DictionaryThis Logistics Glossary Post is going to focusing on order fulfillment in the supply chain. In the logistics industry, we look at order fulfillment as a way to de-couple the supply chain and is especially important for companies that either offer product customization and/or have a variety of different products to offer. Looking at order fulfillment to minimize the amount of steps take along the supply chain and mitigate the impact of variety both on cost and time to produce.

Order Fulfillment

Hal Mather published a book called Competitive Manufacturing and pioneered the research behind order fulfillment. He was also responsible for defining the order fulfillment strategies that we are defining below:

Engineer-to-Order (ETO)

Definition: Engineer-to-Order refers to products that are designed and built to customer specifications. For example if I wanted a custom car built from scratch, a company that specializes in that service would have an engineer-to-order car. Companies that use this approach usually large construction projects or companies that offer one-off products such as the example above.

Build-to-Order (BTO)

Definition: Build-to-Order, also known as Make-to-Order (MTO), refers to products that have a standardized built. This means that the basic build of the product is the same throughout, but the production of components and the manufacturing of the final product is linked to the order placed by the final customer’s specifications. This is usually seen in the automotive industry, where customers can customize certain aspects of the car model that they have chosen to purchase (i.e. colour, type of interior, etc.).

Assemble-to-Order (ATO)

Definition: Assemble-to-Order products are built to customer specifications based on a list of items (i.e. a stock of existing components). This means that the base product itself has the type of architecture to allow the final product to be configured in such a way that the components can fit. The most common place this is seen is in electronics like laptops where you have the option to choose your hard drive space, the amount of memory, the type of graphics card, etc.).

Make-to-Stock (MTS)

Definition: Make-to-Stock, also known as Build-to-Forecast (BTF), is a production strategy that is most commonly seen in grocery stores and retail. The product is manufactured as is with no customization and its production is built against a sales forecast.

Digital Copy (DC)

Definition: Digital Copies are as they sound, the products are digital assets and inventory is maintained within a single digital master (i.e. source). Copies are created based on the demand and customers can download and save products on their storage devices. A common example is an e-book, where a digital copy is bought and downloaded onto an e-book reader for consumers to use.

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Today we have created an infographic to shed light into what supplier diversity is and to highlight some quick facts about how the women-owned and other minority-owned businesses have been progressing in the recent years. We also cover the spending trends with regards to the investment of companies into supplier diversity programs.

The benefits of supplier diversity go beyond the “social good.” We are now at an age where companies are starting to find that supplier diversity programs can be fiscally beneficial. A study from the Hackett Group showed that companies that “focus heavily on supplier diversity” generated a 133% greater ROI when it comes to procurement than the typical business. And this is just the beginning, scroll down to see more facts about supplier diversity.

Supplier Diversity and the Logistics Industry

Morai-Logistics-Infographic-Supplier-Diversity

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Tulips_On_Park_AveHave you ever wondered how flowers arrive at your doorstep? Flowers are an iconic symbol and even something as simple as a rose can have several different meanings behind the gesture of giving someone on. For example, whether or not you give one or a bouquet, and even the colour(s) you pick matters. Flowers can even be part of a grand gesture, like the Canadian Tulip Festival where the Dutch government sends 20,000 tulips to Canada every year (10,000 from the Royal Family and 10,000 from the Dutch Bulb Growers Association) due to Canada-Netherlands relations in WWII. Since Mother’s Day is this weekend (at least for Canada and the United States) we thought we would focus on the logistics of flowers, both in how flowers arrive to the flower shops these days as well as how flowers arrive at your doorstep.

Rising Freight Costs and Flower Shop Woes

Have you ever wondered where these florists get their flowers? Well, they’re not just grown in the back! In fact, even though traditionally flowers have come from local sources within the community (i.e. nearby flower farms), these days they can come from anywhere. In an interview with Jim McCann – the owner of 1-800-flowers.com – on Bloomberg, he mentions that 80% of the flowers in the West come from Colombia now because of a free-trade agreement that allowed thousands of different Columbian products, flowers included, tariff-free entry into the American market. This in contrast to a couple of years ago when 75% of flowers were supplied locally/domestically.

The difficulty in flower logistics is that, while they are a beautiful gift, they are expensive and dead in a day. In fact, flower production in the US is going up because of rising freight costs. Many small businesses in general are affected. In Canada, for example, the cost of ground transportation has risen ~9.5% since February 2011. The preservation of flowers is actually much better these days due to improvements in the cold supply chain, with flower preservation doubling in just the past 5 years.

Getting Flowers to Your Doorstep

since the delivery conveniences of companies like Amazon, and the conceptualization and development of same-day delivery, consumers are all about the now. They want their products, and they want it ASAP (and it has to be cheap!). Flowers are no different, the biggest strategy that florists have when it comes to high-demand periods like Valentine’s Day and Mother’s Day is partnering with local florists to handle product orders.

And with that, we’d like to leave you with how much the flower industry is worth on Mother’s Day:
Source: ftd.com

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DictionaryOur mission to provide little tidbits on the vast library of logistics terminology month by month continues! We love to educate those who are interested in logistics to know more in manageable chunks. This month’s Logistics Glossary Week post is on food logistics. What kind of terminology along the supply chain are used when transporting goods? This post on food logistics terminology is going to focus on regulating edible perishable goods.

Food Logistics – Part I

One of the main challenges for companies that have to deal with food transport is ensuring that the food coming from the origin stays fresh throughout its journey to its destination, no matter what the distance. On top of that, these perishable food items also have to arrive with enough time to be on store shelves and stay unspoiled for a particular amount of time to be bought and consumed by customers. Below are some terms that are commonly used in food logistics related to maintaining a level of standard (from origin and throughout the supply chain) for food once it hits the store shelves.

Food and Drug Administration (FDA)

Definition: The Food and Drug Administration, or FDA, is an agency of the United States Department of Health and Human Services. The FDA serves to protect and promote public health of food safety, pharmaceutical drugs (both prescription and over-the counter), as well as various other consumable goods like tobacco products, medical and veterinary products and devices, etc.

Every country has their own set of rules and regulations (e.g. the Canadian Food Inspection Agency enforces Canadian Food and Drug Regulations) and it is important to consider these as a logistics company as some differences can alter how a product should be transported and handled. This is why when doing food-related cross-border logistics, it is important to be aware of these governing bodies and their regulatory requirements.

Standard Operating Procedure (SOP)

Definition: Standard Operating Procedure, or SOP, in the general sense is a detailed written set of instructions for a process that must be followed to ensure standardization and compliance.

In the world of food logistics, the SOP of food is based on the type of food product and the recommendations of the governing body that regulates its best practices. This is important as it is the responsibility of companies that offer food or perishable edible goods to be able to ensure a consistent and desired outcome for the end consumer.

Hazard Analysis and Critical Control Points (HACCP)

Definition: Hazard analysis and critical control points, or HACCP, is a food safety system based on the principles of identification, evaluation, and hazard control. It is more of a systematic preventative approach to food safety, as opposed to a finished product inspection.

Time and Temperature Control for Safety (TCS)

Definition: Time and temperature control for safety food items, or TCS foods, are as the term suggest; food that needs time and temperature control to prevent a product from becoming unsafe due to biological hazards.

Food that is normally regarded as TCS foods are those that are high in protein, are moist, or are moderately to slightly acidic. Some regulating bodies recommend that these products be labeled.

Source: foodprotection.org
Source: foodprotection.org

The above example is from the International Association of Food Protection and serves as a label for potentially hazardous food that requires time/temperature control for safety.

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3 Reasons to Partner with a 3PL Provider
3 Reasons to Partner with a 3PL Provider

Why do companies look to outsource their logistics processes? The primary reason is that companies expect third-party logistics providers (3PLs) or logistics service providers (LSPs) to run all transporting and warehousing operations more efficiently, and at a lower cost, than they can run it themselves. The services that 3PLs provide can include all of the steps along the supply chain from origin to destination depending on the type of partnership. Furthermore, multiple 3PLs can take care of different aspects of your logistics needs (one that specializes in small package deliveries for one product line and another for larger shipments, etc.).

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  • Benefits of outsourcing third-party logistics services.
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  • Current state of the logistics industry for 3PL.
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Source: Wikimedia Commons
Source: Wikimedia Commons

We’d like to kick off April with our Industry Focus Week post on reverse logistics. You may have seen lots of news in the past little while about the benefits of reverse logistics, and how emphasizing strategies on reverse logistics is a good thing. But what exactly is reverse logistics? We thought that this month we would focus on answering that question for our readers.

What is Reverse Logistics?

According to The Council of Logistics Management, the official definition of reverse logistics is:

The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics.

In layman’s terms, reverse logistics is essentially all logistics operations related to reusing products and materials. Contrary to normal logistics processes, which focuses on bringing products towards the customer (i.e. origin to destination), reverse logistics goes at least one step back in the supply chain. For example, having products or goods move from the customer to the manufacturer or distributor. The process of reverse logistics creates its own challenges, as certain factors can affect how goods can be taken backwards through the supply chain cycle (e.g. cross-border issues), hence the importance of creating a proper reverse logistics structure.

Looking at its most salient model, reverse logistics in the retail industry is the process by which customers return their products.

Why Is Reverse Logistics Important?

The importance of reverse logistics is mostly based on industry, but the average manufacturer spends 9-15% of total revenue on returns. It can be seen by certain companies as a hidden cost, but it can be a very real one based on industry and involves processes where vendors convert liabilities into either reduced liabilities or viable assets (i.e. it’s more than just warranty and basic logistics processes).

Industries involved in retail are obviously the most affected by reverse logistics risk management, as 95% of customers will not buy from a company if they have a bad returns experience. Thus, focusing on reverse logistics is an important, and sometimes unseen, customer service opportunity that many businesses have yet to properly leverage. US-based experts have suggested that companies with best-in-class reverse logistics capabilities average a 12% advantage in customer satisfaction, which leads to better retention and a higher rate of return (customers).

Process Improvement Strategies

Reverse Logistics Magazine released a great list of reverse logistics elements that can be modified and improved for optimizing the reverse supply chain:

  • Gate keeping
  • Compacting Disposition Cycle Time
  • Reverse Logistics Information Systems
  • Central Return Centers
  • Zero Returns
  • Remanufacture and Refurbishment
  • Asset Recovery
  • Negotiation
  • Financial Management
  • Outsourcing

They also highlighted the importance of updating warehouses with reverse gear. This essentially focuses on equipping warehouses with the capability to accept returns, process, repair, and replace products coming in through the reverse supply chain cycle. So if your company involves any form of reverse logistics, these factors can be the difference of having your end step (i.e. customers) experience improved.

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DictionarySpring is here! What better time to continue our end-of-the-month Logistics Glossary Week posts, to continue our mission to provide all who are interested in our industry to get savvy with our terminology. This month we’re going to continue our Border Crossing Logistics Terminology series!

Border Crossing Logistics Terminology – Part II

This month’s focus we’re going to be taking a more basic look at what cross-border logistics is all about and focus on the kinds of governmental initiatives that are involved in various cross-border logistics processes.

Cross-Border Logistics

Definition: The definition of cross-border logistics is pretty intuitive. It is simply any logistics processes that involves moving goods from one geographic boundary, usually separated by political entity (i.e. political entities or legal jurisdictions such as governments, sovereign states, federal states, and other applicable subnational entities.

As borders that separate these regions have their own system of governance, third-party logistics companies that specialize in cross-border logistics can take away any potential chaos with regards to compliance and the required documents to get your goods across from origin to destination.

North American Free Trade Agreement (NAFTA)

Definition: The North American Free Trade Agreement, or NAFTA, is an agreement between Canada, the United States, and Mexico. It was created in order to allow easier trade between the borders of each participating country through an ease of customs, regulations, and arguably most importantly: tariffs.

Because of the advantages that NAFTA offers to the participating North American countries, Canada and Mexico have been and currently maintain their place as two of the largest trading partners for the United States, and vice-vera.

Customs-Trade Partnership Against Terrorism (C-TPAT)

Definition: The Customs-Trade Partnership Against Terrorism, or C-TPAT, is a voluntary supply chain security program. Headed by the US Customs and Border Protection, it was launched in 2001 in order to improve the security of private companies’ supply chains with respect to terrorrism.

Companies who participate in the C-TPAT certification program undergo a documented process for determining and alleviating risks throughout their cross-border supply chain processes. The benefit to this program is that participating companies are deemed low-risk, and are eligible for expedited processing of cargo which in turn leads to fewer customs examinations.

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International Women’s Day happened on the 8th of this month and we thought we would contribute a belated infographic for this week’s blog post. The logistics industry is notoriously known for being a Gentleman’s Club consisting of a primarily male workforce. Though that still exists today, companies have taken steps to balance the gender discrepancy in the workforce and women are slowly starting join logistics and supply chain companies at all levels.

The Status of Women in the Logistics Industry

Morai-Logistics-Infographic-The-Status-of-Women-in-the-Logistics-Industry

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Source: Wikimedia Commons
Source: Wikimedia Commons
There is a lot of talk these past couple of months on the implications of 3D printing and how it will change the face of the logistics and supply chain industry. This month we thought we would highlight the industry and shed some light into its development.

Widely practical, 3D printing is used primarily for prototyping and, more recently, distributed manufacturing. It is commonly seen in the following industries: architecture, construction, industrial design, automotive, aerospace, various engineering and medical industries, and fashion just to name a few.

What is 3D Printing, Exactly?

By definition, 3D printing is the process of making three-dimensional solid objects using a digital model. Also known as additive manufacturing, 3D printing uses a process called the additive process and carries out the process under computer control.

In the additive process, layers of material are laid down in different shapes. This is in contrast to subtractive processes in manufacturing, which is what is traditionally used to produce goods and involves the removal of material by various methods (i.e. cutting, drilling, carving, etc.).

The technology and concept of 3D printing is not a new idea. In fact, 3D printing technology has been around since the 1980s. The first working 3D printer was created by Chuck Hull of 3D Systems Crop. in 1984. It wasn’t until the early 2010s that companies started producing 3D printers for commercial distribution and use. This is partly due to a Moore’s Law type of progression; the development of the technology used in 3D printing has drastically impacted the price of 3D printers enough to be able to release it to consumer production.

How Will This Affect the Supply Chain?

Cerasis has released an excellent post regarding the impact of 3D printing particularly in inventory and logistics. The most interesting concept is that with the advent of 3D printers, the need to store finished products is nonexistent. There is no more need to store component parts before compiling the final product anymore; it essentially gets rid of the need to shelve or store products in warehouses anymore. This essentially collapses the supply chain to its most basic processes, which creates new efficiencies along the supply chain.

The 3D printing process can drastically alter the global supply chain and re-assemble it into a new local system. It can bypass the constraints of the traditional supply chain model: the need for low cost, high-volume assembly workers, real estate for stages of manufacturing and warehousing components, etc. Thus, the efficiencies of 3D printing impact the entire supply chain, from the cost to distribution and assembly to improving assembly cycle times.

Forbes released a post recently that suggests 3D printers essentially turn consumer products into digital content. The printers can already produce fairly detailed solid objects, though at this stage quite expensively. But according to Moore’s Law, and indeed looking at the history of 3D printing, prices have dropped significantly since the 1980s and will do so in the future. This could impact hardware stores and parts distribution services the same way e-books have impacted book stores.

Too Good to be True?

Tech Republic recently released a post suggesting that 3D printers are a potential double-edged sword and made some interesting points regarding what we should watch out for throughout the development of 3D printing as a process to be used by the masses.

The process of 3D printing itself, while efficient in many ways, are also not the most environmentally friendly. To start, they are energy hogs, 3D printers consume 50-100 times more electrical energy than injection molding and has a reliance on plastics. They are also known to pose health risks, especially with 3D printers used in the home. The emission from desktop 3D printers release unhealthy air emissions. There are also numerous issues on the corporate and legal side, involving potential national security risks, ethics and regulation, and corporate responsibility of products from 3D printed technology. So while 3D printing is something to look forward to, it is also something we should watch carefully.

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DictionaryWe’re ending February with our monthly Logistics Glossary week post. This focus is on maritime logistics terminology. Maritime logistics is essentially what it sounds like; it is the part of the supply chain that is primarily involved in the maritime environment. So anything involving the sea or ocean!

Maritime Logistics Part 1

Egyptians are commonly credited to be the first recorded instance of maritime logistics dating back to 3200 BCE. Transportation in those days were primarily dependent on wind, and stayed that way until mechanized ships (i.e. using steam engine technology) were invented and developed in the mid-19th century.

Fast forward to today, we now primarily use a diesel based engine and maritime logistics is a booming business, with about 90-95% of international trade being carried onboard ships of some sort. This post will focus on the different shipping terms you hear in the maritime logistics world.

Maritime Logistics Management

Definition: Maritime logistics management is the part of logistics and supply chain that plans, implements, and controls processes in the maritime environments (i.e. ocean or sea transport). These processes include, but are not limited to, efficient and effective flow of goods, services, and other related information based on customer or client needs.

Liner Shipping

Definition: Liner shipping a type of shipping involving high-capacity, ocean-bound ships that go on regular laid out routes and schedules. Currently, there are about 400 liner services that function today. They are commonly routed to do weekly departures from all the ports that each service calls. Ships that do this type of service are called liner vessels and are usually container ships and roll-on/roll-off ships. This type of transport is known to carry approximately 60% of the goods (by value) moved internationally every year.

Tramp Shipping

Definition: Tramp shipping is similar to line shipping in that it also involves high-capacity, ocean-bound ships. The main difference though is that tramp shipping doesn’t involve laid out routes and schedules; in fact, there’s no fixed routes, itinerary, or scheduling involved. Tramp shipping is advantageous because unlike liner shipping, tramp shipping options can be available at a short notice (or fixture) to load cargo from any port to any other port. This is great for customers that require specific shipping options that main routes from line shipping services may not offer, or if the route options do not make sense (i.e. are too convoluted).

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!