Appunti completi del corso Logistics Managment

How to create value

Logistics management: part of supply chain management

Objectives:

• Effectiveness in serving the market = to meet customers' requirements (high revenues)
• Efficiency in leveraging resources = to control costs (lower cost)

How much money the company can achieve compared to the capital used, Return on Assets (ROA): want to make it higher.

NB:

• Most important cost is transportation >50%
• To increase revenues better customer service or outsource
• KPI related to the revenues
  • Product range
  • Fill rate
  • Time related
  • Accuracy
• To reduce current assets: reduce inventories or C2C

C2C: cash to cash cycle time = the average days required to turn a dollar invested in raw material into a dollar collected from a customer

C2C = DSO + DIH - DPO (DSO = days to collect accounts from a customer, DIH = days of inventory holding, DPO = days allowed by suppliers to pay).

• To reduce fixed assets: improve logistics planning so you have less unpredictability or outsource.
• You must manage the trade-off between the 4 aspects.

Supply chain strategy

In order to understand what supply chain strategy we must adopt to maximize the ROA we must:

1. Know your supply chain
2. Choose the approach
3. Define policies
4. Review over time

Lee's model: Lean VS Agile Supply Chain strategies:

Lean supply chain: Max the ROA minimizing wastes.

Agile supply chain: Minimize variability of ROA, the flexibility is the most important feature.

Responsive supply chain: Aims to mitigate risks on the demand side.

Risk hedging supply chain: Aims to reduce risks in supply disruption.

Time-based, asset-based, technology-based, relationship-based supply chain strategies

These strategies affect all the 4 dimensions of ROA:

• Time-based supply chain: Reduction of lead time and replenishment time in order to reduce cycle time (pull approach = chase the demand).
• Asset-based supply chain: Efficiency in the use of logistics assets.
• Technology-based supply chain
• Relationship-based supply chain: Collaboration between the suppliers and the customers.

Warehouses

Type of warehouses:

• Warehouses/distribution centres: storage and flow management functions. Orders to the warehouse fulfilled with inventories -> inventory management and reorder policy.
• Logistic platforms/transit points: flow management functions -> Cross docking activity.

4 main activities in a warehouse coordinated by the WMS:

• Storage (maximize space use)
• Picking/order assembly (maximize picking efficiency)
• Receiving/shipping (number of truck doors functional to inbound and outbound flows and you must consider the dimension of the trucks)

The storage system

Design parameters:

• Storage capacity SC
• Throughput capacity TC

Descriptive parameters:

• Area utilization rate (AUR)
• Cube utilization rate (CUR)
• Selectivity: directly accessible UL locations/SC <=1
• Saturation coefficient of the SC: average or maximum number of UL stored/SC

Cost indicators:

• Storage cost/UL location
• Handling cost /UL handled

NB: Storage system and handling system must be chosen jointly.

Typologies of storage systems for pallet UL:

• Block stacking: low selectivity, low cost of investment, for items with high inventory level.
• Rail racks: drive-in (LIFO) or drive-through (FIFO low performance in cycle time) pallet stored from the long side so the forklift can enter, for fragile products, 50 €/pallet location, 1 item per lane so low selectivity, higher exploitation in height, for high inventory level.
• Flow racks: gravity or push-back (LIFO) high maintenance, 200 €/pallet location, low selectivity, for items with a medium-high stock level.
• Selective pallet racks: most important solution, minimize use of iron, high selectivity, both for stock full pallet and picking stocks, 20-30 €/pallet location.

Typologies of pallet handling trucks

• Walkie stackers: to horizontally move PL and load or unload trucks (trans pallet)
• Front loading forklift trucks (need space for curves) (move pallet horizontally and vertically) (counterbalance more flexible or straddle reach)
• Side loading forklift trucks (take PL from sx and dx and front, no curves) (move PL horizontally and vertically, more expensive) (side loaders bilaterali or turret trilaterali)

Management policies

2 main management policies:

• Management of the operative cycles (single or dual command cycles).
• Criteria to allocate the UL.

Dual command (DC) cycle compared to single command (SC) cycle:

• No empty return -> more efficient
• It is required that storage and retrieving activities are concurrent
• The WMS finds the best combination of UL per a DC

Index to choose the criteria to allocate the UL (the higher is the index the more important is the item):

• Retrieving index RI = for a generic item I is the number of full or cut UL retrieved from the storage system during the period T
• Access index AI (to reduce cycle time)

Allocation policies:

• Randomized storage (better use of storage capacity)
• Dedicated storage (items with biggest AI must be stored closer to I/O, bad use of storage capacity)
• Class-based storage (creation of family of items with the same AI, each zone has randomized storage, the boundary curves between zones are equal time curves starting from the I/O) (it is a good trade-off)

NB: In class-based storage, we never work with more than 2/3 classes because after that the advantage given by the reduction of operative cycle times is very low and the disadvantage given by the complexity and storage capacity is high.

NB: The triangles are not equilateral because we must consider the different speed of the forklift in the 2 dimensions.

Design principles:

1. Clustering the items according to the storage system
2. Find required SC TC
3. Constraints (urban, technical, safety, economical)
4. Storage system selection
5. Storage area pre-design
6. Modelling and simulation
7. Technical-economical checks and assessments
8. Design

Automated warehouses

• AS/RS = automated storage and retrieval system (equipped with telescopic forks, can move horizontally and vertically at the same time)
• People is just for supervision and maintenance
• The floor must be perfectly levelled and the contraction accuracy very high
• Selective pallet racks
• The I/O system takes the pallet to the beginning of the aisles, an example is the conveyor (trasportatore)
• Aisle width (AW) is very short 1.4m
• Very high AUR

Shape factor = SF = Tv/Th is optimal when is a rectangle because horizontal speed is more important

Design variables:

• Structure (standard building, sunk building, rack supported building in which it is easier to get taller buildings)
• S/R machines/number of aisles (=1 or <1 if the resulting TC is too high and we want to lower the cost)
• Rack depth (single or double in which you have better SC but worst TC)
• Number of telescopic forks for each S/R machine (1 or 2 one in front of the other or one below the other)

Investment costs:

• Equipment cost (S/R, racks, I/O system)
• Building cost (floor levelling, information system)
• Fire protection system cost (if present)

Operating costs:

• Supervision people cost
• Maintenance cost
• Energy cost

2 main management policies:

• Management of the operative cycles
  • Operative cycles types (single or dual)
  • Optimization of the dual command cycles (NCZ or MTB)
• Allocation policies (only in the aisle)

Optimization of the dual command cycles to maximize the TC:

• Minimum travel between (MTB): couple a storage/retrieval in a specific PL with a retrieval/storage in the closest PL in terms of time, we want to minimize the travel without load
• No cost zone (NCZ): couple a storage/retrieval in a specific PL with a retrieval/storage without increasing the variable time of the cycle so the DC has the same VT of the SC without increasing the cost, we always try to use this solution.

Application fields:

• High storage capacity required (>5000 UL)
• High TC required (25-35 UL/h per S/R machine)
• Low availability or high cost of the ground
• Need to protect goods (ex. From fire)
• Need to control environmental conditions

Main drawbacks:

• Low flexibility in terms of changes of TC, SC, UL size
• High investment costs and PBT 4/5 years
• High dependability on the system reliability, you can work on the allocation policies to mitigate the risk of fail in one aisle

New automated solutions

• AVS/RS: autonomous vehicle storage and retrieval system (based on the decoupling of vertical and horizontal movements, it tries to overcome the low flexibility of the AS/RS, you can work with different lifts and vehicles up to 2 per aisle, you can work with full PL or totes/cartons) (this solution can improve the service level, has a good scalability and flexibility, high reliability and a lower energy consumption but costs 20% more than AS/RS)
• AGV automated forklifts (central system in the WMS, fixed ruts, limited tasks, limited application field)

Picking

Picking: selective retrieval of UL from high-level UL in order to fulfil customer orders.

Customer order: Collection of several order lines, each one requesting a defined quantity of a specific item.

NB: We do the picking if the quantity of an item requested is smaller than a pallet, otherwise we do the full pick.