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Inventory Management With Alternative Delivery ...

This paper considers a multiperiod inventory model in which a supplier provides alternative lead-time choices to customers: a short or a long lead time. The supplier operates in a batch-production mode. Orders from slow customers can be taken by the supplier and included in the next production cycle, while orders from fast customers have to be satisfied from the onhand inventory. We denote the action of providing a short lead-time product to a long lead-time customer as the inventory-commitment decision, and we also denote the initial inventory stocking as the inventory-replenishment decision. We first characterize the optimal inventory-commitment policy. We then prove that the optimal inventory-replenishment policy is a base-stock type. We extend our analysis to models to consider a multicycle setting, a case of a supply capacity constraint, and a case in which the inventory holding cost is charged in real time. We also compare the performances of the optimal inventory-commitment policy and the inventory-rationing policy. Finally, we use the customer-choice model to characterize the demand-induction and demand-cannibalization effects.

Inventory Management with Alternative Delivery ...

The Delivery alternatives page layout gives an overview of all alternative options. It also lets order takers look beyond the current company for fulfillment opportunities. They can now view both intercompany opportunities and opportunities from external vendors. By sorting the options by delivery date, sales order takers can view an intelligent list of delivery alternatives. In addition, parameters help them better manage the suggested deliveries. Because transport time can affect delivery dates, sales order takers can explore the various transportation choices that carriers offer. Because detailed information is shown for each suggestion, order takers can make informed decisions directly from the Delivery alternatives page.

The delivery date control method determines how the system establishes delivery dates, how delivery alternatives are calculated, and what information is shown. Note that delivery date control takes calendars into consideration. Therefore, the following calendars can affect the suggested receipt date: Warehouse calendar, Transport calendar, Vendor calendar, and Customer calendar. The following table describes each method for delivery date control.

This FastTab shows a list of delivery alternatives that is sorted by receipt date. Above the list, you can select which options to base the suggestions on. You can also select the mode of delivery, which determines the transport days. The following options are available:

This FastTab highlights the impact of the selected delivery alternative. If you select OK, the sales line is updated with the highlighted values in the SELECTED columns. Note that, if the quantity on the selected delivery alternative is less than quantity on the sales line, a delivery schedule is created, and the order line is split into two lines: one line for the selected quantity and one line for the remaining quantity. You can also update the commercial line so that it matches the schedule lines and affects the pricing.

Logistics coordinates the movement and storage of resources such as goods, equipment and inventory. For manufacturers, logistics starts with the incoming supply of raw materials and carries through to the delivery of finished products to customers.

Logistics teams are responsible for making sure each of these steps run smoothly, including purchasing, accepting inbound delivery, storage, packaging, inventory management, shipping, outbound transportation and delivery. Choreographing these processes gets complicated when volume grows and there are multiple products to manage. Companies that use several distribution channels and operate facilities in different locations face another layer of complexity.

Inbound logistics brings supplies or materials into a business, while outbound logistics deals with moving goods and products out to customers. Both focus heavily on the transporting of goods. But inbound is all about receiving, while outbound focuses on delivery.

The primary challenges of inbound logistics are high costs, uncertain delivery dates and unpredictable lead times. These make it hard for businesses to maintain ideal inventory levels and improve warehouse efficiency and productivity.

Information vacuum: One frequent challenge is not knowing the exact location of a shipment, when it will arrive and how much it will cost. This lack of knowledge causes some companies to carry extra inventory, make purchases too early and suffer delays in production and customer deliveries. Real-time information systems allow a company to track and trace shipments and communicate with suppliers to make sure accurate data is captured when entering materials.

Surges in deliveries and receiving: Without proper planning, businesses can end up juggling too many deliveries simultaneously. As a result, their yards become clogged with trucks, causing confusion among drivers about which dock to use. Peaks and lulls in deliveries makes it hard to effectively staff receiving personnel, as well. A weak receiving process leads to errors and a backup of materials. Solutions include scheduling arrivals, routing deliveries to specific docks and maintaining a consistent pace throughout the day. Warehouse management software (WMS) can help with logistics. Another technique is cross-docking, where the receiving department matches incoming inventory to open orders. When workers unload products, they move them directly to another dock to load onto an outbound truck, without ever storing them.

Processing returns: Returns processing is an afterthought for some companies, leading to lost sales when stock is not put back into inventory quickly. Inaccurate inventory counts and reduced customer satisfaction are additional problems. Create clear, efficient processes for returns and communicate the importance of returns management to staff to combat this issue.

Analyze your choices. Understand how your decisions affect cost and efficiency. For example, if the procurement department makes purchases in large quantities to receive volume discounts, are those savings offset by the expense of holding and managing excess inventory? The major cost drivers for inbound logistics are purchasing, supplier management, transportation, receiving, warehousing, material handling and inventory management.

Build strong relationships with suppliers: Strong supplier partnerships can yield benefits such as better terms, reduced lead time, cost savings and a sense of security during market fluctuations. Prioritizing this relationship helps your supplier understand your business better. A supplier compliance plan explains your requirements and penalties for mistakes such as late delivery or not following route guidelines. Such a program can reduce freight and warehouse costs, improve speed and accuracy, and increase customer satisfaction.

Use a transportation management system (TMS): This software automates, manages and optimizes freight operations. A TMS compares shipping quotes and service levels among carriers, schedules the shipment and tracks it through delivery. These details help a company reduce costs, increase efficiency and gain full visibility into its supply chain.

Warehouse and Storage Management: A company keeps a certain quantity of goods on hand to meet demand. Outbound logistics processes store these goods securely in the right conditions and organize them. Inbound and outbound logistics overlap in warehouse management. But outbound logistics deals with outgoing finished products. For companies that sell finished products they receive from suppliers, inbound logistics concentrates on product acquisition and outbound logistics fulfills orders sent straight to customers and distributes the products to retail outlets.

Inventory Management: Software often plays a central role in inventory management, a process that determines the best place to store goods in the warehouse for fast order fulfillment and the order picking and packing operation. Inventory management goals include inventory and order accuracy as well as maintaining product quality by preventing damage, theft, obsolescence or spoilage.

Delivery Optimization: Optimizing delivery involves not only reducing costs but meeting ever-increasing customer expectations for speed and visibility. Often, these two things go hand-in-hand. Route planning software groups orders more efficiently for delivery, sorts packages by route, plots the best course with an eye to traffic, fuel consumption and other variables, and assigns routes to drivers.

Adapt to current inventory strategies. Just-in-time (JIT) inventory and other rapid replenishment methods mean that large orders delivered to customers at widely spaced intervals are no longer the norm. Most customers using JIT will not have room to store a lot of excess product, so you need to adapt your outbound logistics to mesh with these inventory trends. You may need to account for more LTL orders.

Other elements of supply chain management include manufacturing and delivery-related customer service. Logistics helps synchronize the supply chain by controlling the flow of goods from the point of origin to the point of consumption. Participants in the supply chain, like suppliers and buyers, find partnerships helpful. Two firms work together for their mutual benefit. These partnerships are often open-ended, unlike strategic alliances or project partnerships.

Suppliers may collaborate closely with important customers on product formulation, product size, product mix, SKUs, inventory levels, supply forecasts, risk management, cost control, waste reduction and ordering systems. The customer may want to work together with logistics providers on pacing, packaging, scheduling and route efficiency. 041b061a72


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