I would like to introduce the concept of Intra-logistics as the new mantra for Materials Management. Intra-logistics is a recent European term that describes the internal flow of materials between different logistics nodes within a company. Conceptually, Intra-logistics includes the set of logistical activities necessary to find, purchase, receive, store, process, issue, and deliver materials.

1. May 2013
Out With the Old, In With the New: Intra-logistics
Inside this issue:
Out With the Old, In
With the New: Intralogistics
1
The Wonder, Wacky
World of WIP
2
Board of Directors
Chair
Karl Harward, MBA
Vice Chair
Mary Walker, CPSM, CPSD,
C.P.M., A.P.P.
Secretary/Treasurer
Sheila D. Petcavage, C.P.M.
Chair Emeritus
Ken Killen, Ed.D, C.P.M.
Director/Coordinator
Sponsoring Programs
(ISM Conference)
Fred Lutz, C.P.M., CIRM
Membership Chair
Raymond F. Hopkins, C.P.M.
Director
Cheryl Phillips
Director
John H. Guju, MBA, C.P.M.
Director
Terry R. Volpel, CPSM, C.P.M.
Technology Advisor
Robert A. Bonnell, C.P.M.
Advisor
M. Bixby Cooper. Ph.D, MBA
Advisor
Steven Melnyk, Ph.D.
We’re on the web!
www.ismmmg.org
Author — Thomas L. Tanel, C.P.M., CTL,
CISCM
In this column, I would like to introduce the
concept of Intra-logistics as the new mantra
for Materials Management. APICS defines
Materials Management as a grouping of
management functions supporting the complete cycle of material flow, from the purchase and internal control of production
materials to the planning and control of
work in process to the warehousing, shipping, and distribution of the finished
product.
Intra-logistics is a recent European term
that describes the internal flow of materials
between different logistics nodes within a
company. Conceptually, Intra-logistics includes the set of logistical activities necessary to find, purchase, receive, store, process, issue, and deliver materials. This same
set of functional activities is involved in controlling both the flow of resources and the
associated data into and out of the logistical operating system. In today’s global supply chain, the efficient and effective allocation of logistical resources is a challenge
common to all organizations. Increasingly,
organizations are recognizing the need to
allocate their logistical resources, through
the implementation of the Intra-logistics concept, to maximize profits or budgets, improve customer service, establish needed
controls, and reduce costs.
Intra-logistics consists of the following logistics functional activities:
 Purchasing - The responsibility to
source, contract, negotiate, and procure materials, equipment, supplies,
services, etc. while maintaining a
viable supplier base
 Receiving and Stores - The responsibility for activities related to inbound transport, receiving, inspec-
tion, storing, handling, issuing and
controlling stock and inventory
 Inventory Management - Includes
activities and techniques required to
maintain materials, products, and
supplies at desired stocking levels
 Material Control - Directing or regulating the movement of materials
through the entire manufacturing,
processing, or conversion cycle from
beginning to end
 Materials Handling - The functional
and organizational design pertaining to the flow and movement of
materials and supplies throughout
the organizations facilities
Distribution and Transportation - Encompasses all the operations in the movement
and flow of finished goods to include inventory control, warehousing, order processing,
and outbound transport.
In the framework of Supply Chain Management, Intra-logistics controls the material
flow along the complete value-added chain.
Just like Materials Management, Intralogistics is an organizational concept that
fosters a total systems approach to plan,
acquire, store, move, and control materials,
supplies, parts, work-in-process, and finished or consumable goods in order to optimize all organizational resources.
In conclusion, Materials Management typically is concerned with the regulation of the
flow of material to, within, and from the
organization. Since Intra-logistics covers a
wide spectrum of varied activities, totally
committed to providing a smooth flow from
suppliers to operations/production/
maintenance then to internal and/or external customers, perhaps it’s time to retire the
term Materials Management.
What do you think? Out With the Old, In
With the New?

2. Page 2
The Wonderful, Wacky World of WIP
Author — Terry Volpel, CPSM,
C.P.M., SCMP, LSSBB
Ask many people to define a Raw
Material and they won’t even blink
before answering. Ask them what a
Finished Good is and they will rattle off
a reasonable definition. Ask them
about how one gets from one state to
another and you often get the classic
“deer in the headlights” look. This is the
realm of the WIP (Work in Process) and
like mystical alchemy it transforms raw
materials into finished goods like water
into wine, carbon into diamond and
plants into oil.
Much has been written about manufacturing and its processes. Motorola’s
Six Sigma, Toyota’s Lean, Goldratt’s
Theory of Constraints, JIT and others
are some of the buzzwords floating
around. All these methodologies describe the path towards the perfect
system of transformation. In all of these
systems we can find successes and failures. We have yet to find the ultimate
or perfect system for all manufacturing
and one of the main reasons why can
be found within a discussion of WIP.
Work in Process (WIP) starts with an
input of raw materials into some transformational process. Lean Manufacturing theory tells us that every time we
touch that material we need to add
value. JIT tells us we should not have
idle machinery or material backed up
waiting for the next process. Theory of
Constraints (TOC) tells us that process
steps are rarely even and so the “Takt”
time to do any process may be different from the previous step or the next
step, automatically causing a buildup of
inventory. TOC tells us to identify these
“constraints” and solve them.
The auto industry has done this by
starting with a time slot and fitting as
many steps into a slot as they can. For
example, a stop on a Ford assembly
line might be 10 minutes and a number
of processes need to be accomplished
in that time frame because that car
moves on to the next station at the end
of the ten minutes unless manually
stopped because of a problem. So in
adjacent stations one might do 5 steps
in one and 15 steps in the next because
that is what can be fit into the time.
Another type of process involves the
Theory of Constraints (TOC) concept of
individual process steps and batch sizes
of one. The “Drum, Buffer, Rope” concept is as easy as “sell one-make one”.
Each process step is designed to process a single unit at a time. If a step
takes twice as long as the previous step
and the subsequent step, the answer is
to build a buffer inventory after the
longer step so the subsequent steps can
continue producing one unit without
waiting for the longer step to produce
a unit.
Boeing (787) and Airbus (A380)
experimented with a new concept in the
aerospace industry modeled loosely on
the automotive manufacturing system of
JIT. They quickly ran into Supply Management problems with suppliers who
were unfamiliar with the new technologies and both manufacturers ended up
either financially bailing out or even
acquiring some tier 2 and 3 suppliers to
keep material flowing in their pipeline.
Additionally the delivery delays due to
an incredibly long and complicated
supply chain pipeline added years to
deliveries and are still being felt today.
Even though we refer to a “supply
chain”, the reality is that it is more like
a supply “mesh” or “web” with multiple
tiers and spokes guiding the incoming
materials to a specific place and time.
The consumer electronics industry is
very tied to economies of scale where a
manufacturer (Apple, Samsung, etc.)
would build in large batches. At first
many did this in house but the trend has
been to use third party contract houses
(Hon Hai (Foxcon), Flextronics, Celestica, etc.) to make the products by the
thousands or even millions. This can actually simplify the supply chain for raw
materials because they can and do
order the complete run of raw materials as it is a finite number (e.g. 5 million
Blackberry 9910 units). Once that run is
done it may not be repeated and the
next model is being geared up with its
own raw material requirements. When
the first model begins to run out, the
new model goes into production and
hits the market just as the older model
is sold out. The few remaining older
models are discounted and sold off.
Sometimes there are two or three generations or models in the planning and
preproduction stage while the current
models are being introduced to the
marketplace.
I mentioned earlier that the general
goal of all of these methodologies is to
produce a finished good in the shortest
amount of time at the cheapest cost
with the least wasted time and effort. In
the past couple of years there are a
couple of new factors that have entered the discussion that I believe will
have significant effects on how the
whole WIP system is managed in the
next number of years.
The first is the whole “social consciousness” aspect of business. Whether
it is a consumer perception of a “sweat
shop” or a forced labor situation, companies like Nike and Apple are being
forced to look beyond the pure economics of manufacturing to the reputation and practices of their outsourcing
suppliers. Now we are starting to see
more discussion about “conflict minerals” and a manufacturer’s responsibility
to identify and manage their supply
chain to the point where they can certify the source of their raw materials. In
time I believe a consequence of this
may be more companies deciding to
“insource” more of their production or
to establish rigorous audit processes to
inspect and correct substandard labor
practices, particularly in third world or
developing countries.
The second is the whole environmental movement. This really started to
take hold in the early years of this century with the EU’s Reduction of Hazardous Substances (RoHS) legislation
and later with the ”Registration, Evaluation, Authorization and restriction of
Chemical Substances” (REACH) programs. Growing from these initiatives
we now see more focus on measuring a
company’s carbon footprint. This will go
way beyond “greenwashing” for publicity’s sake and should become a major
factor to consider for companies who
are examining the “make or buy” calculations for their products. With the
growing calls for a price on carbon in
whatever form it takes (cap and trade
or carbon tax) manufacturers will have
to adapt their WIP decisions and methodologies to suit the changing situations.
I anticipate a number of new
buzzwords will hit the industry as theorists and academics devise new and
better ways of managing that mystical
world between raw material and finished good.
Like Dorothy said, “Toto, I have a
feeling we aren’t in Kansas anymore.”