• Unit 8: Supply Chain Distribution and Logistics

    This unit covers the analysis of facility layouts, given layout objectives and types. Different requirements for manufacturing and service-industry building layouts are considered. Location decisions include analyzing the link between supply-chain networks and facility locations as part of operations optimization.

    Completing this unit should take you approximately 10 hours.

    • 8.1: Distribution Network Analysis

      Distribution networks are used to get products from the manufacturer to wholesalers and retailers. Since distribution requires large-scale transportation, businesses are constantly striving to optimize delivery. In analyzing their distribution network, a manufacturer will consider customer demand, financial issues such as cash flow, current processes, challenges, geography, and transportation costs among other considerations.

      • 8.1.1: Tiered Suppliers

        Most manufactured goods rely on many different parts from various suppliers. Suppliers are tiered or vertically stratified based on their specialization and expertise. The automotive industry, for example, has a three-tier supply chain consisting of entire-systems manufacturers on top as first tier, components builders in the second tier, and individual parts suppliers in the third tier.

      • 8.1.2: Subassembly Suppliers

        Manufacturers sometimes outsource sub-assembled parts or pieces to increase the speed of their production capabilities. These suppliers are contracted third parties who are usually specialists in their particular field. Some initial benefits can include reduced delivery times, quality assurance, and a decrease in overall production costs.

      • 8.1.3: Supplier Relations

        Relationships are the key to success in any business. Managing supplier relations is a long-term commitment to promote collaboration and maintain a stable supply chain in the future. Consequently, the customer ultimately wins when manufacturers and suppliers have great relations.

      • 8.1.4: Reverse Supply Chain

        The traditional business process moves goods and services to the customer. However, a reverse supply chain is when goods move from the customer back to a vendor. This is so for various reasons, from product reacquisition, reinspection, assessment of product quality, and refurbishing.

    • 8.2: Network Design

      As part of making a product, manufacturers must establish a network of suppliers, transporters, and contractors. Strategically designing its network will afford a business an opportunity to establish a system that will best meet customer demand. Obviously, minimizing costs is of utmost importance, however, as firms grow the emergence of labor security, maintenance of fixed costs within the network, and managing quality may also become top priorities.

      • 8.2.1: Number and Location of Distribution Centers

        How many centers a supply chain has will make an impact on the supply chain network. In addition, where the distribution center is placed will also affect the supply chain and logistical transportation systems. A well-designed plan can potentially reduce costs associated with material handling and may increase labor productivity and operational profits.

      • 8.2.2: Global Location Center Decisions

        Manufacturers with global reach have to make important decisions on where to establish a physical presence. This decision is strategic because of the complexities involved with operations, including logistical, environmental, political, geographical, and even local incentives. Since these long-term decisions affect profitability, the result must maximize overall connectivity with others in a firm's supply chain.

      • 8.2.3: Allocating Product to Distribution Centers

        A distribution center is the core of a supply chain network infrastructure. Assigning production and inventory storage to a specific plant means it must be in close proximity to distribution centers to minimize transit times. Deciding the best sites for stock and distribution will determine the business' flexibility and can result in significant cost savings.

      • 8.2.4: Vehicle Routing Models

        Vehicle routing is an important problem in transportation, distribution, and logistics. This component of the supply chain is the critical link between suppliers, manufacturers, wholesalers, retailers, and customers. The travel time, service time, and vehicle availability are of significant concern.

    • 8.3: 1PL, 2PL, 3PL, 4PL, and 5PL Logistics

      PL refers to Party Logistics, and the number refers to a business or individual within service integration. 1PL are manufacturers and retailers who handle their cargo without an intermediary, whereas a 2PL is used for international transportation of wholesale goods for trade. The 3PL is a third-party business that mainly does transportation and delivery of products but may also provide warehousing, management, and customs services. A fairly new concept is the 4PL which is the management of an entire company's supply chain, with a 5PL aggregating demands of other 3PL for bulk transport freight.

    • 8.4: Domestic and Global Logistics

      Modern worldwide supply chains and manufacturing mean a business must operate domestically and globally. A well-functioning domestic and global logistics operation considers customs, infrastructure, shipping arrangements, quality of services, time efficiency, and tracking ability. The reliability of a supply chain to deliver goods on time to a customer requires sound logistical performance.

    • 8.5: Green and Reverse Logistics

      Today customers consume products in a linear fashion. Meaning when a product is purchased it is used and then disposed of for a new or different model. Green logistics serves to recirculate goods back to a business so they can be remanufactured or refurbished for a new customer base.

    • 8.6: Service Response Logistics

      The overall goal of a supply chain is to create a satisfied customer by ensuring the entire process delivers quality goods on time. However, when inefficiencies become apparent in the logistics system, managers must respond so delays are minimized. Despite all the complexities in logistics and transportation, the responsiveness to changes in the system will ensure services are not disrupted.

    • Study Guide: Unit 8

      We recommend reviewing this Study Guide before taking the Unit 8 Assessment.

    • Unit 8 Assessment

      • Receive a grade