Principles of Distribution and Logistics

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2012 APICS

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Instructor Guide Version 1.0

Table of Contents
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Brief Table of Contents

Session 1 Operations Management Foundations
Session 2 Introduction to Distribution and Logistics
Session 3 Channel Network Design
Session 4 Inventory Management
Session 5 Distribution Requirements Planning (DRP)
Session 6 MidTerm Examination
Session 7 Warehouse Management
Session 8 Packaging and Materials Handling
Session 9 Transportation Management
Session 10 Transportation Operations
Session 11 Final Exam

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Instructor Guide Version 1.0
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Principles of Distribution and Logistics

Table of Contents

Session 1: Operations Management Foundations

Principles of Operations Management Overview...............................................

1-3

Principles of Manufacturing Management Overview..........................................

1-5

Operations Management Foundations Overview.................................

1-7

Session Learning Objectives...................................

1-9

Why Study Operations Management?....................

1-11

Why is Operations Management So Important?.................................................

1-13

Operations Management Definition...................................................................

1-21

What Do Operations Managers Do?...................................................................

1-25

Operations Management and the Organization..................................................

1-27

Operations Management and the Supply Chain......................................

1-29

Operations Management and Competitive Advantage......................................

1-35

Trends in Operations Management...................................................................

1-39

Career Opportunities..........................................................................................

1-41

Distribution and Logistics Concepts Self-Assessment.......................................

1-45

Distribution and Logistics Terms Check.............................................................

1-47

Bill of Distribution Exercise......................................

1-49

Distribution and Logistics Organizational Structure Exercise.............................

1-51

Review, Terms, Discussion Questions, Exercises...................................

1-53

Terms Check........................................................................................

1-55

Performance Check Answers and Test Documents....................................

1-58

Discussion Questions.......................................................................

1-61

Suggested Additional Readings......................................................................

1-65

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Session 2: Introduction to Distribution and Logistics

Introduction to Distribution and Logistics Overview......................

2-3

Session Learning Objectives..............................................................................

2-5

Defining Distribution Management..................................................................

2-7

What is the Supply and Distribution Channel?.....................................

2-9

The Need for Distribution Channels.........................................................

2-11

Reducing Channel Transaction Complexity.......................................................

2-13

Channel Intermediaries..........................................................

2-17

Role of the Distribution Function.................................................................

2-21

Defining Logistics Management.........................................................................

2-27

Logistics Management Functions.......................................................................

2-29

Logistics Operations....................................................................................

2-31

Reverse Logistics and Motivating Factors..........................................................

2-33

Reverse Logistics Hierarchy and Benefits..........................................................

2-35

Logistics Strategy...............................................................

2-37

Guidelines for Logistics Strategy.............................................................

2-39

Logistics and Supply Chain Management..........................................................

2-41

Review, Terms, Discussion Questions, Exercises...................................

2-43

Terms Check........................................................................................

2-45

Performance Check Answers and Test Documents....................................

2-49

Discussion Questions.......................................................................

2-53

Case Study.........................................................................

2-57

Suggested Additional Readings......................................................................

2-61

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Instructor Guide Version 1.0
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Principles of Distribution and Logistics

Session 3: Channel Network Design

Channel Network Design Overview........................................................

3-3

Session Learning Objectives..............................................................................

3-5

Channel Network Design Fundamentals............................................................

3-7

Reasons for Supply and Distribution Channels..................................................

3-9

Critical Design Considerations...

3-13

Channel Design Factors............................................................

3-15

Level of Channel Dependency............................................................

3-17

Channel Design Manufacturing Method..................................................

3-19

Channel Configuration Attribute Matrix.......................................................

3-21

Producer Storage with Direct Delivery...............................................................

3-27

Producer Storage with Drop Ship...............................................................

3-29

Producer with Extended Channel Network.........................................................

3-31

Aggregator with Extended Channel Network......................................................

3-33

Aggregator with e-Business Network........................................

3-35

Framework for Channel Network Design......

3-39

Micro Decisions Influencing Channel Design.....................................................

3-41

Factor-Rating Method...................................

3-43

Center of Gravity Method........................................................................

3-45

Channel Demand and Capacity......................................

3-47

Review, Terms, Discussion Questions, Exercises...................................

3-49

Terms Check........................................................................................

3-51

Performance Check Answers and Test Documents....................................

3-56

Discussion Questions.......................................................................

3-59

Case Study.........................................................................

3-63

Suggested Additional Readings......................................................................

3-67

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Session 4: Inventory Management

Inventory Management Overview...............................................................

4-3

Session Learning Objectives..............................................................................

4-5

Inventory Definitions.............................................................................

4-7

Functions of inventory.................................................

4-9

Strategic Inventory Management Process ..........................................

4-11

Characteristics of inventory in the Distribution Channel.....................................

4-13

Channel Inventory and Demand Flows....................................................

4-15

Inventory Replenishment Components.........................................

4-17

Ordering Techniques When to Order............................................

4-19

Order Point Basic Model and Order Point Trigger...........................................

4-21

Order Point Potential of Demand Variation and Safety Stock.........................

4-23

Calculating the Safety Stock.............................................................

4-25

Determining the Order Quantity..........................................................................

4-31

Order and Inventory Carrying Cost Components..........................

4-33

Determining the Optimal Order Quantity......

4-35

EOQ Calculation...

4-37

Maximum and Minimum Ordering.....................................................................

4-39

Replenishment Planning Process......................................................................

4-41

Review, Terms, Discussion Questions, Exercises...................................

4-43

Terms Check........................................................................................

4-45

Performance Check Answers and Test Documents....................................

4-49

Discussion Questions.......................................................................

4-53

Case Study.........................................................................

4-57

Suggested Additional Readings......................................................................

4-65

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Principles of Distribution and Logistics

Session 5: Distribution Requirements Planning (DRP)

Distribution Requirements Planning (DRP) Overview.

5-3

Session Learning Objectives............................................................

5-5

Distribution Channel Dependencies....................................................

5-7

Push System Functions............................................

5-9

Push System Allocation Example..........................................................

5-11

Pull System Functions.......................................................................

5-13

What to Choose: Order Points or DRP?..............................................

5-15

Defining Distribution Requirements Planning (DRP)..........................................

5-17

Time Phasing The Heart of DRP...................................................

5-19

Introduction to the DRP Grid..............................................

5-21

PAB and the DRP Grid.............................................................

5-23

Net Requirements and the DRP Grid..........................................................

5-25

DRP Planned Order Generation..........................................................

5-27

PAB and Net Requirements Recalculation...................................

5-29

DRP Grid Exercise.......

5-31

DRP and the Bill of Distribution..

5-33

DRP Planning Process.

5-35

DRP Example....................................

5-37

Review, Terms, Discussion Questions, Exercises...................................

5-39

Terms Check........................................................................................

5-41

Performance Check Answers and Test Documents....................................

5-45

Discussion Questions.......................................................................

5-49

Case Study.........................................................................

5-53

Suggested Additional Readings......................................................................

5-57

Session 6: Mid-Term Exam

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Session 7: Warehouse Management

Warehouse Management Overview...................................

7-3

Session Learning Objectives............................................................

7-5

Defining Warehouse Management.

7-7

Warehouse Functions Materials Handling.

7-9

Product Storage..............................................................

7-11

Order Management.....................................................

7-13

Information Transfer..................................................................

7-15

Types of Warehousing...........................................................

7-17

Basic Operations of Warehousing...................................................

7-25

Strategic Decision Components....

7-27

Use of Third-Party Logistics (3PL).........................................................

7-29

Warehouse Management Process.....................................................................

7-31

Importance of Warehouse Standards.................................................................

7-33

Receiving Flow......

7-37

Warehouse Stocking Functions.........................................

7-39

Three Ps of inventory Control...............................................

7-37

Transaction Management...

7-43

Order Picking Options.....

7-45

Order Shipment Flow..

7-47

Warehouse Performance.....................................

7-49

Review, Terms, Discussion Questions, Exercises...................................

7-51

Terms Check........................................................................................

7-53

Performance Check Answers and Test Documents....................................

7-58

Discussion Questions.......................................................................

7-61

Case Study.........................................................................

7-65

Suggested Additional Readings......................................................................

7-69

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Principles of Distribution and Logistics

Session 8: Packaging and Materials Handling

Packaging and Materials Handling Overview...

8-3

Session Learning Objectives..............................................................................

8-5

Warehouse Design and Layout Objectives..........................................

8-7

Warehouse Size and Capacity..............................................

8-9

Basic Warehouse Layouts.........................................................

8-11

Warehouse Layout Development..........

8-13

Warehouse Design and Layout Principles.......................................

8-15

Principles of Materials Handling....................................................

8-17

Types of Storage Systems.....................................................

8-19

Large-Item or Large-Volume Storage..................................................

8-21

Small-Item or Low-Volume Product Storage...................................................

8-25

Automated Storage Systems..

8-27

Stocking Inventory in Warehouse Locations....

8-33

Dock Equipment.......

8-37

Mobile Materials Handling Equipment...

8-41

Role of Packaging....

8-47

Unitization.................................................

8-49

Unitization Principles and Examples.

8-51

Warehouse Automation Key Drivers...............................................................

8-53

Warehouse Automation Components......................................................

8-55

Warehouse Management System (WMS)....

8-57

Review, Terms, Discussion Questions, Exercises...................................

8-59

Terms Check........................................................................................

8-61

Performance Check Answers and Test Documents....................................

8-66

Discussion Questions.......................................................................

8-69

Case Study.........................................................................

8-73

Suggested Additional Readings......................................................................

8-77

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Session 9: Transportation Management

Transportation Management Overview.....................................

9-3

Session Learning Objectives............................................................

9-5

Defining Transportation Management...

9-7

Fundamental Principles of Transportation....

9-9

Principles of Transportation Operations.............................................................

9-11

Transportation Participants....................................................

9-17

Transportation Services Load Transport.........................................................

9-19

Transportation Services Product Storage...........................

9-21

Relationship of Transportation to Other Business Functions...........

9-23

Modes of Transportation..

9-27

Types of Transportation Carriers............................................................

9-41

Third-Party Logistics (3PL) Functions and Transportation.............................

9-45

Logistics Outsourcing Models..................................................................

9-47

Transportation Challenges......

9-49

Review, Terms, Discussion Questions, Exercises...................................

9-51

Terms Check........................................................................................

9-53

Performance Check Answers and Test Documents....................................

9-58

Discussion Questions.......................................................................

9-61

Case Study.........................................................................

9-65

Suggested Additional Readings......................................................................

9-69

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Principles of Distribution and Logistics

Session 10: Lean Production Management

Transportation Operations Overview ............... 10-3
Session Learning Objectives................................................................ 10-5
Transportation Operations Principles....

10-7

Role of Transportation Administration............................

10-9

Types of Transportation Risk...... 10-11

Transportation Management Process... 10-13
Transportation Cost...... 10-15
Detailed Transportation Cost Components.. 10-19
Transportation Rates and Pricing.. 10-23
Terms of Sale.... 10-25
Transportation Mode Selection................................................................... 10-27
Transportation Carrier Selection. 10-31
Transportation Routing and Scheduling......................................................... 10-33
Documentation and Post-Shipment Processing.......................................... 10-39
Transportation Performance Measurement.................................................... 10-41
Transportation Performance Scorecard.......................................................... 10-43
Transportation Management System.... 10-45
Review, Terms, Discussion Questions, Exercises................................... 10-47
Terms Check........................................................................................ 10-49
Performance Check Answers and Test Documents.................................... 10-54
Discussion Questions....................................................................... 10-57
Case Study......................................................................... 10-61
Suggested Additional Readings...................................................................... 10-65

Session 11: Final Exam

aChain - APICS International Channel Partner - www.achain.com.br

2012 APICS

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Instructor Guide Version 1.0