4892

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the warehouse. It is typically proportional to warehouse size (capacity) but in a nonlinear way.

3. 25_________. These represent inventory holding costs, which are proportional to average positive inventory levels.

Thus, estimating the warehouse handling costs is fairly easy, whereas estimating the other two 26) ________is quite difficult. To see this difference, suppose that during the entire year 1000 units of product are required by a particular customer. These 1000 units are not required to flow through the warehouse at the same time, so the average inventory level likely will be 27) _________lower than 1000 units. Thus, when constructing the data for the DSS (28) ________), we need to convert these annual flows into actual inventory amounts over time. Similarly, 29) ________ and average inventory associated with this product tell us nothing about how much space is needed for the product in the warehouse. This is true because the amount of space that the warehouse needs is proportional 30)_______ , not annual flow or average inventory.

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

Cross-docking is a strategy that Wal-Mart made famous. In this system, warehouses function as inventory coordination points rather than as inventory storage points. ___ typical cross-docking systems, goods arrive ___warehouses ____the manufacturer, are transferred ___vehicles serving the retailers, and are delivered to the retailers as rapidly as possible. Goods spend very little time___ storage ____ the warehouse—often less than 12 hours. This system limits inventory costs and decreases lead times____ decreasing storage time.

Of course, cross-docking systems require a significant start-up investment and

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information.

4. Cross-docking strategies are effective only ____ large distribution systems in which a large number of vehicles are delivering and picking

____ goods ____ the cross-dock facilities ____ any one time. In such systems, there is enough volume every day to allow shipments of fully loaded trucks from the suppliers to the warehouses. Since these systems typically include many retailers, demand is sufficient such that items that arrive at the cross-docking facilities can be delivered immediately to the retail outlets ____ full truckload quantities.

7.Translate the following from Russian into English.

1.Под интермодальной перевозкой понимается система доставки грузов несколькими видами транспорта по единому перевозочному документу с их перегрузкой в пунктах перевалки с одного вида транспорта на другой без участия грузовладельца.

2.Комбинированная перевозка – смешанная перевозка, выполняемая без перегрузки груза. В этом случае груз перевозится на всём пути следования в одном и том же контейнере, съемном кузове.

3.Мультимодальная (трансмодальная) перевозка – это перевозка, при которой лицо, организующее её, несёт ответственность на всём пути следования, независимо от количества принимающих участие видов транспорта при оформлении единого перевозочного документа.

4.Кросс-докинг – это логистическая операция внутри цепочки поставок, при которой отгрузка товара на склад и его последующая доставка получателю согласованы по времени таким образом, чтобы исключить хранение товара на складе. В результате партия продукции доставляется от поставщика (производителя) продавцу за максимально короткий срок. В обычном понимании – это услуга по «перетарке», перегрузке товара из большетонных машин в менее тоннажные с минимальным хранением на складе или вообще без него, причём услуги экспедирования и доставки обычно тоже включены. Операция «кросс-докинг» в зависимости от требований и пожеланий заказчика может включать комплектование, переупаковку и маркировку груза. Кроме того, компании, предлагающие «кросс-докинг», предоставляют услуги «индивидуального хранения», «складского хранения» и любых других предложений, по логистике, сервису и складу.

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8. Read the case and answer the questions.

In 1979, Kmart was one of the leading companies in the retail industry, with 1891 stores and average revenues per store of $7.25 million. At that time, Wal-Mart was a small niche retailer in the South with only 229 stores and average revenues about half those of Kmart stores. In 10 years, Wal-Mart had transformed itself; in 1992 it had the highest sales per square foot and the highest inventory turnover and operating profit of any discount retailer. Today Wal-Mart is the largest and highest-profit retailer in the world. In fact, sales for year ending Jan. 2003 were $244.5 billion, and it is also the largest employer in the US. How did Wal-Mart do it? The starting point was a relentless focus on satisfying customer needs; Wal-Mart's goal was simply to provide customers with access to goods when and where they want them and to develop cost structures that enable competitive pricing. The key to achieving this goal was to make the way the company replenishes inventory the centerpiece of its strategy. This was done by using a logistics technique known as cross-docking. In this strategy, goods are continuously delivered to Wal-Mart's warehouses, from where they are dispatched to stores without ever sitting in inventory. This strategy reduced Wal-Mart's cost of sales significantly and made it possible to offer everyday low prices to their customers.

1.How did Wall Mart transform itself?

2.If the cross-docking strategy works so well for Wal-Mart, shouldn't all companies use the same strategy?

II.Watch the video “Supply chain: 3 key things” and do exercises. Words to remember:

agile – быстрый, подвижный, динамичный

big-ticket item – товар с очень высокой стартовой ценой buzz word – модное словцо; у всех на слуху

CPFR (Collaborative Planning, Forecasting and Replenishment) –

совместное планирование, прогнозирование и пополнение запасов

CRM (Customer Relationship Management) – управление взаимодействием с клиентами

emergency delivery – срочная доставка

equation – уравненовешенность, сбалансированность

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exponentially – в геометрической прогрессии glitch – сбой в работе

inbound cost – затраты входящих грузопотоков

KPI (Key Performance Indicators) – ключевые показатели деятельности lean – работающий с минимальными затратами

stock keeping unit – единица учёта запасов; единица складского хранения stock out – «нет в наличии»

utilization – эффективное использование

1.While watching the video, answer the following questions.

1.What are the 3 things a CEO needs to know about logistics management?

2.What do you need to understand about your customer service needs?

3.What could you be losing money on?

4.What cost do many companies focus on?

5.What other questions may give you a few ideas on where to look to improve your supply chain?

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

For those who don’t know much about supply chain or logistics management, I would like to highlight 3 key areas 1) __________ . 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 2) _______ on over 800 companies over a 9-year period. These were things like shipping delays, production delays, 3) ________ 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 4) __________ 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?

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

3.Where can we improve our supply chain 5)_________ 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 6) _________ 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

7)_________ 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

8)________ 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

9)________. So, getting customer service right is really about understanding your different customer needs, the needs of your products and services 10) _________

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 11)

_________. 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 12) ________.

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 13) ________. Or certain processes may have much higher than expected 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, 14) _________ and storage costs.

As an example, I have a customer, who is a distributor. They have 10000 15)

________ and lots of small orders. They found 30% of their orders leave the warehouse 16) _________. That’s just taking sales minus costs and warehouse

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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

17) ________ 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 18)

_________ 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 19) ________, 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 20)

________ 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 21) __________ 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.

3. Summarize the information represented in the video.

Unit 2. Logistics process.

Words to remember:

Act of acceptance, Certificate of delivery (marine) – Акт приёмки грузов to adopt the requirements – принять требования

advances (technological) (pl) – технические достижения to align – согласовывать

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to ally – поддерживать, соединять assistance – помощь

to base around – базироваться вокруг to benchmark – сравнивать

cargo segregation – сортировка грузов to collate – сопоставлять

competitive edge – конкурентное преимущество

to cover contingencies – покрывать непредвиденные расходы crucial – крайне важный

deconsolidation of transportation units – расформирование грузовых транспортных единиц

demarcation – установление границ disruption – сбой, срыв

(via) depot – (через) склад

feasible – выполнимый, возможный flowchart – блок-схема

flow of cargo – грузопоток

freight handling – переработка грузов guise – облик

imperative – жизненно важный, обязательный inextricably – неразрывно

information processing – обработка информации to invoice – выставлять счёт

list of shipment – комплектация транспортных партий

“make-to-order” manufacturing process – производственный процесс

"производство на заказ" to map out – планировать to measure – измеряться

to meet customer’s needs – соответствовать потребностям клиента to monitor – контролировать

objective – цель obsolescence – устаревание outcome – результат

to overcome the problems – решить (преодолеть) проблемы

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partial delivery – частичная поставка peripheral – (n) переферийное оборудование

(adj) переферийный to pick the order – выбрать заказ

to pinpoint the relationships – точно определять отношения pre-allocated – предварительно распределенный

to ratchet up – углублять to scrap – списать в брак

seamless operation – сквозная работа to span functions – охватить функции

stock keeping units – единицы учёта запасов subsequent disposal – последующее размещение sufficient – достаточный

superfluous – лишний

to take account of smth – принимать что-либо во внимание trade-off – компромисс

to transcribe – расшифровать transshipment – перегрузка, перевалка

I. Read the texts and do exercises. Text 1. Logistics process.

One of the key elements of planning for logistics is concerned with the design of appropriate logistics processes. These processes are the methods used to ensure that the business operates effectively so that all the major objectives are achieved. The aim is for a streamlined operation that works across the various functional boundaries existing within any company. Thus, processes need to be supply-chain-oriented. One of the main problems with logistics processes is that they are very often tied in with a number of different functional elements of the business and so it is difficult for them to operate efficiently. The results of this are usually seen to be either additional costs within the logistics system or lower levels of customer service. In many operations, both of these effects occur.

The reason that the concept of logistics processes has been highlighted in recent years is a development of the move away from the functional view of logistics. Although functional excellence is important, the idea of trade-offs within logistics is now an accepted aspect of sound logistics planning. Some parts of an

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operation may sacrifice their efficiency to the greater good of the operation as a whole. Following on from this, there is the perspective of the supply chain where logistics is viewed not just across internal company functions but also across the broader expanse of different companies. The chief beneficiary of this has been the final customer. The aim of any supply chain is to ensure that cross-company and cross-supply-chain activities are directed at achieving customer satisfaction for the end user.

Unhappily this is not the case within many companies. Processes have generally been derived to enable each separate function within an organization to undertake its particular role, but they are not streamlined to act across all company functions as a united whole. Thus, an effective process should be designed as a seamless operation rather than as a series of different elements. The order fulfillment process provides a good example of a typical logistics process. The aim of order fulfillment should be to ensure that a customer's order is received, checked, selected and delivered according to the customer's requirements, with no disruption and with complete accuracy. The process within many companies does not always work like this!

Typical functional errors might be:

•incorrect transcription of the original order requirements;

•incorrect notification of availability;

•incorrect selection or picking of the order;

•damage to the goods;

•late delivery;

•delivery to an incorrect address;

•invoicing to the incorrect address.

It is usually quite easy to identify problems that occur within individual functions and then put into place control measures to overcome these problems. It can be much more difficult to identify problems that occur between functions. Firstly, there is usually an unclear line of demarcation between functions, which makes it no easy matter to determine that there is a problem, let alone what the problem is.

Secondly, it is very difficult to determine what the cause of the problem is – not least because of the associated 'blame' culture that often exists between functions, so that one will traditionally blame the other regardless of the true issues.

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To avoid problems such as these, some companies now seek to redesign their key logistics processes. There are three essential elements. Properly designed processes should aim specifically to satisfy customer demands and expectations. They should also be cross functional or indeed where possible they should be supply-chain-oriented. For most companies, the aim of achieving cross-functional processes is a big and sufficient challenge. Finally, they should be time-based in that they need to reflect the importance of time as a key element in the logistics offering.

What then are the key logistics processes? These will, as expected, vary between different companies, different sectors and different industries. Typical examples are:

•Order fulfillment is concerned with the ability to turn a customer's specified requirements into an actual delivered order. Thus, it embraces many of the traditional functions usually recognized as being a part of the logistics operation. It involves the information elements of receiving and documenting an order through to the physical means of selecting and delivering the goods. For some 'make-to-order' manufacturing operations, this will also have an impact on the production process itself. Some companies maintain the divide between the ordertaking component (which is information-based) and the order-delivery component (which is both information-based and physical).

•New product introduction is an area where many companies find they have problems. There are many logistics issues related to the introduction of new products into the marketplace. Very often existing, standard logistics structures and processes are insufficient to enable a satisfactory launch of a new product. One of the main problems is the inability to respond sufficiently quickly. Standard processes are designed to deal with known products. The consequence of introducing new products using existing processes is usually one of two possibilities. The first is that the product takes off very quickly and very well and there is insufficient ability in the supply chain to ratchet up supply to the required levels. The alternative is that demand is lower than initially expected and so there is an oversupply of stock, which eventually leads to products being sold off at discount rates or to obsolescence.

•New product development reflects the idea to design the product so that it can reach the market as quickly as possible from the initial design plan through to