LOG 408: Global Logistics Management

Lecture 10: Cases on Supply Chain Operation

• The significance of inventory as well as inventory cost control in logistics and SCM

• Some inventory control systems designed to reduce costs and inventory reduction strategies including just-in-time inventory management

• Role of warehousing in contemporary global supply chains.• Compare cross docking with traditional warehouse operations in

managing goods flows• Material movements and handling processes within warehouses and

distribution centers – Two pairs of balance (efficiency versus flexibility; storage versus

picking)

Key Points of Lessons in Last Week

10-2

Case Presentation 4: Gate Gourmet (1)

Overview:– Gate Gourmet serves food for aviation industry– Its food supply chain is basically a pull system (make to order),

start to prepare a meal only after order confirmed. •Q1:

– Uncertainty in the specification of meals• Transmission of food and non-food schedules between GG

and its suppliers for each aircraft service (rescheduling flight is common)

• GG has to work closely with its customers for delivery efficiency

• Need to keep excess capacity for random arrivals

10-3

Case Presentation 4: Gate Gourmet (2)

• Q1 (Cont.): – Its investment should focus on SC visibility and greater

collaboration among customers, the firm, and suppliers• Q2: – Advanced IT system to ensure full real-time visibility of

demands and supplies – Short setup time for cooking and flexible procedures– Low variety of items being produced– Reliable vendors and good communications– Two distinct kitchen processes, one for mass production

and one for small /last-minute orders

10-4

In class quiz: Audio Duplication Service Inc.

(ADS)• Why are ADS's customers' customers moving towards VMI

agreements?– Reduce inventory holding cost and expect better service with VMI

• How would this impact ADS’s business? How can ADS management take advantage of this situation?– Change the distribution and higher transportation cost, redesign

operation for VMI benefits

• How should ADS manage logistics?– Outsourcing for efficiency

• Why do ADS's customers' customers not go for factory gate pricing (FGP) agreements with their suppliers?– FGP not applicable as retailers are small without power over suppliers

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Case Presentation 5: John Lewis Partnership (1)

Overview:– John Lewis Partnership is one of the largest UK retailers– It has six DCs (for distinct group of products), and now is

starting a new National DC for small-sized items•Q1: – Fewer full bins and more goods need to be picked up at

picking stations• Increasing picking focus, introduce picker-to-goods• Expand the picking space and reduce the storage

density

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Case Presentation 5: John Lewis Partnership (2)

• Q2:• Rapid growth in home shopping needs– Yes or no solution for the separation» Pro for separation: better fit for the demand

volume and variety in home shopping goods as they may be quite different from wholesale ones

» Con for separation: cost efficiency with lower safety stocks

– The key is to maintain effectiveness of the two operations while maximize potential economies of scale from integration of the two sections

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Case Presentation 5: John Lewis Partnership (3)

• Q3:• Further improvement in– Better warehouse design to fit with small volume

goods (for home and small business needs) while maintain the overall cost efficiency

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