Logistics and Supply Chain Management (Логистика и управление цепями поставок). Учебное пособие

1. Read the following international words. Define their meanings comparing them to the meanings of the corresponding Russian words:

activity, business, company, characteristic, design, diversification, effective, information, material, motivation, process, strategy, transport, system, typical, variability.

3. Translate English words and phrases in column A using Russian words and phrases from column B:

Management wisdom between 1950s – 1980s was to own the whole supply­chain.

Reasons for vertical integration were the need for control (cost, assurance

of delivery, quality) within the chain and possibility of diversification of business activities. There was a commonly believe that “the bigger we are, the better we are” – bigger on the balance sheet “Asset”1. Nowadays this strategy is changing. Western firms began to understand how Japanese companies manage buyers-suppliers relationship. “Nowhere has the contrast between Western and Japanese manufacturing been more evident than in materials – or inventory – management.” Inventory management has become the indication of world class practices. It is a key parameter to assess the capabilities of management. The role of inventory management is supplying goods to its customers, when suitable products are available at an acceptable price within reasonable timescale.

Objectives for inventory control are customer service, inventory cost and operating cost. The most profitable policy is not to optimize one of these at the expense of the others. Managing inventory: the purpose of controlling the inventory is to drive the stocks toward their proper level which is determined by the characteristics of supply and demand patterns. The major factors are supply lead time, average demand rate, variability of demand, supply frequency, customer delivery time allowed. There are also practical considerations such as: reliability of the supplier, criticality of the item, availability of item from other sources. Just in Time Management: The Just-In-Time (JIT) inventory system is having the right goods/products, at the right time, at the right place, and in the exact amount without the safety net of excessive inventory. It overcomes the need for storing large volumes of stock ‘Just-In-Case’ they are needed. It requires setting up a contract with a logistics provider (JIT company) to store and deliver equipment as and when needed. JIT is the logical aim of tight inventory control, effective process planning and plant design, workforce motivation, cost reduction; logistics and even material require planning. JIT works as pull system whereas conventional stock control and material require planning (MRP) are essentially push system. Move to a true JIT requires changing of attitude: “We are doing alright, don’t risk it” has to be replaced “What we need to do and how do we make it happen?” The advantages of JIT are inventory investment, “supply to order” instead of “provision for stock”, less slow moving stock, better flexibility, simplified administration, waste elimination. Three main factors that determine safety stock are variability of demand, reliability of supply, and dependability of transport. One of the means through which JIT can be achieved is Kanban system (Kanban means “card” in Japanese). It is a concept related to lean and just-in-time (JIT) production. It is an information tool developed initially by the engineer Taiichi Ohno at Toyota. The Kanban is a card (or label) fastened to a specific item being manufactured (finished or semi finished product) that tells a workstation the quantity to be delivered to the workstation located just downstream. It is a scheduling system that tells you what to produce, when to produce it, and how much to produce.

6. Give English equivalents for the words and phrases given below:

The practical considerations of managing inventory are ……………..13 of the supplier, criticality of the item, ……………14 of item from other sources.

4. How has the way of thinking on inventory management

8. Why is it necessary to hold the levels of inventories? Name the

reasons for it.

15. How can you describe Just-In-Time principle?

18. What kind of attitude from the part of the firm management is

necessary in order to implement JIT system?

1. Канбан – система организации производства и снабжения,

2. Оперативное управление материальными запасами исходит

5. Основные причины поддержания уровня материальных запасов – это преимущество покупки товаров по сниженным ценам,

выполнение полных загрузок, сокращение транспортных расходов, страхование несчастных случаев.

All employees should/must drive the stocks toward their proper level

If you want a tight inventory control, effective process planning and plant design, workforce motivation and cost reduction you must/should implement Just-In-Time Management.

The manager told his assistant “You should/must learn how to use Kanban system”.

We agree with our partners that we have to/should control the supply chain and diversify business activities.

When striving for safety stock, you should/must keep in mind variability of demand, reliability of supply and dependability of transport.

B. The importance of inventory management.

D. Just in Time Stock replenishment.

E. Kanban system.

We should sell out as soon as possible. So, the next thing to do is…

Why don’t we sell out? What we’ve got to do now is… I am worried about the store’s location. I totally disagree. I’m not sure about that. The solution, then, is to keep the store going.

1. Read the following international words. Define their meanings comparing them to the meanings of the corresponding Russian words:

4) shipper (consignor)

4. Observe the words and phrases from the text “Variables Affecting Choice of Supplier, Shipment Size and Mode in Freight Transportation”:

The freight transport industry is complex and intermodal as more than one mode may be used to transport a good during its origin-destination journey. Goods are shipped under a single contract, but transportation is performed by several different modes of transport. Land or "ground" shipping can be by train or by truck. Railroads: Since olden times, railroads have handled the largest number of ton-miles. Railways dominated the intercity1 freight tonnage till World War II and in some cases of Europe, Asia and Africa they even connected the

countries. This early superiority enabled railways to transport large shipments very economically. Trucking: There are three types of carriers: parcel, full truckload (FTL), and less-than-truckload (LTL). FTL carriers typically carry fully or partially-loaded containers from a shipper to a single destination. LTL carriers collect freight from different shippers, consolidating the goods into containers for line-haul to a terminal. The freight may be further sorted or consolidated at the terminal for continued hauling. Shipment of freight directly from the shipper to the destination is known as a door to door shipment. In comparison to railroads, motor carriers have relatively small fixed investments in terminal facilities and operate on publicly maintained highways. Motor carriers are best suited to handle small shipments moving short distances. Water transport: The main advantage of water transportation is the capacity to move extremely large shipments. Water transport employs 2 types of vessels, deep-water vessels, which are generally designed for oceans and seas and diesel-towed barges, which generally operate on rivers and canals, have considerably more flexibility. Water transport ranks between rail and motor carrier in the fixed cost aspect. The main disadvantage of water transport is the limited range of operation and speed. The capability to carry very high cargo at an extremely low variable cost places this mode of transport in demand when low freight rates are desired and speed of transit is a secondary consideration. Air transport: Its major advantage being its speed, which is accompanied by high costs. A coast-to-coast shipment via air requires only a few hours contrast to days taken by other means of transportation. In air and sea shipments, ground transportation is often still required to take the product from its origin to the airport or seaport and then to its destination. Vans and trucks make deliveries to sea ports and air ports where freight is moved in bulk. Thus, truck plus rail, truck plus water, and rail plus water are common multimodal combinations. In case of multimodal transportation the carrier does not possess all the means of transport in practice; the carriage is often performed by sub-carriers. The factors influencing a shipper's choice of transport mode are complex and highly interdependent. They involve tradeoffs between the cost of transportation and overall transit time and delivery reliability. Thus, the shipper is typically the receiver's "agent" in the process and it is his wishes that are honored in the size of shipment and the choice of mode.