This presentation is designed to take an astute quick look at international logistics and warehouse management, both in terms of today's global supply chain and in the demand flow management process, so you can know how to make the most of this strategically. You've probably heard something about these topics. You may even be somewhat familiar with them. But how much do you really know about their strategic importance? In an international logistics and warehouse management system, cost-to-cost "trade-offs" available through systems analysis are easy to identify. One example is using premium transportation for small, time-phased purchased lots to reduce inventory investment and lower safety stock. Another might be using a distribution center for freight consolidation or Crossdocking to improve customer service levels and avoid material handling inefficiencies. Yet another might be the use of a blanket agreement (with a rolling forecast) with your supplier. By aligning supplier capacity to your customer schedules and your inventory goals, you gain pipeline visibility through automated order tracking and alerts in addition to lowering costs and raising customer service levels. The overall goal, to achieve a fully integrated logistics approach, is to realize maximum trade-offs among basic functional activities such as warehousing. Traditional Logistics and Warehousing channels are indeed changing. As organizations move from mass production and mass distribution to lean manufacturing, postponement, and mass customization, creative approaches are needed in the management of logistics and warehousing. The challenge is always present, because different customers may demand different levels of service. Demand often cannot be forecasted, especially if one must deliver customized products or services exactly where the customer needs them on a global scale at multiple locations. Businesses today must understand that they are competing on the basis of time more than on any other factor. The rigors of international logistics require that you take action to meet your customers’ demand for faster, more frequent, and more reliable deliveries. Your suppliers need to meet increasingly precise inbound schedules. Tomorrow’s customers are more likely to be in another country or continent than they are likely to be from across town, in another state, or in another province. In addition, diverse countries use different formats for weights and other units of measures, as well as many countries and localities have different licensing requirements and charge different duties, value-added taxes (VAT), and fees, which altogether amount to a major content-management challenge for your Global Trade and Logistics IT systems.

1. International Logistics/
International Logistics/
Warehouse Management:
Warehouse Management:
An Overview Presentation
for NAPM-San Antonio
by Thomas L. Tanel, C.P.M., CTL, CCA
CATTAN Services Group, Inc.
College Station, TX
cattan@cattan.com
979 260-7200
© 2004 CATTAN Services Group, Inc.

2. Domestic versus Global—
Which Is Which?

3. Definition of Logistics
Management
Logistics Management is:
Logistics Management is:
that part of Supply Chain Management that plans,
that part of Supply Chain Management that plans,
implements, and controls the efficient, effective forward
implements, and controls the efficient, effective forward
and reverse flow and storage of goods, services and
and reverse flow and storage of goods, services and
related information between the point of origin and the
related information between the point of origin and the
point of consumption in order to meet customer’s
point of consumption in order to meet customer’s
requirements.
requirements.
Source: CSCMP formerly CLM

4. World-Class Logistics
Customer
Focus
Delight the Customer
Focus on Growth
•
•
•
•
•
•
•
•
•
•
Provide
Shareholder
Value
Minimize Asset Base
Understand True Logistics Cost
•
•
•
•
•
•
•
• Activity-based costing
• Net landed cost vs. functional
lowest costs
• External partner linkage
• Competitive cost index
Enable and
Exploit
Information
Technology
Integrate Systems
World-Class Infrastructure
•
•
•
•
•
•
•
•
•
•
Perfect orders
Responsive
Very short OTD cycle time
On-time delivery
Tailored logistics systems
Easy to do business with
Asset consolidation
Cross-docking, flow-through
In-transit merge
Greater use of third parties
Worldwide contracting
Network optimization
Replace inventory with information
Common applications
Decision support tools
Leverage capabilities of suppliers
Real-time tracking
Reverse logistics
Partnerships
Tailored programs
Product availability
“Mutual” success
Internal and external resources
Training
World-class people
Constant upgrade of capabilities
“Interest in change”

5. The Logistics Process
Order Processing
Seller
Inventory
Management
Production Planning
Warehousing
Customer
Raw Material
Manufacturing
Traffic Management
Deliver to Customer
Transportation

6. Definition of Supply Chain
Management
Supply Chain Management:
Supply Chain Management:
encompasses the planning and management of all
encompasses the planning and management of all
activities involved in the sourcing and procurement,
activities involved in the sourcing and procurement,
conversion, and all Logistics Management activities.
conversion, and all Logistics Management activities.
Importantly, it also includes coordination and
Importantly, it also includes coordination and
collaboration with channel partners, which can be
collaboration with channel partners, which can be
suppliers, intermediaries, third party service providers,
suppliers, intermediaries, third party service providers,
and customers. In essence, Supply Chain
and customers. In essence, Supply Chain
Management integrates supply and demand
Management integrates supply and demand
management within and across companies.
management within and across companies.
Source:CSCMP formerly CLM

7. Supply Chain Activities
The type of solver technology used is dependent on the
characteristics of the planning applications, including
where, what, when, and how the work is to proceed.
Source: I2 Technologies

8. The 4 P’s-Logistics and SCM Focus
Purpose:
Clarify your mission to generate
passion, enthusiasm, action,
innovation, pride and a feeling
of empowerment.

9. The 4 P’s-Logistics and SCM Focus
Partnering:
Work closely with suppliers,
contractors, carriers, vendors,
intermediaries, and customers
to create a higher sense of
quality and service, trust and
openness, and a sense of shared
risk and cooperation.

10. The 4 P’s-Logistics and SCM Focus
Paradigms:
Shift your views to open up new
possibilities, opportunities, and
solutions. It’s dangerous to believe
you will remain successful simply by
doing the same things that once
brought success.

11. The 4 P’s-Logistics and SCM Focus
Process:
The human qualities that bring
success involve innovations and
risks. Focus on risk optimization
rather than risk minimization.
It’s not systems and technology
that dictate process but
support it.

12. Global Warehousing & Distribution
• Intermodal
• Licensing
• INCOTERMS
• IFF/CHB Links
• Banking
• Sales Terms
• Customs
• Security
• Export Packing
Send anywhere . . .
to anywhere—
"Whatever it takes!"

13. Distribution Centers & Warehouses Base Data

14. Third Party Logistics
WHAT IS IT?
• The use of an outside logistics company to perform all or part
of a company’s material management or product distribution
function.
• It is the integration of information, inventory, warehousing,
and transportation services.

15. 3PL Functions—View from Cadre Technologies

16. Fourth Party Logistics (4PL)
A New Way to Collaborate
What Is Fourth
Party Logistics?
A Fourth Party Logistic
(4PL) provider is a supply
chain integrator that
assembles and manages
the resources, capabilities,
and technology of its own
organization with those of
complementary service
providers to deliver a
comprehensive supply
chain solution.

17. 4PL Forward Logistics Supply Network
CUSTOMER
Warehouses
DCs
Synchronization
Event
Mgmt
&
SCP/E
Visibility
Order
Fulfillment
Communication
Brokers
Forwarders
SCM
4PL
Lead
Logistics
Provider
Contract
Manufacturers
Transportation
Carriers
3PLs

18. Domestic versus International Requirements
NVOCC
CHB
IFF
WTO
EXPORT
IMPORT
DOMESTIC
FREIGHT
BROKER
GATT
NAFTA
FMC

19. Boosting Supply Chain Agility for a
Competitive Edge
“There are two ways to improve
“There are two ways to improve
Supply Chain agility:
Supply Chain agility:
speed production cycle times once new
speed production cycle times once new
demand information works its way
demand information works its way
down the supply chain, or reduce
down the supply chain, or reduce
the time it takes for that
the time it takes for that
information to arrive.”
information to arrive.”
Source: Sam Cassis, VP of Marketing at Exemplary, a web based provider of applications

20. Global Pipeline Visibility
Where is my stuff?
• Via the IFF/CHB
• Via the IMC
• Via the carrier
• Via the internet
• Via proprietary software
Supplier
Inbound
Transport
Manufacturing
Distribution
Outbound
Transport
Supply Chain Information Systems Requirements
Ultimate
Customer

21. Supply Chain Digest’s View of the Supply Chain
Source: Supply Chain Digest’s White Paper –Getting Global Sourcing Right

22. Supply Chain Information Systems
PLAN
PLAN
EXECUTE
EXECUTE
MRP
MRP
ORDER
ORDER
PROCESSING
PROCESSING
MANAGE
MANAGE
ACCTS
RECEIVABLE
WAREHOUSE
WAREHOUSE
FIXED ASSETS
FORECASTING
IMPORT
EXPORT
TRAFFIC
ACCTS PAYABLE
DRP
PURCHASING
GEN LEDGER

23. Supply Chain Planning and Execution
—Global Trade Management

24. ADC in the Supply Chain
Goods
characteristics,
capacity, availability,
status
Capacity,
schedules,
status receipts
Capacity,
schedules,
status receipts,
inventory
Demands goods,
requests services,
requests receipts
Service,
capacity,
schedules,
routes, receipts

25. Integrated Supply Chain Links
Supplier
Base/ERP
Wholesaler
Distributor
HQ
Advanced
Planning
Systems
Transportation
Carriers
Transportation
Carriers
Host ERP
Operations Management
Systems
Plant's
MES
Customer
Base/ERP
SCP/SCM and
CRM
Warehouse's
WMS
Distribution
Center's WMS

26. Collaboration—Logistics and
Supply Chain Costs
Collaborative initiatives between supply chain partners and
Collaborative initiatives between supply chain partners and
alliances to reduce uncertainty will serve to reduce the cost
alliances to reduce uncertainty will serve to reduce the cost
of risk. Such actions must focus on cost prevention
of risk. Such actions must focus on cost prevention
that address, both the supply chain pipeline’s and the demand
that address, both the supply chain pipeline’s and the demand
chain stream’s, security and sustainability without expensive
chain stream’s, security and sustainability without expensive
redundancy. This means reduce waste, non-value added
redundancy. This means reduce waste, non-value added
activities, and duplicative work and move towards true
activities, and duplicative work and move towards true
inter-organization collaborative relationships.
inter-organization collaborative relationships.

27. Logistics—Big Picture
Benefits
•• A typical $100 million business that
A typical $100 million business that
switches over can realize a savings of
switches over can realize a savings of
2.4 million.
2.4 million.
•• Integrated logistics functions translate
Integrated logistics functions translate
into various profit contributions:
into various profit contributions:
– Total logistics costs shaved by 20%
– Total logistics costs shaved by 20%
– Pretax contribution is 2.4% higher
– Pretax contribution is 2.4% higher

28. More Profit Potential--$$$
Any “cost saving” that can be made in total
Any “cost saving” that can be made in total
logistics reflects savings at the rate of the
logistics reflects savings at the rate of the
company’s cost of capital and frees up that
company’s cost of capital and frees up that
capital for other business purposes.
capital for other business purposes.
1.Logistics can have aadramatic impact on whether aa
1.Logistics can have dramatic impact on whether
company’s profit picture will be colored red or black.
company’s profit picture will be colored red or black.
2.Logistics (other than Purchases) may account for
2.Logistics (other than Purchases) may account for
more than 15% of aacompany’s sales dollars, and
more than 15% of company’s sales dollars, and
improvements of 5-25% in the various logistics
improvements of 5-25% in the various logistics
functions are within reason.
functions are within reason.

29. The Puzzle of Logistics and SCM Infrastructure
PMS
EDI &
E-Com
Purchasing, Procurement,
Acquisition & Contracting
OMS
ADC
Customer Relationship Management
Advanced
Planning
Systems
Business
Intelligence
MES
BPO
RFID
EProcurement
Collaborative
Planning, Forecasting,
& Replenishment
SCEM
Extended Enterprise
Management
ERP
Reverse
Auctions
Supply Chain Planning,
Execution & Management
Strategic
Sourcing
WMS
&
TMS
SOP

30. General Pagonis and Logistics
A decade after taking the job of VP
of Logistics at Sears, Pagonis said,
“People just don’t pay attention to
logistics, and I try to use whatever
technique I can get visibility for it to
show that good logistics equals sales
and profits.”

31. The Importance of Logistics

32. Synchronized Supply Chain Management
Network optimization software contains advance planning engines to
synchronize and optimize the supply chain channel for supplier/carrier
selection, production sourcing, and inventory pre-build decisions.
Reduce
Transportation Costs
On-Time
Delivery
Reduce
Manufacturing Costs
Orders Filled
Complete
Responsive
Production
Increase turnover
Reduce waste and
obsolescence
Rapid Order
Fulfillment
Reduce inventory

33. The Warehouse’s Ultimate Objective
The ultimate objective of the warehouse is to
hold the minimum operational inventory that
contributes the most profits
--as long as that level is consistent with your
customer service requirements and ordering
and planning philosophy.

34. Demand Chain—Pull Vs Push
PHYSICA
L
TO
BOOK
REPLENISHMENT
S
U
P
P
L
Y
Forecasted
Demand
I
N
V
E
N
T
O
R
Y
Actual
Demand
PULL
VS
PUSH
DEMAND

35. Warehouse Cutout View—Various Configurations

36. Warehousing Equipment Diversity
Standard Racking
Double Deep
Mobile Racking
Drive in Rack
Source: ATLET
Narrow Aisle
Live / Flow

37. Microsoft Business Solutions—
ABC Layout by Location
Source: Microsoft Business Solutions—Winning Strategies for Distribution

38. Warehouse Layout-Combo Storage Methods

39. Crossdocking and Logistics
No stock!
Storage!
Customer Order
Ship
Receipt
Cross-Docking
•
Cross Docking Helps to achieve the key logistics objectives of:
• Stock reduction
• Fixed resource reduction
• More responsive operating systems

40. Warehouse Layout--Crossdocking

41. Intermodalism
USING MULTIPLE
MODES OF
TRANSPORTATION
FOR ONE
CONTINUOUS
MOVEMENT

42. Comparison of Distribution Costs and
Time from National Warehouses—Example

43. International Transportation and Distribution
CARRIER TYPES:
Usage, Costs
Dependability
FINANCIAL
INSTRUMENTS
versus
DRAWBACKS
IMPORT
LANDED COST
LICENSES
EXPORT

44. Common Characteristics:
Hub and Spoke Concept

45. Where Have We Been?
—Survival of the Fittest
Darwin is often misquoted by people who say,
“Only the strong survive.” What Darwin actually
said is that it is not the strongest of the species
or the most intelligent that will survive—it is the
ones who are most responsive to change.

46. Supply Chain Compass-Five Stages
Source: Manugistics
The
Fundamentals
CrossFunctional
Teams
Integrated
Enterprise
Extended
Supply Chain
Supply Chain
Communities
Cost of quality
Unreliable order
fulfillment
Cost of customer
service
Slow growth,
margin erosion
Non-preferred
supplier
Quality and cost
Customer
service
Profitable
customer
responsiveness
Profitable
growth
Market
leadership
Organizational
Focus
Independent
departments
Consolidated
operations
Integrated
supply chains
(internal)
Integrated
supply chains
(external)
Rapidly
reconfigurable
Process
Change
Standard
operating
procedures
Cross-functional
communication
Cross-functional
processes
Customerspecific
processes
Reinvented
processes
Predictable
costs and rates
On-time,
complete
delivery
Total delivered
cost
Share of
customer
Net worth
Automated
Packaged
Integrated
Interoperable
Networked
Key Tools/
Planning
Spreadsheets
Point tools
Enterprise
supply chain
planning
Point-of-sale
supply chain
planning
Synchronized
supply chain
planning
Execution
MRP and other
homegrown
applications
ERP
Customer
management
systems
Network-centric
commerce
Business Pain
Driving Goal
Metric
IT Focus
MRP II

47. Global Logistics Strategy
Source: Coopers & Lybrand Consulting
Aligning worldwide
distribution strategies
around sourcing/selling
business models
Key Requirements
• Centralized management/worldwide
integration
• Customer service options
• Sourcing initiatives and alliances
• Procurement/supplier integration
• Global network optimization
• Process-driven information systems
Reengineering the
movement of product to
improve availability and
lower net landed cost
Key Performance Measures
Shareholder Measurements
• Inventory turns
• Asset utilization
• Operating costs
• Customer satisfaction
• Loss management (asset protection)
Customer Measurements
• Product availability
• Flexibility
• On-time performance
• Speed
• Responsiveness
• Consistency
• Quality
Synchronizing
processes
across all
regions/markets
Key Organizational Processes
Planning and Control
• Configuration and scheduling
• Demand management and
communication
• Sourcing strategy
• Manufacturing strategy
• Supply chain integration
• Product life cycle
Support
• Infrastructure
• Information and technology
• Key performance indicators

48. Lord Kelvin on Measures
When you can measure what you’re
When you can measure what you’re
speaking about and express it in
speaking about and express it in
numbers, you know something about it;
numbers, you know something about it;
but when you cannot measure it, when
but when you cannot measure it, when
you cannot express it in numbers, your
you cannot express it in numbers, your
knowledge is of a meager and
knowledge is of a meager and
unsatisfactory kind.---Lord Kelvin
unsatisfactory kind.---Lord Kelvin

49. Measuring Up – A Best Practice Model for
Evaluating Supply Chain Performance
Source: Arthur D. Little
Goal
Measure
Definition
Improved customerorder fulfillment
Fill rate
Portion of custom orders (either external or internal) that are
on time and accurate as the customer would determine
Improved customer
satisfaction
Survey
Systematic feedback obtained directly from customer
(external or internal); likely using a sampling survey
Supplier order
fulfillment
Portion of supplier orders that are on time and accurate
Supplier quantity
Non-conforming or defective items or services divided by
total at supplier interface
Procurement
effectiveness
Year-over-year cost reduction on like items (i.e., by
commodity family)
Days of supply
on hand
Inventory investment on hand (in dollars) divided by daily
ship rate (in dollars)
Inventory turns
Cost of Goods Sold (COGS) divided by average annual
inventory investment
Timing
Cash-to-cash
Elapsed time from payment of suppliers to collection of
payment from customers
Quality
Quality
Non-conforming or defective items or services divided by
total at customer interface
Operational integrity
Productivity loss
Operational productivity lost due to supply chain nonconformance
Better procurement/
supplier management
Inventory

50. What It Means to You Personally
• Ability to view the big picture
• Grasp of supply chain concepts
• Understand the key
performance indicators of
logistics/warehousing
• Use of information, enablers,
and technology
Control of the Supply Chain

51. THANK YOU FOR COMING
CATTAN Services Group, Inc.
© 2004 CATTAN Services Group, Inc.