Inbound Logistics: The New Frontier

Dr.Paul S Bender, Executive Advisor, psbender@aol.com

Business logistics management was an extension of physical distribution, the management of material flows from the end of the production line to the customer. For this reason, inbound flows, from suppliers to production or logistics facilities, traditionally have had less attention among business logisticians. However, in many sectors, inbound logistics is a more important cost element than outbound logistics, with more complexity and greater impact on service.

Thus, detailed planning, execution and control systems to optimize inbound logistics operations are becoming a major competitive weapon in many sectors characterized by large scale procurement. These include the manufacturing of vehicles (e.g., automobiles, buses, trucks, locomotives, railroad cars, ships, aircraft), heavy equipment (e.g., farm, construction), process facilities (e.g., chemicals, oil), heavy electrical equipment (e.g., turbines, generators), large engines (e.g., marine, air conditioning) and also retail, reverse logistics and others.

The emergence of powerful tools to generate automatically large scale mathematical models of inbound logistics operations enables companies to update them dynamically as conditions vary. The capability to optimize such models enables them the capability to minimize total costs subject to all pertinent restrictions. Agillence has developed and implemented successfully such models at some of the most sophisticated companies in the world.

Another major contribution of these models is that they enable the efficient separation of purchasing from inbound logistics. Traditionally, purchasing departments have tended to buy products on a delivered basis at their companies’ docks. Our experience has been that negotiating product purchase prices independently from inbound logistics costs and then adding the minimum inbound logistics cost, typically yields important reductions in landed costs.

Furthermore, having detailed models of inbound operations enables logisticians to assemble total logistics models including also outbound and reverse logistics operations. Such models can optimize the entire material flow of companies or supply chains at a level of detail impractical until recently. The result is substantial reductions in total logistics costs together with significant improvements in service. We see increasing interest in this approach that is likely to dominate logistics management in the future.

Make Technology Fit with People and Lean Processes

Dr Jeffrey Liker in his “The Toyotaway Fieldbook” explained how Toyota adopts technology into its operations. Dr. Liker took Agillence Inbound Solution development project as a case study to detail Toyota’s approach.  If you need a complimentary copy of this case study, please send us your request by clicking on the image below

Warehouse Location Strategy

Our partner SCPI Team gave a presentation on “Warehouse Location Strategy” in National Beer Wholesalers Association conference. In this presentation, SCPI Team presented unique approach of combined network optimization and routing by truck type in making warehouse location decisions in DSD networks like beverage distribution. Experiences from different beverage network design projects were presented.

ASCD (Agillence Supply Chain Designer) is the only network design tool available in the market that combines network design and routing into one optimization model.

Warehouse Location Strategy- SCPI

Toyota’s Route has the human touch

From Automotive Logistics Magazine – 2005.

Toyota’s first public acknowledgement of development of routing tool and its benefits. According to Uminger – “Toyota will use SMAP for strategic planning master network design, new plant selection and cyclical re-routing. Toyota will reset its routes on a monthly basis. The tool will also help Toyota to shorten its forecast time. Whereas the previous cycle was six weeks, four to do the planning and communication and two to get logistics providers ready, the timescale will be cut to four weeks – two weeks to plan and two weeks notice for service providers. That will allow us to get 60 day volume forecasts down to 30 days”.

Toyota – Route Design

Welcome to Agillence blog site

Welcome to Agillence blog site. Through this web site, we want to share our experiences in solving different logistics and supply chain problems. Tell us supply chain, logistics, or transportation challenges you face, and we will share our experiences and knowledge on how we would approach your problems.

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