SCMN 3720 Transportation Exam 1 Study Guide

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Questions and Answers

What is the largest category of spending within logistics costs in the U.S. today?

Inventory Holding Costs

Packaging Expenses

Operational Costs

Transportation Costs (correct)

Which of the following are key warehouse activities?

Inventory storage and material handling (correct)

Financial auditing and compliance

Customer service and marketing

E-commerce sales and procurement

What must a company determine before developing its fulfillment model?

The return policy

Customer demographics

Order volume and product availability (correct)

Distribution network design

How does total landed costs impact a company's market reach?

It determines the profitability of international expansion Signup and view all the answers

What are the two main components of logistic activities?

Transportation and warehousing Signup and view all the answers

Which aspect primarily revolutionized inventory management?

Just-in-time inventory system Signup and view all the answers

What are the key cost trade-offs with packaging?

Durability vs. weight Signup and view all the answers

What is meant by economies of scale in logistics?

Higher volume leads to lower per-unit costs Signup and view all the answers

What is the goal of a distribution facility's overall layout?

To optimize the flow of products and minimize handling time Signup and view all the answers

What does slotting determine in warehouse management?

The specific location of each SKU within the warehouse Signup and view all the answers

Why are aisle widths important in warehouse design?

They provide safety and efficiency for maneuvering equipment Signup and view all the answers

What are the benefits of proper product slotting?

Improved picking efficiency and reduced travel time Signup and view all the answers

What are the 3 steps to finalizing the detail facility design?

Assessment, refinement, and confirmation Signup and view all the answers

What defines a perfect order fulfillment?

An order that is delivered on time, complete, and undamaged Signup and view all the answers

How is average inventory determined?

By averaging the inventory levels over a specific period Signup and view all the answers

What do high inventory turns indicate about a company?

The company is efficiently managing inventory and sales Signup and view all the answers

What primarily distinguishes a distribution center from a warehouse?

Distribution centers handle order fulfillment and shipping. Signup and view all the answers

Which of the following is a key function of a distribution center?

Order processing Signup and view all the answers

How does the postponement strategy impact inventory management?

It allows for customization of products just before delivery. Signup and view all the answers

Which product storage method is typically the most cost-effective but provides less storage density?

Block stacking Signup and view all the answers

What determines the choice of material handling equipment (MHE) in a facility?

The size and weight of the products Signup and view all the answers

What is the primary reason for using sophisticated product storage systems?

To enhance inventory visibility and control Signup and view all the answers

Which method is least likely to be used for products that require temperature control?

Open-air storage Signup and view all the answers

What primarily influences the design of a distribution facility?

Operational workflow and efficiency Signup and view all the answers

Study Notes

The Role of Logistics in Supply Chains

Supply Chain Management (SCM) encompasses the oversight of materials, information, and finances as they move from supplier to manufacturer to wholesaler to retailer to consumer.
Logistics refers to the planning, implementation, and control of the efficient movement and storage of goods, services, and related information.
Logistics ensures that the right product reaches the right place at the right time, in the right condition, and at the right cost.
The Seven Rights of Logistics include: right product, right quantity, right condition, right place, right time, right cost, and right customer.
The term "Logistics" traces its origins to the Greek word "logistiki," representing the art of calculation, primarily associated with the movement of troops.
Logistics is essential for efficient supply chains, impacting customer satisfaction, cost reduction, and operational effectiveness.
In the U.S., logistics costs account for about 8-10% of GDP, which is comparatively lower than several developed nations.
Transportation costs represent the largest category of logistics spending in the U.S. today.
Logistics costs in the U.S. are trending upwards due to increases in fuel prices, labor costs, and demand fluctuations, influencing overall supply chain strategies.
Logistics roles include inventory management, order fulfillment, transportation management, and customer service support.
Economies of scale refer to the cost advantages companies gain as they increase production; larger volumes typically reduce per-unit costs.
Total landed costs include all costs associated with bringing a product to market, including production, transportation, customs, and tariffs.
Total landed costs directly affect a company’s ability to expand market reach by influencing pricing and competitiveness.

Logistics Activities & Fulfillment Models

The two main components of logistics activities are transportation management and warehouse management.
Key warehouse activities include:
- Storage of Inventory: Holding products until needed for sale or distribution.
- Inventory Management: Tracking inventory levels, orders, and deliveries to avoid stockouts and overstock.
- Material Handling: Movement of goods within the warehouse, using equipment like forklifts and conveyor belts.
- Packaging: Designing and creating packages that protect products during transport and appeal to consumers.
- Value Added Activities: Additional services such as assembly, labeling, and customization that enhance product value.
- Returns Management: Handling of returned products, from reverse logistics to restocking.
- Transportation: Movement of goods between locations, crucial for meeting delivery timelines.
Transportation in logistics involves selecting the right mode of transport (e.g., truck, rail, air) for efficiency and cost-effectiveness.
Cost trade-offs between inventory and transportation involve balancing storage costs with timely deliveries; too much inventory increases holding costs, while frequent shipments can raise transport costs.
The introduction of the barcode revolutionized inventory management by increasing accuracy and speeding up tracking processes.
Cost trade-offs with packaging include balancing materials and design costs against the potential for damage during transport.
E-commerce retail has a return rate of about 20-30%, significantly impacting logistics strategies.
The order fulfillment process encompasses receiving, processing, picking, packing, and shipping customer orders.
Before developing a fulfillment model, a company must determine the type of products it sells and its customer service strategy.
The four key drivers in determining a company's fulfillment model are customer needs, service levels, operational costs, and inventory management.
Various fulfillment models include direct shipping, drop shipping, and multiple distribution centers, each having unique characteristics based on inventory handling and delivery speed.
Starting a company's Logistics Network Model analysis requires determining the service level required and the geographical areas served.
Key cost trade-offs in determining a network model involve inventory costs, transportation costs, service levels, and facility operating costs.

Distribution Facilities

The goal of a distribution facility is to efficiently manage the storage and movement of goods to ensure timely delivery to customers.
Since 1950, distribution facilities have transformed significantly, emphasizing automation, inventory management technology, and efficiency enhancements.
Different types of distribution facilities include warehouses, distribution centers, fulfillment centers, cross-docking facilities, and manufacturing plants.
A warehouse primarily focuses on storage, while a distribution center emphasizes rapid processing and throughput of goods.
The five primary functions of a distribution center are:
- Receiving goods and verifying against purchase orders.
- Storing inventory in an organized way for quick access.
- Picking items for orders based on customer requests.
- Packing selected items for shipment.
- Shipping products to customers or retail locations.
Postponement as an inventory strategy involves delaying final product customization until orders are received, reducing inventory costs and risks.
Examples of value-added activities include kitting, custom labeling, and repackaging for specific customer promotions.
The type of storage facility used is determined by factors such as product types, order volumes, and service levels required.
Products requiring temperature-controlled environments include pharmaceuticals, perishable food items, and certain chemicals.

Product Storage & Material Handling

Companies use product storage systems to optimize space utilization, manage inventory flow, and improve order accuracy.
The type of storage methods used in a Distribution Facility is influenced by product characteristics, volume, turnover rates, and handling requirements.
Indoor dry goods product storage methods include shelving, pallet rack systems, bulk storage, and drive-in storage methods.
The most common product storage method is pallet racking, which allows for efficient use of space and access to inventory.
LIFO (Last In, First Out) and FIFO (First In, First Out) are order picking methods impacting inventory management; FIFO helps reduce spoilage for perishable goods.
Product storage density is measured by the amount of inventory stored relative to the space utilized.
The least expensive product storage method typically involves floor storage or bulk stacking with low density.
The most expensive and highest storage density method is automated storage and retrieval systems (AS/RS).
The order picking method impacts storage methods by influencing layout design, accessibility of products, and overall efficiency.
Basic pallet storage and picking methods involve placing pallets directly on the warehouse floor or using a rack system.
Material Handling Equipment (MHE) options include forklifts, pallet jacks, conveyor systems, and Automated Guided Vehicles (AGVs).
The most common MHE is the forklift, widely used for moving heavy pallets and crates efficiently.
Material handling equipment utilization depends on facility layout, product types, and volume of goods handled.
CVS' focus on bulk items at a dedicated facility maximizes efficiencies in inventory turnover and reduces handling costs.

Facility Layout & Design Part 1

The four steps to Distribution Facility Design include needs analysis, conceptual design, detailed design, and implementation.
Key criteria in space requirements planning consist of throughput volume, inventory types, operational flow, and future scalability.
The peak-to-average storage ratio is a measure of maximum storage potential compared to typical inventory levels, indicating efficiency.
Planned occupancy is vital to ensure effective use of space, maximizing operational efficiency and minimizing wasted resources.
Inventory turns reflect how often inventory is sold and replaced over a specific period; it is calculated as Cost of Goods Sold (COGS) divided by average inventory.
A high inventory turn suggests efficient inventory management and sales performance, enabling lower holding costs.
Average inventory is determined by taking the sum of inventory levels at specific intervals and dividing by the number of intervals.
A standard pallet typically measures 48” x 40”, with variations for specific applications.
Understanding SKU capacities on a standard full pallet helps optimize storage designs and improve order fulfillment efficiency.
Advantages of newly built facilities include modern design and customization; disadvantages include higher initial costs. Repurposed facilities may have lower costs but can require significant upgrades.
Current warehouse vacancy rates are trending down due to increased e-commerce demand, driving up competition for space.

Facility Layout & Design Part 2

The overall layout goal of a distribution facility is to enhance productivity and minimize operating costs through efficient design.
Facility layout principles include workflow optimization, flexibility, spatial efficiency, and safety, providing benefits like reduced travel time and improved resource utilization.
Frazelle's Layout Methodology encompasses four steps: defining objectives, assessing existing conditions, developing layout options, and selecting the final design.
Adjacency Optimization in facility design refers to arranging areas in a way that minimizes travel distances and enhances workflow.
The three steps to finalizing detail facility design involve detailed planning, stakeholder approval, and implementation phases.
Slotting is the process of strategically placing products in a warehouse based on factors like demand and size to improve picking efficiency.
Slotting determines the optimal arrangement of products for quick access and reduced handling time during order fulfillment.
Benefits of proper product slotting include increased picking efficiency, better inventory accuracy, and reduced labor costs.
Aisle widths are crucial for operational efficiency, allowing sufficient space for equipment movement and quick access to products.
Cost trade-offs in narrow aisle designs involve balancing space utilization with accessibility and equipment maneuverability.

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Description

Prepare for your SCMN 3720 Transportation Exam 1 with this comprehensive study guide. It covers essential topics like supply chain management, logistics principles, the significance of logistics in the supply chain, and associated costs. Review key concepts and terminology to excel in your exam.