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Chapter 11 – Technology in the Supply Chain

In-class exercises and discussion points

Logistics and the Internet of Everything

In the internet of everything the ‘things’ are those various physical devices and objects connected to the Internet and each other, especially for intelligent decision making. Ask students to identify these various ‘things’ (e.g. smart phones, RFID sensors on packages, GPS tracked vehicles, etc).

Additive Manufacturing and the Maker Movement

Ask students to identify products and markets with potential for 3D and 4D printing. You may wish to link this to the discussion on mass customisation in Chapter 4.

Answers to end of Chapter Questions

Is there still a role for workers in automated logistics systems?

Ideally there are two parts to a good answer – firstly identify areas where automation in logistics has replaced jobs, and then reference back to the discussion on STS in the previous chapter and changing job roles in logistics with higher knowledge content in particular.

What are the barriers to a more widespread application of RFID?

Cost to implement and maintain; technology and roll out still in development; lack of uptake by supply chain partners; will the data captured be utilised and add value?

Think of examples of products that can be 3D or 4D printed. How will materials flows in these supply chains change as a result?

Similar answer to the in-class exercise above – examples are of course many and include: spare parts, medical implants and other medical devices such as dentures and contact lenses, foods such as chocolate, etc. Less finished goods and more raw materials will thus flow further downstream in the supply chain; as noted above good to link this with mass customisation (Ch 4). Also niche market for 3D and 4D printing machines and parts!

Good websites and video clips

· DHL Trend Research, includes some excellent and informative reports: http://www.dhl.com/en/about_us/logistics_insights/dhl_trend_research.html

· Cisco and the internet of everything https://www.youtube.com/watch?v=5Jxo7AGZmMw

· Article on smart ships and cargo: https://theconversation.com/to-service-global-trade-todays-ships-and-cargo-are-smarter-than-ever-46032

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Chapter 12 – Information and Finance Flows in the Supply Chain

In-class exercises and discussion points

KPIs

Ask students to identify – and differentiate – operational and more strategic / high-level KPIs (Table 12.2 / p231 gives examples).

Service Level Agreements (SLAs)

Ask students to consider what should typically be covered in a SLA (p231).

Landed costs

Ask students to identify the various typical costs that constitute the total landed costs of a shipment (p233/234) – get them too to pick different types of products where the various costs will differ (e.g. currency exposure costs may be more significant when sourcing from some countries, insurance costs more significant for high value products, etc).

Answers to end of Chapter Questions

Describe the barriers to having full visibility of information across the supply chain.

P222-223: cultural, financial, technical and organisational. Discuss – with examples – each of these categories of barriers.

Information complexity, proliferation, diffusion, velocity and accuracy are key drivers of developing increasingly sophisticated supply chain information technologies. Describe each of these drivers in the context of logistics and SCM

As per bottom of p221 – today’s global SC networks are distributed across multiple, widely dispersed echelons and this leads to information complexity and proliferation. The information increasingly diffuses downstream in the SC to multiple partners (including ‘always-on’ consumers). Velocity (speed) due to faster cycle times and competition. The need for accuracy is obvious.

How do ERP systems differ from MRP systems?

The bottom left quadrant of Figure 12.1 shows the evolution from MRP to MRP II to ERP – describe then components of MRP (Fig 12.2) and show how ERP, the modern derivative of MRP, spans across organisations.

When a manufacturer partners with a 3PL for the international distribution of its products, what activities will be covered in the SLA? How will the 3PL charge for its services?

SLA components detailed on p231. Costing approaches:

· Transactional costing

· Costs plus margin; ‘open book’ where the LSP provides full costs visibility to the customer and charges accordingly

· Gain share

· The other issue to consider is what penalties if any may apply (e.g. if performance falls below a set level) and any allowances for inflation/cost increases (e.g. fuel escalators).

Good answers will refer back also to Ch 7 which dealt with selecting LSPs.

What are landed costs?

As per the in-class exercise above - the various typical costs that constitute the total landed costs of a shipment (p233/234) and noting too that with different types of products the various costs will differ (e.g. currency exposure costs may be more significant with sourcing from some countries, insurance costs more significant for high value products, etc). Good answers may also briefly differentiate landed costs from other costs categories.

How can logistics be used to facilitate international trade?

This is the discussion on trade facilitation (bottom of p235) – noting in particular time to market as a trade barrier (so better, more cost effective and faster logistics services are key) and reducing bureaucracy (and thus the ‘single window’ initiative).

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Chapter 13 – Supply chain vulnerability, risk, robustness and resilience

In-class exercises and discussion points

Known unknowns, knowable unknowns and unknowable unknowns

The quote from former US Secretary for Defence Donald Rumsfeld on page 258 can provide a useful basis for class discussion – ask students to think of examples of risks in each of these categories. This should lead to a wider appreciation of the potential vulnerability of supply chains.

Solutions to end of chapter questions

1. What is meant by supply chain vulnerability?

The likelihood of a supply chain or logistics system being exposed to damage, disruption or failure.

2. Why is a robust supply chain not necessarily a resilient supply chain?

While a robust supply chain is capable of for example managing regular fluctuations in demand, it may not be resilient in the sense that after a major disruption it may not be capable of returning to its original (or desired) state.

3. Distinguish objective and perceived risk.

‘Objective risk’ is usually determined by experts applying quantitative scientific means while ‘perceived risk’ can be defined as the imprecise and unreliable perceptions of ordinary people.

4. Discuss the relevance of the Sarbanes-Oxley Act 2002 (SOX) to logistics.

The Sarbanes-Oxley Act (SOX) is legislation enacted in the US, but with worldwide reach, to improve the oversight of accounting and reporting practices. It requires full disclosure of potential vulnerabilities that once might have been considered to be beyond the legal boundaries of the firm and would thus encompass logistics related activities such as for example vendor managed inventory (VMI) and outsourcing.

5. Outline how risk might be dealt with in levels 1, 2 and 3 of Peck’s model of the supply chain.

This is Figure 13.1 on page 267.

Level 1: at this level risk is largely about improved visibility (of demand and inventory), velocity (to reduce the likelihood of obsolescence and optimise asset utilisation) and control. If processes are tightly monitored and controlled, then non-conformance to plan can be quickly detected. Level 2 is concerned with asset and infrastructure dependencies and risk management in this context draws upon actuarial asset-based approaches (originally developed in insurance) to risk management. Level 3 in Peck’s model is concerned at the strategic level with organisations and inter-organisation networks and potential solutions would include partnering, dual sourcing and outsourcing.

Extra essay style question

· Outline how you would go about assessing the capability of a supply chain to cope with unexpected risks.

The starting point would likely be to consider the broad range of potential risks impacting the supply chain in question (no particular supply chain is described, so students may describe a hypothetical supply chain of their choice) – this brings in the concept of ‘vulnerability’ which we saw as the likelihood of a supply chain or logistics system being exposed to damage, disruption or failure. Once the extent to which the supply chain is vulnerable is understood we can then turn to assessing the capability of the supply chain to cope with such unexpected risks. Peck’s model (Figure 13.1) can be used to show how risk can be dealt with within such a supply chain at various levels. The goal should be a supply chain which is not only robust, but also and more importantly resilient (with both terms being defined).

More questions

· What are wicked problems?

· What is ‘Business Continuity Planning’ (BCP)?

· Distinguish risk and uncertainty.

· Give examples of sources of external shocks to the supply chain.

· Explain the acronym ‘VUCA’.

Good websites and video clips

· Donald Rumsfeld’s known unknowns: www.youtube.com/watch?v=_RpSv3HjpEw

· Horsemeat scandal: food SC too complex: http://www.bbc.co.uk/news/uk-21394451

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Chapter 14 – Sustainable Logistics and Supply Chain Systems

In-class exercises and discussion points

Local versus overseas sourcing

The caselet on page 287 provides a useful basis for class discussion. Should we produce more products locally and thus reduce the demand for international transportation? Or is that economically feasible given the, in many cases, low unit costs of international transportation? In addition, can we be sure that locally produced products will have a lower carbon footprint (for example products that grow naturally in some countries may require artificial light if grown in the countries where they are most demanded). In our experience with this exercise, students can often adhere to absolute positions so be sure and encourage students to see beyond their fixed viewpoints and see all dimensions of both sides of the debate.

Solutions to end of chapter questions

· What are the pertinent sustainability issues in the context of logistics and SCM?

Students should ideally first note that globalisation, growth in trade, outsourcing etc all lead to growth in the demand for logistics services. The particular link between economic growth and transport growth, detailed on page 281, can also be discussed. The impact of logistics activities on the environment and concepts such as carbon footprints and food miles can also be noted. The issue then becomes how can logistics and supply chain systems be made more sustainable given the continued demand which exists for their services (and this is the focus of the next question)?

· What are the different ways by which the environmental footprint of logistics and SCM can be reduced?

This is in effect Figure 14.3, adoption of some / all of these strategies, depending upon the context, will lead to reduced environmental impact. Higher quality answers would introduce issues such as for example JIT leading to reduced transport system efficiency thus increasing the environmental footprint.

· What is meant by the term ‘port-centric logistics’?

The co-location of various logistics activities at a sea port rather than at inland locations. Students should note that this can generate both commercial returns for port operators as well as being of benefit to the environment by enhancing the efficiency of transport systems.

· How might we ‘decouple’ economic growth and transport growth?

In a general sense by increased use of scale in transport and enhancement of the efficiency of transport systems, thus dampening overall growth in transport activity. Higher quality answers would next introduce some of the points made in the textbox on page 281, for example having economic growth which demands less transport activity, as is the case for example with the services sector.

· Why might JIT inventory management approaches not be sustainable from an environmental perspective?

Because they typically involve the transportation of smaller loads more frequently. Larger loads are generally more advantageous, on a per unit basis, from an environmental perspective.

· What is meant by the term ‘carbon footprint’?

A term that has come into use to describe the environmental disbenefits associated with economic activities such as the movement of freight.

Extra essay style question

· Outline how you would go about improving the ‘environmental credentials’ of a road haulage company.

Road haulage, of all logistics activities, is the one most often associated with the environmental disbenefits of logistics activity. Assuming that the company wants to sustain and grow its business, and doesn’t intend diversifying into other transport modes, the issue now becomes how can the road haulage company act more effectively and efficiently while making as much or even more money! Table 14.1 outlines many strategies and practices which can save money for both the hauliers and their customers. More generally of course the haulier can engage in promotional activity to showcase its ‘new’ environmental credentials.

More questions

· What is meant by them term ‘food miles’?

· Outline how increasing scale in the ocean container sector is changing global shipping networks

· Outline the various ways by which the environmental penalty of road haulage may be reduced

Good websites and video clips

· Red Bull – the lifecycle of the can: http://energydrink-uk.redbull.com/red-bull-can-lifecycle

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Chapter 15 – Reverse Logistics

Solutions to end of chapter questions

· This chapter identified six different manufacturing aspects. Use these aspects to compare the characteristics of remanufacturing with the traditional manufacturing environment.

This is Table 15.2 / P297.

· If you were designing and implementing a reverse logistics process for your firm, what are the key factors you would consider for implementation, and why?

The first decision is to agree on the mix of reuse / remanufacture / recycle / disposal.

Then consider the relevant external factors (legislation, customer demand, incentive) and internal factors (environmental concerns, strategic costs/benefits, volume and quality of returns, resource, integration and coordination).

· Identify a few performance metrics for reverse logistics. Why are traditional performance metrics inadequate for the task of capturing the reverse logistics objectives?

The usual performance measures (customer satisfaction, service level, responsiveness, cost and quality) are not appropriate as they are more relevant to forward flowing supply chains – instead metrics such as those outlined on Table 15.3 are required.

More questions

· Distinguish open-loop and closed-loop reverse logistics systems.

· Discuss the recovery options hierarchy.