Integrated Logistics Q A

INTEGRATED LOGISTICS Q&A 1
Integrated Logistics Q& A

Thirty-‐Sehvan C. Forty-‐Seven, 2013

Thirty-Sehvan C. Forty-Seven 2
Table of Contents

How does logistics contribute to time and place utility? ........................................................ 7
Explain the significance of the fact that the purpose of logistics is to meet customer
requirements. ........................................................................................................................................ 7
Explain how power retailers are logistical trend setters. ...................................................... 7
What is the systems approach to problem solving? How is this concept applicable to
logistics management? ....................................................................................................................... 7
Distinguish between materials management and physical distribution. ......................... 8
Discuss the postponement concept as it relates to the production and logistics
interface. ................................................................................................................................................. 8
Discuss five activities that might be part of a company’s logistics department. ............ 8
Discuss the difference between a supply chain and supply chain management. ........... 8
What is the difference between a lean supply chain and an agile supply chain? Under
what circumstances is each an appropriate supply chain approach to pursue? ............ 9
Do you agree or disagree that supply chain collaboration can be classified as
transactional, tactical information sharing, or strategic in nature? Why? ...................... 9
Some companies are hesitant to use frequent shopper cards because the data
provided could violate the customer’s privacy. Do you agree or disagree? Why? ....... 9
Do you agree or disagree with the sentiment that fourth-‐party logistics companies
(lead logistics providers) merely add unnecessary cost and few service
improvements to supply chains? Why? ..................................................................................... 10
In what ways can information be helpful in logistics and supply chain management?
.................................................................................................................................................................. 10
List the six general types of information management systems and give one logistics
application for each one that you’ve named. ............................................................................ 10
Discuss the benefits and drawbacks of EDI. .............................................................................. 10
Refer back to the logistical activities listed in Chapter 1; pick two that you are
interested in and research how they have been influenced by the internet. Are you
surprised by your findings? Why or why not? ......................................................................... 11
From a logistical perspective, what are some of the differences between online and
in-‐store retailing? .............................................................................................................................. 12
Define and describe the order cycle. Why is it considered an important aspect of
customer service? .............................................................................................................................. 12
What are some advantages and disadvantages to checking all orders for
completeness and accuracy? .......................................................................................................... 12
What is pick-‐to-‐light technology, and how can it improve order picking? ..................... 13
Discuss the order delivery stage of the order cycle. ............................................................... 13
How can customer service act as a competitive weapon? .................................................... 13
Describe some of the key issues associated with measuring customer service. .......... 13
How do product characteristics influence packaging and materials handling
considerations? ................................................................................................................................... 13
What are the three general functions of packaging? How might they come into
conflict? ................................................................................................................................................. 14
Describe some of the devices that are used to monitor conditions during the journey
that a shipment makes. .................................................................................................................... 14
What are some environmental disadvantages to plastic packaging? .............................. 14
What environmentally friendly packaging strategies might a firm adopt? ................... 14
How can reducing packaging inefficiencies improve the performance of a logistics
system? .................................................................................................................................................. 15
Discuss the advantages and disadvantages of the unit load. ............................................... 15
What trade-‐offs exist between wood, plastic, and metal pallets? ...................................... 15
How might an organization’s order picking and assembly system influence its
decisions on materials handling equipment? .......................................................................... 15
Why is it important to know about the characteristics of a country’s transportation
infrastructure? .................................................................................................................................... 15
What are the advantages and disadvantages to a pipeline’s lack of vehicles? .............. 16
Discuss the drawbacks to rail transportation. ......................................................................... 16
How do weather conditions influence the reliability of inland water carriers? .......... 16
Define what is meant by economic regulation. Why is transportation economic
deregulation important? ................................................................................................................. 17
Discuss how transportation managers could be involved with other operations of the
firm. ......................................................................................................................................................... 17
Discuss the four factors used in determining a product’s freight classification. ......... 17
Why is the carrier selection process less straightforward than the modal selection
process? ................................................................................................................................................. 17
Discuss the basic issues, conflicts, and problems involved in concealed loss and
damage claims. .................................................................................................................................... 17
Distinguish between tracing and expediting. Why are motor carriers being used to a
greater extent in expediting? ......................................................................................................... 18
What is a carrier performance scorecard? How might it be used by transportation
managers? ............................................................................................................................................. 18
Explain how the location decision process involves several layers of screening or
focus. ....................................................................................................................................................... 18
How have cost considerations influenced facility location decisions? ............................ 18
In what way is the location of customer markets a strategic consideration in facility
location? ................................................................................................................................................ 18
Discuss the factors that influence the number of facilities that a firm chooses to
operate. .................................................................................................................................................. 19
How does a raw material’s status as pure, weight losing, or weight gaining influence
the facility location decision? ........................................................................................................ 19
Discuss how population can be viewed as both a market for goods and a source of
labor? ...................................................................................................................................................... 19
Discuss the advantages and disadvantages to locating manufacturing, assembly, or
distribution facilities in countries with relatively low wages. ........................................... 19
What are right-‐to-‐work laws? How do they influence locational decisions? ................. 20
What are expatriate workers? What challenges do they face? ........................................... 20
Distinguish among cycle, safety, pipeline, and speculative stock. ..................................... 20
What are ordering costs, and what is the trade-‐of between inventory carrying costs
and ordering costs? ........................................................................................................................... 20
Distinguish between a fixed order quantity and fixes order interval system. Which
one generally requires more safety stock? Why? ................................................................... 21
Explain the logic of the EOQ model. ............................................................................................. 21
Define what is meant by dead inventory. What are several ways to manage it? ......... 21
What are substitute items, and how might they affect safety stock policies? ............... 21
Why should organizations carefully consider potential trade-‐offs before adopting a
lean philosophy? ................................................................................................................................. 22
Why does warehousing exist in a supply chain? ..................................................................... 22
Explain the four ways that warehousing facilitates the regrouping function. .............. 22
What are the advantages and disadvantages of private warehousing? ........................... 22
Discuss why contract warehousing is a preferred alternative for many organizations.
.................................................................................................................................................................. 23
How does multiclient warehousing mix attributes of public and contract
warehousing? ...................................................................................................................................... 23
Discuss the trade-‐offs associated with order-‐picking versus stock-‐replenishing
functions. ............................................................................................................................................... 23
How can warehousing productivity be improved without significant investment in
technology or equipment? .............................................................................................................. 23
Discuss how warehousing security can be enhanced by focusing on people, facilities,
and processes. ..................................................................................................................................... 24
Contrast procurement’s historical focus to its more strategic orientation today. ...... 24
Discuss the benefits and potential challenges of using electronic procurement cards.
.................................................................................................................................................................. 24
What is the role of ISO certification in quality management programs? ........................ 24
Describe significant benefits and drawbacks to Six Sigma programs. ............................. 25
Pick, and discuss, two components of the global sourcing development model
presented in this chapter. ............................................................................................................... 25
Name, and give an example of, the five dimensions of socially responsible
purchasing. ........................................................................................................................................... 25
Discuss some of the ethical issues that are associated with procurement. .................... 26
How might a particular country’s government be involved in international trade and,
in turn, international logistics. ...................................................................................................... 26
Discuss how a nation’s market size might impact international logistics? .................... 27
What is a certificate of origin, a commercial invoice, and a shipper’s export
declaration? ......................................................................................................................................... 27
What is an NVOCC? ............................................................................................................................. 27
Explain the load center concept. How might load centers affect the dynamics of
international transportation? ........................................................................................................ 28
What is the Logistics Performance Index? How can it be used? ........................................ 28
What are the two key components of an income statement? .............................................. 28
What are the key components of the Strategic Profit Model? How can it be used to
examine the effect of logistics decisions? .................................................................................. 29
Do you agree or disagree that return on assets is a good way to examine operational
efficiency? Why? ................................................................................................................................. 29
How does logistics strategy connect to overall corporate strategy? Is it a one-‐way or
two-‐way connection? ........................................................................................................................ 29
Do you think that corporate cultures are relevant for designing a logistics
measurement system? Why or why not? .................................................................................... 29
Do you agree or disagree with the sentiment that logistics measurement systems
need to include both financial and non-‐financial measures? Why? .................................. 30
Discuss several issues that influence the organization of logistics activities within a
firm. ......................................................................................................................................................... 30
Describe the hierarchal and matrix organization design. .................................................... 30
From a logistics perspective, how is network organizational design manifested in
terms of relevancy, responsiveness, and flexibility? ............................................................. 30
Describe some potential logistics social responsibility dimensions. ............................... 31
What are some ways in which the Transportation Security Administration is
attempting to improve the security of the U.S. transportation system? .......................... 31
In what ways is the legislation requiring 100 percent scanning of U.S.-‐bound
containers likely to be disruptive to international trade? ................................................... 31
What concerns have importers expressed with implementation of the Importer
Security Filing rule? ........................................................................................................................... 32
Integrated Logistics Q&A

How does logistics contribute to time and place utility?
Place utility refers to the customer access to demanded products (where the products are); value
is created in this access and demand. Value necessitates that the desired products are in the
appropriate place to allow for streamlined customer procurement. Time utility is similar in that
the products must be available when the customer needs it; product sensitivities differ depending
upon the specifics and time-related consequences of the deliverable items. Given that logistics is
the movement of products within supply chain between the point of origin and the point of
consumption, the issues of time and place are both critical considerations to boosting logistics
outcomes.
Explain the significance of the fact that the purpose of logistics is to
meet customer requirements.
The logistics flow of goods is architected to meet customer requirements, meaning that
customers vary in their priorities and needs. In tailoring logistics, logistics professionals are able
to create service and product value through customer-driven logistics tactics and control. The
significance is that in allowing the consumer to direct logistics design, professionals are
changing their approach to logistics/supply chain strategy to better meet these ends.
Explain how power retailers are logistical trend setters.

Power retailers, such as the big box giant Wal-Mart, wield enormous power in shaping supply
chains. These entities are grounded in large market reach and low ticket prices; therefore, it is
imperative to use supply chain mechanisms to cut costs. Thus, logistics is deemed integral to
strategy planning and implementation. These trend setters have set new standards in the field,
such as using collaborative planning, forecasting, and replenishment (CPFR) techniques as well
as improved inventory turnover initiatives. Simply, power retailers influence provides the capital
and cooperation needed to reach new levels of logistics evolution.
What is the systems approach to problem solving? How is this
concept applicable to logistics management?
The systems approach is based on the idea of mutual interdependence throughout the firm, from
marketing to finance to logistics. Instead of dividing these activities into departments, the
system approach takes a more inclusive, holistic approach, the implications of which is that all
functions must be aligned towards shared goals and objectives. In terms of logistics, “This
means that one logistics system does not fit all companies because goals and objectives vary
from one firm to another” (Murphy & Wood, 2011, p. 9). Similarly, all functions must
understand and consider how they affect other departments. In recognizing and appreciating this
interdependence, the multidimensional activities that define the logistics function are viewed as
intrafunctional and thus acting in collaboration as a whole.
Distinguish between materials management and physical distribution.

Materials management is the “movement and storage of materials into a firm” whereas physical
distribution is the “storage of finished product and movement to the customer” (Murphy &
Wood, 2011, p. 10). Therefore, the primary difference is destination. In materials management,
materials come into the firm and in physical distribution, the materials move to the customer and
away from the firm. These activities may be coordinated, but careful, common sense planning is
critical.
Discuss the postponement concept as it relates to the production and
logistics interface.
The postponement concept is the “delay of value-added activities such as assembly, production,
and packaging until the latest possible time” (Murphy & Wood, 2011, p. 13). Utilization can be
increased in many ways, including interfacing between productions and logistics. The idea is to
design value-added activities at the latest possible point in time; this may result in changing the
traditional process configuration to better reflect this point where the systems of production and
logistics meet, connect, and interact.
Discuss five activities that might be part of a company’s logistics
department.
Customer service (1) mirrors the customer-centered focus of logistics, ensuring that the right
products are delivered to the right person at the right time and place in the right condition and for
the right price - getting all of this right is crucial to logistics success as it is determined by the
customer. Demand forecasting (2) is used to estimate future product demands; this analytical
tool is paramount to strategy and operations. The greater the supply chain collaboration, the
more accurate the predictions and the demand forecasting value to organizational leadership and
management. International logistics (3) addresses the logistics activities that take place
internationally; these movements carry increased costs and challenges than simply moving goods
domestically. Procurement (4) is the strategic obtainment of raw materials, component parts, and
supplies bought externally and used for internal operations. Warehousing management (5) refers
to the place where inventory is stored over a period of time; logistics has changed the
contribution and role of warehousing in contemporary supply chain systems.
Discuss the difference between a supply chain and supply chain

management.
A supply chain is the actual activities that make up the flow and transformation of goods from
raw materials (extraction) to the final product stage. Supply chain management (SCM) is the
planning and managing of all the many and varied activities within the supply chain, including
sourcing, procurement, and conversion functions. SCM also speaks to the coordination and
collaboration of involved partners and the integration of these different spheres to create the final
supply chain flow.
What is the difference between a lean supply chain and an agile
supply chain? Under what circumstances is each an appropriate
supply chain approach to pursue?
A lean supply chain eliminates waste, including time, to create a level schedule. In conditions
where demand is unpredictable and fluctuating, it is advisable to use this approach to reduce
risks and losses. An agile supply chain allows greater flexibility in terms of demand; the agile
approach focuses on responding to changes in demand such as volume and variety. The agile
approach is preferable under conditions where market demand and products are varied and the
supplier needs to adapt to unforeseen shifts. Agility assists in supporting market share,
competitive advantage, profitability, stock values, and customer satisfaction.
Do you agree or disagree that supply chain collaboration can be
classified as transactional, tactical information sharing, or strategic in
nature? Why?
I agree that supply chain collaboration equates to strategic information sharing on a broader scale
(including transactional and tactical definitions) and is therefore critical to improved
profitability. The greater the accuracy and efficiency of these exchanges, the easier it is to cut
cost throughout the supply chain. This merging of visibility and access is critical to crafting
competitive advantage in a highly challenging modern marketplace. As such, cooperation and
SCM aims are likely to drive the companies to technological and theoretical heights as firms
learn new ways to partner for product, service, and profits excellence. While some are hesitant
to embrace this transparency, others are more hesitant. However, the classification of supply
chain collaboration as either transactional, tactical, or strategic is only needed to help
differentiate between tasks. The larger reality is that supply chain collaboration is vital to
organizational strategy as a whole, meaning that this cooperation - or lack thereof - deeply
impacts company objectives, achievements, and sustainability.
Some companies are hesitant to use frequent shopper cards because
the data provided could violate the customer’s privacy. Do you agree
or disagree? Why?
Supply chain analytics can be used to extract insight into specific customer and target audience
behaviors, attitudes, and interests, which can be used to expertly sculpt company directions. If
the goal is to meet customer needs, then it is logical that the more information the company can
gather or the better the firm can get to know its buyers, the greater the return. The highly
detailed profiles offered by frequent shopper cards can be viewed as helpful or hurtful from the
consumer perspective; some value privacy above customization. Hesitancy to use this
information demonstrates a concern for the customer. In my opinion, it is important to be
transparent in how data is used and how data will benefit the consumer and then allow customers
the choice to participate. Ethically, I believe it is fine business practice to use such information
for aggregate customer base profiles; but in terms of target selling and marketing, I believe
consumers should have the right to choose. It is up to the company to prove the advantage and
gain customer approval so as to protect consumer privacy and confidence.
Do you agree or disagree with the sentiment that fourth-‐party

logistics companies (lead logistics providers) merely add unnecessary
cost and few service improvements to supply chains? Why?
I do not agree that fourth-party logistics (4PLs) providers merely weigh down costs and fail to
improve service. Globalization has greatly expanded and complicated how supply chains
operate and the scope of supply chain reach; this has introduced a number of cultural, economic,
technological, political, spatial, and logistical hurdles that 4PL specialization can more expertly
navigate thereby reducing the probability of stock shortages, documentation errors, and other
oversights that can have costly consequences, including jeopardized customer satisfaction. 4PL
integration, if deemed appropriate for organizational investment, can lend a vital hand in
streamlining international supply chain advantage.
In what ways can information be helpful in logistics and supply chain
management?
The four primary benefits of information in logistics and supply chain management include:
1. Greater knowledge and visibility across the supply chain therefore making it possible to
replace inventory with information.
2. Use of POS technology to increase awareness, use, and planning through customer demand
optimization.
3. Improved coordination of multidimensional functions, including manufacturing, marketing,
and distribution through ERP tools and practices.
4. Streamlined order processing and reduced lead times enabled by coordinated logistics
information systems.
It is important to distinguish between data and information, understanding that data (facts) serve
information, which is a body of facts that, together, are useful in driving decision-making
processes. Analytics is thus the construct through which collected data is translated into
meaningful information.
List the six general types of information management systems and
give one logistics application for each one that you’ve named.
1. Office automation system – spreadsheet applications calculating critical points, such as
optimal order quantities
2. Communication system – Virtual meeting platforms
3. Transaction processing system – RFID and POS technologies
4. Management information system and executive management system – logistics
information systems that convert TPS data for logistics use (Collections, analysis,
storage, retrieval, and dissemination functions)
5. Decision support system – simulation and transportation management systems
6. Enterprise system – Oracle, SAP databases
Discuss the benefits and drawbacks of EDI.

Electronic data interchange (EDI) is based on a computer-to-computer platform for the seamless,
structured transmission of business data across companies sharing technological infrastructure
capabilities, resulting in supply chain coordination and integration. Benefits include reduced:
documentation, processing times, inventory overhead costs, personnel costs, information float,
shipping errors, returned goods, lead times, order cycle times, and ordering costs. When
properly implemented, these direct advantages lead to indirect improvements in cash flow,
billing accuracy, productivity, and customer satisfaction. However, there are many hurdles to
overcome and potential drawbacks include a lack of awareness and application, high setup costs,
lack of format standardization, and hardware/software incompatibilities. Furthermore, there is a
misconception that EDI is outdated when in fact is remains a central and viable logistics tool that
generates value-creation when understood and expanded in scope and use.
Refer back to the logistical activities listed in Chapter 1; pick two that
you are interested in and research how they have been influenced by
the internet. Are you surprised by your findings? Why or why not?
Customer Service – The Internet has brought customer service management (CRM) capabilities
into an altogether different league. Organizations are advantaged by exponentially improved
customer contact points that can be driven by data collection and mining activities that allows
firms to tailor there CRM approaches to best fit customer interests and needs, therefore
empowering customer service to drive improved loyalty, retention, and satisfaction aims. Dr.
William H. Bleuel (2010) cites Forrester Research results which indicates that the effects are not
all positive as often perceived; the study “suggests that the Internet has created a platform that is
having a negative effect on customer loyalty” as online shoppers are becoming increasingly
fluent in optimizing their purchases through use of ratings and reviews, online researching, and
mobile product comparisons for in-store offers. As such, the Internet is making it more difficult
for retailers to lock-in customer loyalty as increased product availability and options has
somewhat reduced shopping to a commodity wherein consumers seek price and value above
brand. I was somewhat surprised by this research; however, the Internet offers advantages and
disadvantages. Companies are afforded increased contact and service opportunities and this is
due to this increased customer engagement with this technology. The goal is to effectively use
the medium to drive organizational strategy through service prioritization.
Demand Forecasting – Web-enabled systems can be used to improve demand forecasting efforts.
However, there is a dark side that organizations must also grapple with. According to Shin and
Tunca (2010), “An increased number of competing retailers and uncertainty in consumer demand
tend to increase inefficiency, whereas increased consumer market size and demand forecast costs
reduce the loss in supply chain surplus” (p. 1). This statement outlines the risk-benefit reality of
the global digital marketplace. I am not surprised by these findings. Logically, as consumers are
afforded more opportunities, demand forecasting is destabilized to a degree because concrete
factors such as geographical constraints are removed. Additionally, as companies gain access to
a global marketplace and are supported by highly sophisticated technologies, demand forecasting
improvements are driven by real-time data and improved data accuracy; and the Internet acts as a
unifying infrastructure to collect, track, store, and disseminate this critical data.
From a logistical perspective, what are some of the differences

between online and in-‐store retailing?
The execution of logistics functions and activities characterize the major differences between
online and in-store retailing. Online retailers must handle high order volumes (more plentiful
and smaller quantities) as well as accurate and timely order fulfillment whereas brick-and-mortar
entities deal with smaller order amounts and immediate goods/service delivery in comparison.
Additionally, online shopping is deemed open-case, meaning that “open-case picking is
facilitated by materials handling equipment, such as totes and push carts;” therefore, product
placement and packaging differ from in-store approaches and challenges (Murphy & Wood,
2011, p. 37). Transportation ad returned orders also impact logistics strategies. Online retailers
are often called to tailor logistics strategies to improve effectiveness and efficiency considering
the distinctly different and varied customer delivery scenarios and complications associated with
direct delivery. Online shopping stresses logistics in customer fulfillment as these
responsibilities fall on the organization while in-store retailers focus on getting the product to the
store as the primary task of meeting customer demand through inventory control and availability.
Define and describe the order cycle. Why is it considered an
important aspect of customer service?
The order cycle, also referred to as the replenishment cycle or lead time, “refers to the time from
when a customer places an order to when the goods are received” (Murphy & Wood, 2011, p.
115). Order management, demand forecasting, and customer service are uniquely linked to this
overall process. The customer service connection is due to the role of the order cycle in meeting
customer expectations in a timely manner, thereby impacting customer satisfaction levels.
Improved order cycle outcomes translate to improved customer satisfaction and value perception.
This is critical to organizational performance, especially considering that customer perception
ultimately determines organizational success. The organization must ensure that its product
availability and delivery appropriately meets consumer demands.
What are some advantages and disadvantages to checking all orders
for completeness and accuracy?
Order processing is crucial to customer satisfaction. In checking all orders for completeness and
accuracy, the company ensures first-time customer satisfaction, reducing future probabilities and
costs of returns, dissatisfaction, and negatively impacted customer perception. “Incomplete or
inaccurate orders can negatively affect customer satisfaction and increase costs” but this
investment also adds cost and time to the order cycle (Murphy & Wood, 2011, p. 118). These
tradeoffs must be carefully weighed. Generally, all orders should be checked to prioritize and
ensure service excellence through complete, accurate, and timely order fulfillment objectives.
What is pick-‐to-‐light technology, and how can it improve order
picking?
Pick-to-light technology uses lights to identify product locations in order fulfillment; the worker
is guided in a streamlined order fulfillment path that optimizes time and accuracy, resulting in
higher pick rates and fewer picking errors.
Discuss the order delivery stage of the order cycle.

Order delivery is the final stage of the order process and speaks to the time from when the
transportation carrier takes possession of the shipment until it is received by the customer. Many
improvements have been made in this area as delivery options have increased and improved.
Additionally, as shippers enter the market, organizations have greater choice and competition
benefits; successful navigation of these alternatives can reduce lead time and total order cycle
outcomes thus significantly improving customer satisfaction.
How can customer service act as a competitive weapon?

Customer perception measures organizational success. An exceptional customer service
reputation substantially impacts public perception and company value; this is a powerful means
of differentiation and research shows that customers are willing to sacrifice costs for consistent,
reliable service that bolsters consumer confidence and trust. “The firm that can offer a high level
of customer service, especially on a personal basis, will find that it has a powerful sales
advantage in the marketplace” (Murphy & Wood, 2011, p. 120).
Describe some of the key issues associated with measuring customer
service.
Customer service is defined as “the ability of logistics management to satisfy users in terms of
time, dependability, communication, and convenience;” these four dimensions are difficult to
quantify (Murphy & Wood, 2011, p. 121). A systematic program of measurement and control is
needed and a major hurdle is determining what data sources to use as drivers of internal and
external performance. Establishing an empirically-supported customer service measurement
metric is complex and difficult; however, it is critical to correlate data collection with desired
customer service factors that affect organizational outcomes.
How do product characteristics influence packaging and materials

handling considerations?
Each product is unique in its physical properties and therefore packaging needs. Additionally,
volume and quantity also affect how and when the product is packaged. Most importantly,
packaging attributes sculpt materials handling decisions. For instance, physical characteristics,
such as whether the product is a solid, gas, or liquid greatly impact these two factors. Other
product characteristics including element exposure sensitivity, chemical characteristics, and
perishable natures all influence these considerations; therefore, a comprehensive understanding
of these interrelated elements is essential to making effective packaging and transport decisions.
What are the three general functions of packaging? How might they
come into conflict?
“Packaging, which refers to materials used for the containment, protection, handling, delivery, ad
presentation of goods, serves three general functions: to promote, to protect, and to identify
(label) the relevant product” (Murphy & Wood, 2011, p. 198). Conflict arises with conflicting
interests, such as promotional product packaging design and increased threat of theft due to this
information, whereas more subtle identification methods like codes alleviate this ease. It is
paramount to balance these three roles to optimize all three without incurring unnecessary trade-
offs or risks.
Describe some of the devices that are used to monitor conditions
during the journey that a shipment makes.
Packaging is one aspect; however, monitoring the package environment is also imperative. This
task is namely achieved by inserting enclosed recording devices; these instruments vary in
sophistication and complexity. Some devices can be used to evidence in-transit damage claims
against the carrier; others serve only to bolster working knowledge of how to best handle goods.
The goal is to deliver top-quality products in top-quality condition. The journey can lead to
major repercussions and shipment safety and security is crucial to customer satisfaction through
delivery success.
What are some environmental disadvantages to plastic packaging?

Plastic has become an enemy of many environmental activists. Over recent years, plastic has
grown in desirability due to its economic affordability, versatility, and user-friendliness;
however, from a conservation standpoint, plastic poses a severe detriment, namely that it can
take several hundred years to biodegrade. Additionally, plastic is petroleum-dependent and this
finite resource is reaching perilous levels as the modern industrial lifestyle continues to guzzle
more than the earth can recuperate. Also, as petroleum costs rise, plastic becomes a less
attractive option. Litter is another shortcoming as plastics have been implicated in an epidemic
multitude of marine life deaths. Plastic, while dollar-wise, is seen as a planetary disease and
creative packaging alternatives are needed to increase sustainability and reduce environmental
harm.
What environmentally friendly packaging strategies might a firm

adopt?
Firms may consider one or more of the following environmentally friendly tactics: 1) Reduce
amount of packaging materials used and/or improve recyclability through material singularity; 2)
Use environmentally friendly/safe packaging materials; 3) Use reusable containers; and 4) Create
packaging strategies and partnerships that include firms or services that collect or recycle used
packaging. The expanse of these considerations is vast and these decisions must be made a clear
understanding of regulatory constraints, fiscal outcomes, and sustainability factors.
How can reducing packaging inefficiencies improve the performance

of a logistics system?
“Packaging inefficiency can have a number of undesirable logistics consequences, to include
increased loss, increased damage, slower materials handling, higher storage costs, and higher
transportation costs” (Murphy & Wood, 2012, p. 205). For instance, inefficiency may increase
pallet requirements, resulting in higher storage and transportation costs. Improving
inefficiencies holds great cost savings potential, damages reduction, and service improvements.
Discuss the advantages and disadvantages of the unit load.

The unit load (unitization) consolidates multiple units into a single shipment to improve
efficiency and reduce costs. Advantages include: Additional protection, discouraged theft,
strategic stacking choice, and facilitated use of more sophisticated mechanical devices as
opposed to human personnel for product movement. Drawbacks include: Necessitates large
quantity shipments, reduced target clientele, high costs of movement machinery to actualize
technological advantage, and lack of standardization in pallet size, which results in higher
manual labor costs due to repalletization. Furthermore, the unit load platform renders the above
product space unproductive. Loading poses obstacles to increased efficiency as well as space
and cost conservation and profit maximization.
What trade-‐offs exist between wood, plastic, and metal pallets?

Between 90-95% of U.S. pallets are made of wood, which is a cheaper alternative compared to
plastic and wood options; however, these two materials boast longevity that far exceeds the
lifespan of traditional wood options. Furthermore, splintering may lead to injuries that can be
avoided by plastic and metal pallets and there is unlikely a need to try to repair salvageable
pallets. Flammability is another concern as is weight for which wood is far heavier than the
alternatives.
How might an organization’s order picking and assembly system

influence its decisions on materials handling equipment?
Order picking and assembly systems influence materials handling equipment decisions. In a
picker-to-part setup, the picker locates the order by moving to the order storage location whereas
in a part-to-picker system, the pick location is brought to the picker using technologies and
platforms such as carousels. “These two systems involve trade-offs between travel time, recall
that travel time accounts for between 60 and 80 percent of total order-picking time” (Murphy &
Wood, 2011, p. 214). In this sense, the system determines the equipment used (i.e. forklift vs.
carousel).

Why is it important to know about the characteristics of a country’s
transportation infrastructure?
Transportation infrastructure varies greatly throughout the globe and “at a minimum, a lack of
infrastructure makes it difficult to use that mode in domestic (within-country) transportation”
(Murphy & Wood, 2011, p. 218). Without this concrete support, transportation planning, costs,
and strategy are severely impacted. As such, it is imperative to have a comprehensive

understanding of the country’s infrastructure, including reliability, reach, and regulations.
Failure to take these planning precautions is highly detrimental to transportation planning.
Discuss the speed of airfreight transportation in terms of its line-‐haul
and accessorial service.
Airfreight transportation is characterized by speed of service. Line-haul refers to terminal-to-
terminal movement of freight of persons whereas accessorial service relates to the transportation
service that is supplemental to the long-haul component and therefore adds to transportation
costs and transit time while increasing shipment handlings, handling costs, and potential
damages/losses. Given these constraints, air transportation, while fast, is costly. In cargo
transport, accessorial service, as discussed, slows overall line-haul speed.
What are the advantages and disadvantages to a pipeline’s lack of
vehicles?
The lack of vehicles results in enormous labor cost reductions, minimized possibility of worker-
related accidents, as well as eliminated risk of work stoppage due to worker protest. “The lack
of vehicles also means that pipelines transportation is one way; the other modes have two-way
transportation, a fronthaul and a backhaul. The backhaul is often a significant source of excess
capacity, or unused available space” (Murphy & Wood, 2011, p. 223). The lack of vehicle
dependence makes this transport mode the most reliable form as the risk of disruption and
negative weather effects; but pipelines are also slow, increasing total transit time and requiring
additional inventory within the logistics system.
Discuss the drawbacks to rail transportation.

Rail transportation is highly concentrates; this domination decreases competition - limiting
service and pricing options. Issues such as unstable reliability are less likely to be addressed
given the monopolization of the market. Additionally, rail infrastructure is susceptible to
damage and destruction that further affects transit times, costs, and delivery. These systems are
far les flexible and still require additional transport mode involvement to reach final destinations.
In terms of pricing and delivery speed, rails fall in the middle. Air and water is more expensive
than rail; and rail is faster than pipeline and water, but slower than air and truck (Murphy &
Wood, 2011).
How do weather conditions influence the reliability of inland water
carriers?
Inland water carriers rendered unreliable due to the unpredictability of weather conditions,
ranging from drought to icing. For example, droughts may diminish water levels resulting in un-
navigable waterways; the need to shift transport modes means higher transport costs. Flooding is
another possibility for disruption. It is important to plan for these possible risks.
Define what is meant by economic regulation. Why is transportation
economic deregulation important?
Economic regulation “refers to the control over business practices and activities such as entry
and exit, pricing, service, accounting and financial issues, and mergers and acquisitions”
(Murphy & Wood, 2011, p. 231). Regulations are restrictive in nature. Deregulation efforts ease
these constraints. According to Murphy & Wood (2011), deregulation of the transport industry
allows greater freedom in pricing and services, therefore allowing for tailor and customized
transport solutions within the scope of increased competition.
Discuss how transportation managers could be involved with other

operations of the firm.
The transportation manager can be used as part of strategic operations on a systemic and
systematic level as this position seeks to blend price and service structures and options for the
company as a whole. From this perspective, transportation managers are critical inputs for all
company objectives, ranging from sales to marketing to purchasing functions.
Discuss the four factors used in determining a product’s freight

classification.
The four freight classification factors are: density, stowability, ease of handling, and liability to
damage or theft. Density speaks to size and weight relations and is primary in classification.
Stowability is how easily the product is to pack into a load, including material care needs and
durability for freight loading. Ease of handling relates to possible challenges due to size, weight,
etc. while liability factors are connected to the possibility and probability of damage,
perishability, and loss.
Why is the carrier selection process less straightforward than the
modal selection process?
Carrier selection is far more complex given the competitive options available. Additionally, a
“lack of agreement on the number of relevant factors that might be used in carrier selection”
increases these complications. Therefore, the carrier selection decision requires more time, data,
and analysis to ensure appropriate and profitable carrier partnership.
Discuss the basic issues, conflicts, and problems involved in concealed
loss and damage claims.
Concealed loss or damage is discoverable only delivery, typically during unpacking and
inspection. Carriers may be hesitant to cover such claims for two primary reasons: 1) Due to
exterior care, there is a strong likelihood that producer failure to protect is to blame and 2)
Possibility that the consignee’s employees are actually at fault. This is a delicate situation
necessitating tact because the carrier does not want the cost burden of unfair claims and does not
want to unnecessarily implicate either the shipper or consignee in the loss or damage.
Distinguish between tracing and expediting. Why are motor carriers

being used to a greater extent in expediting?
“Tracing refers to determining a shipment’s location during the course of its move, and the
ability to trace shipments directly affects expediting, which involves the need to rapidly move a
shipment to its final destination” (Murphy & Wood, 2011, p. 256). Motors carriers are playing a
greater role in expediting because they are less expensive that their air carrier counterparts and
can dedicate one truck to one shipment, resulting in faster, more reliable service outcomes.
What is a carrier performance scorecard? How might it be used by
transportation managers?
This tool can be used to qualify, quantify, track, analyze, and monitor carrier performance. By
selecting performance attributes, the scorecard is a diagnostic measurement that denotes carrier
service quality. Therefore, these analytics and data sets can be use to identify areas of
improvement, evidence service quality, support improvement initiatives, and tacks quality
advantage on an individual, industry, and comparison level.
Explain how the location decision process involves several layers of
screening or focus.
The location decision process is a layered approach with detailed analysis and scope growing
with each subsequent steps leads to a smaller number of areas or sites: Starts from region moves
to location selection areas and then to physical site inspection and analysis (i.e. regulations,
zoning, etc.). This macro to micro consideration creates a solid framework for making key
location decisions backed by data, facts, and research findings.
How have cost considerations influenced facility location decisions?

Logistics is firmly rooted in a systems approach in which the total costs of various logistics parts
and function is directly and comprehensively considered. “Today’s cost considerations arise
because many consumers are sensitized to buy products only when prices are low,” meaning that
bargain deals, price slashing, bottom-dollar discounts lure consumers and this strategy
undermines traditional customer loyalty as buyers have access to worldwide seller options
(Murphy & Wood, 2011, p. 157). In order to compete on price-point, expenses must also be low
to allow for profitability. Most often, location has shaped this cost-cutting strategy as companies
sought cheaper labor sources in foreign countries; but the recent oil dependency and fuel prices
have added tremendous costs as producers pay hefty tickets to transport these goods. Once
more, location becomes a strategic priority.
In what way is the location of customer markets a strategic

consideration in facility location?
Facilities are fixed point with high fixed cost considerations. In transportation terms (and in light
of high transport costs), the closer the produce is to the customer market, the less money
funneled in to transportation expenses. The same principle applies to supply markets. Another
crucial aspect is economic growth as companies seek to optimize profits by tapping into
attractive and expanding markets with strong consumer income bases and development aims.
Location therefore impacts transportation costs, consumer reach, and supplier decisions on major
levels of operational strategy. Finally, sustainability is another vital factor as companies are
increasingly met consumer demand trends such as local sourcing (a locavore strategy) and
environmentally-sound production that may undermine consumer traffic and perception if not
appropriately handled.
Discuss the factors that influence the number of facilities that a firm
chooses to operate.
After answering where, the next question is how many? Facility numbers are generally led by
demand and output capacities; as needs arise and current facilities fail to meet “acceptable”
outputs in comparison to demand, new facilities are added to foster continued growth and meet
demands with adequate and profitable supply. These decisions are predominantly driven by
technologies that use data to decipher optimal facility count and placement given store locations,
distribution needs, and transit times to maximize product access, service, and supply as needed.
How does a raw material’s status as pure, weight losing, or weight
gaining influence the facility location decision?
Raw material status defined extraction methods, costs, and complexity. Pure materials allow the
processing function freedom in location, meaning that anywhere near the raw material source
and market fits the needs. Weight-losing products refer to materials that lose considerable
weight in processing; therefore, the processing point should be located as close as possible to the
source to reduce transport costs. On the other hand, weight-gaining products are those that gain
weight through processing; as such, it is more lucrative to locate the processing point near the
market to reduce heavy transport costs through strategic planning efforts.
Discuss how population can be viewed as both a market for goods and
a source of labor?
Populations act as potential market and labor sources. In this scope, the population may act as
buyers and employees. Location is key to tapping market and labor opportunities and trade off
costs must be carefully weighed. Cheap labor sites may limit the degree of market potential as
well as increase transport costs; however, in locating the facility in or neat the market whose
capital exists to support purchase and profit, there may be regulatory and cost restrictions that
erode profits (i.e. labor wage laws) despite improved transportation costs. These factors must
be clearly understood and investigated.
Discuss the advantages and disadvantages to locating manufacturing,

assembly, or distribution facilities in countries with relatively low
wages.
Lower wages may deliver theoretically improved profitability; however, these efforts can be
complicated by worker skill and educational deficits that impair product and service quality
outcomes. Additionally, public perception can negatively impact profits as a growing consumer
consciousness and call for corporate social responsibility may render these costs greater than
originally presumed as human rights concerns are now a matter of increased buyer awareness
(i.e. sweatshops). Such ethical oversights can plummet profits and result in costly outcomes.
Another issue is supervisor experience and supply as unskilled labor pools may require imported
management – another strong line item in the expense report. Working in foreign countries
introduces a myriad of economic, political, social, cultural, diversity, and regulatory measures
that are highly risky. Cheap labor carries high risks that can be assessed and mitigated, but not
eliminated. At this time, many multinationals are driven by wage differentials and are using low
cost labor to provide goods that compete on price in the larger marketplace.
What are right-‐to-‐work laws? How do they influence locational

decisions?
Right-to-work laws protect employers from the union employment protections. Unions tend to
increase labor costs and limit management controls. If a company desires to avoid union
parameters, they may opt to locate facilities in right-to-work states that bar this constructs.
What are expatriate workers? What challenges do they face?

Expatriate workers are “employees who are sent to other countries for extended periods of time;”
these assignments can be very costly and high risk, with assignments ranging up to $1 million in
costs and turnover running between 20 and 40% (Murphy & Wood, 2011, p. 162). The major
challenges are socialization and cultural adaptation with familial relationship stress extensively
burdening success rates.
Distinguish among cycle, safety, pipeline, and speculative stock.

According to the text, cycle refers to inventory that is needed to satisfy normal demand during
the course of an order cycle. Thus, cycle constitutes the base stock whereas safety speaks to the
buffer stock or inventory held in addition to the cycle. Pipeline is in-transit inventory sent for
replenishment purposes and speculative stock is inventory that is held for forecasted increased
demands due to seasonal changes, price fluctuations, projected shortages, etc. These stock
categories are important in differentiating stock intent, use, and roles within the inventory
management function.
What are ordering costs, and what is the trade-‐of between inventory
carrying costs and ordering costs?
Inventory carrying costs are tied to costs for holding inventory and are typically expressed as a
percentage that is then multiplied by the total inventory value. As such, changes in carrying
costs impact the associated expenses of the inventory. Depending upon the industry, market and
product, carrying costs vary significantly. Ordering costs are those costs associated with the
actual ordering of the inventory (i.e. order and setup costs); these costs are numerous and
extensive. “The trade-off that exists between carrying and ordering costs is that they respond in
opposite ways to the number of orders or size of orders,” meaning that “an increase in the
number of orders leads to higher order costs and lower carrying costs” (Murphy & Wood, 2011,
p. 137). Understanding how these factors interact and impact costs is critical to successful
inventory management as it is necessary to optimize these decisions for the greatest return.
Distinguish between a fixed order quantity and fixes order interval

system. Which one generally requires more safety stock? Why?
A fixed order quantity system relies on set order amounts whereas an order interval system is
linked to specified order intervals. In an interval system, the order amount fluctuates and in a
fixed order quantity, the time varies but the quantity is consistent. Therefore, the fixed order
quantity system is tied to reorder trigger points that allow inventory to be kept. Thus, the fixed
order interval system requires more safety stock because this system is far more vulnerable to
stockout situations.
Explain the logic of the EOQ model.

The economic order quantity (EOQ) model calculates proper order size in light of both carrying
and order costs. “The EOQ determines the point at which carrying costs equal ordering costs”
(Murphy & Wood, 2011, p. 140). The logic behind this model is that the mathematically, the
optimally cost-effective quantity based on operational costs. The goal is to minimize total costs;
thus the EOQ holds that when carrying costs equal ordering costs, the best level is achieved for
costs maximization.
Define what is meant by dead inventory. What are several ways to
manage it?
Dead inventory is product for which no sales have occurred during a 12-month period; this
signals that product demand has died and carrying costs are burdening the company. Therefore,
managing dead stock is paramount to operational health. There are multiple ways to manage
dead stock, including making items to order, use of aggressive marketing tactics (i.e. sales, price
drops), selling inventory to other companies, donating stock for partial tax write-offs, and last
resort acts such as dumping inventory (Murphy & Wood, 2011).
What are substitute items, and how might they affect safety stock
policies?
Substitute items or products are those products that serve as consumer alternatives for another
product. This can occur across specific product levels (i.e. brands) and product classes.
Substitutability is important to safety stock policies because this impacts consumer behavior in
purchasing as well as retailer loyalty. It is imperative to understand at what point the substitution
becomes problematic from the consumer perspective. Through this analysis, safety stock
policies can determine the level of safety stock needed for particular products and classes to
ensure that consumer demand is adequately met within the store.
Why should organizations carefully consider potential trade-‐offs

before adopting a lean philosophy?
Lean manufacturing has revolutionized inventory management; however, there are trade-offs that
must be considered prior to adopting this strategy. Lean ideology seeks to eliminate wastes
through increased speed and flow, ultimately reducing inventory safety stock and carrying costs
as inventory is driven by demand. While quality improvements are empirically evidenced in JIT
inventory structures, supplier order systems must be carefully aligned to support this end without
error as all flows impact outcomes. Furthermore, lean philosophy is rooted in increased
shipments of smaller quantities but this system is birthed from a period of low fuel costs,
minimal traffic congestion, local sourcing methods, and less regulations regarding national safety
concerns (i.e. due to terrorism). Therefore, the adoption of lean systems must takes these new
complexities into account to ensure that results are capable of meeting consumer demand at an
improved total cost structure.
Why does warehousing exist in a supply chain?

Warehousing refers to product storage both at and between points of origin and points of
consumption, acting as a substitute activity to goods transportation. “A key reason for
warehousing is because patterns of production and consumption do not coincide, and
warehousing serves to match different rates or volumes of flow” (Murphy & Wood, 2011, p.
178). Additionally, warehousing serves as a regrouping function within the supply chain. While
it is a stoppage of product flow, warehousing is critical to supply chain functionality.
Explain the four ways that warehousing facilitates the regrouping

function.
The regrouping function take four forms: 1) accumulating, 2) allocating, 3) assorting, and 4)
sorting out. Both accumulating and allocating deal with quantity of product adjustments while
assorting and sorting out refer to product assortment adjustments. Warehousing facilitates
regrouping because it is the platform on which these four activities occur and it is critical to
efficient supply chain outcomes and performance excellence.
What are the advantages and disadvantages of private warehousing?

Private warehousing is characterized by high fixed costs and is therefore only feasible for
companies with high inventory handling needs as the higher costs can be spread out, resulting in
lower per unit storage costs. This option also benefits stable demand patterns; however, excess
capacity must also be weighed. If and when there is sufficient demand volume and stability,
“private warehousing offers potential users a great deal of control over their storage needs”
(Murphy & Wood, 2011, p. 181). Disadvantages, as discussed, are the high fixed costs and
demand constraints mentioned above. External financial market circumstances also impact these
storage decisions and attractiveness. This option may also reduce flexibility in responding to the
external environment as these organizations are more vulnerable to demand shifts and their value
may be negated through mergers and acquisitions.
Discuss why contract warehousing is a preferred alternative for many

organizations.
Contract warehousing or third party warehousing provides mutual advantage through customized
warehousing and logistics arrangements where benefits and operational risks are shared between
vendor and client. This option tends to be more cost efficient that private warehousing but more
costly than public warehousing. “Contract warehousing is a preferred alternative for many
organizations because it simultaneously mitigates the negative aspects and accentuates the
positive aspects of public and private warehousing” and allows the company to hone its core
competencies while advantaging by partnering with warehousing expertise that align
warehousing management strategies with client-driven criteria (Murphy & Wood, 2011, p. 182).
Also, this method offers a high degree of control but is also viewed as more flexible than the
private warehousing approach.
How does multiclient warehousing mix attributes of public and

contract warehousing?
Multiclient warehousing utilizes a multiclient facility that offers differentiated services available
in public warehousing but less customization than contract warehousing. Multiclient facilities
use yearly contracts and are “attractive to smaller organizations that don’t have sufficient
volumes to (1) build their own storage facilities or (2) use traditional one client contract
warehousing services” (Murphy & Wood, 2011, p. 182). This mix fosters an environment that is
profitable but targets those organizations looking for a hybrid alternative in warehousing
procurement.
Discuss the trade-‐offs associated with order-‐picking versus stock-‐

replenishing functions.
Order-picking sends the worker out to the inventory; while stock-replenishing occurs
simultaneously, there is potential for increased congestion and slowed productivity as well as the
benefit of less oversight demands. However, these trade-offs can be managed through
information and activity system design.
How can warehousing productivity be improved without significant

investment in technology or equipment?
Warehousing can be empowered through a comprehensive review of existing procedures,
practices, and processes to identify task optimization opportunities by targeting the largest areas
of inefficiency and creating methods to reduce or eliminate these inefficiencies without adding
costs. In this scenario, value is generated without greatly increasing cost investments. It is
imperative to carefully select strategies to ensure that methods (i.e. incentives) do not result in
higher costs for reduced performance outcomes.
Discuss how warehousing security can be enhanced by focusing on
people, facilities, and processes.
Warehousing security is meant to protect the product and prevent theft. Product protection
correlates with internal and external product, personnel, and environment controls. In terms of
people, security can be enhanced through human resource processes, such as hiring and
screening. In terms of facilities, improvements can be made through low-tech and high-tech
strategies. In terms of processes, handling can be reduced – thus creating less opportunity for
loss or damage. Similarly, greater accountability in tracking and control can also mitigate
internal theft through tighter controls. Security sophistication is highly varied and the greater the
resources available, the greater the ability to improve total security outcomes across all three
spheres; however, it is imperative to take a cost-benefit analysis approach to this issue to ensure
that the returns are worth the cost investments. As such, people and processes may be stellar
starting points for security improvements.
Contrast procurement’s historical focus to its more strategic

orientation today.
Procurement accounts for between 60 and 80% of typical organization revenues. Historically,
the approach and the goal have been to cut costs. Simply, as costs decrease, profits increase. In
seeking the lowest possible cost, companies have embraced exploitative methods, ranging from
sourcing to bidder policies. However, the current market ideation understands that procurement
offers a far greater advantage and this function is increasingly integrated into the overall
corporate strategy. In essence, the historical procurement perspective has a limited definition of
value and it oriented in the short-term whereas modern procurement strategies highlight the
critical role of this function within a broader context of value creation and value perpetuation.
Discuss the benefits and potential challenges of using electronic

procurement cards.
Electronic procurement cards or p-cards are essentially credit cards with personal use capabilities
serving organizational procurement efforts. P-cards change the invoicing structure, simplifying
the process. However, challenges include installing the appropriate limitations and control
measures. International market use is an area of difficulty that is tied to currency differences,
technological availability, card acceptance hurdles, and cultural obstacles. Issues such as
turnover and authority complicate streamlined use of p-cards that can help increase process
timeliness and efficiency, as well as track usage trends and drive analytics. This issue highlights
a larger question as to the marriage of technology and business. Just because a program is
technologically possible and theoretically positive, the reality may be far more complex in terms
of adoption, use, and ethics.
What is the role of ISO certification in quality management programs?
ISO certification reflects an organization’s commitment to “quality through training, reviews,
and continuous improvement” (Murphy & Wood, 2011, p. 101). This certification is a way to
identify and encourage quality programs that are backed by extensive research and evidence,
acting as a standardized measurement that the organization has documents, implements, and
demonstrates these quality assurance management and monitoring capabilities. As such, ISO
certification can be understood as a competitive advantage. In general, certification is a way to
promote and track desired outcomes. Quality management is a stellar starting point given the
integral role of quality in driving organizational success and guiding organizational structures.
Describe significant benefits and drawbacks to Six Sigma programs.

Six Sigma is another quality-related initiative that “emphasizes the virtual elimination of
business errors” by setting incredibly high quality standards and instilling the appropriate
practices needed to achieve this error margin (Murphy & Wood, 2011, p. 102). According to
Murphy and Wood (2011) the primary benefits of Six Sigma structures are reduced costs,
reduced wastes and errors, and reduced cycle times; however, drawbacks include cultural
barriers, high human and capital investment, and top management support. As with all other
cultural changes, Six Sigma necessitates total organizational buy-in to realize the advantages
and, depending upon the organization, this first step may prove far more challenging than
expected. Furthermore, this total team requirement renders the system vulnerable as any changes
in this support function disrupt the integrity of the program.
Pick, and discuss, two components of the global sourcing

development model presented in this chapter.
Planning is the first and arguably most important step in the global sourcing development model;
this step requires an honest and comprehensive assessment of global sourcing opportunities and
challenges. The objective of this investigation is to provide the data needed to articulate global
procurement policies and procedures. This is an important understanding because, through
planning, the organization understands the actual possibilities available as opposed to creating
misaligned strategies. Furthermore, the company must ensure its procurement tactics mirror
organizational objectives as conflict can prove costly and devalue company strategies. As such,
planning is central as it is the platform on which all other model activities are constructed. For
instance, the relationship management function is born out of the initial identification of unique
organizational opportunities. Cross-cultural barriers such as culture, language, and politics may
affect this element; therefore, relationship management must work from an understanding of the
cultural context in which these relationships are rooted. Again, global procurement offers
significant advantages but these can only be gained through planning, which necessitates a clear
and authentic appreciation of the partners and partner cultures with which the company is
attempting to connect.
Name, and give an example of, the five dimensions of socially
responsible purchasing.
The five dimensions of socially responsible purchasing are: diversity, the environment, human
rights, philanthropy, and safety. This model creates a new paradigm of business in which the
cut-throat cost advantage is replaced with a long-term orientation of sustainable profitability
through partnerships with the surrounding communities. In essence, business takes on a role of
stewardship and in this role, the corporations are held to higher levels of accountability for their
actions and responsibility for the impacts on the human and planetary environment. For
instance, diversity tends to address minority representation and equity; this relates to both
internal and external relationships. For example, minority recruitment strategies can increase
diversity while corporate donations can be used to help jumpstart diversity initiatives outside of
the organization. The environment poses a vital concern and corporations can address this issue
through policy, procedure, and practice changes as well as direct their research and development
efforts to find sustainable and carbon footprint reducing approaches to conducting business.
Human rights is another central theme and labor practices are often at the root of contention. As
companies seek to cut cost, many have opted for cheaper foreign labor sources. However,
research and investigation shows that abusive labor practices are often part of the low priced
labor. Use of sweatshops is an example of poor business practices that can lead to major
consumer backlash. In terms of philanthropy, corporations can improve their standing by using a
portion of their profits to benefit the community; through donations, goodwill and PR can be
used to create shared value. Finally, safety is a critical concern and organizations can improve
their relationships with the workforce and the community by improving their safety standards
and prioritizing their workers health and wellbeing.
Discuss some of the ethical issues that are associated with
procurement.
In terms of ethics, procurement introduces concerns in that cost reduction strategies often
introduce ethical dilemmas that must be carefully weighed. Bribes and kickbacks are two areas
that can quickly create procurement advantage but at a critical ethical cost. Market competition
philosophies often create a survival of the fittest mentality in which the winner takes it all; these
clichéd approaches are increasingly replaced with a deeper understanding and commitment to
interdependence and value generation. However, it is still important to monitor and guide ethical
expectations on an individual as well as organizational level. Procurement costs as previously
mentioned are a major organizational expenditure and source of revenue; as such, this function
introduces a wealth of opportunities and threats.
How might a particular country’s government be involved in

international trade and, in turn, international logistics.
Government or political factors is one of the six environmental factors that affect international
logistics. Political decisions and policies impact trade allowances, restrictions, and relationships.
Furthermore, nation powers may ally to pressure other states. Currency policy is another vital
element that has major implications of foreign direct investment decisions and the international
flow of goods. Tariffs, taxes, import quotas, nontariff barriers, embargoes, and other political
activities define the macro environmental framework in which trade occurs. The international
trade climate is the output of the convergence of single nation state policies and their actual
market interactions. It is necessary to understand how these factors interrelate to navigate this
territory. Governments essentially set the terms or the rules of the trade game; therefore, these
decisions have incredible consequences on international logistics in terms of cost effectiveness,
process design, methods and modes, as well as other fundamental factors.
Discuss how a nation’s market size might impact international

logistics?
A nation’s market size includes currency fluctuations, market size, income, infrastructure, and
economic integration. For instance, Murphy and Wood (2011) explain that when a country’s
currency is weak, the cost to import increases. Infrastructure is a major necessity to logistics
support and determination. As such, infrastructure is therefore a priority in world development
aims because it facilitates trade, which powers economic growth. A nation’s market size speaks
to its development and interest opportunity. In terms of population, as exampled by India and
China, this human resource introduces incredible opportunity for integration and even
domination of the world market as this populace basis acts as a workforce and a consumer pool.
International logistics objectives may aim to optimize by using this workforce for goods
production as well as targeting this consumer base for marketing and sales goals. In both cases,
nation size impact market interest and international logistics advantage.
What is a certificate of origin, a commercial invoice, and a shipper’s

export declaration?
A certificate of origin details the specific countries in which the product was manufactured and
may be required or used by governments for control purposes or by exporters to verify
manufacture location. A commercial invoice summarizes the entire transaction and outlines key
data such as the description of the goods, terms of sale, payment methods, etc. The shipper’s
export declaration (SED) contains relevant export transaction data, including the transportation
mode, transactions participants, product export description, etc. These documents are vital to
international logistics, which is comprised of a standardized system of documentation or
information flows. These documents are the foundational communications that support and
facilitate international trade ease. Documentation plays a major and often complex role in the
logistics function and meeting each of these requirements through careful and accurate
documentation is imperative to logistics success, especially within the international trade
framework in which issues such as security and trade are amplified due to nation state
requirements and restrictions.
What is an NVOCC?

An NVOCC is a nonvessel-operating common carrier that is often confused with an international
freight forwarder because “both intermediaries consolidate freight from different shippers and
leverage this volume to negotiate favorable transportation rates from ocean carriers” (Murphy &
Wood, 2011, p. 274). While companies may qualify and register as both a NVOCC and
international freight forwarder, the company is only allowed to act in a single identified capacity
on one shipment. Murphy and Wood (2011) identify three key factors that differentiate these
two licensed entities: 1) NVOCCs may issue their own bills of lading; 2) NVOCCs can set their
own rates for ocean and intermodal shipments; and 3) NVOCCs can enter into service contracts
with ocean carriers to purchase transportation services. NVOCCs act as common carriers in
accordance with the obligation of such entities to serve and delivers. “From the shipper’s
perspective, an NVOCC is a carrier; from an ocean carrier’s perspective, an NVOCC is a
shipper” (Murphy & Wood, 2011, p. 274).
Explain the load center concept. How might load centers affect the
dynamics of international transportation?
Load centers are major shipping ports that are strategically used to facilitate improved shipment
due to increasing shipper capacity and size, often by creating a one-port destination. Load
centers may impact international logistics and international transportation by changing the
dynamics of the infrastructure, resulting in some ports being turned into feeder service providers
for load center operations. Additionally, load centers may impact intermodal transportation,
requiring truck and rail to adapt to these new hub centers to accommodate to these structural
changes. Containership traffic and containership design are changing to meet new demands and
seeking ways to streamline costs. In this concept, the shipping environment is finding ways to
fuel this competitive advantage and multiple port stops have been cited as problematic.
Therefore, the load center concept offers incredible opportunity; however, the existing market
will need to remain flexible in casting new roles and configuring new avenues to meet emerging
consumer demands.
What is the Logistics Performance Index? How can it be used?
The Logistics Performance Index (LPI) addresses the importance of logistics as a key indicator
of a country’s performance. The LPI consists of seven base logistical dimensions, each of which
speaks to particular and critical aspects of logistics functionality within the specified country.
Currently, the LPI tracks data from 155 countries, rating logistics performance on a high-to-lows
scale of 5-to-1. The value of this tool is that it provides a multi-perspective and comprehensive
analysis of country logistics; this single dimension and aggregate data is paramount in making
crucial logistics decisions and comparisons. Additionally, the analytics can be used for cross-
regional, cross-demographic, and cross-economic assessments. As such, the LPI framework
provides a solid foundation for logistics planning, design, and tracking. With this international
scope and benchmark, the logistics function gains power and position in strategic planning as
there are clear metrics that allow the logistics team insight on a domestic and international scope.
This data is an important step to elevating logistics as organizational strategy.
What are the two key components of an income statement?
The income statement tracks income over time and this is determined by the two key
components of revenues and expenses. Revenues are typically referred to as sales whereas
expenses refer to costs. Revenues are the input and expenses are the output. In logistics, the
expenses category offers a great deal of potential for improving company profitability by
reducing these cost and/or creating a stronger value chain to generate larger revenues. “Because
a large percentage for a typical organization are driven by logistics decisions, many
organizations spend considerable time focusing n this connection between logistics and financial
performance” (Murphy & Wood, 2011, p. 47). This is an intelligent move because profit
margins can be improved by working with and within the systems, processes, and relationships
that define the logistics function. As the firm improves their operations, profits reflect these
advances.
What are the key components of the Strategic Profit Model? How can
it be used to examine the effect of logistics decisions?
The Strategic Profit Model (SPM) is a framework for return on assets (ROA) analysis, which
delineates the investment dollar percentage that returns to the organization as a profit; key
components are net profit margin and asset turnover. The SPM uses revenues and expenses to
determine the net profit margin and then employs asset inclusion to measure asset turnover. “Net
profit margin measures the proportion of each sales dollar that is kept as profit, while asset
turnover measure the efficiency of the capital employed to generate sales” (Murphy & Wood,
2011, p. 49). Logistics can learn from these figures. This framework can be used to identify and
examine how logistics decisions affect the company’s performance measures, including profit
performance and ROA. This model visually and mathematically depicts the relationship
between logistics and financial performance.
Do you agree or disagree that return on assets is a good way to
examine operational efficiency? Why?
I think that ROA is a sound method for examining operational efficiency because it moves
beyond sales and expenses to define how capital is being used. This measure can help in internal
and industry benchmarking as well. As an investor, it is imperative to grasp if the company is
effectively using its resources to guide investment decisions; as a logistics manager, ROA
provides a solid tool for tracking and measuring performance through insight into capital usage
by understanding how operational assets can be leveraged to generate profits.
How does logistics strategy connect to overall corporate strategy? Is it
a one-‐way or two-‐way connection?
Logistics deeply impacts corporate strategy as it largely determines the operational/functional
side of asset generation and profitability. A one-way connection is created as logistics is used to
drive organizational strategy through improved value while corporations set the terms of their
logistics ethics and expectations. Depending on the firm’s selected corporate strategy (i.e.
differentiation), logistics will reflect and align to these established perimeters. The hierarchy of
strategy positions logistics in service to and participation in the larger corporate strategy; all
other functions (i.e. Marketing) work in interdependency in order to align with corporate strategy
and maximize value.
Do you think that corporate cultures are relevant for designing a

logistics measurement system? Why or why not?
Yes, I think corporate culture is critical in logistics design because this cultural context
determines worker expectation and norms and affect innovation and learning support.
Performance measures are crucial, however, these are defined by and within the culture.
Improvement is dependent upon the culture and practices instilled within the firm. For instance,
behavioral issues and communication are cited as factors of logistics measurement design. Top
management support is vital to ensure tracking and feedback and it is my assertion that culture
decides the scope of support and participation.
Do you agree or disagree with the sentiment that logistics

measurement systems need to include both financial and non-‐
financial measures? Why?
I believe that both financial and non-financial measures need to be included to gain a deeper
understanding of value creation. While the financial framework is certainly indicative of healthy
performance, a more holistic approach, such as that offered by the balanced scorecard (BSC)
reflects the vital elements of “customers, internal business processes, learning and growth”
(Murphy & Wood, 2011, pp. 50-51). Mission and vision statements are also integral to assessing
is logistics is aligned with organizational strategy. Numbers are one facet and this perspective
can be skewed in showing short term advantage. A holistic approach moves beyond the present
profits and looks at system sustainability in adding value through service to the client. This is a
far more advantageous approach because it allows the firm to better understand and
communicate its value through logistics improvement.
Discuss several issues that influence the organization of logistics

activities within a firm.
Logistics activities are impacted by many factors, including the number and location of
customers and the organization’s size. Organizational structure and organizational design are the
two key areas of discussion. Each firm is a unique entity with different needs and platforms;
logistics should reflect these strategies as previously discussed. For example, the choice of
centralized or decentralized logistics may depend on the company’s customer profile. This data
must be used to drive logistics decisions as opposed to insisting that the stakeholders adapt to the
company’s logistics plan. A holistic approach is optimal, meaning that the entire picture must be
integrated in the creation of profitable, efficient, and effective logistics solutions.
Describe the hierarchal and matrix organization design.

The hierarchal design is rooted in traditional militaristic definitions and organizations of power
and control, resulting in a top-down flow. Each manager is given a limited number of
subordinates and these subordinates report to one supervisor; and this allows for flexibility in
command; however, this model does not adapt to changes in social perspectives and values. The
matrix organization design allows for cross-functional responsibilities. This multifunction
design supports customer responsiveness given that the manager has a greater scope of impact.
However, this design tends to be more costly as more employees are needed in comparison to the
hierarchal model. Both organizational designs are useful in environments characterized by
costly information and restricted communication; additionally, these models thrive when
decision alternatives and time constraints are limited. Therefore, these models must be evaluated
within the contemporary context of increasing data and options with increasing time limitations
as expectations of both quality and speed grow strong.
From a logistics perspective, how is network organizational design

manifested in terms of relevancy, responsiveness, and flexibility?
A network design shifts focus from function to process, thus emphasizing value creation, which
is generally customer-centered and customer-defined. From a logistics perspective, relevancy
refers to the satisfaction of present, emerging, and anticipated customer needs and is based in
developing mutual advantage or shared value with key customers through service to these needs.
Responsiveness differs in that is addresses the extent to which the company can effectively take
care of unplanned unique customer needs; accommodation is often paramount to achieving
customer satisfaction. Since all situations cannot be definitively planned for, responsiveness is
an important component of service preparedness. Flexibility argues that “an organization’s
ability to address unexpected operational situations, is predicated on avoiding early commitment
to an irreversible course of action” (Murphy & Wood, 2011, p. 60). In part, flexibility reflects
the degree to which the company has planned for this accommodation by allowing its processes
to be inherently adaptive. A firm should design its logistics solution to foster these three terms,
thus gaining significant value and competitive advantage in being able to quickly and
proficiently navigate complex customer needs and diversity.
Describe some potential logistics social responsibility dimensions.

Social responsibility understands that business has surpassed the profit maximization stage and is
instead part of a global system of interdependence, which impacts environment, ethics, diversity,
safety, philanthropy, and human rights issues and concerns. Logistics is a part of these processes
and can serve to bolster customer relationship management and value strategies by designing
solutions that take these fundamental issues into consideration. Examples include energy
efficiency, alternative fuels, recycling, improved safety standards and labor practices. This
philosophy comprehends the larger scope in which business in general and logistics in particular
impact client relationship, perceptions, and values. By tapping into this idea of shared value and
conscientious action, clients are more likely to invest in organizations that align with their deeper
ethical values and beliefs.
What are some ways in which the Transportation Security

Administration is attempting to improve the security of the U.S.
transportation system?
TSA has had to step up security following the 9/11 attacks and investigations. Passenger and
cargo screening are primary areas of corrective and proactive efforts to improve security
performance. Additionally, the TSA has developed a Transportation Worker Identification
Credential (TWIC) that helps identify workers across all transportation modes, providing
personal and biometric data to allow access to secure areas. Issues in implementation and
optimization are still slowing progress; however, major steps have been taken to emphasize
security as part of an integrated national response to security vulnerabilities.
In what ways is the legislation requiring 100 percent scanning of U.S.-‐
bound containers likely to be disruptive to international trade?
The 100% cargo scanning mandate has major time and cost implications, especially considering
that the scan is conducted in nondomestic ports, the majority of which are not technologically
equipped to expedite this requirement. These ports would then have to purchase and install the
appropriate technologies and invest in personnel to facilitate this trade security. Many have
opted instead to discontinue shipments to the U.S. or route shipments through compliant ports.
This extra movement and attention further compounds shipper costs. Trade optimization
necessitates a cost-effective smooth flow of goods and the 100% rule complicates this
streamlining therein adding substantial costs factors that impact total trade outcomes. If this
legislation disrupts international trade, it is plausible that organizations, in seeking the most
profit-friendly trade alternatives, will find other avenues to boost profitability rather than eat
these losses.
What concerns have importers expressed with implementation of the

Importer Security Filing rule?
The Import Security Filing rule or the “10+2” moniker outlines that importers are required to file
10 pieces of information and carriers are required to file two pieces of information prior to cargo
loading at non-U.S. water ports. Importers state that while filing errors have declined from 30 to
less than 5%, it is challenging to obtain timely, accurate, and complete data as required and that
the costs of compliance are disconcerting. Importers are also interested in their profit margins
and while market reach is critical to sales; if the hurdles for trade and entry are too high, then the
benefits are outweighed by the costs.
Reference:
Bleuel, W. H. (2010, November 12). Is the impact of the Internet on loyalty positive or negative.
The Customer Institute. Retrieved from
http://thecustomerinstitute.blogspot.com/2010/11/is-impact-of-internet-on-loyalty.html
Murphy, P. R., & Wood, D. F. (2011). Contemporary logistics (10th ed.). Upper Saddle River,
N.J.: Pearson Prentice Hall.
Shin, H., & Tunca, T. I. (2010, March). Do firms invest in forecasting efficiently? The effect of
competition on demand forecast investments and supply chain coordination. In University
of Virginia: Darden School of Business. Retrieved from
www.darden.virginia.edu/web/./Tunca3%20Shin-Tunca-10.pdf

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INTEGRATED LOGISTICS Q&A 1

Integrated Logistics Q& A

Thirty-­‐Sehvan C. Forty-­‐Seven, 2013

Table of Contents

Integrated Logistics Q&A

Explain how power retailers are logistical trend setters.

Distinguish between materials management and physical distribution.

Discuss the difference between a supply chain and supply chain

Do you agree or disagree with the sentiment that fourth-­‐party

Discuss the benefits and drawbacks of EDI.

From a logistical perspective, what are some of the differences

Discuss the order delivery stage of the order cycle.

How can customer service act as a competitive weapon?

How do product characteristics influence packaging and materials

What are some environmental disadvantages to plastic packaging?

What environmentally friendly packaging strategies might a firm

How can reducing packaging inefficiencies improve the performance

Discuss the advantages and disadvantages of the unit load.

What trade-­‐offs exist between wood, plastic, and metal pallets?

How might an organization’s order picking and assembly system

and strategy are severely impacted. As such, it is imperative to have a comprehensive

Discuss the drawbacks to rail transportation.

Discuss how transportation managers could be involved with other

Discuss the four factors used in determining a product’s freight

Distinguish between tracing and expediting. Why are motor carriers

How have cost considerations influenced facility location decisions?

In what way is the location of customer markets a strategic

Discuss the advantages and disadvantages to locating manufacturing,

What are right-­‐to-­‐work laws? How do they influence locational

What are expatriate workers? What challenges do they face?

Distinguish among cycle, safety, pipeline, and speculative stock.

Distinguish between a fixed order quantity and fixes order interval

Explain the logic of the EOQ model.

Why should organizations carefully consider potential trade-­‐offs

Why does warehousing exist in a supply chain?

Explain the four ways that warehousing facilitates the regrouping

What are the advantages and disadvantages of private warehousing?

Discuss why contract warehousing is a preferred alternative for many

How does multiclient warehousing mix attributes of public and

Discuss the trade-­‐offs associated with order-­‐picking versus stock-­‐

How can warehousing productivity be improved without significant

Contrast procurement’s historical focus to its more strategic

Discuss the benefits and potential challenges of using electronic

Describe significant benefits and drawbacks to Six Sigma programs.

Pick, and discuss, two components of the global sourcing

How might a particular country’s government be involved in

Discuss how a nation’s market size might impact international

What is a certificate of origin, a commercial invoice, and a shipper’s

What is an NVOCC?

Do you think that corporate cultures are relevant for designing a

Do you agree or disagree with the sentiment that logistics

Discuss several issues that influence the organization of logistics

Describe the hierarchal and matrix organization design.

From a logistics perspective, how is network organizational design

Describe some potential logistics social responsibility dimensions.

What are some ways in which the Transportation Security

What concerns have importers expressed with implementation of the

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Thirty-‐Sehvan C. Forty-‐Seven, 2013

Do you agree or disagree with the sentiment that fourth-‐party

What trade-‐offs exist between wood, plastic, and metal pallets?

What are right-‐to-‐work laws? How do they influence locational

Why should organizations carefully consider potential trade-‐offs

Discuss the trade-‐offs associated with order-‐picking versus stock-‐