knowing I would be available to attend a class on any given day and my travel schedule was more conducive to self-study.

    I’ve talked to many students who need the discipline and structure of attending a class-room session. It helps them with accountability. But, in recent years I’ve seen a trend toward self-study, especially for CSCP and CLTD. It’s why I started APICS CLTD Coach. We ‘tutor’ students going through self-study. We provide different levels of support based on individual needs. Ranging from pointing people in the right direction and pulling the string, to regular sessions reviewing key concepts and providing the real life experience perspective. I encourage you to connect with your local APICS chapter to leverage them as a resource and get involved with a class. For example, APICS Atlanta is working on a 5 Saturday review of CLTD in the coming months. And check out http://www.apicscltdcoach.org to get a glimpse into what myself and others think is relevant to better understanding CLTD. Not to be left out, CPIM students should check out http://www.apicsexamwarehouse.com.

    Amanda: Professional Development and continuous learning is obviously a big part of your career plan. Why do you think it is important?

    Chris: Early in my career, I found the APICS certifications helped me with career advancement. Over time, my interest has evolved into learning for the sake of better understanding. I like to understand topics that will potentially help my customers and I enjoy sharing my passion and experience with others who might be trying to improve themselves professionally, or with companies who see APICS certified employees as a foundation for continuous improvement of their supply chains. I heard a CEO once theorize there are three phases to a career, Learn, Earn and Return. For me, I am bridging the transition between Earn and Return.

    Continuous learning supports something a mentor once told me, ‘Those who know how will always work for those who know why’.

     
  • LeanATL 2:48 pm on July 16, 2017 Permalink | Reply  

    Incoterms® 

     

     

    Question: Incoterms® is/are:

    1. Short for International Commercial Terms
    2. Voluntary
    3. Eleven (11) established rules commonly used in foreign trade
    4. Developed by the International Chamber of Commerce
    5. Trade terms indicating which tasks will be performed by exporter/importer
    6. Trade terms indicating which activities will be paid by exporter/importer
    7. All the above

    Understanding Incoterms® is important given the growth of international trade and globalization. When doing business abroad, the more specific your contract terms, the less room for misinterpretation by the involved parties. Incoterms® trade terms indicate which tasks will be performed and which activities will be paid by the exporter, which tasks will be performed and which activities will be paid by the importer, and when product responsibility moves from one party to the other.

    The APICS Dictionary, 15th edition, defines a private carrier as:

    ‘a set of (voluntary) rules established by the International Chamber of Commerce providing internationally recognized rules for the interpretation of the most commonly used trade terms in foreign trade…’

    The 11 terms primarily define when risk for the cargo passes from seller to buyer and which party is responsible for freight and insurance costs. The first letter in the terms is significant:

    • C: Require the seller to pay for shipping.
    • D: The seller or shipper’s responsibility ceases at a specified point, and they deal with who will pay pier, docking, and clearance charges.
    • E: When the goods are ready to leave the seller’s premises, their responsibility ceases.
    • F: The primary cost of shipping is not met by the seller.

    From there the current Incoterms® are divided into two categories: one for any mode of transport, and the second for sales that solely involve non-containerized shipping by sea or inland waterways. Click here to read more from Inbound Logistics.

    If you have taken an accounting class in the USA you probably learned about FOB. The term FOB is also used in modern USA domestic shipping to describe the point at which a seller is no longer responsible for shipping cost, specifically ‘FOB origin’ and ‘FOB destination’.

    The two terms have a specific meaning in commercial law and cannot be altered. But the FOB terms do not need to be used, and often are not. In this case the specific terms of the agreement can vary widely, in particular which party, buyer or seller, pays for the loading costs and shipment costs, and/or where responsibility for the goods is transferred. The last distinction is important for determining liability or risk of loss for goods lost or damaged in transit from the seller to the buyer.

    For example, a person in Miami purchasing equipment from a manufacturer in Chicago could receive a price quote of “$5000 FOB Chicago”, which would indicate the buyer would be responsible for the shipping from Chicago to Miami. If the same seller issued a price quote of “$5000 FOB Miami”, then the seller would cover shipping to the buyer’s location.

    Following are additional resources to help you better understand Incoterms® in preparation for the CLTD Certification.

    Back to our question, Incoterms® is/are:…

    Answer: 7. All the above

     
  • LeanATL 11:12 pm on June 25, 2017 Permalink | Reply  

    3PL, 4PL or LLP 

    In a recent post we discussed transportation carrier types and how they might fit into your supply chain strategy. Another strategic decision is how you manage warehouse/distribution operations. Is your organization competent enough to efficiently manage your own warehouse or should you outsource to another organization (3PL). If you do manage your own operations and become really, really good at it, should your company form another company/division to provide logistics services to others (LLP). Finally, if you do outsource to 3PLs and you have multiple 3PLs in your network, should you contract with another third party to manage your 3PLs (4PL)?

    3PL 4PL LLP

    Understanding these terms and concepts are extremely relevant to professionals in the era of the extended supply chain. A 2013 survey from PricewaterhouseCoopers, ‘Next-Generation Supply Chains: Efficient, fast and tailored’ found the highest percent of outsourced supply chain activities involve the Deliver process of the SCOR Framework, specifically inbound and outbound logistics.

    The APICS Dictionary, 15th edition, defines

    third-party logistics (3PL) as:

    ‘A buyer and supplier team with a third party that provides product delivery services.’

    fourth-party logistics (4PL) as:

     ‘4PL differs from 3PL by:

    1. 4PL is often a separate entity
    2. 4PL is a client interface
    3. 4PL provide management services
    4. 3PL can offer 4PL services.’

    Lead logistics provider (LLP) as:

     ‘Organizations that oversee the third-party logistics operations of their clients.’

    In my professional opinion, there is a very, very thin line (almost invisible) between and LLP and a 4PL. An LLP strategy is generally an evolution of a great collaborative relationship a company has with their 3PL, Penske Logistics Named as Lead Logistics Provider by Whirlpool. Depending on the marketing literature you read, 4PL and LLP are one in the same. Another tell of the blurring boundary between 4PL and LLP is the trademark of the term 4PL. In 1996, Accenture, a global consultancy (and my former employer) trade marked the term 4PL but has since let the trademark lapse.

     
    • Bob Erdman 1:36 pm on June 28, 2017 Permalink | Reply

      Yes. My understanding about 4PLs is that they would take the role of strategic consultants and systems integrators – WMS and TMS systems, for example, would be placed under a 4PLs control for future integration and development. 3PLs would be more involved in day-to-day management of supply chain affairs.

      Like

  • LeanATL 7:39 pm on May 11, 2017 Permalink | Reply  

    Common vs Contract Carrier 

    Kroger TruckA recent query on APICS Supply Chain Channel asked…(what is the) Difference Between Common Carrier and Contract Carrier. I’ll answer at two levels. Level 1 will help you pass the CLTD exam. Level 2 provides a deeper understanding of the terms.

    Level 1:

    The APICS Dictionary, 15th edition, defines a common carrier as:

    ‘…transportation available to the public that does not provide special treatment to any one party and is regulated as to the rates charge, the liability assumed, and the service provided.’

    The APICS Dictionary, 15th edition, defines a contract carrier as:

    ‘…a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract.’

    Level 2

    While legally there are key differences from a government regulation perspective (i.e. UPS is not a common carrier – UPS reserves the right in its absolute discretion to refuse carriage to any shipment tendered to it for transportation), it is better to see the differences from a customer (shippers) perspective. Specifically what the carrier does and when they do it.

    A common carrier will work with multiple shippers from day to day. They are NOT dedicated to servicing a specific shipper and will frequently have multiple shipments for multiple companies on a load to help them optimize their costs. An example of a common carrier is Delta Airlines. You can call them today, rent a seat, and be on your way across the country with 150 other travelers. If you are a shipper, you will typically “rate shop” your loads with common carriers to determine the most efficient and economical carrier service. For example, if I want to fly from Atlanta to Chicago I would rate shop my trip on http://www.Kayak.com to check the common carriers for best service (delivery schedule) and cost. Kayak may even suggest I fly Delta to Chicago but use United for my return flight to Atlanta.

    Example truck common carriers in the States include:

    • Old Dominion
    • YRC Freight (formerly Yellow)
    • Southeastern Freight Lines
    • R+L Carriers
    • Central Transport
    • CH Robinson
    • B. Hunt
    • YRC Freight
    • FedEx (maybe)

    A contract carrier will work with the shipper on a longer-term contract. The carrier will reach an agreement (level of service and cost) and work with a specific shipper over the length of the contract. Specialty carriers, i.e. refrigerated, flat bed, etc. may be better off establishing longer-term contracts with shippers to help them spread their higher operating costs over more certain shipments. As a shipper, I’m assured of terms and conditions for my shipments over the length of the contract. While I may still work with common carriers for one-off shipments, I fully expect to use my contact carrier as much as possible.

    Back to my Chicago trip example, I may decide I take enough trips to Chicago to warrant a more dedicated air service and may opt to sign a contract with NetJets (https://www.netjets.com/Home/) to serve my air travel needs.

    Contract carriers may also subcontract some of the shipments to independent carriers (i.e. owner operators or smaller companies who own tractors). This provides them more flexibility without higher overhead costs of owning assets.

    Example contract carriers in the States include:

    • Interstate Distributors
    • CH Robinson
    • B. Hunt
    • MCT Transportation
    • Total Transportation of Mississippi
    • Ryder
    • UPS
    • FedEx

    Some confusion might result given you still have a contract with a common carrier but it is a short term contract (Bill of Lading), for a specific shipment. The contract with a contract carrier is longer-term. When working with a contract carrier you might be in a collaborative, outsource agreement as a strategy to strengthen your competitive advantage.

    Frequently a carrier can be listed as both a common and contract carrier. This is typically done through different company divisions. The blurring line between common and contract carrier becomes even more fuzzy doing a Google search on “Is UPS (or FedEx) a common (or contract) carrier”. The results are surprising. The UPS Terms and Conditions of Carriage, states, “UPS is not a common carrier and reserves the right in its absolute discretion to refuse carriage to any shipment tendered to it for transportation”. The highlighted verbiage restricts UPS from being considered a common carrier (common carriers cannot generally refuse service to a shipper).

    Alternatively, the search on FedEx as a common carrier results in a criminal charge case where FedEx claimed “common carrier” exemption to certain possession laws. They used the “basic notion that if they are in the business of shipping pretty much everything for pretty much everyone, they can’t be expected to always know, or be liable for, certain illegal uses of their service”.

    Common and contract carriers are third party (for-hire) companies organizations. As an option, a company might opt to be a private carrier, to own and manage their own fleet internally.

    The APICS Dictionary, 15th edition, defines a private carrier as:

    ‘…a group that provides transportation exclusively within an organization.’

    There are many reasons companies would opt to in-source (private) vs out-source (common/contract) transportation. The primary being costs, management defined core competencies and marketing. Marketing may seem odd but think about a trailer as a mobile billboard traveling through populated cities capturing the attention of everyone passing by. In Atlanta we might see an Advance Auto, Dollar General, Little Debbie, Kroger or Publix truck traveling around Interstate 285. You would be safe to assume these are private carriers. However if you have gotten this far and are confident you understand the differences in carrier types, I propose, when you see that Kroger truck on the highway, chances are it is not a private carrier Kroger asset. I would bet it is owned and managed by Atlas Logistics a contract carrier, 3PL and possibly an LLP.

    We will cover 3PL and LLP in a future post.

     
    • Shaida Allen Wilson 8:01 pm on May 11, 2017 Permalink | Reply

      Thank you! Great information it definitely help me understand the difference between the two carriers especially for the CLTD.

      Like

    • Zain 11:43 pm on May 14, 2017 Permalink | Reply

      Very nice Thank you very much for the detailed explanation.

      Like

  • LeanATL 7:06 am on May 1, 2017 Permalink | Reply  

    Supply Chain Risk Response 

    ProbabilityAndImpactMatrixLast post we discussed the supply chain risk when your carrier goes bankrupt. Risk management needs to be addressed at both organizational and logistics strategy levels. Management may put a premium on minimizing uncertainty and prefer to invest in proper risk management than expose the organization to unneeded expenses, delays, and service disruptions.

    The LinkedIn article by David Houser, Weathering the Storm: How to Manage Your Supply Chain in a Volatile World suggests companies instilling a culture of risk management and improved emergency systems could be a competitive advantage.

    Along with understanding what supply chain risk management is, organizations should develop fundamental risk responses based on a risk probability impact matrix.

    The APICS Dictionary, 15th edition, defines risk management as:

    ‘…the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate event or to maximize the realization of opportunities.’

    Basic response types defined in The APICS Dictionary, 15th edition are:

    Risk Acceptance ‘…a decision to take no action to deal with a risk or an inability to format a plan to deal with the risk.’

    Risk Avoidance ‘…changing a plan to eliminate a risk or to protect plan objectives from its impact.’

    Risk Mitigation ‘…reducing the exposure to risk, either by its likelihood or its impact,’

    Risk plans are good to have in general whether its working with a staffing agency to help pick orders in the warehouse when a larger than expected number of orders are received or lining up alternative transportation routes in the event a key throughput interstate bridge burns to the ground.

    And risk plans may also support your C-TPAT strategy which we will cover in the next blog.

    As your APICS CLTD Coach I would expect you to review and understand Risk Management (CLTD Version 1.0, 2017 Edition pg 1-113) and Risk Strategies (CLTD Version 1.0, 2017 Edition pg 7-47)

     
  • LeanATL 9:40 pm on April 20, 2017 Permalink | Reply  

    Supply Chain Risk Strategies 

    HanjinAs a result of my recent studies for the CLTD exam I developed an interest in container shipping. As the Warehouse Guru I am well versed in all things happening inside the warehouse but gave little to no thought to how product found its way to the warehouse. In the global trading market much of getting to the warehouse is done by container shipping. Now it seems much of the news I see is about containers (this is a cognitive bias know as frequency illusion). One article was about the Hanjin Shipping bankruptcy causing turmoil in global sea freight. The article discussed the impact to supply chains when customers are unable to get product off ships when ports refuse entry for fear of not being paid.

    This ties in direct to the CLTD concept of Supply Chain Risk and Risk Management.

    The APICS Dictionary, 15th edition, defines supply chain risk as:

    ‘…the variety of possible events and their outcomes that could have a negative effect on the flow of goods, services, funds, or information resulting in some level of quantitative or qualitative loss for the supply chain.’

    I recall the stories of port congestion associated to labor stoppages during contract negotiations but never consider the risk of inventory being stranded on ships due to bankruptcy. But it is a risk you should be able to plan for and plan for a response which we will discuss in the next blog.

     
    • Bob Erdman 8:51 pm on April 27, 2017 Permalink | Reply

      And we recently found that 5 top Japanese ocean carriers will consolidate down to 2 soon. It’s more than Hanjin’s problem. Domestically, we may find a shortage of truck drivers soon.

      Like

    • C. Neal McGuire 1:02 am on April 29, 2017 Permalink | Reply

      Another risk assessment factor can be made by following the anomalies in the weather where your products are shipping to globally. I have had ocean containers fall over board in the high seas and had container freight delayed for days domestically because of hurricanes, tornadoes, ice etc..

      Once the commodity is on a ship and has set sail, about all you can do is monitor it but if it is a ground or air transport, you can reroute the shipment/delivery to closer adhere to the original due date. You can even work with the customer to pay for the extra cost if they want to prioritize the product delivery or you can work with the vendor if it is a supply commodity for you to alter the delivery path and minimize the extra cost.

      Like

  • LeanATL 1:10 pm on March 31, 2017 Permalink | Reply  

    Inventory Types 

    I recently had a discussion with someone around the types and specifically functions of inventory as outlined by APICS. For CLTD, APICS references 7 functions:

    • Cycle Stock
    • Pipeline Stock
    • Anticipation Inventory
    • Hedge
    • Safety Stock
    • Buffer
    • Decoupling

    Cycle Stock: The function relates to the decision to manufacture a quantity of product (like in a lot/batch size). The driver is purchasing or producing in batches. The purpose is to reduce set-up costs and avoid the loss of process capacity.

    The APICS Dictionary, 15th edition, defines Cycle Stock as:

    ‘…stock depleting gradually as customer orders are received and is replenished cyclically when supplier orders are received.’

    Pipeline Stock: The function is rather null. The driver is getting product delivered from point A or point B. Think about this as the amount if inventory ‘in transit’.

    The APICS Dictionary, 15th edition, defines Pipeline Stock as:

    ‘Inventory in the transportation network and the distribution system, including the flow through intermediate stocking points.’

    Anticipation Inventory: The function is to support production and/or delivery constraints for product with high, expected fluctuation. The driver is insufficient capacity to support spikes in demand. For example building up stock supplies of barbecue grills in anticipation of the spring buying season.

    The APICS Dictionary, 15th edition, defines Anticipation Inventory as:

    ‘Additional inventory above basic pipeline stock to cover projected trends of increasing sales, planned sales promotions, seasonal fluctuations plant shutdowns and vacations.’

    Hedge Inventory: The function is to manage costs of future inventory and/or create a competitive advantage. The driver is the advance acquisition of inventory to support the company’s business strategy.

    The APICS Dictionary, 15th edition, defines Hedge Inventory as:

    ‘A form of inventory buildup to protect against some event that may not happen. Hedging involves speculation.’

    Safety Stock: The function of safety stock is to protect against unforeseeable fluctuations in demand and/or supply. The driver is acquiring planned inventory to reduce the potential for stock-outs.

    The APICS Dictionary, 15th edition, defines Hedge Inventory as:

    ‘A quantity of stock planned to be in inventory to protect against fluctuations in demand or supply.’

    Buffer: The function of buffering is to protect supply chain nodes from variances in supply and demand. The driver is building up inventory to optimize or plan around a constraint. For example, to keep a machine running, the company may create a buffer of input inventory for the process.

    The APICS Dictionary, 15th edition, defines Buffer as:

    ‘A quantity of inventory awaiting further processing.’

    Decoupling: The function of decoupling is to separate supply from demand to help optimize processes. The driver is protecting against demand uncertainty and minimize stock outs. Decoupling is a form of buffering.

    The APICS Dictionary, 15th edition, defines Decoupling as:

    ‘Creating independence between supply and use of material. Commonly uses buffer inventory between operations so fluctuations in the production rate of the supplying operation do not constrain use rates of the next operation’

    Inventory Chart

    I would not necessarily put these terms in my top priority list for CLTD studies but they are good to know in general and certainly more important if you are pursuing CPIM and/or CSCP.

     

     
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