Logistical Operating Arrangements
The potential for logistical services to favorably impact customers is directly related to operating system design. The many different facets of logistical performance requirements make operational design a complex task, as an operating structure must offer a balance of performance, cost, and flexibility. (9) ,it is astonishing that any structural similarity exists. But keep in mind that all logistical arrangements have two common characteristics. First, they are designed to manage inventory. Second, the range of logistics alternatives is limited by available technology. (10) Three widely utilized structures are echelon, direct, and combined.
Echelon systems utilize warehouses to create inventory assortments and achieve consolidation economies associated with large-volume transportation shipments. Inventories positioned in warehouses are available for rapid deployment to meet customer requirements. (11) A break bulk facility typically receives large-volume shipments from a variety of suppliers. Inventory is sorted and stored in anticipation of future customer requirements. Food distribution centers operated by major grocery chains and wholesalers are examples of break-bulk warehouses. (12) Consolidation is typically required by manufacturing firms that have plants at different geographical locations. Products manufactured at different plants are consolidated at a central warehouse facility to allow the firm to ship full-line assortments to customers. Major consumer product manufacturers are prime examples of enterprises using echeloned systems for full-line consolidation.
(13) Direct distribution typically uses the expedited services of premium transport combined with information technology to rapidly process customer orders and achieve delivery performance. This combination of capabilities, designed into the order delivery cycle, (14) Examples of direct shipments are plant-to-customer truckload shipments, direct store delivery, and various forms of direct-to-consumer fulfillment required to support Internet shopping~ Direct logistical structures are also commonly used for inbound components and materials to manufacturing plants because the average shipment size is typically large.
A. In contrast to inventory echeloning are logistical systems designed to ship products direct to customer’s destination from one or a limited number of centrally located inventories
B. proceeds through a common arrangement of firms and facilities as it moves from origin to final destination
C. A consolidation warehouse operates in a reverse profile
D. reduces time delays and overcomes geographical separation from customers
E. The use of echelons usually implies that total cost analysis justifies stocking some level of inventory or performing specific activities at consecutive levels of a supply chain
F. When one considers the variety of logistical systems used throughout the world to service widely diverse markets
G. These two characteristics tend to create commonly observed operating arrangements
H. Typical echelon systems utilize either break-bulk or consolidation warehouses
