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KEYS

I. Key things in Logistics.

Reading

1. Match the words or phrases on the left with the definitions on the right.

1 – l, 2 – d, 3 – a, 4 – m, 5 – b, 6 – c, 7 – e, 8 – n, 9 – h, 10 – p, 11 – q, 12 – f, 13 – g, 14 – I, 15 – j, 16 – o, 17 – r, 18 – k.

4. Find the words in the text meaning the following:

To move – to treanfer; division (into) – decoupling; costly – expensive; to overcome – to bridge; transport breakage – vehicle breakdown; jam, obstruction – lane congestion; dim, indistinct - blurred; equally, medium; together/along with – on a par with; alternative – tradeoffs.

3. Define whether the sentences are True or False.

1. F, 2. T, 3. F, 4. F, 5. T, 6. F, 7. T.

5. Here is the text about different distribution strategies. Fill in the gaps while reading it.

1) direct shipment, 2) warehousing, 3) cross-docking, 4) to bypass, 5) advantages, 6) lead times, 7) disadvantages, 8) to be negated, 9) transportation costs, 10) fully loaded trucks, 11) to mandate, 12) to be reluctant, 13) to be prevalent, 14) warehouse capacity, 15) to estimate, 16) the inventory turnover ratio, 17) to calculate, 18) storage space, 19) to multiply, 20) by a factor, 21) average inventory level, 22) components, 23) handling costs, 24) fixed costs, 25) storage costs, 26) cost values, 27) significantly, 28) decision-support system, 29) annual flow, 30)to peak inventory

6. Continue reading the text about distribution systems and fill in the gaps with missing prepositions.

In , at, from, to, in, at, by, with , within, for, of, for, up, at , at, in.

Watching the video

2. Watch the video again and fill in the gaps with the missing words given above.

1.to keep an eye on, 2. glitches, 3. stock outs, 4. key performance indicators, 5. to gain a competitive advantage, 6. buzz words, 7. to provide the right product, 8. service requirements, 9. exponentially, 10. in terms of, 11. emergency deliveries, 12. free delivery, 13. geographic location, 14. inbound costs, 15. stock keeping

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units, 16. with a negative margin, 17. average cost per order, 18. revenue side, 19. cost side of the equation, 20. end-to-end, 21. customer behaviors.

II. Logistics process

Reading

Text 1.

5.Define whether the sentences are True or False.

1.F, 2. F, 3. F, 4. F, 5. F, 6. T, 7. F, 8. F, 9. T, 10. T.

Text 2.

1.Match the words or phrases on the left with the definitions on the right.

1– aa, 2 – n, 3 – v, 4 – a, 5 – hh, 6 – m, 7 – d, 8 – t, 9 – x, 10 – z , 11 – ee, 12 – ii,

13– ff, 14 – r, 15 – bb, 16 – b, 17 – o, 18 – c, 19 – e, 20 – h, 21 – g, 22 – f, 23 – k,

24– cc, 25 – dd, 26 – j, 27 – l, 28 – i, 29 –gg, 30 – y, 31 – q, 32 – w, 33 – p, 34 – s,

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2.Give opposites to the following words from the text:

Sufficient – insufficient, ability – inability, availability – unavailability, dependent

– independent, advantage – disadvantage, possible – impossible, effective – ineffective, suitable – unsuitable, understand – misunderstand, appropriate – inappropriate.

3.Define whether the sentences are True or False.

1.F, 2. F, 3. F, 4. T, 5. F, 6. T, 7. F, 8. F, 9. T, 10. T.

6.Fill in the gaps with missing prepositions.

1. in, with, 2. to, 3. out of , 4. of , 5. on, 6. to, 7. with, 8. off, in, up, to, 9. of, with, in, 10. in, of, in, for, 11. out, of, 12. in, under, 13. of, of , of, in, 14. around, of, of , 15. on, 16. out, through, in,

III.Logistics network planning

Reading

1. Match the words or phrases on the left with the definitions on the right.

1 – f, 2 – p, 3 – e, 4 – j, 5 – h, 6 – k, 7 – m, 8 – i, 9 – c, 10 – d, 11 – a, 12 0 g, 13 – q, 14 – b, 15 – l, 16 – o

2. Find the words in the text meaning the following:

To be aware of – to be informed about; paramount – prime, supreme; assessment – estimation, evaluation; to vary – to alter, to differ; relevant – applicable; to fluctuate

– to go up and down; option – an alternative, a choice; to evolve – to develop; impetus – impulsion, push; network – channels

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5. Fill in the gaps with missing prepositions.

6. Chose the correct alternatives to complete the text below.

1) planning, 2) to derive, 3) quantitative, 4) to define, 5) location, 6) facilities, 7) sourcing, 8) relationships, 9) flows, 10) origin, 11) destination, 12) throughputs, 13) options, 14) relevant, 15) compromises, 16) collection, 17) link, 18) inputs, 19) to carry out, 20) models, 21) inventory, 22) routeing, 23) evaluating

7. Complete the following passage with the correct form of the words below.

1) external factors, 2) transport mode, 3) unit load technology, 4) internal factors, 5) qualitative, 6) quantitative, 7) operational, 8) modelling process, 9) a major element, 10) flows and costs, 11) resultant model, 12) time-consuming process, 13) underpin, 14) data collection process, 15) key areas, 16) logistics operation, 17) descriptive measures, 18) standard, 19) be categorized into, 20) demand for, 21) product life cycles, 22) descriptive data, 23) quantitative data, 24) numerical tables, 25) software packages, 26) modelling exercise, 27) variables, 28) data, 29) to suffice, 30) per annum, 31) collection, 32) logistics network, 33) logistics structure, 34) a value added.

8. Match logistics models (A-E) with the texts (1-5). Retell the texts and reveal the main ideas of the logistics models.

1 – E, 2 – A, 3 – D, 4 – B, 5 – C

Watching the video

2. Watch the video again and fill in the gaps with the missing words given above.

1) transport providers, 2)check list, 3) basis of the quote, 4) full vehicle load, 5) a standard semi-trailer, 6) B-double, 7) 20 foot container, 8) 40 foot high cube containers, 9) delivery spots, 10) trunking routes, 11) finger docks, 12) fuel surcharge, 13) modes of transport, 14) lead times.

IV. Channels of distribution.

1. Match the words or phrases on the left with the definitions on the right.

1 – r, 2 – m, 3 – f, 4 – I, 5 – j, 6 – s, 7 – c, 8 – b, 9 – h, 10 – d, 11 – n, 12 – k, 13 – q, 14 – p, 15 – a, 16 – o, 17 – g, 18 – l, 19 – e

4. Find the words in the text meaning the following:

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Point of sale – outlay; agent, dealer– broker; to improve – to enhance; considerably, evidently – markedly; to change, to diversify – to alter; knowledge, proficiency – expertise; lawmaking – legislation; accepted, common – conventional; limits - constraints; display – demonstration

5. Fill in the gaps with missing prepositions.

1. with, of, 2. of, of, within, 3. in, to, down, into, on, 4. on, of, by, in, from, 5. around, of, from, 6. to, in, between, 7. by, to, by, 8. in, through, for.

6. Complete the following passage with the correct form of the words below.

1) own-account, 2) alternative, 3) 3PL, 4) distribution, 5) a third-party company, 6) basis, 7) transport fleets, 8) confined, 9) common, 10) similar to, 11) characteristics, 12) delivered, 13) shared user, 14) distribution costs, 15) storage, 16) tailored, 17) number, 18) geographic, 19) previous, 20) relates, 21) trunking, 22) operator, 23) break-bulk, 24) stocks, 25) venture, 26) underutilized, 27) link, 28) multiuser, 29) context, 30) occasional, 31) cover, 32) peripheral.

V.Warehouse management

1.Match the words or phrases on the left with the definitions on the right.

1 – l, 2 – m, 3 – o, 4 – k, 5 – n, 6 – d, 7 – h, 8 – j, 9 – g, 10 – i, 11 – e, 12 – a, 13 – b, 14 – f, 15 – c

2.Find the words in the text meaning the following:

Consumables – nondurable goods, to track – to follow, to replenish – to refill, parameter – criterion, hazardous – dangerous, code – cipher, facilities – equipment, means, benefit – advantage, subsidiary – assistant, supplemental, application - function

5. Fill in the gaps with missing prepositions.

off, for, 9. of, through, on, 10. for, with, with.

Video scripts.

Unit 1: Supply chain: 3 key things.

For those who don’t know much about supply chain or logistics management, I would like to highlight 3 key areas to keep an eye on. I often call these my 3 things a CEO needs to know about supply chain. But first, let’s understand why a company supply chain is so important. A recent study focused on identifying the impact of supply chain glitches on over 800 companies over a 9-year period. These

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were things like shipping delays, production delays, stock outs and the like. The average fall in share hold values was 8% or $190 mln.

How could that happen you might well ask? Well, sadly within many businesses the key performance indicators being used often don’t tell the whole story. So, let’s move on to the 3 things. These are:

1.Is our supply chain efficient?

2.What does our supply chain really cost our business?

3.Where can we improve our supply chain to gain a competitive advantage and improve the bottom line?

Simple questions I know but many businesses don’t know the answer, so be prepared to ask them or may be it’s you who need to have the answers ready.

So question 1: Is you supply chain efficient? Many people think they might need more buzz words such as lean, agile, CRM, CPFR, collaboration, more IT systems, and sure these may be needed but a lot can be achieved by getting the right people focused on the right processes. Quite simply your supply chain needs to provide the right product at the right service at the right cost. Quality is a given. You really need to understand your customer service needs are not all the same. Most companies over service some customers and underservice others, so your customer service requirements need to be identified and measured. We also need to make sure that the customer service offer is realistic, because as we all know in most businesses once the customer service performance reaches 90% or 95%, service cost increases exponentially. So, getting customer service right is really about understanding your different customer needs, the needs of your products and services in terms of how they’re delivered and the underlined cost drivers.

If you hear some of these types of comments in your business, get worried.

These are real examples. All customers get 2 deliveries per day. Why? I’m sure they don’t all need it or want it. We deliver to the North on Monday, the West on Tuesday, the South on Wednesday, the East on Thursday and on Friday we do emergency deliveries. Just don’t have an emergency on Monday, that’s all I’d say.

Only accounts that spend over $1000 per annum get free delivery. But if anyone complains about poor service, we give them free delivery.

Ok, question 2. What does our supply chain cost? You probably know highlevel numbers but you could be losing money on certain mixes of customer product and geographic location. Or certain processes may have much higher than expected

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cost. Costs can be measured in terms of supply chain cost as a percentage of sales or cost per order, per pallet or carton. And costs need to be visible as total supply chain costs, inbound costs and storage costs.

As an example, I have a customer, who is a distributor. They have 10000 stock keeping units and lots of small orders. They found 30% of their orders leave the warehouse with a negative margin. That’s just taking sales minus costs and warehouse handling costs. So, some simple questions to ask within your business might be: what’s our cost per pallet, per item, per case or whatever unit you use in terms of total supply chain cost. What’s our storage cost and our delivery cost. What’s our average cost per order and does this vary much by product group or customer group? What are our stock turns?

Lastly, question 3. Where can we improve on supply chain? Let’s look at the revenue side first. Can we improve our delivery in full on time? If our products are not on the shelf, we’ll generally lose a sale. Can we get our products to market faster, perhaps to extend their shelf life? Can we improve our service offer? In terms of the cost side of the equation, procurement and inventory management are big-ticket items. Many companies don’t buy over the total cost of view, particularly now with so much oversea sourcing. They just focus on cheaper unit cost not the end-to-end total supply chain cost. And of course, warehousing and transport costs are an area to focus on.

So, to finish off, I suggest that 3 key things you need to know about your supply chain are:

1.Is our supply chain efficient?

2.What does our supply chain really cost our business?

3.Where can we improve our supply chain to gain competitive advantage and improve the bottom line?

As a start point, try asking some of these questions around your business. How do our products influence how we buy, manage and deliver them? How do our customers differ in their service needs? What do our customers really value that our supply chain can influence? And lastly, what customer behaviors can we influence to improve our supply chain costs and asset utilization. So, I hope that gives you a few ideas on where to look to improve your supply chain.

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Unit 2 Benchmarking

D.How can an individual company range beyond general statistics to understand its true supply chain performance and drive continual improvement? The concept of benchmarking entails the study not only of performance numbers but also the processes of what drive those numbers. The opportunity is to study how other companies, competitors and non-competitors, perform a given process, then trialing, adapting, and improving that performance in one’s own organization.

C.The BMS approach is to understand the elements that drive both service and cost. Our approach is to identify the service delivered across the supply chain and the cost incurred to deliver that service. Then we develop the view of how the links between the management enablers like KPI’s and supply chain plans and relationships influence the outputs of cost and service.

E.In practice, benchmarking involves a comparison of numbers. With a database of over 800 supply chains, companies can see their performance ranks against recognized best practice for similar businesses. The opportunities for improvement are dependent on gaining an understanding of the supply chain processes that drive the outcomes that were articulated through the number comparison activity.

B.Fortescue Consumer Product’s national distribution manager Neil Rogerson, a longtime client of BMS, the driver to use benchmarking was a desire to understand the performance level of other organizations. In his words you might think that you are doing right things internally, but an external view it is essential to improve continuously.

F.Benchmarking allowed us to get beyond or get out to a wider world, to get beyond our own boundaries to look for opportunities. BMS sees companies adopting benchmarking for the long haul achieved the most benefit. In one example

distribution costs per unit have not gone up in 12 years despite a CPI rise of 40% and a transport index rise of 35%.

A. Understanding the processes that drive cost provides the insight for improvement. If you are not benchmarking regularly, you don’t know what the potential for improvement and your progression towards targets set actually is relative to other businesses in your supply chains sector or industry type.

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Unit 3. Transportation tips.

Movement of goods through the supply chain to the end consumer relies on transport. While the mode may vary, sea, costal or river barge, rail or road, the reliance on fuel remains.

Between January 2005 and August 2008 the fuel surcharge applied to transport charges in Australia increased by 350%. Similar increases during this time impacted air, sea and road transport internationally. This drove significant additional cost back through businesses and focused attention on understanding cost drivers.

In the Australian market new legislation demanded separate attention. Heavyvehicle driver fatigue reform was implemented on the 29th of September 2008. This is additional to chain of responsibility legislation. Consignors and consignees have a legal responsibility under this legislation. Any transport contracts or demands placed on supply chain partners can’t be contrary to these laws. Laws legislation is beyond our control. We need to understand our responsibility and the impact on transport costs. Losses can be complicated and detailed. There are some basics that you can manage and control.

In understanding your transport needs you must know your freight profile to control the costs. What is your outbound transport cost as a percentage of sales? What is your transport cost per order? Do you see it at a disadvantage or advantage to your peers in the same industry sector or supply chain type.

These all seem rather daunting questions. However the simplest place to start is knowing your freight volume, its seasonality or paid demand times and any special requirements. Special requirements can include car loading constraints, temperature control, hazardous inflammable goods, just to name a few. Potential transport providers will need to know these details to provide you with valid cost of service information. The appearance of lowest transport cost can be achieved by dividing the businesses among multiple regional specialists. Taking a cherry picking approach but beware the chase for cheapest cost by route when it comes at the expensive of service.

Increasing the number of transport providers, increases the number of contracts within your business from operations, warehouses and dispatch right through to the accounts. In reviewing transport needs for our customers we use a 30 point check list.

Some tips for you from this check list are:

1.Understand the basis of the quote. Has the transport provider quoted in cubic meters, kilograms, pallets or spaces, they’re all different. Where a full vehicle

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load stated is this for 22 spaces which is a standard semi-trailer or is there for the further rate for 34 spaces which would be a B-double? A B-double is a regular semitrailer with an additional trailer. It takes a vehicle length from 19.5 meters to 25 meters. When shipping containers are utilized, does the full container rate apply to a simple 20 foot container? Have you been provided with rates for 40 foot containers or for 40 foot high cube containers? These should be clearly explained on your quote. Your perspective service partners should be prepared to discuss and confirm this with you.

2.Tip 2. Avoid nasty surprises by knowing difficult delivery spots. Some of your key customers may be outside of metropolitan delivery areas. They may also be off the regular line haul or trunking routes, requiring stock to effectively double back on itself. Some facilities schedule and inspect deliveries 24 hours 7 days a week. Facility design elements, for example, finger docks, dock levelers or the reverse extreme where there are no docks or ramps at all can constrain the type of equipment that can be used to complete your deliveries. All of those factors can obviously impact cost.

3.Tip 3. Understand the fuel surcharge. Note that it will differ between carriers and modes of transport. Ask for documentation supporting the basis of calculation and ask how frequently the fuel surcharge will be reviewed and revised.

4.Tip 4. Look for alternatives in transport. Where you are using road transport, will delivery lead times allow the use of rail? Are there customer groups where delivery lead times can be renegotiated and cheaper modes of transport utilized? Environmental concerns and escalating fuel costs are focusing attention on transport needs. Understanding your freight profile and the options available will allow you to drive improvement without jeopardizing service to your customers.

Unit 4. Global sourcing

Part 1.

I am Jonathan Zhang, a Senior Consultant with the Logistics Bureau. Nobody could ignore the role that global sourcing plays in today’s procurement world. Despite the global economic slowdown, and huge cost gap between the developed countries and low cost countries we ensure continuous growth in sourcing from regions such as China,

Mexico, South East Asia and Eastern Europe. No matter if you’re a local manufacturer, a wholesaler, or a retailer, I am sure that you would agree with me that managing an efficient global sourcing network and process can be a serious challenge. It can have a

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huge impact on the total value of your delivering to shareholders. Today, we’re going to have a look at 2 business cases.

Case 1: Just imagine your company currently manufacturing consumer durable products locally and facing severe competition from cheap imports. You might want to get yourself immunized by sources offshore directly so you can maintain a relatively low product cost. Be prepared, it’s not only about getting the product imported from low cost countries. It is all about managing your total cost of the supply chain right from suppliers to DCs and to your customers. We would remind you that the longer your total supply chain is, the more prepared you need to be to face the cultural, organizational and operational challenges. Here are just some key questions what we should ask ourselves.

1.What is your organization’s long-term business strategy?

2.What is the broad commercial and supply chain implication of shutting down local operations and starting up offshore sourcing or offshore manufacturing?

3.Is your demand flow mechanism robust enough?

4.Does your planning and purchasing team have the experience required to manage an overseas supply base?

5.Do you have a competent support team on the ground to resolve supply issues?

6.Is your functional purchasing closely aligned with your strategic procurement objectives?

7.Have you established a clear business process to ensure effective coordination

across demand planning, purchasing, engineering, global inventory management and international logistics, just to name a few.

Let’s have a look at Case 2. Let’s say you are a sizable wholesaler in the local market and you’ve been sourcing via your agency network for quite a while. Now the Board of your company have decided to embark on direct sourcing to make your cost of goods sold much lower to increase the share of your profitable business.

1.Is your company ready to control direct sourcing from the origin?

2.What are the challenges of managing an overseas sourcing center?

3.What impact will the extra 30 days plus lead time give to your total supply chain in terms of customer service and your inventory holdings at various stocking points?

4.How do you design a regional or global sourcing network that struck the right balance between supply chain cost and supply chain reliability?

5.How do you manage supply chain collaboration across wide geographical and time span?