CURSUS CONTENTS 1) Introduction 2) Human resources functions 3) A new factory 4) Products 5) Services management 6) The processes 7) Planning the

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1 CURSUS CONTENTS 1) Introduction 2) Human resources functions 3) A new factory 4) Products 5) Services management 6) The processes 7) Planning the production 8) Mass production 9) Project management 10) Make to order production 11) Production management philosophies 12) Maintenance 13) Quality management 14) Procurement 15) Transport and distribution

2 uman activities can be summarized to transform and to transport ings using some energy. oods, services, raw materials, finished products, data, human beings, nimals, money. he aim of a manager is to optimize transformation and transportation. ll techniques in the previous chapters were linked to production or perations management. Transport is often seen as an inescapable cost r an external activity out of our control. It is false, it is the last peration and it must be under control. he job is finished in customer s hand, not in our hands. ransport usually represent from 10 up to 30% of the final cost of a roduct.

3 Table of contents Transport Strategical point of vieuw Main modes of transport 1. Road 2. Rail 3. Waterway 4. Pipe lines 5. Sea 6. Air 7. Telecommunications 8. Multimodal Liège as an example Incoterms Transport decisions (case study)

4 Transport strategical point of vieuw

5 Parameters TRANSPORT & DISTRIBUTION Transport strategical point of vieuw The geographical position (structure or not) Delivery time (i.e NEPAL) Cost (transportation + insurrances + customs taxes + pre and post forwardings, handling, stocking, packaging) Volume, quantity, frequency Nature of the goods (hazardous, dimension, toxic, explosives, nuclear) Risk of damage Cost of defective packing (temperature, moisture, sun radiance) Quality of service

6 Transport strategical point of vieuw Transport is a compromise between cost and services, but we have to think all included. Environment constraints, delivery time, security, customs and shipping formalities, handling, stock, packaging, political situation, congestion Usually : the faster the more expensive.

7 Modes of transport: The Road 70% of the exchanges in tons 7% of the GDP Gross Domestic Product of the EU Advantages: FLEXIBLE 1) Go everywhere whitout intermediate handling 2) No fixed timetables 3) Small or big quantities 4) Light infracstructure to un/load lorries Drawbacks : Victim of its success, pollution Victim of its success, pollution 1) Road saturation 2) Fuel consumption for 1 kg of fuel for 1 ton 20 km, rail 80 km, Waterways 104 km 3) Noise, danger

8 Modes of transport: The Road Two kinds: TL & LTL Full Truckload, less than a truckload LTL requires infrastructure to stock, to pick-up, and to load and unload the goods. Important for the cost in the case of wayback. NB: Truck load limited by country Size and Weight 2 Kinds of truck Legislation Worktime Documents : CMR,TIR Responsibility : means not result

9 Modes of transport: The Rail

10 Modes of transport: The Rail km of railwaylines in Europe Advantages : Cheap 1) High fixed costs but low variable costs => Low value or large shipment over long distance (steel, chemical products, grain) 2) Use little space and energy 3) Able to increase capacity Drawbacks : Delay, pre and post forwarding, not international 1) Factory have to be close to the railway or a station 2) Time de/coupled the train 3) Track gauge, voltage of traction, way of circulation are different 4) Fixed timetables, few flexibility

11 Modes of transport: The Waterways

12 Modes of transport: The Waterways km of navigable waterways, only half for ship exceeding 1000T Use mainly for bulk, liquid, dry freight, chemicals, coal. Advantages : 1) Use few energy 2) No noise, few ecological consequences 3) Long distance Drawbacks : 1) Need public support for infracstructure and maintenance 2) Pre and post forwarding to and from the port is required 3) Can not go everywhere, missing connection

13 Internationaly : gas, fuel. Locally: water, stream Modes of transport: The Pipelines Investments high, but low variable costs. NATO is using pipe lines in Europe.

14 Modes of transport: The Sea For Intercontinental transport, sea is predominant. For UE, 90% of foreign trade and over 35 % of inland trade. 2 kinds : charter line, conference or regular lines (Evergreen) Many kinds of ships : bulk, containers, fruit, fuel, gas, car Advantages : 1) Low cost, few energy 2) Intercontinental 3) Big volume, big sizes Drawbacks : 1) Slow 2) Pre and post forwarding, cannot reach interland directly 3) Handling infracstructure

15 Modes of transport: The Air Transport 1% of the weight, 10 % of the value Advantage : 1) Speed : Perishable goods, newspapers 2) Intercontinental Drawbacks : 1) Cost 2) Pre and post forwarding 3) Subject to weather conditions 4) Vibration

16 Modes of transport: Telecommunications Data transfert has considerably changed in quantity and speed from TAM-TAM through Poney Express up to Internet. Satelites, GPS, GSM, WAP, UMTS, ADSL

17 Modes of transport: Multimodal or combined transport Standardisation of handling tools and packaging. Box (Ratio 60-40), Euro-palet (1200*800 mm) Container Truck on rail Train on boat Container from truck to waterways

18 Modes of transport: Summary Road Rail Waterways Sea Air ensity Very High Average Low Very high Low vailability f network Very good Good Good Very good Limited ensibility to limatic risk Average Low Average Low High ize of rminals Of no concern From average to large Small Post area very considerable Airport area considerable peed Average Average Very low Low High apacity Average Average High Very High Average ower upply Oil Coal, electricity and diesel Oil Oil, nuclear energy, coal, gas Oil ost Considerable Average Very low Low Very High

19 Liège as an example : Liège freight Logistic

20 INCOTERMS International Commercial Terms Who pay or is responsible for: 1) Ownership 2) Freight (transport cost including stock, handling, 3) Insurrance 4) Customs Part of the contract NB: Always a term and a place FOB Antwerp, Imagine what ex-works can mean in a group

21 INCOTERMS EXW FCA FAS FOB CFR CIF CPT CIP DES DEQ DAF DDU DDP Ex-works (from the factory not loaded, not cleared for custom) Free carrier (cleared from customs and delivered to the transporter) Free alongside ship (on the quay, not on the boat) Free on board (in the boat) Cost and freight (port of destination, not insurrance) Cost, insurrance and freight (+ insurrance) Carriage paid to (freight to destination not insurrance) Carriage and insurrance paid to (+ insurrance) Delivered ex ship (port of destination, cleared from customs, on board) Delivered ex quay (idem + on the quay) Delivered at frontier (at the last border) Delivered duty unpaid (everything except duty) Delivered duty paid (everything)

22 ransport decisions : Case study Chapter 7 Ballou rom East Coast to West Coast nnual demand Units 30 per unit (without transport cost) nventory carrying cost 30% a year afety stock items in the plant and in the warehouse ransport data : Rate (Euro/Unit) Transit Time (Days) Number of shipment /year ail iggy back ruck ir

23 Transport : case study Transport cost on an annual basis = rate * demand Transit inventory cost = transit time * D * inventory carrying cost Plant inventory cost = Q/2 * inventory cost (Q = shipment) Quantity Q/2 Safety Stock Time

24 Rail Piggy back Truck Air ansport 0.1 * 700,000 = 105, , ,000 70,000 transit 0.3 * (21/365) 0.3 * (14/365) 86,301 34,521 * 700,000*30 = * 700,000*30 = 363, ,644 ant Inventory 0.3 * (35, ,000) *30 = 765, * (17, ,000) * 30 = 607, *(67,500 * 30 = 607, *(58,750 * 30 = 528,750 arehouse ventory 0.3 *(35, ,000)* 30.1 = 767, *(67,500 * = 610, *(67,500 * 30.2 = 611, *( * 30.4 = 553,425 OTAL 1,996,015 1,564,681 1,445,351 2,096,696

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