Catalogue

8Chapter 1 Logistics and Freight Distribution

8Text 1 Logistics

11Dialogue 1 The Gateway to Europe

14Text 2 Freight Distribution

17Dialogue 2 Distribution Center Jobs

19Case Study 1 Activities of Logistics System

23Exam Paper 1

26Chapter 2 Supply Chain Management

26Text 3 The Characteristic of Supply Chain Management

30Dialogue 3 Interview with Joel Sutherland (I)

32Text 4 Selecting Supply Chain Solution

34Dialogue 4 Interview with Joel Sutherland (II)

37Case Study 2 Future Trends in Supply Chain Management

43Exam Paper 2

46Chapter 3 Transportation and Intermodalism

46Text 5 Transportation Theory

48Dialogue 5 Saving Money on Transportation

51Text 6 Containerization and Intermodalism

54Dialogue 6 Common Auto Transport Questions

56Case Study 3 Transportation in Geography

58Exam Paper 3

59Chapter 4 Outsourcing and Globalization

59Text 7 Outsourcing Is Done for Many Reasons

61Dialogue 7 CEVAs CEO Offers up Take on Global Logistics Consolidation()

63Text 8 Definition of an International Logistics Zone

64Dialogue 8 CEVAs CEO Offers up Take on Global Logistics Consolidation()

65Case Study 4 Third Party Logistics Relationship

66Exam Paper 4

68Chapter 5 Retailing Industry

68Text 9 Report on China Retailing Industry

70Dialogue 9 The Retail Logistics Landscape Is so Diverse

72Text 10 Keeping up with the Retail Supply Chain

74Dialogue 10 We Are Totaly Convinced about the Potential of RFID

76Case Study 5 Retail Supply Chain

77Exam Paper 5

80Chapter 6 Chain Store

80Text 11 Standardization of the Operation of Chain Stores Opinion

82Dialogue 11 Reach Marketing

84Text 12 Features of Development of Chain Store

86Dialogue 12 an Expanding Home Furnishings Chain

88Case Study 6 Turn the Crisis into Opportunity

89Exam Paper 6

92Chapter 7 Electronic Commerce

92Text 13 The Background of E-Commerce Logistics in China

95Dialogue 13 Gideon Stein Speaks on IM Networks ()

98Text 14 The Definition of E-commerce and E-logistics

99Dialogue 14 Gideon Stein Speaks on IM Networks ()

101Case Study 7 E-logistics: Trends and Opportunities

106Exam Paper 7

107Chapter 8 Warehouse and Inventory

107Text 15 Warehouses and Stores Processes

109Dialogue 15 A Conversation with Joe Couto()

112Text 16 Stock Control System

113Dialogue 16 A Conversation with Joe Couto()

115Case Study 8 Warehouse Management

118Exam Paper 8

120Chapter 9 Procurement Management

120Text 17 Definition about Procurement

122Dialogue 17 Conversations with Cisco Management()

124Text 18 Procurement Planning and Specifications

126Dialogue 18 Conversations with Cisco Management()

128Case Study 9 Procurement Methods

129Exam Paper 9

132Chapter 10 Information Management

132Text 19 Logistics Information and Communication Technology

134Dialogue 19 Information Management for Agricultural Development

136Text 20 Information Application

137Dialogue 20 Security Information and Event Management

139Case Study 10 Develop a Matrix of a Sites Location Parameters

141Exam Paper 10

142Chapter 11 Marketing and Customer Service

142Text 21 an Emerging Marketing

144Dialogue 21 Customer Service

146Text 22 Customer Serrvice

147Dialogue 22 Q&A with Andy Sernovitz

149Case Study 11 The Conception of Customer Service

152Exam Paper 11

153Chapter 12 Equipments and Packaging

153Text 23 A Logistics Equipment Company

155Dialogue 23 Cisco IOS Packaging

157Text 24 Packaging Types

160Dialogue 24 Fruits and Vegetables Packaging

162Case Study 12 Coca-Cola Company

163Exam Paper 12

165Appendix I

183Appendix II Abbreviations

187Appendix III Reference

Chapter 1 Logistics and Freight Distribution

Dialogue 1 The Gateway to Europe

With its centralized location, market proximity and highly developed logistics infrastructure, the Netherlands is often called The Gateway to Europe. To learn more - click on a question for a quick link to the answer, or scroll down to read the entire section.

Q: Why is logistics important for my companys success in Europe?

A: To become successful in the European market, offering the right product for the right price is just not enough anymore. If your company plans to compete with the existing players in the market, you must do it at the right place, in the right time, and in the right configuration. So, its essential to set-up an effective and efficient supply chain, tailored to the unique characteristics of your products, service levels and markets.

There are, of course, many ways to set up your European supply chain. However, one of the most common is the centralized European distribution model, in which your entire European supply chain is managed from one central point in Europe.

Q: Where should I set up my European Distribution Center?

A: One of the crucial aspects in designing your European supply chain is selecting the right location for your European Distribution Center. Location factors such as air and sea port capacity, quality of the transport infrastructure, availability of logistics services, employment and real estate are obviously important. But dont forget to consider customs regulations and the tax environment as well. The Netherlands is an ideal location from which to serve the European market. In fact, more than 50% of all international companies using a Centralized European Distribution Center located it in the Netherlands.

The Dutch trading history goes back many centuries, so theres a long-established tradition in transport and logistics. Unique characteristics of the Netherlands include:

Central location within the European market

Excellent sea and airport facilities

Extensive transport infrastructure with fast connections

Excellent and well-developed logistics industry

Internationally-oriented business community

Q: Are there tax and customs advantages to importing my goods via the Netherlands?

A: Since foreign trade and investments contribute significantly to the Dutch economy, the Dutch government works hard to create an attractive business climate for foreign companies. It aims to facilitate doing business via the Netherlands through cooperation and flexibility, as well as streamlined customs procedures that quickly validate documents. Bureaucratic red tape and customs checks have been replaced by streamlined administrative controls. Examples of this are:

Customs Bonded Warehousing Theoretically, customs duties are due when goods are imported into the European Union (EU). But the Netherlands allows the payment of these duties to be postponed through the storage of the goods in a customs bonded warehouse. Only when the goods are shipped out of the warehouse does the company pay the import duties. This can result in considerable cash-flow advantages.

VAT Deferment System In contrast to most other EU member states, the Netherlands has instituted a system that provides for the deferment of VAT at the time of import. Instead of paying VAT when the goods are imported into free circulation within the EU, the payment can be deferred to a periodic VAT return. Under this system, the VAT at import should be declared but the amount can be deducted on the same return. The bottom line is that there is no actual payment of VAT at import, so that you can realize cash-flow and interest earning benefits.

Highly Automated Customs Procedures Dutch Customs makes use of computerized clearance systems that speed up the flow of cargo. Also, as a result of unified and standardized documentation across the EU, approval time is minimized and costly delays are eliminated.

Q: When I start doing business in Europe, should I set up my own distribution center or can I find a partner who can do this for me?

A: The choice between outsourcing and setting up your own logistics operation depends on various issues: Is logistics a core or strategic activity? What would be the type and scale of the operation? What is the required time-to-market, and how much logistics knowledge is available in the company? However - especially for companies starting to do business in Europe for the first time - outsourcing the logistics operation to a local logistics service provider (LSP) can offer considerable advantages. Some of these advantages include:

No capital investments needed - fewer risks

Lower total logistics costs

Flexibility in space and manpower

Economies of scale

Insight into logistics costs

Concentration on core business

Flexibility in supply chain set-up

In Europe outsourcing logistics activities to logistics service providers (LSPs) is more common than in the US and Canada. Of all operations, about 65% is outsourced worldwide, but in the Netherlands this percentage is an even higher 75%. The reason is the high volume of goods flowing via the Netherlands. This makes it profitable for LSPs to offer warehousing, transportation services and value added services. The advantages for your company are that the rates are competitive, and there are frequent connections to pan-European destinations.

Q: Which services can I outsource to a logistics service provider?

A: Companies in the logistics industry here offer a wide variety of services to clients. Standard services offered include:

Freight forwarding from all over the world to Europe

Customs clearance

Storage

Order-receiving and preparation

Value-added services such as final assembly, labeling, kitting, fiscal representation

Transportation throughout Europe

Management information

The logistics service provider can also assist you in optimizing your supply chain, which can save on costs and improve lead-times.

New Words and Phrases

contemporary [] n.adj.,

merely [] adv., ,

reside in v.

concomitant [] adj.n.

bring forward v., ,

dedicate to v.

revictual [] v.,

multidimensional [] adj.,

transshipment n.

conventionally adv., ,

array [] n., , , , vt., ,

discard [] vt., v.

blurring [] , , ()

reciprocal relationship

coordinate [] n., , ()adj., vt.,

consolidation [] n.,

decomposition [] n.,

proximity [] n.,

extraction [] n., , [](), , , , []()

milestone [] n., , ,

endeavor [] n., vi.,

corridor [] n.

standpoint [] n.,

suburban [] adj.,

replenishment n.,

storey [] n.[]

foremost [] adj.(), , adv.,

agglomerate [] n., adj., vt., , vi., ,

embedded [] adj., ,

paradigm ] n.

in terms of adv., , ,

witness [] n.[], , , , vt., ..., , vi.,

scenario [] n., ,

pickup [] n.,

double-edged adj., ,

sword [] n.

empower [] v.,

proximity [] n.,

real estate n.,

bureaucratic [] adj.

postponed v., vbl.,

VAT =Value-Added Tax ,

deduct [] vt.,

kit [kit] n., , ,

fiscal [] adj., , , n.(),

Dialogue 2 Distribution Center Jobs

Q: Does Distribution have both fulltime and part-time opportunities?

A: Yes. The majority of Distribution associates are fulltime, but we are also very flexible working with associates who only desire part-time positions.

Q: Does Publix hire many external candidates for hourly positions in Distribution?

A: Absolutely. The most common are order selectors, maintenance mechanics, ammonia refrigeration specialists and clerical positions.

Q: Is it true Publix offers free meals?

A: If there is a cafeteria at or near the facility in which you work, support associates (Distribution, Manufacturing, and Corporate) are entitled to a free hot buffet-style meal in the cafeteria on the days they work.

Q: How do I know what openings there are at a specific Distribution Center and how do I apply?

A: Each Distribution Center has its own specific needs, which change frequently. You may inquire about current openings by calling our Jobline, available 24 hours a day, to hear a recording that lists all openings as well as instructions on how to apply for any that interest you. You may also view job openings on www.publix.jobs/support.

Q: How do I know what management openings there are at a Distribution Center?

A: Generally, we do not advertise for management openings because most of them are filled by promotion from within. However, we occasionally accept applications from outside the company for specific positions. Those openings are listed on www.publix.jobs/support.

Q: How old do you have to be to work at a Distribution Center?

A: Distribution only accepts applications from job seekers who are at least 18 years old. Federal and state laws regulate the employment of minors. These laws specifically regulate the hours that individuals under the age of 18 may work, the occupations in which they may be employed, and the hazardous equipment and/or materials from which they are restricted.

Q: Am I required to have experience working in a Distribution Center to apply for openings at your Distribution Center?

A: Usually not, but those who do have that experience have an advantage over those who do not.

Q: If I am interested in a position in one of your Distribution Centers, where do I send my rsum?

A: We do not process unsolicited rsums for Distribution positions. All applications for positions in our Distribution Centers must be completed in person at a Publix Employment Office or submitted through www.publix.jobs/support or Hotjobs.

Q: Will I be contacted after submitting an application?

A: Only applicants who are chosen for an interview are called. The number of applications we receive makes it impossible to contact each applicant.

Q: How long is my application active?

A: For 60 days. If you dont hear anything within60 days after you apply, we encourage you to reapply.

Q: What are some of the expectations you have for people who are invited to join your company?

A: Publix is a leader in the supermarket industry because our associates have high standards. They are individuals who can meet our lofty expectations. In fact, they are people who only want to work with others who also have high standards. To maintain our leadership position and positive company morale, we strive to hire people who are:

passionate about delivering premier customer service,

driven to make things betterfor Publix and for the communities we serve,

energized by teamwork, and

honest, dependable, respectful of others and of Publix property.

New Words and Phrases

roughly [] adv.,

contemporary [] n.adj.,

subcontractor [] n.,

bundle [] n., , v.

spatial [] adj.

intricate [] adj., ,

merchandising [] n.,

predominant [] adj., , , ,

mitigate [] v.

depreciation cost

concomitant [] adj.n.

tolerance [] n., , , , ()()

vt.()

distinct [] adj., , ,

convergence [] n.,

synchronization [] n.n.

eliminate [] vt., v.

intermediary [] n., , adj.,

tier [] n., , , , vt., vi.

realm [] n.

dislocation [] n., ,

level off v., ,

progressive [] n., adj., (),

discipline [] n., v.

designated,

bypass [] n.vt.,

pioneer []n., , ,

ammonia [] n.[],

cafeteria [] n.

hazardous [] adj., ,

unsolicited [] adj.,

lofty [] adj., , ,

passionate [] adj.

Exam Paper 1

LOGISTICS AND MULTI-MODAL TRANSPORT

Time allowed Three hours

Answer any FIVE questions All questions carry equal marks

1. Describe how the container terminal interface should be geared in a multimodal transportation system. How can good road/rail connections improve the efficiency of terminals? Use examples to elaborate your answer.

2. Discuss the evolution of third-party (3PL) and fourth-party (4PL) logistics concepts over the years and, compare and contrast the differences between the developed world and developing world including emerging economies. Use examples.

3. Explain the importance and benefits of proper inventory management systems for a company and the options available to manage the costs together with their limitations and risks.

4. Explain the importance of electronic commerce and how it helps to increase the efficiency for a multi-modal transportation business together with the developments that can be envisaged into the future. Are there any risks involved? Discuss.

5. Recently, the shipping industry saw container vessels as large as 12,000 TEU being introduced in some trade-lanes. Are these large vessels very important to facilitate the escalating world trade? Are there any alternatives available? Discuss with examples.

6. Discuss how the traditional usage of a Bill of Lading could be modified to suit todays requirements. Express your imagination with examples.

7. Describe the role of logistics in the context of globalised world. Answers should cover all modes of transportation.

8. Competition Laws is a mainstream discussion in the shipping industry. Discuss the developments taking place in different parts of the world.

EXAMINERS REPORT

The overall results were not very satisfactory this year. The work of a large number of candidates was incomplete and/or out of focus. A considerable number of candidates seem to have totally misunderstood one or two questions. As usual, some answers were too short, and the content was insufficient to reach the required level to gain a pass. Although some answers carried the logical flow needed, candidates did not cite any/good examples/illustrations to display the knowledge and, as a result, candidates could not attain the pass mark. Most answers showed lack of planning as well.

QUESTION 1 CONTAINER TERMINAL INTERFACE WITH OTHER TRANSPORT SYSTEMS

This was one of the very popular questions and most candidates managed to score well. Candidates were supposed to explain the facilities container terminals required for an efficient and effective turnaround of container trains and trucks. The requirement included; wide port access roads, automated gates and sufficient rail tracks, inland container depots (ICDs) and other connected facilities to avoid the bottlenecks in the landside. Modern port handling equipments is an integral part. If the port is a Tran-shipment hub and expecting large ships (10,000 - 14,000 TEU capacity), the ports should be equipped with the necessary port equipments to provide fast turnarounds to these vessels. The container yard and storage capacity is also important to avoid congestion. Also, efficient transfers between ports and airports, cargo consolidation facilities, modern IT facilities etc. are required. For the second part of the question, candidates were expected to demonstrate their knowledge as to how good rail/road connections could improve the terminal operations with suitable examples.

QUESTION 2 THIRD PARTYAND FOURTH PARTY LOGISTICS

This was not a popular question although it was wide-open. Basically, candidates were required, at the outset, to define the concepts of. 3P/L (a company providing logistics services - sometimes customized with integrated warehousing and transportation solutions) and 4P/L (a company providing more strategic solutions with an aim to long term cost reductions with consultancy options) However, the services 3P/L and 4P/L companies provide may differ from location to location and candidates were required to explain the evolution and level of developments in different geographic locations (both developed and developing world) with examples.

QUESTION 3 INVENTORY MANAGEMENT SYSTEMS.

Most candidates misunderstood this question. The question was all about the inventory management systems of capital goods. But this focus was seldom seen. Candidates discussed the inventory control of equipments such as containers. The answers should highlight the importance of proper inventory management systems of a business from a cost control point of view. As options available, candidates were expected to discussed, Just in Time (JIT), BSS (Buy, Stock, Sell), 3S (Sell, Source, Ship), Distribution Centre (DC) strategy etc together with their limitations and risks including what happens if the system is interrupted.

QUESTION 4 ELECTRONIC COMMERCE

This was another popular question which was wide-open for candidates to show their knowledge of the developments of e-commerce in multimodal transportation. There can be numerous/endless applications in operation. This includes real time tracking systems available from the place of origin up to the place of destination. Creative thinking was expected and due credit has been given to logical discussions and imaginations. But, most answers were limited to stereotype- traditional thinking and innovative expressions were rather scarce. There can be numerous security risks in the usage of electronic commerce. The involved risks were to be identified and explained.

QUESTION 5 12,000 TEU SHIPS - ARE THEY IMPORTANT, ANY ALTERNATIVES?

This was a rather practical question where candidates could bring in their knowledge and experience. The shipping industry saw over 12,000 TEU capacity vessels a few years back. These vessels are mostly deployed in the Asia-Europe trade lane. The question gave an opportunity to discuss the importance of the larger vessels in todays context (in terms of international trade growth). The answers should cover - how these vessels are deployed, their service patterns/trade lanes and the current demand and supply situation. The discussion can be extended to cost effective alternatives as well. Well-balanced and creative answers earned extra marks.

QUESTION 6 HOW THE USAGE BILL OF LADING CAN BE MODIFIED

The question was totally misunderstood by most candidates. Instead of discussing how the usage of bill of lading can be modified, candidates discussed the functions of the bill of lading. Basically, this was all about transforming the system to use electronic forms of bill of lading. Answers should cover the developments such as the electronic-B/L options available like Bolero which is rather limited to a club. Most large shipping companies are now advocating for e-B/L and other measures of standardization to suit the 21st century. However, this is a mammoth task as all stakeholders including shipping lines, customs, banks, other authorities etc. need to agree on the system and there can be numerous security issues. It was important to discuss the pros and cons and risks involved in the usage of e-B/Ls. Discussions with appropriate/logical creative thinking earned extra marks.

QUESTION 7 THE ROLE OF LOGISTICS IN THE GLOBALISED WORLD

This was an open-ended, practical question where candidates could bring in their knowledge and understanding of developments in the entire logistical arena and its role. The answers should contain examples covering different geographic locations and all modes of transportation and depicted the todays logistics world.

QUESTION 8 COMPETITION LAWS AND THEIR DEVELOPMENTS

The knowledge of the candidates was poor and this was one of the least popular questions. This covered deregulatory issues and how competition laws are taking shape around the world. The liner conferences are getting banned in October this year within the European Union. Also, in many other places such as China, India and South East Asian countries, shippers are accusing the liner conferences as price fixing bodies and the authorities are becoming very strict, and introducing stringent regulatory and monitoring measures. The answers should cover the current situation in Europe and USA. However, due credit has been given for other contributions. Extra marks have been awarded to those who compared and contrasted.

CONCLUSION

As usual, some candidates reproduced the questions on the answer script wasting valuable time. Lack of preparation was noticed. It is always prudent to acquire useful techniques that are needed to deal with written examinations. Some displayed time management deficiencies as well. It is a good practice to commence answers with an introductory paragraph and end with some sort of conclusion to enhance the quality of the answer. This brings a good order and system. But, this was not seen in most scripts. In some cases these structural improvements could have enhanced the quality and brought a few extra marks to jump the threshold to a pass.

Chapter 2 Supply Chain Management

Dialogue 3 Interview with Joel Sutherland (I)

Sutherland, who has a B.S. degree from the University of Southern California and an M.B.A. from Pepperdine University, spoke recently with DC Velocity Editor at Large James Cooke about his career.

Q: How did you end up in the supply chain profession?

A: I was going to the University of Southern California, thinking I was going to be an engineer and I found a course that I liked more through the business school that was called Marketing, Logistics and Transportation Management. So I entered that program in my sophomore year and ultimately got my undergraduate degree in business with a focus in marketing, logistics, and transportation management.

Q: in giving you the Distinguished Service Award, CSCMP noted that you were behind a number of innovations in the field. Can you describe one of those innovations and its impact?

A: I have a couple, but I will give you one in particularcollaborative transportation management. I was recruited by the president of J.B. Hunt Logistics to come in and help him craft a division for a new company that we eventually named Transplace. This goes back to 1998-1999. We were doing something unique in terms of working with our clients and carrier partners as a third party. We got involved with collaborative transportation management and worked very closely with Wal-Mart and Procter & Gamble on that. Then, as we started servicing other customers like AutoZone and Office Depot, I started putting together this collaborative relationship.

I then got involved with VICS [the Voluntary Interindustry Commerce Solutions Association] because they wanted to know if there was a relationship between CPFR (collaborative planning, forecasting, and replenishment) and collaborative transportation management. I spent several years running a committee for VICS, where we defined what collaboration transportation management was.

I will skip forward to today. I am working through the center here at Lehigh with a confectionery company called Just Born. We are developing a collaborative supply chain with Just Born and other candy companieswe call it the confection connection. As part of the program, we are going to co-load the shipments of these multiple candy companies that are going to the same locationswere putting them on the same truck at the same time.

This all came about from collaboration transportation or collaborative supply chain. There are other forms of collaborationcollaborative warehousing, collaborative communications, and so forthbut transportation is where the biggest savings come from.

Q: Can you briefly define collaborative transportation?

A: Well, it is where multiple partiesshipperswork together to serve a common customer. So in the case of Just Born, the shippers are candy manufacturers and the common customers are retailers. The program allows the manufacturers to save on freight costs by consolidating loads going to the same location. In the confectionery industry, 75 to 90 percent of the shipments are LTL today. If you can combine shipments going to the same locations, you can change that to 90 percent truckload.

So the intent is a bulk conversion from LTL to truckload and not in the traditional pool distribution or cross-docking modes. Really, you are combining them under one warehouse, where you can then take a look at the purchase orders. The orders are coming from common customersWalgreens or Sams, for example. Then you can plan those loads so that you can fill the truck with goods from multiple shippers that are headed to the same location. The savings in transportation alone are somewhere around 20 to 25 percent.

Q: What other innovations were you involved in?

A: I wouldnt call it an innovation as much as an application. I spent a number of years working for a Toyota Group company called Denso, which is a $40 billion parts manufacturer. I was the highest-ranked American in that company. After 11 years there, I really mastered the Toyota production systemLean. Since I left Denso, I have applied those lean processes beyond manufacturing or production operations to the supply chain. What I have done is focus on ways to identify and eliminate inefficiencies in the supply chain. I have applied those throughout my career in companies that I have gone to work for.

One was at International Paper. At International Paper, we were creating a new company called Xpedex and building it up through acquisitions. I was the chief supply chain officer at the corporate headquarters. My role was to integrate these companies, which we were acquiring at a rate of two or three a year. The question came up: How do you quickly integrate them and eliminate inefficiencies?

So I created a process based on the Toyota production system to identify inefficiencies and eliminate them in a way that became cultural. In other words, this was a process that the newly acquired companies had to implement, and there were metrics attached to it. They reported on a daily, weekly, monthly basis, but it was a way to drive kind of a cultural integration, applying the Toyota production system techniques in a wholesale distribution environment. We achieved dramatic improvements over a short period of time. (To be continued)

New Words and Phrases

commit [] vt.(), (), , ,

implement [] n. , vt., v.

vague [] adj., , ,

metrics [] n.,

uncertainty [] n., , ,

autonomous [] adj.

inadequate [] adj.,

concise [] adj.,

pitfall [] n.

synergy [] (=synergism), ,

futile [] adj., , , ()

constitute [] vt.(), (), ,

analytic [] adj.,

simulation [] n., ,

parameter ] n., ,

hassle [] n.vi.vt....

haul [] n., , , , , (), vi., , , vt.,

deferred [] adj.,

positively adv

contractor [] n.,

confectionery [] n.,

LTL [] ()

metrics [] n.,

Dialogue 4 Interview with Joel Sutherland (II)

Q: Looking back on things, what is your greatest personal accomplishment in the field to date?

A: I could say my greatest personal accomplishment was at Denso. I went from basically a lower management level to the first vice president of operations, but it was really supply chain. I was the highest-ranked non-Japanese in Denso for North America.

I dont know if youre familiar with the Japanese training process, but they put you through every role within a company. That is how they test you, and that is how they reward you. During my 11 years at Denso, I went from distribution, running warehousing and transportation and inventory control, to manufacturing and production to procurement. Throughout this rotation, which was a competitive process, several people were being evaluated. By the end, I had won out.

I succeeded at becoming the first American vice president, but more important was the responsibility they gave to me afterward, which is what I consider to be true supply chain management. I had responsibility for all the procurement going back to my suppliers and even qualifying suppliers that they used. But I also was getting involved in returns and reverse logistics and in figuring out how to satisfy customer complaints involving the products that are ultimately installed into automobiles. I had total responsibility for that at a time when we didnt know the term supply chain management.

As for a professional accomplishment, I would say it was turning around Formica. At Formica, I was brought in by an equity group as part of a turnaround team. It was a horrible union environment, where they had lost all trust in management. Also, they did everything they could to sabotage the efforts that management was making.

A company called Wilsonart comes along and says: how can we provide a better supply chain solution? They reduced the order to delivery cycle time dramatically. As a result, they took market share away from Formica within a very short period of time.

So the equity group brought me and several other folks ina manufacturing guy, a finance guy, an HR guy. My role was to integrate the logistics activities within the company. I applied what I call the Toyota culture, developing trust with the unions, showing them that I understood their business and understood what their jobs were, and spent six months developing closer relationships with them.

In the meantime, I started pulling the various operations together, with an eye toward eliminating silos and making the company leaner. So I again applied those Toyota production system techniques to develop a program for measuring results and rewarding performance appropriately. Within two years, we were able to dramatically shorten our order to delivery cycle time. We had a culture that was much improved, and we were able to sell the company. Unfortunately, the new owners went into bankruptcy, but thats a different story.

Q: You are now at Lehigh University. How can industry and universities work together better to advance the supply chain profession?

A: There are only a few universities that really have a focus on outreach to industry. When you think of the supply chain programs out there, how many have brought in an industry person like me to provide a real outreach to industry? Too many centers have put academics with limited or no industry experience in charge of developing a supply chain program or working with industry. Many universities dont even have a research center that is outreached to industry.

So the first step is having a center like we have at Lehigh that is intended to work with industry to identify its needs and solve supply chain problems. I learned a long time ago that a university is just like a manufacturing company. If you manufacture something, you have to manufacture something for which there is demand in the marketplace, right?

Q: Yes.

A: Otherwise, you are not going to sell it. The same is true with universities that offer supply chain and logistics programs. If theyre turning out students who dont have the knowledge and skills industry is seeking, those students are not going to be able to get a job. The one thing that universities have to do is have research centers like we have here. We really understand what industry needs. As an industry research center, we can go back and say, These are the skill sets that we need to incorporate into our program so that it is aligned with the demand of industry. That could be regional demand or it could be global demand. You want to take a look at how students are going to get a job. You are manufacturing that talent.

Q: That leads into the next question. Are there any special courses a student considering a career in distribution should take right now?

A: I am a big fan of IE courses. If you are taking pure business classes in supply chain, you are missing a big part of where that demand is, what industry is really looking for.

Q: You mean industrial engineering?

A: Industrial engineering, with the focus in the supply chain area. Industrial engineering historically was focused on manufacturing, but that has changed. In the United States, there are more supply chain programs that are now applying IE techniques and skill sets.

Q: Looking back on it, what has been the biggest change youve seen in logistics and distribution?

A: I would say one would be technology. We used to have to build our own technology. We used to have to figure out for ourselves what the problem was and how we would solve it. Now, there is so much technology out there that you can just buy off the shelfand you can customize it, you can implement it in a matter of weeks instead of years, and you can do it at a fraction of the cost. Because of that enabling technology, we have been able to move it into supply chain management vs. just managing within the single enterprise.

Q: If you were to do it all over again, would you still pick this profession?

A: Absolutely. I picked this back in the early 70s, and it has been tremendous for me for a number of reasons. One is that there is never a dull day in this field, and it is constantly evolving. When I joined NCPDM [the National Council of Physical Distribution Management, the forerunner to CSCMP], we were talking basically inside the four walls. From transportation and some warehousing and some inventory management to logistics, we started integrating a lot of the activities into supply chain management. I think that Wall Street now recognizes the importance of effective supply chain management. (End)

New Words and Phrases

go about v., , ,

alignment [] n.,

denominator [] n.[] ,

numerator [] n.

destroy [] vt., , v.,

substantial [] adj., , ,

portfolio [] n.portfolio [] n.

breadth [] n., (), ()

underestimate [] vt., n.

incremental [] adj.

filter [] n., , , vt., , vi., , (),

groundwork [] n., ,

functionality [] ,

accommodate [] vt., , , , , ..., ,

vi.

niche [] n.

creep in

extraordinary [] adj., , ,

laden [] adj., , vbl. lade

dominant [] adj., , adj.[]

turnaround [] n., , , (, )

sabotage [] n.(), , vi.vt...., ,

silo [] n., , [], ()

outreach [] v.,

align with v....

figure out v., , , ,

tremendous [] adj.,

forerunner [] n.(), ,

Exam Paper 2

LOGISTICS AND SUPPLY CHAIN MANAGEMENT

Time: 3 hours

Maximum Marks: 100

(Weightage 70%)

Note: (i) Section A has six questions. Each carrying 15 marks each. Attempt any four.

(ii) Section B is compulsory and carries 40 marks.

SECTION A

1. There are many possible structures for supply chain, but the simplest view has materials converging on an organization through tiers of suppliers and products diverging through tiers of customers. Elaborate.

2. Explain clearly the meaning of World-Class in World-Class Supply Chain Management (WCSCM). What are the features of World-Class Companies? Give your answer highlighting different characteristics pertaining to management level, quality control, operations/production and technological advances.

3. Define Enterprise Resource Planning (ERP). Give its tangible and intangible benefits. Why does a company pursue a new ERP solution?

4. When Christopher says that Supply chains compete, not companies what exactly does he mean? Evaluate this statement from the cost point of view.

5. Given the information below, which alternative would you recommend?

Location

A

B

C

Raw materials

0-40

50

70

60

Market

0-20

40

40

80

Transportation

0-10

90

70

50

Labor cost

0-20

40

40

30

Construction cost

0-10

10

60

30

The score of each location pertaining to each factor is out of 100.

6. In the era of outsourcing, third party logistics can add value to existing supply chains. Explain this statement with examples.

SECTION B

7. Read the following case and answer the questions given at the end.

Passenger Interchange

In most major cities the amount of congestion on the roads is increasing. Some of this is due to commercial vehicles, but by far the majority is due to private cars. There are several ways of controlling the number of vehicles using certain areas. These include prohibition of cars in pedestrian areas, restricted entry, limits on parking, traffic calming schemes, and so on. A relatively new approach has road-user charging, where cars pay a fee to use a particular length of road, with the fee possibly changing with prevailing traffic conditions.

Generally, the most effective approach to reducing traffic congestion is to improve public transport. These services must be attractive to people who judge them by a range of factors, such as the comfort of seating, amount of crowding, handling of luggage, availability of food, toilets, safety, and facilities in waiting areas. Availability of escalators and lifts, and so on. However, the dominant considerations are cost, time and reliability.

Buses are often the most flexible form of public transport, with the time for a journey consisting of four parts:

joining time, which is the time needed to get to a bus stop

waiting time, until the bus arrives

journey time, to carnally do the travelling

leaving time, to get from the bus to the final destination.

Transport policies can reduce these times by a combination of frequent services, well-planned routes, and bus priority schemes. Then convenient journeys and subsidized travel make buses an attractive alternative.

One problem, however, is that people have to change buses, or transfer between buses and other types of transport, including cars, planes, trains, ferries and trams. Then there are additional times for moving between one type of transport and the next, and waiting for the next part of the service. These can be minimized by an integrated transport system with frequent, connecting services at passenger interchanges.

Passenger interchanges seem a good idea, but they are not universally popular. Most people prefer a straight-through journey between two points, even if this is less frequent than an integrated service with interchanges. The reason is probably because there are more opportunities for things to go wrong, and experiences suggests that even starting a journey does not guarantee that it will successfully finish.

In practice, most major cities such as London and Paris have successful interchanges, and they are spreading into smaller towns, such as Montpellier in France. For the ten years up to 2001, the population of Montpellier grew by more than 8.4 per cent, and it moved from being the 22nd largest town in France to the eighth largest. It has good transport links with the port of Site, an airport, inland waterways, main road networks and a fast rail link to Paris. In 2001, public transport was enhanced with a 15 kilometer tramline connecting major sites in the town centre with other transport links. At the same time, buses were rerouted to connect to the tram, cycling was encouraged for short distances, park-and-ride services were improved, and journeys were generally made easier, As a result, there been an increase in use of public transport, a reduction in the number of cars in the town centre, and improved air quality. When the tram opened in 2000, a third of the population tried it in the first weekend, and it carried a million people within seven weeks of opening. In 2005, a second tramline will add 19 kilometers to the routes.

Questions :

(a) Are the problems of moving people significantly different from the problems of moving goods or Services?

(b) What are the benefits of public transport over private transport? Should public transport be encouraged, and if so how?

(c) What are the benefits of integrated public transport systems?

Chapter 3 Transportation and Intermodalism

Dialogue 5 Saving Money on Transportation

With a soft economy and an uncertain stock market, more and more people are keeping an eye on spending, and they are interested in getting more for their money. Kyle Busch has over a quarter-century of experience saving money on transportation. He answers ten commonly asked questions about purchasing vehicles and saving money.

Q: Why does it make sense to consider buying used vehicles?

A: Transportation is a depreciating asset that loses value, especially during the first three years of ownership. Buying a 2 to 3 year-old used vehicles will provide about a one-third reduction in the cost. Additionally, the initial owner will have test driven the vehicle for the second owner.

Q: What is a common error than many people make when buying transportation?

A: A common error when buying transportation involves buyers not thoroughly identifying their transportation needs and then purchasing a vehicle that does not entirely meet those needs. For example, a buyer might choose a mid-size family sedan that satisfies many of his or her needs. However, six months after the purchase, the buyer realizes that another vehicle in the same category provides a softer ride, better fuel economy, etc. and would have better satisfied his or her driving needs.

Q: After identifying transportation needs, what should buyers do next?

A: It is worthwhile to visit a local public library to research which vehicle(s) will indeed satisfy specific transportation needs and then identify those that have good reliability ratings.

Q: Is it best to buy a vehicle from a specific source?

A: Each transportation source has certain advantages and disadvantages. However, the important thing to keep in mind is that a number of vehicle sources should be considered (i.e., private owners, rental car companies, company vehicles, off lease vehicles, new car dealerships, bank repossessions, the Internet). When buyers inform a vehicle source that they are also considering the other sources, better deals are usually obtained.

Q: What questions should buyers ask by telephone to better determine if a vehicle is worth their time to investigate?

A: How many miles has the vehicle been driven (the average is about 12,000 to 13,000 miles per year)? Is the transmission an automatic, a semi-automatic, or a manual? If the transmission is not what the buyer wants, there is no need to ask further questions. Has the vehicle been repainted and if so, why? It is best to avoid repainted vehicles.

When are the next state inspection and emissions standard test due? The vehicle should have a minimum of at least eight-months remaining until the next required state inspection and emissions test. How often were the engine oil and the oil filter changed, and who performed the service? An acceptable answer would be every 3,000 to 3,500 miles or about every three to four months.

Are you the original owner of the vehicle? Original owners tend to take better care of vehicles. What is the reason that the vehicle is being sold? It is encouraging if the individual is the original owner and if he or she is planning to again buy the same make of vehicle.

Q: What if the owner is lying when answering questions about a vehicle?

A: It is worthwhile to obtain as much information about a vehicle as possible; therefore, buyers should ask questions. The interior and exterior inspections and vehicle test-drive help to verify the information provided by the owner.

Q: How long should the vehicle test-drive take?

A: It is worthwhile to test-drive a vehicle for a minimum of 20 minutes on two separate occasions. The test drive should include a variety of roads that buyers will drive day-in and day-out.

Q: Should buyers take a vehicle to a mechanic before making a purchase?

A: A mechanic should confirm what buyers have concluded after they have inspected and test-driven a vehicle. Buyers should request that the vehicle be raised on a lift for the mechanics inspection and that the mechanic test-drives the vehicle.

Q: of course buyers what to save money, but what protection do they have when purchasing a 2 to 3 year-old vehicle?

A: Many vehicles have manufacturers bumper-to-bumper warranties of three years/6,000 miles or four years/50,000 miles in addition to five years/60,000 miles on the drive train (i.e., engine and transmission). The warranties are transferable to buyers who purchase the vehicles. The warranties begin on the date that vehicles are first purchased from new car dealers. The buyers best interests are also served when they have performed research to identify vehicles that have favorable reliability ratings.

Q: What is a long-term benefit of saving one-third when buying vehicles?

A: The average new vehicle costs about $15,000.00 to $18,000.00. Most 2 to 3 year old vehicles will easily provide five or more years of trouble free driving. If buyers invest the savings (i.e., $5,000.00 to $6,000.00) and they are able to add $800.00 per year toward transportation, after a five-year period, they will have the money needed to purchase another 2 to 3 year-old vehicle without straining their budget.

New Words and Phrases

As a prelude to...[]

to distill

hierarchy [] n.,

arterial [] adj.

commute [] v., , ,

errand [] n., ,

hybrid [] n., , adj.,

accommodate [] vt., , , , , , , vi.

detour [] n., vi.vt.

commute [] v., , ,

facet [] n.(), (), , , vt....

hang out v.

vice versa [] adv.

radius [] n., , , , ,

proximity [] n.,

indelible [] adj.,

tenure [] n.(), (), , ()

beltway [] n.(),

bickering []

partisanship [] n.,

democrat adj.democrat [] n.

pluck [] n.v.(),

congressional [] adj., ,

proliferation [] n.,

depreciate [] v., (), , ,

sedan [] n.,

bumper-to-bumper [] adj.

without strain ,

Dialogue 6 Common Auto Transport Questions

Q: How much will it cost to ship my vehicle?

A: There are many factors that go into this, so its impossible to give a one size fits all answer. When you get a quote from an auto transport company, you will be asked several questions, like:

Do you need your vehicle delivered by a specific date?

How far will you be traveling?

How large is the vehicle you will be transporting?

Do you want door-to-door service, or will you be dropping off and collecting your car at a terminal?

These questions are necessary in order to give you a more approximate estimate. Obviously, the larger your vehicle and the longer the distance to ship, the more you will pay.

Q: How can I locate auto transport companies?

A: There are many ways to find a car-shipping provider: browsing through advertisements in local newspapers, phone books or the Internet, or asking friends, colleagues or your moving company for references.

Relocation.com matches individuals with industry professionals who provide superior service. If looking for a vehicle-transport company, simply submit a request for a quote on our site. If you incur any difficulty locating an auto shipper nearby, inquire about local terminals or carriers where you can drop off or pick up your vehicle. These terminals are most likely associated with a company located elsewhere.

Q: What should I look for when selecting an auto transport company?

A: Selecting an auto transport company you can trust with your vehicle is no easy task. Before making your decision, it is necessary to inquire whether the company is licensed and bonded. This will help you determine if they are regulated by the United States Department of Transportation (DOT).

The Interstate Commerce Commission (ICC), which was terminated in 1995, transferred its safety guidelines over to the Department of Transportation. This assisted in elevating the status of the DOT in the world of transportation. You can refer to the DOT and Better Business Bureau to determine whether your auto transport company meets the regulations for secure transporting or if any complaints have been made against them.

Q: What is an oversize fee?

A: An oversize fee is an additional fee for vehicles larger than the average size. Cars in this category generally include SUVs, vans or pickup trucks. This fee is applied because these vehicles take up more space on the carrier. Consult with your car transport company about whether this charge applies to you prior to signing the contract.

Q: How far in advance should I schedule my pick-up?

A: Make arrangements at least two weeks in advance, especially if you will be traveling a long distance. The earlier you schedule your pick-up, the better your chances of having your vehicle picked up on the date you request. Companies will also have an immediate pick up option available at an additional fee. An important point to keep in mind is that pick up and delivery dates are not guaranteed, so you need to plan appropriately.

Q: Where will my car be picked up and delivered?

A: Generally, there are two types of services you can request:

Door to Door This includes a home pick up and delivery. Although it is the most convenient option, you will pay extra for it. However, you may be asked to meet the carrier at a nearby location if the truck carrier is too big to enter your neighborhood.

Terminal Service With this service you are required to drop off and pick up your vehicle at an auto transport terminal. This may be inconvenient for you if you only have one vehicle because you may have to travel a long distance to get to the nearest terminal.

New Words and Phrases

maritime [] adj., , ,

oceangoing adj.

truck chassis

intermodal []

correspond to,

ubiquity [] n., ()

initiator [] n., , ,

conventional ship, , ,

anonymous [] adj.

hectare [] n.1

periphery [] n.

metropolitan [] adj., ,

gantry cranen.,

imperative [] n., , , , adj., , , , , []

concession agreement

divergence [] n.

illicit trade,

ethanol [] n.,

hydrogen [] n.

albeit [] conj.

mandated adj.

sustainable [] adj., ,

reintroduce [] vt.,

inflator [] n., ,

Oval Office

unobligated [] ,

infusion ] n.

deficit [] n.,

Exam Paper 3

TRANSPORTATION & TRAFFIC ENGINEERING

Time: 3 hoursMaximum Marks: 70

Note : Attempt all questions.

1. Answer any two of the following: (2x5=10)

(a) Describe the role of transport in defense needs, tourism development, social development and disaster management.

(b) Explain the functions of the basic components of a transportation system.

(c) Discuss "transportation versus employment generation".

2. Answer any two of the following: (2x5=10)

(a) What are the engineering surveys carried out for a highway project? Explain two of them.

(b) Explain with sketches two types of grade separated intersections.

(c) What is meant by 'soil classification?' What is the use of soil classification?

3. Answer any two of the following: (2x5=10)

(a) What are the general requirements of good concrete for airfield pavement?

(b) What are the factors influencing concrete pavement design? How does temperature affect pavement design?

(c) Explain the use of machinery for a road embankment construction.

4. Answer any two of the following: (2x5=10)

(a) Why is Origin-Destination surveys needed? Explain any one method of O-D survey.

(b) What are the functions of road markings? What are the common types of road markings?

(c) Discuss the engineering measures to prevent road accidents.

5. Answer any two of the following: (2x5=10)

(a) What are the functions of track ballast? What are the requirements of a good ballast material?

(b) How is the movement of trains controlled?

(c) Explain the components of railway track maintenance.

6. Answer any two of the following: (2x5=10)

(a) What are the advantages and disadvantages of air transport?

(b) How is the runway orientation decided? What are the factors that influence runway length?

(c) What are various forms of water transport? What are the advantages of water transport?

7. Answer any two of the following: (2x5=10)

(a) What are the engineering investigations needed to design a water transportation project?

(b) Discuss briefly "inland water transport".

(c) What are the factors that are considered for selecting the site for an airport?

Chapter 4 Outsourcing and Globalization

Dialogue 7 CEVAs CEO Offers up Take on Global Logistics Consolidation()

AMSTERDAMJohn Pattullo, former COO of the EMEA division of Exel Supply Chain and a 30-year veteran at Procter & Gamble in global marketing, logistics, and sales roles, recently began his new duties as CEO of CEVA Logistics, a provider of global supply chain and logistics services. Pattullo succeeds Dave Kulik, who will now serve as vice chairman of the board of directors of CEVA Group Plc., a subsidiary of Apollo Management Ltd., CEVAs parent company.

Logistics Management senior editor Jeff Berman had an opportunity to speak with Pattullo earlier today about his new role as CEO of the fifth-largest 3PL (third-party logistics services provider), with slightly more than $7.8 billion in 2006 gross revenues, according to Armstrong & Associates, a supply chain consultancy, and roughly 50,000 employees, operating in more than 100 countries.

LM: What is your take on the current state of the global 3PL market?

JP: It is a very healthy market globally right now with seven to eight percent growth and with a lot of activity in some emerging economies, most notably in Eastern Europe. As an industry, weve got a very good track record of delivering cost savings to our customers. But there are a couple of areas where we need to do more.

LM: Which ones are those?

JP: First, there is product innovation. Our industry does not have a particularly strong record of breakthrough, innovative products [from a services and IT perspective]. It has to do with IT tools that provide customers with better control and visibility, and expanding to new product areas within the supply chain and coming up with products in areas that customers are looking for more practical help from in this industry.

Secondly, we are more and more trying to look at our most senior levels of customers end-to-end supply chain propositions. Things are happening in both areas; we just need to do more of it to supplement what I think is a good story on customer cost reduction.

LM: What about the ongoing trend of 3PL industry consolidation? It seems like the new normal in a way.

JP: One thing to remember is that this [3PL] market is pretty fragmented. As the market leader, DHL, for example, has a market share of six-to-seven percent. If you contrast that with many other markets, it is still relatively fragmented. That said, there is still a strong trend of consolidation occurring, andto some extentwe are following our customers, because in the last 20 years there has been a trend of customers moving from operating on a country basis (and rarely above that) to a regional level and now more and more customers want to operate their supply chains on a global basis. And they expect the industry to follow and meet their global infrastructure requirements and global capabilities and that is a good thing for both parties. (To be continuous)

New Words and Phrases

properly [] adv.,

entail [] vt., , , n.[]

INCOTERMS International Chamber of Commerce Terms

reaction [] n., , ()

tailored [] adj.

abdicate [] v., (,)

accountability [] n., ,

frustrate [] v., , ,

drill into()(, )

discretion [] n.

corollary [] n., ,

transition [] n., , , ,

ramp [] n., , vi., , vt.,

glitch [] [],,

anticipate [] vt., , , , v., ,

haunt ] v.

veteran [] n., , , adj.,

fragmented [] adj.,

Dialogue 8 CEVAs CEO Offers up Take on Global Logistics Consolidation()

LM: Are there any other factors that come into play regarding industry consolidation?

JP: The other consequence of consolidation is that it can allow for much stronger, faster leveraging and best practices. With CEVA, for example, there is a lot of know how on lean principles and that can now be rolled out globally to all of our sites relatively quickly. In the past, best practices tended to travel more slowly across more fragmented industries. It helps our customers to have them travel faster.

LM: With the recent news regarding CEVAs acquisition of EGL, it was stated that the new company will be comprised of two groups: CEVA Contract Logistics and CEVA Freight Management. How are things going so far with the new entity?

JP: Things are off to good start. Having come from DHL/Exel, I have seen a fair amount of acquisitions and mergers, and it is very unusual to find a situation like the one we have with this, where both companies are so completely enthusiastic. Usually one party in the marriage feels like it is being dragged to the altar, but this is a situation where the senior employees in both companies are enthusiastic because they see it as a perfect fitin terms of CEVA bringing contract logistics and EGL bringing freight forwarding. And CEVA is strong in automotive, EGL is strong in electronics, energy, and retail. CEVA is strong in Europe, and EGL in the U.S. and Asia, so things are very complimentary.

LM: What are the biggest challenges in this integration?

JP: Channeling all this enthusiasm into a homogenous culture that has its own character separate from TNT and EGL. The biggest challenge is going to be creating that. The other challenge is to be selective. There is such a good complementariness between the two companies that when you get half a dozen senior managers together, you are getting 50 good ideas. There is no way to implement so many, so we need to be selective about the business opportunities and the projects we focus on.

LM: In terms of shipper feedback. What are you hearing from them, regarding what their biggest obstacles are in day-to-day operations? In what ways are they most looking to 3PLs to help solve their problems?

JP: One is communication where a shipper says look, we really want to have a senior account manager with whom we can work on both strategic opportunities and day-to-day problem solving. There is a lot of interest in more strategically-oriented structures, which allow a 3PL to have a senior leader responsible for an account, which contrasts with how things were many years ago, when a 3PL typically would have had somebody in every country handling that account. Now they want to have a senior person that they can communicate with. The other thing is consistency. Gone are the days when you spend a meeting talking about how wonderful the top 20 percent of the operations are. Our customers are now more interested in getting the bottom 20 percent up to the standard of the top and having much less performance unsteadiness. This is a result of customers becoming more regional and more global. They want to drive up the standards of the weaker operations. I think it is good for the industry but different from the Dialogue that occurred a few years ago.(End)

New Words and Phrases

contingency [] n., , ,

adjacent [] adj.,

impediment [] n., , , (), ,

confront [] vt.,

criteria n.

perspective [] n., , , , , , ,

consequence [] n., [], , ,

roll out v., , , , ,

enthusiastic [] adj.,

dragged

altar [] n., (),

complimentary [] adj., , ,

homogenous [] adj.[],

complement [] n., [], []vt.,

contrast [] vt., vi.n., , ()

consistency [] n., , , , , ,

unsteadiness [] n.,

Exam Paper 4

Time: 3 hours

Maximum Marks: 100

Note: Attempt any five questions. All questions carry equal marks.

1. "Difference between domestic and international logistics can be said to arise on account of three major factors". Elaborate on this statement and enumerate the recent developments in international Logistics that have made it an important plank of corporate strategy. (10+10)

2. (a) Why is inland water transport rarely used for movement of export-import-cargo in India ? How can the situation be improved?

(b) "The Total Cost concept and The Cost Trade-offs go hand in hand". Discuss. (10+10)

3. Enumerate the salient features of commercial shipping and examine its role in the development of international trade. (10+10)

4. Outline the structure of civil aviation in India and discuss the role of Airport Authority of India and Directorate General of Civil Aviation in the functioning of air services in India. (8+12)

5. Discuss the basic principles and factors that govern the linear freight rates. Also specify the different elements added to basic freight rates to work out the final charges to be made in case of break bulk cargo. (12+8)

6. Outline the precautions that must be taken by international buyers and sellers to prevent the possibilities of maritime fraud. How does International Maritime Bureau help in reducing the corporate vulnerability to frauds and malpractices? (12+8)

7. Attempt any two of the following questions (10+10)

(a) "Overworked ports suffer from low level of efficiency and productivity and have become costly from the users point of view". Discuss this statement in relation to the working of Indian ports.

(b) Shippers ship-owners consultation arrangements in India leave much scope for improvement. Comment

(c) The mathematical calculation of Reorder Quantity (ROQ) should be used only as a guideline. Discuss.

8. Write short note on any four of the following: (5+5+5+5)

(a) Ship-owners lien and Maritime lien

(b) Bareboat Charter

(c) Dredging Corporation of India

(d) Disadvantages of Containerization

(e) Liabilities of Multi-model Transport Operator

(f) Distribution of World Fleet by Country Groups

Chapter 5 Retailing Industry

Dialogue 9 The Retail Logistics Landscape Is so Diverse

(STEPHANIE McKERN, Australian academic and Member of the Advisory Board of the Logistics and Supply Chain Management Society (LSCMS), discusses key developments in the retail logistics sector with Logistics Insight Asia.)

Q: Does a promising market beckon logistics service providers in the Asian retail sector?

A: Euro-monitor currently forecasts consumer packaged goods industry annual growth rates of nearly nine percent for China, six percent for India and a whopping 16 percent for Vietnam from 2006-2010. These growth statistics when compared to Europe or the US are signifying cant. Some 3PLs see such potential in this area that they have segmented their in-country operations between manufacturing logistics and retail logistics. However, as economists are pointing out, the retail consumption (final demand) from the rest of the world still contributes to the consumption of almost 70 percent of goods produced in Asia. While there are opportunities for Asia (including Southeast Asia) to consume more of its own products, this may not be able to fully compensate for the fall in the consumption in the US the average American consumes nine times more than the average Chinese.

Q: with the environment increasingly taking centre stage, how is this affecting the retail logistics sector?

A: The focus has been more than just looking at costs the green supply chain plays a significant role in retail logistics decisions. A recent survey sponsored by Kewill, found that 75 percent of the respondents who awarded logistics contracts included sections on environmental compliance in tender documents. Innovative solutions are expected in the months and years to come, to cut costs, improve efficiency and reduce carbon emissions.

Q: Has the retail logistics sector been a signify cant employment generator over the years?

A: One would be hard pressed to find figures on employment growth in the retail logistics sector specifically. However, as an industry, logistics is and will continue to be a growth sector, expanding at about double the rate of global GDP.

Q: How much has the logistics component affected the rise in food prices in the world market of late?

A: There is little doubt that rising transportation costs are already affecting food prices from two perspectives: the impact of fuel on transportation costs and that cost being passed on to the eventual consumer; and the profitability and desirability of bio-fuels the world is hungry for an alternative to petrol, but there is a consequence of raising crops for fuel instead of food.

Q: Can you comment on the positive role played by software and IT tools in retail sector logistics?

A: Technology development in logistics has been incredible over the last 15-20 years and we are continuing to experience this development in areas like RFID. However, there are numerous hurdles (price being the key one), which prevents this from being entrenched firmly in the retail sector, despite the best efforts of firms like Wal-mart. Information technology continues to be better implemented with companies realizing that it is the movement of information which permits fast, accurate and creative solutions for product movement. Examples of this include cross docking, route planning, improved vehicle utilization, and communication over distances to ensure minimal impact of security screening on international shipments. Without the quick movement, analysis and manipulation of information, some of the practices that we are now taking for granted (such as cross-docking) would not be possible.

Q: How would you assess the competitive environment with regards to local and foreign logistics service providers?

A: In countries like China, India and Indonesia, the retail logistics landscape is so diverse that one would be hard pressed to find one 3PL to provide a complete solution in a particular geography. Foreign players that tend to be seen as successful in this market may rely heavily on domestic 3PL capabilities, i.e. one may end up subcontracting ones logistics operations to a global 3PL company, but the entity providing the last-mile-solution will actually be a local provider. In a discussion with a leading 3PL in Indonesia last week, a senior executive pointed out that his company has experienced an annual growth of 30 to 40 percent. Its strategy is to take over the last mile provision of logistics services from international brands that fail to deliver on their promises to their customers.

New Words and Phrases

residential [] adj.,

pedestrian [] n.adj., ,

franchise [] n., v.,

thrift [] n., , []

cost-plus [] adj.

psychological [] adj.()

discrimination [] n., , , ,

careless [] adj.,

haggle [] v.n.

vanish [] vi., , []n.[]

sustainable [] adj., ,

edible oil

household appliances

cosmetic [] n.adj.

promising market

beckon [] v.,

compensate for v.

tender [] adj., ,

emission [] n.(), ,

eventual [] adj., , , ,

desirability [] n.,

hurdle [] n., , , , v., (), ()

be entrenched in

manipulation [] n., , ,

landscape [] n., , , v.

Dialogue 10 We Are Totaly Convinced about the Potential of RFID

(Germanys Metro AG, the fourth largest retailer in the world, has been a pioneer in RFID implementation. Company spokesman MORITZ ZUMPFORT talks to Logistics Insight Asia.)

Q: How extensive are Metros operations in the Asia retail sector?

A: We are currently present in China, India, Japan, Pakistan and Vietnam, and together, these countries are home to 54 Metro Cash and Carry stores. With 37 outlets, the Chinese market drives Metros fortunes in the continent.

Q: And the revenue generation from these 54 outlets?

A: Asia, needless to say, is one of the strongest growth regions for the Metro Group. In several emerging economies, affluence and buying power are developing at an extraordinarily dynamic rate. In 2007, Metro Cash & Carry, the self-service wholesale brand, achieved sales of more than 1.8 billion euros (US$2.6 billion) in Asia. We are convinced that this positive development will continue in the future.

Q: Does Metro have its own logistics operations or use third-party service providers for this purpose?

A: Modern supply chains are not established by Metro Cash & Carry alone, but in close collaboration with MGL Metro Group Logistics as well as MGB Metro Group Buying. Both are cross-divisional service companies for the entire Group. To a certain degree, Metro Cash & Carry also cooperates with external service providers (3PLs). However, we do not provide detailed information about the companys logistics and transportation partners. It should be noted that up to 90 percent of Metro Cash & Carrys assortment is sourced from local producers and suppliers within the respective country. Especially in emerging markets like India or Vietnam this calls for the implementation of a modern and resilient supply chain. Hence we have established modern distribution centers, an efficient cold chain as well as state-of-the-art storing capacities wherever the wholesaler is doing business. In several Asian countries, Metro Cash & Carry even conducts farmer and fishermen trainings in which the suppliers learn how to increase their yield as well as the quality of their products. In India, for instance, the company has already trained over 40,000 farmers and fishermen.

Q: Metro has been a pioneer in RFID implementation. But has this been effective in improving the efficiency of operations and reducing costs?

A: We are totally convinced about the potential of RFID to revolutionize the retail sector by enabling an improvement in supply-chain-wide efficiency, acceleration of processes like inflow of goods, augment the transparency of goods flows (seamlessly track the movement of goods from the manufacturer to the store), and reduction of inventory levels. As the first retailing group in Germany to introduce RFID, the Metro Group started applying the technology along the entire supply chain in November 2004. The objective was the optimization of processes in logistics and warehouse management. To implement the technology, logistic units (pallets, packages and hanger goods shipments) were fitted with transponders. Since August 2006, RFID is also being used on smaller retail units as well cartons and sub-cartons. Through our recent initiative, Advanced Logistics Asia, we seek to demonstrate how RFID can optimize efficiency and transparency in its goods flows on an international scale as well. It goes without saying that the logical outcomes of these benefits are reduction in costs, quality assurance and curbing of counterfeiting. With the passage of time, RFID will also be used at item level, which will facilitate self check-outs and make queuing at the counters for payment a thing of the past. Numerous partners from the consumer goods industry are cooperating in the roll-out of RFID at the Metro Group by labeling their consignments with tags. These include international groups such as Procter & Gamble, Henkel and Johnson & Johnson, as well as medium-sized companies of the likes of PapStar and Lemmi Fashion. The assumption that only the big companies can benefit from RFID is incorrect. Small and medium sized companies stand to gain critical advantages by deploying the technology and cooperating with retailers. We therefore support our suppliers in the introduction of RFID by publishing guidelines, an RFID newsletter, and offer information on the Internet.

New Words and Phrases

tout [] v. Tout [] [] ()

reactionary [] adj., n.

streamline [] adj.

compliance [] n.,

penalty [] n.,

preparation [] n.,

carton [] n.,

aside from adv.

potentially adv.

appropriate [] adj.

reactive [] adj., , ,

extraordinarily [] adv.

assortment [] n.

respective [] adj.,

resilient ] adj.,

state-of-the-art n.

inflow [] n.,

seamless [] adj.,

demonstrate [] vt., , vi.

curbing [] n.,

counterfeiting n.

passage [] n., , , , (), ()

queue [] n., , vi.,

roll out v., , , , ,

consignment [] n.(), , , , ,

deploy [] v.,

Exam Paper 5

Answer THREE questions, at least ONE from each section.

Using a SEPARATE ANSWER BOOK for EACH SECTION. All question carry equal marks. Marks will be awarded for practical illustrations. Candidates may use any approved calculator.

Section A

1. Some food retailers have chosen to switch back from outsourcing distribution through a third party logistics (3PL) provider, to in-house distribution. Debate the value of 3PL Vs in-house logistics for food retailers with particulate reference to Waitrose and their decision to manage their new Ayles ford RDC in-house. (100 marks)

2. Logistics can kill your business (Chris Jackson, Exel). Critically analyze the strategic importance of logistics for international fashion retailers. Your answer should draw from cases covered in the lectures and other relevant retail examples. (100 marks)

3. The recent Stern report calls for strict controls on Carbon emissions and recommends the introduction of Carbon pricing to show people the full social costs of their actions. Discuss to what extent the introduction of Carbon pricing might affect retailing logistics in 2020. (100 marks)

Section B

4. (a) VMI (vender managed inventory) and CPFR (collaborative planning, forecasting and replenishment) where discussed in the context of forecasting. Including appropriate examples and illustrations:

Explain what is meant by each of those terms, highlighting links between them where appropriate. Analyze the extent to which each of these initiatives is likely to solve real forecasting problems and issues. (60 Marks)

(b) A Supplier is studying the accuracy of its forecasts for sales of a product over the past few weeks. The weekly sales and the corresponding forecasts from two separate forecasting methods are given below.

Summarize the accuracy of the forecasts by calculating the Mean Absolute Deviation (MAD) and the Mean Squared Error (MSE) for each of the two sets of forecast errors. Also calculate Theils inequality Coefficient (Theils U) for each of the two sets of forecast errors.

By considering the forecast errors and the values obtained for MAD, MSE and Theils U, comment on the adequacy of the two forecasting methods that the company has been using for this particular product. (40 Marks)

5. (a) From the warehouse location perspective, explain why some retailers have decided to have only one warehouse and why some retailers have decided to have many warehouses.

(b) Compare and contrast the effects and implications of a warehouse fire at one of Waitroses four RDCs with the effects and implications of a warehouse fire at Primarks (essentially only) warehouse. You should make sure that your answer considers issues across the whole of supply chain.

6. What are the particular supply chain problems facing toy retailers? How can a toy retailer organize their supply chains to create real competitive advantage? You should include appropriate illustrations in your answer, and where appropriate reference supply chain initiatives from other sectors of retailing (e.g. fashion and grocery). (100 marks)

Chapter 6 Chain Store

Dialogue 11 Reach Marketing

Burt Flickinger III, managing director of Reach Marketing, has been a close follower of retail trends and strategies for two decades. In a recent interview, he offered his insights on where the food and drug retail channels might be headed.

Drug Store News: How do you see chain drug stores fitting into todays retail marketplace?

Burt Flickinger: Chain drug today and tomorrow is the best-positioned of the 10 major channels of retailing to capitalize on both consumer and format growth. One reason for that is, for some inexplicable reason, the food retailers a generation ago decided to desert downtown and oversaturate the suburbs. Drug stores, whether its Duane Reade in New York or Walgreens coast to coast, have followed the commercial boom downtown and the gentrification and the re-residentialization of urban areas.

Drug Store News: What does this mean for the future of drug stores?

Flickinger: The 24-hour food and pharmacy stores with drive-through pharmacy and significant parking have become not only destination stores, but substitute supermarkets in urban areas and substitute convenience stores. In a very efficient 5,000-square-foot to 10,000-square-foot layout, the drug stores have largely revolutionized retail by becoming three complementary formats all under one roof.

Drug Store News: Do you have examples of this?

Flickinger: In markets, such as Phoenix, which has a million people moving in every five years, Walgreens becomes dominant not only in drug, but dominant in convenience food. Circle K or 7-Eleven has a core consumer constituency ranging in age from 15 to 45, but Walgreens core consumer constituency goes from 15 to 85.

Drug Store News: Do you believe drug stores will look different in five years than they look today?

Flickinger: Yeah, they will have more frozen food and more refrigerated food, led by the dairy categories. There also will be a little broader assortment of shelf-stable food and shelf-stable beverages, as well as a more representative assortment of natural and organic foods to complement the initiatives drug chains have taken in this area.

Drug Store News: What does the future hold for the food-drug combination store?

Flickinger: This combination certainly helps drive customer counts and transaction size, but its future in terms of profitability through pharmacy still is undetermined. Many of the major supermarket chains have gotten into third party plans late, where there tends to be either some exclusivity or co-exclusivity. And while thats being challenged in various state court systems, most of the supermarket chains have not invested sufficient time in political action or campaign funding with the state legislators. With the National Association of Chain Drug Stores, the lobbying is really superb at the federal, state and local level, which really helps the drug chains.

Drug Store News: Weve seen more supermarket and other chains become aggressive in opening pharmacies. As the margin pressure increases, however, do you see the pendulum swinging the other way, with some non-drug chains getting out of pharmacy?

Flickinger: Some chains have gone back and forth over the years. [Pharmacy] looks good because the script count is growing at healthy double-digit rates. But the issue is that many of these supermarket chains got into pharmacy late, and theyre lucky if they can write 500 to 600 prescriptions per week. Very few of them clear 1,000 prescriptions a week. Normally you need well over 1,000 prescriptions to break even. So its going to be tough going. And then theres going to be site saturation, too.

Drug Store News: How much of a factor will Wal-Mart be in the pharmacy business?

Flickinger: Wal-Mart today is the fifth-largest pharmacy operation in the United States. I see Wal-Mart challenging Walgreens by the end of the decade for the No. 1 position in pharmacy.

Drug Store News: Regional drug chains have fared well, for the most part, over the past few years. Do you think that that trend will continue?

Flickinger: They will [prosper] in well-protected urban areas, like what Duane Reade has in the New York/New Jersey market. The one other area of re-emergence that we may see, given the success of Freds, is the return of what had been the 3-D, or deep-discount drug store. Those stores can combine high-volume grocery, pharmacy and general merchandise and great prices and still make a profit.

Drug Store News: Do you think convenience stores such as 7-Eleven or Circle K will add pharmacies?

Flickinger: I think Wawa, which is the most innovative of the convenience store chains, will probably be the first to develop pharmacy, just because Wawas got the customer counts to support it in new stores. They have a very mobile customer and tend to see that customer four or five times a week, versus a drug store or a supermarket or a discount store that tends to see a customer one to two times every week or two.

Drug Store News: What are the implications of Safeway getting into the general merchandise business in a bigger way?

Flickinger: Its a brilliant strategic move, and its certainly going to have some negative implications for [some drug chains] and dollar stores. Its going to be one of Safeways key breakaway initiatives. And its going to add significant dollars and contribution to operating profits, while using Safeways global sourcing ability to provide tremendous prices on both in-and-out and basic merchandise.

New Words and Phrases

unified []adj.

remainder [] n.vt.adj.

poultry [] n.

aquatic [] adj.

nonstaple [] adj.. n.

seasoning [] n.

flavorings [] adj.n.

cereal oil

pertaining []adj. (to)

renewal [] n.

formulate [] vt..vi.

franchisee [] n.,

anonymity [] n., ()

form letter n.

franchisor [] n.

arena [] n.,

saturate [] v., ,

constituency [] n.(), (), ,

superb [] adj., , ,

pendulum [] n.,

breakaway n.,

Dialogue 12 an Expanding Home Furnishings Chain

While many retailers are either closing stores or pulling back their expansion plans, its interesting to hear about chains that are doing the opposite. Room & Board, a Minneapolis-based home furnishings chain with 10 stores across the country, is actually looking for new locations during the recession. Right now it is seeking space in Boston; Dallas; New Jersey; Miami; San Jose, Calif.; and Seattle. Room & Board, which prides itself on its American-made furniture and customized options that offer customers a variety of sizes and styles, opened an Atlanta store in May. Mark Miller, the companys chief financial officer, recently spoke with BNET Retail about his outfits expansion plans.

BNET: Is there a reason why you are looking to expand your store base right now?

A: Our approach in the past has been to add about one store a year. Weve been a company that has grown pretty thoughtfully and methodically by finding the right market and the right property. Currently our infrastructure is in a good place. Were able to grow. We have a good set of vendors and employees in our central office that can support the growth. Weve invested in the Web in the last couple years. So what is needed now is the next level of customers in these new markets, and were not there yet.

The other part of it is that were a private company and not really as affected as public companies that have run into problems. Were debt free, so we dont really have that issue. Were just using this economy to look for opportunities that are coming up, whether its a purchase or a lease.

BNET: Have you seen opportunities as a result of some of the store closures taking place in the industry?

A: I dont know if its directly because of someone closing. Its not like weve moved into their space. But if youre a landlord or an owner of a building and one of your key tenants is leaving and not going to renew their lease that may get you to want to offer a better deal. We normally dont go into where a Linensn Things or a Circuit City would depart from. Our buildings are generally stood alone, or were a significant anchor space in a bigger project. Were not in strip malls.

BNET: Whats your geographic-expansion strategy?

A: We opened in Atlanta in May, and were opening in Culver City, Calif., in the fall of this year and Washington D.C. in the spring of next year. We have customers in every state, and we focus on the ones that are in the markets that we would like to explore. We look at where our competitors are, and we like to be close to them. We look at complimentary retailers. We have a company advisory board, and we look at some of the basic demographics, such as income, home ownership and occupation. We really like markets where theres a big interest in de