CLTD Module 2 - Logistics Network
Design
3 Reasons to Assess Network Design - answer1. Increased Customer Expectations
2. M&A redundancies
3. Freight volume increase/relocation of facilities
charter - answer defines the scope of work, and objectives and end results of a project
Network Design Process steps (8) - answer Create project team
Identify drivers of change
Audit as-is network
Assess network alternatives
Plan facilities
Finalize to-be state
Develop and implement plan
Disband project team
6 Steps in as-is audit - answer1. Gather Data
2. Map current system
3. Describe network's key activities
4. Measure against benchmarks
5. List current gaps to strategy
6. Generate plans to close those gaps
Foreign Sales Corporation - answera US-devised means of securing tax reductions for
US exporters, using a subsidiary the org establishes in a pre-approved location (e.g.
USVI, Jamaica)
licensing - answerpaying a fee for permission to manufacture and sell a product created
by another
E.g. franchising and management contracts
Export Trading Companies (ETC) - answerbuys the goods from the org and sells at a
profit
Export Management Companies (EMC) - answerexport specialists that act as the export
marketing department or international department for client firms
most likely used for startups with little int'l trade experience
, Threshold service level - answerthe cheapest possible way of serving all customers
considering the costs of transportation and warehousing together at a given level of
safety stock and delivery timing/frequency
Steps in forming a Network Design strategy - answer1. Identify customer segments
2. Calculate threshold service level and determine network capabilities
3. Use sensitive analysis to adjust factors
4. Present alternatives and finalize strategy
Square root rule - answera quantitative technique used to estimate the impact on safety
stock of adding or deleting warehouses from a network
assumptions: each DC has equal demand and each new warehouse has independent
demand
Transportation requirement drivers - answerdemand forecast and demand management
activities (sales strategy)
weight-losing products - answerproducts that are best processed near the supply base
to reduce transportation costs
e.g. sugar from sugar beets
weight-gaining products - answerproducts that are best processed near the point of
demand to reduce transportation costs
e.g. water-added materials
#1 factor in determining facility location - answerlabor rates
brownfield - answera site that has toxic pollution, so cleanup and reuse of the site are
often incentivized
heuristics - answera form of problem solving in which the results or rules have been
determined by experience or intuition instead of by optimization
heuristic models use experimentation to find approximate answers, trading accuracy for
speed and easy calculation
Cost-volume analysis - answera type of break-even analysis that compares the fixed vs
variable costs of locations; used to determine the volume of product that flows through a
facility to justify its fixed costs
High operating leverage indication - answerhigh proportion of fixed costs to overcome,
but higher profits per sale will occur after the break-even point
Design
3 Reasons to Assess Network Design - answer1. Increased Customer Expectations
2. M&A redundancies
3. Freight volume increase/relocation of facilities
charter - answer defines the scope of work, and objectives and end results of a project
Network Design Process steps (8) - answer Create project team
Identify drivers of change
Audit as-is network
Assess network alternatives
Plan facilities
Finalize to-be state
Develop and implement plan
Disband project team
6 Steps in as-is audit - answer1. Gather Data
2. Map current system
3. Describe network's key activities
4. Measure against benchmarks
5. List current gaps to strategy
6. Generate plans to close those gaps
Foreign Sales Corporation - answera US-devised means of securing tax reductions for
US exporters, using a subsidiary the org establishes in a pre-approved location (e.g.
USVI, Jamaica)
licensing - answerpaying a fee for permission to manufacture and sell a product created
by another
E.g. franchising and management contracts
Export Trading Companies (ETC) - answerbuys the goods from the org and sells at a
profit
Export Management Companies (EMC) - answerexport specialists that act as the export
marketing department or international department for client firms
most likely used for startups with little int'l trade experience
, Threshold service level - answerthe cheapest possible way of serving all customers
considering the costs of transportation and warehousing together at a given level of
safety stock and delivery timing/frequency
Steps in forming a Network Design strategy - answer1. Identify customer segments
2. Calculate threshold service level and determine network capabilities
3. Use sensitive analysis to adjust factors
4. Present alternatives and finalize strategy
Square root rule - answera quantitative technique used to estimate the impact on safety
stock of adding or deleting warehouses from a network
assumptions: each DC has equal demand and each new warehouse has independent
demand
Transportation requirement drivers - answerdemand forecast and demand management
activities (sales strategy)
weight-losing products - answerproducts that are best processed near the supply base
to reduce transportation costs
e.g. sugar from sugar beets
weight-gaining products - answerproducts that are best processed near the point of
demand to reduce transportation costs
e.g. water-added materials
#1 factor in determining facility location - answerlabor rates
brownfield - answera site that has toxic pollution, so cleanup and reuse of the site are
often incentivized
heuristics - answera form of problem solving in which the results or rules have been
determined by experience or intuition instead of by optimization
heuristic models use experimentation to find approximate answers, trading accuracy for
speed and easy calculation
Cost-volume analysis - answera type of break-even analysis that compares the fixed vs
variable costs of locations; used to determine the volume of product that flows through a
facility to justify its fixed costs
High operating leverage indication - answerhigh proportion of fixed costs to overcome,
but higher profits per sale will occur after the break-even point
