D470 Transportation and Logistics Questions and Answers

D470 Transportation and Logistics Questions and Answers volume-to-weight ratio volume (L x W x H)/weight Helps ensure efficient space utilization and compliance with mode restrictions. Product Life Cycle (PLC) Stages Introductory Stage, Growth Stage, Maturity Stage, Decline Stage What are the 4 Vs of Operations Management? (Unilever's Operations Manageent) Volume, Variety, Variability, and Visibility. Volume Operational Production Strategy Refers to how much production of a specific product is required to satisfy its overall demand in the market. (Physical number of units or items produced) Variety Operational Production Strategy Related to the variety of goods/services to be produced and sold to customers. (Diversity) Selling various products or services helps organizations increase sales and profit potential and decreases product dependency. Variation Operational Production Strategy Refers to how much the level of demand changes over some time due to external factors. Visibility Operational Production Strategy Refers to value chain of a company's all processes put together. Project Production one-at-a-time production of a product made to customer order Mass Production Process of making large quantities of a product quickly and cheaply Continuous Production the production of a very-high-volume commodity product with highly automated equipment. Machines constantly make the product. Batch Production producing a limited number of identical products - each item in the batch passes through one stage of production before passing on to the next stage Time Performance A measure of how often a supplier meets agreed-upon delivery dates (used in supply-chain management metrics). Quality Performance The product or service performs its intended function as identified by the consumer. (minimize waste) Flexibility Performance The ability to respond proactively or reactively to uncertainties in the business environment. Dependability Performance Can be counted on to follow through and achieve results with consistency. (the way it was intended and on time) Logistics Reengineering Process (LRP) Goal Analyze workflows within and between enterprises in order to optimize end-to-end processes and eliminate tasks that don't provide customer value. Used to achieve significant improvements in operational efficiencies. Reverse Logistics The area of logistics that involves bringing goods back to the manufacturer because of defects or for recycling materials. Cross-docking A technique whereby goods arriving at a warehouse from a supplier are unloaded from the supplier's truck and loaded onto outbound trucks, thereby avoiding warehouse storage. Postponement a hybrid production method whereby basic units of a finished good are manufactured in advance of actual demand and held in strategic form or location until demand occurs, when final customization takes place What is the most efficient way to minimize empty miles in transportation? Picking up lots from suppliers after drop-off to customers. (ex. picking up raw materials on the way back to the warehouse from customer deliveries) Operational Decision in Shipping Company's Functionality Vehicle maintenance. Operational Decisions Short-term choices typically made on a weekly, daily, or hourly basis. Outsourcing Drivers * Opportunity for users to focus on their core business or core competence. * Organizational and cost benefits * Concentrate their management expertise in their core business areas. * Access to wider knowledge. (tech and experience) * Capital cost advantage due to the lack of requirement to invest in facilities and resources for the distribution. * Reduction of ownership and responsibility (taken off of the balance sheet (more profitable on paper)) * Economies of scale * Clearer picture of operating costs * Greater flexibility Outsourcing Approach * Preparation and issue of an invitation for contractors to tender for the work. (RFI) request for information * The production of the request for a proposal for the shortlisted contractors (RFP) * Evaluation and comparison of the responses to the request. * Risk assessment exercise to identify any potential problems. * Final contract formulation * Implementation and management of the outsourced operation (planning and monitoring) Outsourcing Drawbacks * Cultural Incompatibility * Loss of control over the delivery operation * Loss of control over the company's logistical variables (if a third party is used) * Loss of distribution and logistics expertise in the user company. * Brand Integrity risk * Issues maintaining confidentiality of information * Changeover costs may negate overall financial benefits. 4PL (Fourth Party Logistics) A supply chain integrator that assembled and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution 3PL (Third Party Logistics) A buyer and supplier team with a third party that provides product delivery services. This third party may provide added supply chain expertise. Bunker Adjustment Surcharge (BAF) Used to account for variations in marine fuel pricing. Currency Adjustment Factor (CAF) A surcharge imposed by a carrier on ocean freight charges to offset foreign currency fluctuations. Peak Season Charge (PSS) Applied to both air and sea freight to offset the imbalance of trade. Repositioning Charge Used to cover the cost of returning an empty container to a location where it may be loaded with revenue-earning cargo. (ex. ships from China to US are full and on the return to China they are empty loss of Opportunity Cost) War Risk Surcharge Applied to any mode of tranport in a war zone as well as areas around the war zone. Carrier Security Fee Covers the cost of complying with the International Ship and Port Facility Security Code (ISPS) Factors of Mode Selection: 1. Operational Factors 2. Transport Mode Characteristics 3. Cost and Service requirements 4. Consignment Factors Consignment Factors Physical Characteristics of the products. - volume-to-weight -value-to-weight -substitutability -special characteristics Operational Factors External to the direct distribution operation: - customer characteristics - physical product characteristics - Economic factors Trade Facilitation Agreement (TFA) a WTO agreement that aims to cut customs-related red tape and ease the flow of trade between countries. Harmonizing Customs Procedures. Infringement and Amended Foreign Trade Act (IFTA) Legal framework designed to regulate and address issues related to intellectual property rights (IPR) infringement in the context of foreign trade. Serves to safeguard the interests of rights holders and promote fair competition in international trade. Prevention of Corruption in Tariffs and Trade (PCTT) Legislative framework aimed at combating corruption and unethical practices in the context of tariffs and trade. Bribery, kickbacks, and undue influence in trade-related transactions. Goal of ensuring fairness, transparency, and integrity in international trade processes. Kyoto Customs Convention Set standards for customs procedures, including clearance of goods, documentation requirements, and the use of modern technologies to streamline processes. Kyoto Customs Convention Goals - Simplify and standardize customs procedures (predictable) - Harmonize customs procedures - Modernize customs procedures (modern technology and best practices) - Facilitate international trade - Enhance compliance with customs regulations (transparency) - Cooperation and information exchange among customs administrations Custom Tariff Rate Definition and Categorization Factors - Product Classification (characteristics and composition)Commodity Code - Origin of Goods (country) - Tariff Schedules - Trade Policies (gov. implemented for economic reasons) - Tariff Preferences and Exemptions (goods eligibility) - International Agreements - Revenue Considerations (higher rates for luxury or non-essential imports) How to Achieve Customs Preferential Treatment 1. Determine Eligibility 2. Obtain Documentation (origin of goods) 3. Complete Customs Declarations (improved and updated) 4. Submit Proof of Origin 5. Comply with Regulatory Requirements 6. Maintain Records 7. Stay Informed Customs and Trade Compliance Manager Responsibilities 1. Developing and Implementing Compliance Policies 2. Classification of Goods 3. Managing Import and Export Documentation 4. Customs Clearance 5. Tariff and Duty Managmeent 6. Risk Management and Compliance Audits 7. Training and Education (for stakeholders) 8. Monitoring Trade Sanctions and Export Controls 9. Internal and External Communication (primary point of contact for customs authorities, regulatory agencies, and other external stakeholders) 10. Continous Improvement Corrupt Practice Act of 1977 1. Prohibition of Bribery 2. Accounting REquirements 3. Extraterritorial Jurisdiction (includes outside of the US) 4. Penalties Including Fines, Disgorgement of Profits, and Potential Criminal Prosecution 5. Enforced by the U.S. Department of Justice and the Securities and Exchange Commission Supply Costs Pertaining to International Trade 1. Product Cost 2. Transportation Costs 3. Logistics Costs 4. Customs Duties and Taxes 5. Documentation and Compliance Costs 6. Currency Exchange Rates and Foreign Exchange Costs 7. Trade Finance Costs 8. Risk Management Costs 9. Compliance and Regulatory Costs 10. Market Access Costs Agile Method Supply Chain Strategies Emphasize flexibility, collaboration, technology enablement, and customer-centricity to enhance responsiveness, efficiency, and resilience in today's dynamic and competitive business environment. Quick Response Supply Chain Strategy Focuses on minimizing lead times and rapidly responding to customer demands by streamlining processes, enhancing communication, and leveraging technology. Taguchi Method A statistical approach to product and process optimization. It emphasizes the design of robust products and processes that are insensitive to variations in manufacturing or environmental conditions. Forrester's Model A powerful framework for understanding, simulating, and managing complex systems, helping organizations make more informed decisions and improve their understanding of dynamic systems behavior. 5S Concept A methodology for workplace organization and efficiency improvement. -Sort: go through all items and remove -unnecessary waste -Set in order: Organize items in a logical efficient manner - Shine: Cleaning and maintaining the workplace - Standardize: Establishing standardized procedures and visual controls - Sustain: maintain the practices over the long term through training, employee engagement, and continuous improvement. Efficient Customer Response (ECR) A strategy aimed at enhancing the efficiency and responsiveness of the supply chain to meet customer demand effectively. - Collaborative Planning - Quick Response - Efficient Replenishment - Information Sharing - Continous Improvement Border Enforcement Security Task Force (BEST) Designed to enhance border security and combat transnational crime by coordinating efforts aong various federal, state, local, tribal, and international law enforcement agencies. Led by the U.S. Carriers Carriers: Companies or individuals responsible for physically transporting goods from one location to another. Handle the actual movement of goods, including loading, transporting, and unloading cargo, while ensuring compliance with safety regulations and delivery schedules. World Customs Organizations An intergovernmental organization that facilitates international cooperation and standardization in customs matters. - International Customs Standards - Capacity Building - Information Exchange - Policy Development - Advocacy and Outreach International Trade Organizations Play a pivotal role in facilitating and regulating global trade activities. - WTO (World Trade Organization) - (WCO) World Customs Organization - (ICC) International Chamber of Commerce - (IMF) International Monetary Fund - Regional Trade Organizations Freight Forwarders Intermediaries that facilitate the transportation of goods on behalf of shippers. They act as logistics experts, advising shippers on the most efficient and cost-effective shipping methods while handling the complexities of international trade and transportation. Freight Forwarder Responsibilities 1. Booking Cargo Space 2. Documentation Preparation (declarations, invoices, etc.) 3. Customs Clearance 4. Cargo Consolidation 5. Transportation Coordination 6. Insurance Arrangments 7. Cargo Tracking and Monitoring 8. Customer Service Terminal Operator Responsibilities Responsible for managing and operating transportation terminals, such as seaports, airports, railway terminals, and trucking terminals. -Facility Management - Cargo Handling - Safety and Security - Customer Service - Logistics Coordination - Compliance and Regulatory Compliance - Technology Integration - Financial Management Operating Control System A set of procedures, policies, and tools designed to monitor and manage the performance of an organization's operational activities. - Monitor Performance - Identify Variances - Enforcing Standards - Resource Allocation - Risk Management - Decision Support - Continuous Improvement Just-in-Time (JIT) A production and inventory management philosophy aimed at minimizing waste and maximizing efficiency by delivering goods or services exactly when they are needed and in the precise quantities required. Operating Plan A detailed outline of an organization's activities, priorities, and objectives for a specific period, typically one year. Operating Control System A framework used by organizations to monitor, manage, and regulate their operational activities. Supply Chain Operations Reference Model (SCOR Model) A framework developed by the Supply Chain Council to standardize and streamline supply chain management practices. - Standardized Framework - Process Classification - Performance Metrics - Process Integration - Continuous Improvement Benchmarking A strategic managment tool used by organizations to measure, compare, and improve their performance against industry peers or best-in-class companies. - Performance Comparison - Setting Performance Targets - Driving Continuous Improvement - Improving Competitiveness Activity-Based Costing (ABC) A costing methodology used by organizations to allocate overhead costs to products or services based on the activities required to produce them. Cost-to-Serve A strategic costing methodology used by organizations to analyze and understand the true cost of serving individual customers or customer segments. Warehouse Management System Software that optimizes warehouse operations, including inventory managment, order fulfillment, and tracking. It provides real-time visibility, automates tasks, and enhances accuracy, productivity, and efficiency. Omnichannel Fulfillment Integrates various sales channels, such as online, brick-and-mortar stores, and mobile platforms, to provide customers with a seamless shopping experience. Allows customers to purchase products through their preferred channels and allows retailers to efficiently manage inventory, orders, and deliveries across multiple channels. Distributed Order Management A system that optimizes order processing and fulfillment across multiple channels and locations. Routes orders to the most efficient fulfillment centers, stores, or suppliers, ensuring timely delivery and enhancing customer satisfaction. Integrated Business Planning A strategic management process that aligns business objectives with operational plans across all functions of an organization. New Product Introduction Metric measures the efficiency and effectiveness of the process for bringing new products to market, evaluating factors such as time to market, cost, and quality to assess overall performance. Market Share Metric Measures a company's portion of total sales within a specific industry or market, indicating its competitive position relative to other firms operating in the same space. Customer Acquisition Metric Assesses the effectiveness of marketing and sales efforts in acquiring new customers, typically measured by the cost incurred to acquire each new customer. Quality Improvement Metric Evaluates the effectiveness of initiatives aimed at enhancing product or service quality, typically measuring factors such as defect rates, customer complaints, and adherence to quality standards to drive continuous improvement efforts. Quality Function Deployment (QFD) A systematic methodology used to translate customer requirements into specific product or service features, ensuring that customer needs are met and integrated into the design and development process effectively. Malcom Baldridge National Quality Award Criteria A framework used by organiations to assess and improve their performance across various areas, including leadership, strategy, customers, measurement, analysis, knowledge management, workforce operations, and results. Logmark Supply chain Benchmarking Group Criteria A set of standards and benchmarks used by organizations to evaluate and improve their supply chain performance. Includes key metrics related to cost, quality, delivery, flexibility, and innovation, allowing organizations to compare their supply chain practices against industry peers. International Organization for Standardization Criteria (ISO) Develops and publishes international standards to ensure quality, safety, efficiency, and interoperability across various industries and sectors. Adherance to ISO standards helps organizations deonstrate compliance, improve processes, enhance credibility, and facilitate international trade. Causal Forecasting A method that identifies and analyzes the cause-and-effect relationships between variables to predict future outcomes. - Economic indicators - market trends - demographic changes Experimental Forecasting involves conducting controlled experiments or tests to gather data and make predictions about future outcomes. Moving Average Forecasting A time series forecasting technique that calculates the average value of a seriesof data points over a specified time period to predict futuretrends. Taking the average of the most recent data points within a moving window and using this average as the forecasted value for the next time period. Exponential Smoothing Forecasting A time-series forecasting technique that calculates weighted averages of past observations to predict future values. Assigns exponentially decreasing weights to older data points, giving more weight to recent observations. Adjusts for random fluctuations and trends in the data, providing a more responsive and accurate forecast. Cycle Stock Inventory held by a company to meet the averagedemand between replenishment cycles. Safety Stock The extra inventory held by a customer as a buffer against uncertainties in demand, supply, or lead times. Speculative Stock Excess inventory a company holds in anticipation of future demand or market opportunities, rather than current customer orders or immediate needs. Seasonal Stock Inventory that is specifically acquired and held to meet demand fluctuations associated with seasonal patterns or trends. Typically tied to predictable changes in consumer demand, such as holidays, weather conditions, or cultural events. Pareto Analysis Also known as the 80/20 rule or the law of the vital few. A decision-making technique that prioritizes tasks, problems, or factors based on their relative importance or impact. 80% of effects come from 20% of causes. Echelon Distribution Process A supply chain strategy that involves holding inventory at multiple levels or echelons within the distribution network. Instead of centralizing inventory at one location, inventory is strategically distributed across multiple locations closer to customers, suppliers, or production facilities. Put-Away Cycle Time Refers to the duration it takes for goods or inventory to be received into a warehouse or distribution center and placed in their designated storage locations. It starts when the goods arrive at the receiving dock and ends when they are properly stored in their designated storage areas within the facility. Picking A key process in warehouse operations where items or products are selected from inventory to fulfill customer orders or replenish stock. Geofencing A location-based technology that uses GPS, RFID, or celular data to create virtual boundaries or "fences" around specific geographic areas. Push-back Racking System A high-density pallet storage solution that utilizs inclined rails or carts to store multiple pallets deep within each storage lane, aximizing storage capacity in warehouses. As new pallets are loaded, they push existing pallets back along the rails creating a dense storage configuration while maintaining accessibility to stored items. Automated Storage/ Retrieval System A computer-controlled system that automatically stores and retrieves items from designated storage locations within a warehouse or distribution center, enhancing efficiency and accuracy in inventory management. Drive-in racking system Drive-In Racking System: In a drive-in racking system, pallets are stored in lanes that are accessed by forklifts or reach trucks driving into the storage aisles. This system is best suited for storing large quantities of the same product or SKU (stock keeping unit) where inventory turnover is not frequent. The forklifts enter the racking structure and place or retrieve pallets by driving directly into the lanes, stacking pallets on both sides of the aisle. Since forklifts drive into the rack structure, this system offers high-density storage, making efficient use of available space. However, it typically operates on a Last-In, First-Out (LIFO) basis, meaning the last pallet stored is the first to be retrieved. Block Stacking System Powered Mobile Racking A dynamic storage system where racks are mounted on motorized carriages that move along tracks in the floor, optimizing storage space and allowing access to stored items by creating open isles when needed.