Part 1 : At the beginning of 2018, Mark Columbus was appointed the new Head of Supply Chain at Supercoffee, a California coffee pod producer both for coffee shops (e.g., Starbucks) and households (e.g., Keurig machine). His main objective was to develop more the global outreach of the company. Currently, Supercoffee distributes its products mainly in the local markets (United States and Canada), and Columbus objectives are to start exporting at least in some countries in Central and South America. Supercoffee in-house production consists of 158 products, which can be grouped into five families: Strong, Extra, Aroma, Napoli, and America. Each family has a specific blend, roasting temperature, processing procedure (in beans or ground), labels for domestic and international markets, and they can be sold in multiple formats (lots of pods of 2.5 kg for coffee shops, 0.25 and 0.15 kg for households) After an initial growth in 2010-2012, demand for coffee pods has overall stabilized in the final market, and companies like Supercoffee work with coffee machines producer and distributor to produce the right mix and quantity of coffee to satisfy customer request, as they are able to issue a forecast of their future orders for at least 3 months. This way, demand trends are usually quite well characterized for different types of products, and this gives also the possibility to companies to introduce innovations in the flavor and/or packaging, considering the long lifecycle characterizing these products. More critical, instead, is the management of the upstream part of the supply chain, for three reasons. First, high-quality coffee beans are produced only in limited regions world-wide and, has experienced some shortage in the last years due to environmental (i.e., weather) and labor (i.e., strikes) factors. Second, pod packaging needs to be source by respecting specific requirements, considering the strong attention to sustainability aspects related to their disposal. For this, although Supercoffee tries to have a consolidated set of suppliers, frequent rotation and introduction of new partners is necessary. Last, production technologies for bean processing, blending, roasting, flavoring, and packaging are in constant evolution and require companies to invest (if possible) in frequent manufacturing process renovations. Distribution network design Currently, Supercoffee has one central warehouse, located in Reno (Nevada). From this warehouse, coffee pods are sent by road and/or rail to several small and big retailers all over the United States and Canada. Once Supercoffee marketing will have defined a clear strategy for entering foreign markets in South America, the supply chain must be ready to support these efforts. For these reasons, Columbus was thinking about a new structure of the distribution network. Instead of reaching directly the industrial customers through the central warehouse, Columbus would like to use local warehouses (owned and executed by a logistic service provider, but managed and supervised by Supercoffee) in each of the final market (United States, Canada, and other Central and South American countries), in order to make the transportation from the central warehouse more efficient, but also leave open doors to possible personalization of variety according to the characteristic of the demand in each of these markets. QS1: Discuss the solution proposed by Columbus. What type of distribution network does he have in mind? Is it coherent with the Supercoffee supply chain characteristics? Suggestions: First, classify the solution proposed by Columbus. To understand its suitability, carefully consider the characteristics of the Supercoffee supply chain. Independently from what your answer is (yes, it is suitable; or no, it is not suitable), be sure to justify why you pick your answer. Highlight the pros and cons of this choice, and explain why, in your view, pros outweigh cons or vice versa. Part 2 Inventory management policies Considering the characteristics of the Supercofee supply chain, managing inventory of final products should not give the company too much of concern. Instead, in the last two years, Supercofee production system struggled a lot to provide the central warehouse the right quantity at the right time, in order to satisfy retailers’ demand. The central warehouse does not hold safety stock, and several times, Supercoffee ended up sending urgent deliveries without saturating the trucks or the rail cars, thus ending up spending more logistics costs than planned. Last year, Supercoffee had $ 151,081 in finished product inventory and spent $ 38,901 total inventory management costs (including both carrying costs and ordering costs), and $ 17,863 in transportation costs. In order to reduce this problem, Columbus wants also to review the inventory management policy for finished products to be held in the central warehouse. In particular, in order to contain costs, he wants to implement an economic order quantity model with fixed reorder. To quantify the parameter of the model, he has collected several pieces of information. First of all, he collected the following data about production and transportation costs for the different product families. Table 1. Production and transportation cost data of Supercoffee products ($ per unit, where 1 unit = 1 lot; each lot is made by 100 sleeves; each sleeve includes 12 pods) Strong Extra Aroma Napoli America Coffee blend 244.20 245.60 308.90 284.20 261.20 Materials for packing 12.70 12.70 12.70 12.70 12.70 Production costs Direct labor 1.00 1.00 1.00 1.00 1.00 Duties 9.77 9.83 12.75 11.10 10.38 Taxes 7.33 7.37 9.35 8.40 7.82 Other general variable costs 5.00 5.00 5.00 5.00 5.00 Other general fixed costs 13.10 13.10 13.10 13.10 13.10 1.59 1.64 2.2 2.05 1.82 Transportation costs The annual inventory holding rate is the same for all the families, and it is composed of mainly financial opportunity cost of capital, equal to 9%, and defined according to the interest rate on loan received by SuperCoffee. The other costs (obsolescence, storage, insurance, etc.) associated to inventory holding are instead quite low, and amount to 2.5% all-in. In addition to this, Columbus collected data about the reorder cost of each family (including both the set-up costs to switch from one family to the other and the average costs of administrative staff to issue the order for filling a lot from the distribution center): • • • • • Strong: 278.3 $/order Extra: 278.3 $/order Aroma: 342.5 $/order Napoli: 303.1 $/order America: 292.4 $/order Finally, Columbus collected the data about the forecasted demand for the next year, as well as the past values of replenishment lead time from the production plant (note: this value is equal for all the families of product). Table 2. Summary of monthly forecasted orders coming from retailers (number of units aka lots) Strong Extra Aroma Napoli America Jan 114 42 39 654 22 Feb 128 51 79 163 10 Mar 136 52 82 180 34 Apr 233 74 151 198 44 May 219 157 66 183 26 June 284 150 127 217 33 July 343 257 96 207 35 Aug 368 179 85 186 51 Sep 230 83 61 171 16 Oct 162 72 67 205 15 Nov 246 89 103 266 26 Dec 252 181 131 257 43 Table 3. Value of the replenishment lead times from the production plant to the central warehouse during the last year (values in month) Replenishment lead time Jan 0.33 month Feb 0.54 month Mar 0.37 month Apr 0.40 month May 0.47 month June 0.50 month July 0.43 month Aug 0.53 month Sep 0.33 month Oct 0.47 month Nov 0.50 month Dec 0.40 month QS2: How much should Supercoffe central warehouse reorder for each product, if the objective is to minimize the inventor management costs? When this quantity should be reordered? Fill the following table. Type the numbers using the format 2,86.78, by including only two decimals. Note: you can use this file to elaborate on your solution. You can upload this file in the next question, together with the justification of your calculations.(u can see file below called elaborate solution 1) Suggestions: Please look at the solution template provided. Values to calculate the reorder quantity need to be calculated for each family! And pay attention that not all of them are explicitly given by the text, so you have to calculate them. Pay extreme attention to the unit of measure, particular time! Ratio and multiplication can only be made if the variables are expressed in the same unit of time (days with days, weeks with weeks, months with months). Remember to round units and order numbers up. to round units and order numbers up. Strong D Aroma Napoli America units/year units/year units/year units/year $/unit $/unit $/unit $/unit $/unit % % % % % $/unit $/unit $/unit units units units unit/month unit/month unit/month unit/month months months months months Reorder point units units units units units Cycle stock units units units units units Creorder h Cp units/year Extra Quantity to be units reordered d unit/month LT months $/unit QS3: attach your Excel file here (be sure to put comments to highlight your hypotheses) QS4: If Columbus is going to adopt these models with these parameters, will the projected logistic costs be lower, higher, or similar to those of last year? Fill the following table. Type the numbers using the format 2,86.78, by including only two decimals. $/unit units Note: you can use this file to elaborate on your solution. You can upload this file in the next question (or in the previous one), together with the justification of your calculations.(ill attach this file as solution elaborate qs4) Strong Extra $ $ $ $ $ $ $ $ Inventory holding costs $ $ $ $ Total inventory management costs $ $ $ $ Transportation costs $ $ $ $ $ Total logistic costs $ $ $ $ $ Inventory value Inventory carrying Aroma Napoli Am costs Number of orders Qs5: Does this result surprise you, or does it make sense? Justify your previous calculations and comment about the results obtained. If you prefer, you can directly attach your Excel file here (if you didn't do it before). Suggestions: Once you calculate the quantity to be reordered, and the reorder point, you have all the information to evaluate potential costs of these decisions. Again, please follow the solution template provided and fill the table. You have to calculate the inventory value, the inventory management costs (carrying and ordering), and the transportation costs, and compare them to the cost of the previous year. With these new values and models, are the costs higher, lower, or similar? Does this make sense to you? Please note that this second question is very important, because it shows if you really understood what you are doing. If you are, you should already foresee what to expect, and if the costs will be lower, higher, or similar (before the calculation). So, this could be also a check to understand if your calculation makes sense, or if something is wrong. QS6: Columbus would like to change the inventory management policy, but he doesn’t think that there is a need for Supercoffee to introduce safety stock for any of the families of coffee. “We can forecast and manage the demand pretty well for all the families, and our plants are very $ reliable for what concerns the replenishment lead time. I am pretty confident we are able to give our customers a level of service of 90-92%”, he says. Do you agree with Columbus that safety stocks are not needed in the Supercoffee central warehouse? Carefully elaborate on your answer. Suggestions: This is more of a reasoning and conceptual questions. Please note that it is not required to calculate the safety stock in this question. You could, if you think it is useful to support your thesis, but you can answer this question with no safety stock calculation. To do that, the meaning and role of safety stock must be clear, and also you need to be sure you understand from which variables the safety stock value depends on. If you are able to identify this, it is pretty clear from the number provided if Columbus is right or wrong. Of course, the fact that you are not asked to calculate safety stock doesn’t mean you don’t have to use numbers! To answer this question, you will need numbers at some point. So, again, if you don’t see the need to use any values you already calculate or new ones…probably you are not on the right path. Strong Extra Aroma Napoli Production costs Coffee blend Materials for packing Direct labor Duties Taxes General variable costs General fixed costs Reorder costs Transportation costs Inventory carrying costs Financial costs Other inventory carrying related costs $ $ $ $ $ $ $ $ $ 244,20 12,70 1,00 9,77 7,33 5,00 13,10 278,30 1,59 9,0% 2,50% $ $ $ $ $ $ $ $ $ 245,60 12,70 1,00 9,83 7,37 5,00 13,10 278,30 1,64 9,0% 2,5% $ $ $ $ $ $ $ $ $ 308,90 12,70 1,00 12,75 9,35 5,00 13,10 342,50 2,20 9,0% 2,5% $ $ $ $ $ $ $ $ $ 284,20 12,70 1,00 11,10 8,40 5,00 13,10 303,10 2,05 9,0% 2,5% America $ $ $ $ $ $ $ $ $ 261,20 12,70 1,00 10,38 7,82 5,00 13,10 292,40 1,82 9,0% 2,5% Historical demand values (lots per month) Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Strong Extra Aroma Napoli 114 128 136 233 219 284 343 368 230 162 246 252 42 51 52 74 157 150 257 179 83 72 89 181 39 79 82 151 66 127 96 85 61 67 103 131 654 163 180 198 183 217 207 186 171 205 266 257 America 22 10 34 44 26 33 35 51 16 15 26 43 Historical replenishment lead time (months) Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Equal for all the products 0,330 0,530 0,370 0,400 0,470 0,500 0,430 0,530 0,330 0,470 0,500 0,400 Strong Extra Aroma Napoli Strong Extra Aroma Napoli D Creorder h Cp Quantity to be reordered d LT Reorder point Cycle stock Inventory value Inventory carrying costs Number of orders Inventory ordering costs Total inventory management costs Transportation costs Total logistics costs America America Total projected values Strong Extra Aroma Napoli Production costs Coffee blend Materials for packing Direct labor Duties Taxes General variable costs General fixed costs Reorder costs Transportation costs Inventory carrying costs Financial costs Other inventory carrying related costs $ $ $ $ $ $ $ $ $ 244.20 12.70 1.00 9.77 7.33 5.00 13.10 278.30 1.59 9.0% 2.50% $ $ $ $ $ $ $ $ $ 245.60 12.70 1.00 9.83 7.37 5.00 13.10 278.30 1.64 9.0% 2.5% $ $ $ $ $ $ $ $ $ 308.90 12.70 1.00 12.75 9.35 5.00 13.10 342.50 2.20 9.0% 2.5% $ $ $ $ $ $ $ $ $ 284.20 12.70 1.00 11.10 8.40 5.00 13.10 303.10 2.05 9.0% 2.5% America $ $ $ $ $ $ $ $ $ 261.20 12.70 1.00 10.38 7.82 5.00 13.10 292.40 1.82 9.0% 2.5% Historical demand values (lots per month) Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Strong Extra Aroma Napoli 114 128 136 233 219 284 343 368 230 162 246 252 42 51 52 74 157 150 257 179 83 72 89 181 39 79 82 151 66 127 96 85 61 67 103 131 654 163 180 198 183 217 207 186 171 205 266 257 America 22 10 34 44 26 33 35 51 16 15 26 43 Historical replenishment lead time (months) Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Equal for all the products 0.330 0.530 0.370 0.400 0.470 0.500 0.430 0.530 0.330 0.470 0.500 0.400 Strong Extra Aroma Napoli Strong Extra Aroma Napoli D Creorder h Cp Quantity to be reordered d LT Reorder point Cycle stock Inventory value Inventory carrying costs Number of orders Inventory ordering costs Total inventory management costs Transportation costs Total logistics costs America America Total projected values Global Logistics Module 2|International transportation Introduction to international transportation Globalization of operations • How companies globalize their supply chain operations? SOURCING PRODUCTION TRA4721– Global Logistics and Supply Chain Management DISTRIBUTION 2 Transportation in global supply chains TRA4721– Global Logistics and Supply Chain Management Logistic channel • The logistic channel includes: § § the distribution network, whose nodes are the warehouses (central and regional warehouses, transit points) and the retailers, that store the goods the transportation systems (connections) which connect the nodes of the network Points of origin (Plants, Suppliers, …) Connections Points of destination TRA4721– Global Logistics and Supply Chain Management (Shops, customers, …) 4 Logistic channel ? Italy United States Point of destination Plant Nodes Given the # and the location of plants and points of destination, how the logistics channel (i.e. nodes and connection) should be set up to deliver goods from the plants to the points of destinations Plants Connections Points of destinations TRA4721– Global Logistics and Supply Chain Management 5 Transportation: a definition • Transportation includes all the services for the physical movements of a certain quantity of goods between a point of origin to a desired point of destination at the required time, § using different modes of transportation § using load units or vehicles based on the product features and the type of services § being compliant with the legislations (e.g. constraints on the total amount of operating hours of truckers, safety regulations, …) TRA4721– Global Logistics and Supply Chain Management 6 Transportation: why is it relevant? Transportation has an impact on the level of service § Transportation is the physical movement of goods to fulfill the customers demand; § it is the activity that concludes the order cycle TRA4721– Global Logistics and Supply Chain Management 7 Transportation: why is it relevant? Transportation has an impact on cost Transport Infrastructure Investment and Maintenance Spending as Share of GDP (OECD, 2018) TRA4721– Global Logistics and Supply Chain Management 8 Transportation: why is it relevant? Transportation has an impact on cost Source: Council of Supply Chain Management Professionals, State of Logistics Report, (2017) TRA4721– Global Logistics and Supply Chain Management 9 Transportation: why is it relevant? Transportation has an impact on cost Source: Council of Supply Chain Management Professionals, State of Logistics Report, (2017) TRA4721– Global Logistics and Supply Chain Management 10 Transportation: why is it relevant? Transportation has an impact on quality TRA4721– Global Logistics and Supply Chain Management 11 Transportation: why is it relevant? Transportation has an impact on sustainability TRA4721– Global Logistics and Supply Chain Management 12 Transportation: a complex problem § Several modes of transportation § Different solutions for each mode of transportation § Many types of transportation providers § Some financial aspects influenced by transportation (e.g., terms of sales) § Different legislations among the countries (e.g. on weight capacity) ? Italy United States Point of destination Plant SELLER – USA National transportation BUYER – IT International transportation TRA4721– Global Logistics and Supply Chain Management National transportation 13 Global Logistics Module 2|International transportation Introduction to international transportation Global Logistics Module 2|International transportation Modes of international transportation – road and rail transportation Modes of transportation in global supply chains TRA4721– Global Logistics and Supply Chain Management Transportation modes Truck Rail Maritime Air Less than truckload (LTL) Unit Train Container Combi carriers Truckload (TL) Full carload Bulk Freighters Break bulk Less than carload Freights Express carriers Neo-bulk Project Cargo Intermodal TRA4721– Global Logistics and Supply Chain Management 3 Road transportation TRA4721– Global Logistics and Supply Chain Management Characteristics of road transportation • General characteristics § Door to door delivery § Limited risk of damage (goods are handled only at the beginning and at the end of the delivery) § Quick loading/unloading § Low transit time and good reliability (limited impact of weather conditions) § High accessibility both in terms of roads/highways and in terms of supply (if the company chooses a for-hire solution) TRA4721– Global Logistics and Supply Chain Management 5 Characteristics of road transportation 1. FULL TRUCK LOAD (FTL) 2. LESS than TRUCK LOAD (LTL) TRA4721– Global Logistics and Supply Chain Management 6 Full truck load - FTL • Definition: § § § a full truck load (FTL) shipment is a transportation in which a semi-trailer or a trailer is dedicated to a shipper who fills it with freight for one destination. The shipment is usually picked up from one point of origin and delivered to one point of destination Semi trailer Tractor Truck Trailer Once loaded the goods are not handled anymore until they reach their final destination TRA4721– Global Logistics and Supply Chain Management 7 Full truck load - FTL FTL transportation Plant Distribution center When? § Large shipments that fill an entire trailer § Time sensitive freight § When the weight of the goods make it convenient without penalizing the volume TRA4721– Global Logistics and Supply Chain Management 8 Full truck load - FTL • Saturation: the transportation unit load (semi-trailer or trailer) has a maximum capacity in terms of weight and in terms of volume • The ratio between the maximum weight capacity and the maximum cube capacity gives the “optimal” freight density, i.e. the density which saturates both the weight and the cube capacity 3,400 ft3 Optimal density of the goods to be shipped: 10 lbs/ft3 34,000 lbs (< 44,000 lbs) TRA4721– Global Logistics and Supply Chain Management 9 Full truck load - FTL Types of freight $/mile $/pound TRA4721– Global Logistics and Supply Chain Management 10 Less than truck load - LTL • Definition: § a less than truck load (LTL) transportation is a transportation for quantities lower than a truck load, where goods are carried from the point of origin to the point of destination through a carrier’s network, where they are consolidated with other shipments § Goods may be handled multiple times before reaching the final destination TRA4721– Global Logistics and Supply Chain Management Small trucks Large trucks 11 Less than truck load - LTL 1. Pick-up 2. Consolidation Points of origin 3. FTL Transportation Line Haul Shipping branch 4. Sorting 5. Delivery Points of destination Receiving branch TRA4721– Global Logistics and Supply Chain Management 12 Less than truck load - LTL Consolidation Sorting Shipping branch Receiving branch FTL Transportation Line Haul TRA4721– Global Logistics and Supply Chain Management 13 Less than truck load - LTL • When? § Freight < 15,000 pounds § Maximize cost savings § A shipment does mot requires special handling or equipment (perishables, fragile, hazardous items) § No time pressure § Usually field of application: retail supply chains with several point of sales (of the same company or different companies) POS5 Regional receiving branch POS1 TRA4721– Global Logistics and Supply Chain Management POS4 Delivery area POS2 POS3 14 Rail transportation TRA4721– Global Logistics and Supply Chain Management Rail transportation • Definition: in the railroad traditional service, the carrier (less often a manufacturing company) rents space on a train: § a unit train § a full car load § less than a car load § Consolidation and sorting points (same as road transportation) TRA4721– Global Logistics and Supply Chain Management 16 Rail transportation • Transport unit load Hopper/gondola car Box car Rotary car dumper Flat car TRA4721– Global Logistics and Supply Chain Management 17 Rail transportation • Transport unit load Container on flatcar (COFC) Flat car Trailer on flatcar (TOFC) TRA4721– Global Logistics and Supply Chain Management 18 Rail transportation • Characteristics: § Low cost (cost per ton*mile is pretty low) § Accessibility: the loading/unloading points must be on the railroad § Slow speed/High transit times and Low reliability: high and variable handling times at the consolidation stations § Damage risk TRA4721– Global Logistics and Supply Chain Management 19 Rail transportation • Main application fields § transportation of generally low-value goods (e.g., bulk raw materials: lumber, cereals, metals) for large quantities and long distances § No speed and reliability pressure § Sometimes used for short distances (e.g., internal transfer from plant to plant or from plant and distribution centers) TRA4721– Global Logistics and Supply Chain Management 20 Rail transportation Rail freight traffic in selected countries The North American Intermodal Rail Transport System 9,000,000 8,000,000 7,000,000 Million Ton-km 6,000,000 India 5,000,000 China Russian Federation 4,000,000 United States 3,000,000 2,000,000 1,000,000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 TRA4721– Global Logistics and Supply Chain Management 21 Global Logistics Module 2|International transportation Modes of international transportation – road and rail transportation Global Logistics Module 3|Inventory management The role and impact of inventory in global supply chains What is inventory and why is it important? TRA4721– Global Logistics and Supply Chain Management Inventory: a definition • What is inventory? § All the materials, components, semi finished goods and finished goods, stored somewhere waiting to be processed § They include all the company tangible assets that are not depreciated (buildings, equipment, machineries, plants, transportation vehicles) INVENTORY STOCK Inventory takes in account all of the assets a business uses to produce the goods it sells and determines the sale price for the stock Stock deals with products that are sold as part of the business’s daily operation Accounting: once a year Accounting: periodically (e.g., daily) TRA4721– Global Logistics and Supply Chain Management 3 Inventory: a definition • What is inventory? TRA4721– Global Logistics and Supply Chain Management 4 Inventory: impact Inventory is an asset, so it increases the total company assets…and decrease the potential return on investment (operating income/total assets) Inventory has costs, also called inventory holding (or carrying) costs: all business expenses related to holding and storing unsold goods. The total figure would include the related costs of warehousing, salaries, transportation and handling, taxes, and insurance as well as depreciation, shrinkage, and opportunity costs. TRA4721– Global Logistics and Supply Chain Management 5 Inventory: impact https://www.supplychainquarterly.com/articles/3793-its-getting-crowded-in-here TRA4721– Global Logistics and Supply Chain Management 6 Inventory: impact • Remember that? 2% of United States GDP Source: Council of Supply Chain Management Professionals, State of Logistics Report, (2017) TRA4721– Global Logistics and Supply Chain Management 7 Inventory: impact However, not having inventory also has a cost! • Inventory is the first proxy of customer service • Store A Store B Customer finds better deal, Store A will lose the customer! Item is out of stock, Store A will lose that sale In many industries, a key indicator in global supply chains is the fill rate i.e., the percentage of the demand satisfied with on-hand inventory TRA4721– Global Logistics and Supply Chain Management 8 Inventory: challenges • So, how much inventory is needed? § Efficiency: making decisions that help minimize costs § Effectiveness: providing good customer service § In push supply chains: a lever of efficiency in order to decrease the execution cost of production/logistic activities and/or smooth demand variability (production, purchasing, transportation, …) § In pull supply chains: a lever of Effectiveness, in order to better satisfy the customer needs (e.g. to achieve the target service level even though the environment is uncertain) TRA4721– Global Logistics and Supply Chain Management 9 Types of inventory management systems TRA4721– Global Logistics and Supply Chain Management Where is inventory in the supply chain? Stock in plants and warehouses Stock in transit Cross docking stock (temporary) TRA4721– Global Logistics and Supply Chain Management 11 Classification of inventory management systems • From a managerial perspective… § Materials requirements planning § Distribution requirements planning We are not talking about the specific techniques – MRP and DRP – that Enterprise Resource Planning systems (ERP) use to automatically plan materials and finished goods! TRA4721– Global Logistics and Supply Chain Management 12 Materials requirements planning Tire demand Car demand mean mean X 400 X 100 TRA4721– Global Logistics and Supply Chain Management 13 Materials requirements planning • Focus on assembly, components, and raw materials BBQ Bacon Cheeseburger Finished product Assembly A C1 RM1 Assembly B C2 C3 RM2 C4 Assembly C C5 RM3 C6 RM4 DESCRIPTION Bun Hamburger patty Cheddar cheese Bacon BBQ onions Hickory BBQ sauce Burger set Lettuce Tomato Red onion Pickle French fries Seasoned salt 11-inch plate HRC flag TRA4721– Global Logistics and Supply Chain Management QTY 1 8 oz. 2 slices 2 strips 1/2 cup 1 oz. 1 leaf 1 slice 4 rings 1 slice 5 oz. 1 tsp. 1 1 14 Distribution requirements planning • Focus on finished products in the distribution network X 50 X 50 in four weeks X 50 X 50, in four weeks TRA4721– Global Logistics and Supply Chain Management 15 Distribution requirements planning • Focus on finished products in the distribution network Store A Local warehouse 1 Central Warehouse Store B Store C Area 1 Store A Local warehouse 1 Store B Store C Area 2 TRA4721– Global Logistics and Supply Chain Management 16 Distribution requirements planning • Three key questions: 1. When inventory will be needed? 2. How much inventory will be needed? 3. How much holding this inventory will cost? TRA4721– Global Logistics and Supply Chain Management 17 Global Logistics Module 3|Inventory management The role and impact of inventory in global supply chains
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