Logistic: Inventory and Total Logistics Cost

Supply chain is a network of logistic systems. Logistics concerns one company's system. Supply chain includes different companies. E. G. Dell computer – the logistics is Just their company but the supply chain includes all the part suppliers. Their logistics system is a part of dells supply chain. It includes also the retailers and supplier. Other company's logistics included in Dell's supply chain. Logistics is an early version of the supply chain. Logistics originated in the US military. Flow of cargo (people, weapon in war is logistics. ) Organizing a course/seminar – logistics needed for success.Today all the successful companies find their competitiveness from logistics, not from the product itself. E. G. Walter (retailer, wholesaler, supermarket chain) – their competitive edge comes from logistics. They are not selling anything different from others. They have a superior logistics system. Logistics make them succeed. Dell also, service is good, price attrac tive – success comes from logistics. Another definition people define logistics differently but they mean the same thing. Slide Logistics/Concept 4 Instead of saying process, they say optimization, etc. Process of location.Says movement and storage of resources instead of saying goods/services and information. They call logistic activities economic activities. Transport is one of then, port services, production, storage, distribution, etc. – take place bet. The point of origin and point of destination and consumption. Logistics is about the 5 RSI. What are the 5 RSI? Logistics is about getting right goods at right place at right time in right form at right price. Military is really about this. In commercial entities we emphasize on the price a lot. This is also the definition of logistics.Right goods, right in quality in correct quantity. Different level of logistics. In-bound, out-bound logistics. Logistics of production (table, book, car, etc. ), there are two levels of logistics. Logistics within the production process – in the factory. How do you optimize the production within the factory? We call this operational logistics or workers together. How do you put temporary storage along the assembly line? All this is logistics. E. G. WHIM library – lack of space. How to maximize space? Library space layout. It's about logistics. Different factories have different layouts – this is logistics.We are interested in logistics before the production starts. The cargo coming into the factory and when the production is finished, the cargo moving out to the next step – all towards the final consumption. This is what we call in-bound and out-bound logistics. This is what we are interested in. Maritime transport takes part in inbound and out-bound logistics than for production logistics. We are interested in how to move material to production and from production to consumers. When we try to understand logistics, we look at some lo gistics questions for example a typical question is about where to find the raw material needed.Raw material may be in different places. Some places might have different quality and prices. The difference between that place and the production might be different and therefore remonstration time and cost might be different. Where to find energy supply? Labor supply? Should you move your factory offshore to benefit cheap labor? If you do that be careful that higher prices might have to be paid on other services for example transportation. Where to set up production bases? In shipping, where should the port be located? Where to build warehouse and distribution centre. E. . Toyota car has their distribution centre for the Nordic countries at the port of Mammal. Before that they had centre in all the countries. So many distribution centre, different logistics cost than if there is a concentration of activities. Where to have branch organizations? The answers consider a lot of activities i ncluding transportation. We are in maritime transport so we are affected by the customers decision. Other types of logistics questions for ex. How to transport from A to B and choice of transport mode – air sea, road. Egg. Oslo to Mammal – road, sea. Air, rail.Different modes of transport have different logistics implications. Ex field trips – logistics question, how to transport students – sea (too long), air, road, rail. How to transport container? Hub and spoke – benefit from economies of scale. More cargo handling costs. The best solution must be a logistics solution. Best way to transport cargo from A to B. Flow and storage from point of origin to destination to comply with customers' requirement. Moving from A to B different options – different solution. When should transport start – how long should it take. Route? Storage? How, when needed?Mat of cargo to be transported at one time? Economies of scale? Packing needed? Logistics is everywhere. Farmer from southern Sweden – buy fertilizer in Sweden, buy from Germany (expensive land transport), buy from US where its much cheaper, but he has to pay more transportation cost. Where to find the material? Emphasis is on maritime transport – movement of goods. Shipping co. Transport goods – need info to do so. Port and shipping concerned with flow and storage of goods. October 28, 2008 Session 2 Slide Logistics/Concept 9 There always has to be a logistics concept. And a logistics concept is what?It's about total cost concept. This is the most important concept. It looks easy but total cost concept is not always observed, so people make mistakes as a result. It is a customer service requirement. Logistics concept is also about outsourcing, integration, global about concept, it is also about processes. The processes we call drivers. It drives the logistics process. It can't all be about concept. It has to be something tangible. Logistics is abou t processes. We are doing these everyday, ex. Manufacturing and transportation, distribution, inventory control, procurement.These are all activities, but the difference between these and logistics are that we are doing these in an integrated manner under the concept of logistics. So we have the concept and the drivers. The difference between these activities and logistics, we are doing them under the total cost and the customer service concept, so this is relatively new. Third is IT. We call IT enablers – that enables us to do the processes under the concept of logistics. Sometimes we can't do the processes (drivers) without IT. Ex. Dell computers. They obtained their competitive edge from logistics.Logistics means to get a computer from the production to the customers without any retailers. No middlemen. Order online, design own computer. The aim of logistics is to minimize the total cost. Can only do this with IT tools. So the three components have to come together using t he IT tools. We need to understand the role of IT in the whole process. Ex. Just in Time system. This is Inventory control under the concept of egoistic using information technology. The 3 components have to work together. How do we take all these functions (MFC, transportation, distribution, warehousing, etc. In an integrated manner under the concept of logistics using IT tools. Ex. Individual delivery. Concept is to minimize total cost. Total cost is manufacturing, transport, didst. , etc. How do we minimize that? Use IT. Dell used IT to find out that their total cost will be minimized if they cut out the middle man. IT enables the cutting out of the middle man. Good online service. Shipping line is not making anything – it is a part of transport. Shipping companies as a company have logistics problems also. Shipping has a double role to play.Shipping is a part of the logistics chain of a customer, but at the same time they have their own logistics problem. Shipping's logis tics problems include arranging bunkers, choosing port of call, types of service to provide, empty container management, repositioning of containers, terminal logistics, fleet logistics, agency logistics, but shipping as a service provider is part of the logistics of customers. Ex. KEA – furniture maker – shipping important. Shipping has a double role to play. Ex. Wimp's logistics service. Logistics in third world countries is not good enough. Read World Bank Report.The three components of logistics are important. Dell manages their total cost through logistics, so does Wall-Mart. All the processes have to be IT enabled. Control-implementation-control. HP has a fixed model on the shelf. Dell, make your own – different customer service. One is enabled by IT. Logistics has 3 components – concept, process, IT. Slide logistics/Concept 10 Supply chain – different sources to choose from. Take one then the next step and the next. This is the flow of cargo from origin to destination – the flow of information from user to origin. Information flow and cargo flow go in opposite directions.Ex. Dell – the information goes from the customer to Dell and the cargo from Dell to the customer. How will the producer know what kind of products the consumer will need? The consumer will have to tell. Opposite directions. Dell transport one computer to each customer so the customer pays more for transportation, but other costs like the shops and overhead related costs do not exist. If we compare this cost with the cost is very important. Total cost concept can be better understood by looking at slide Logistics/Concept 1 1 . This is a Total cost in Logistics and Supply Chain System.Marketing and logistics are closely related. This picture is very true. What is marketing? It is about the 4 As – product, price, promotion, place. So in this marketing there is one component about place which is about logistics. In the logistics about the place and the customer service (where the customer wants the cargo to be) and there are other cost elements. Ex. Related to place, transport cost has to be incurred – also warehousing cost, flow and storage. Other costs like inventory costs will be incurred. What is the difference between inventory cost and warehousing cost – inventory cost for keeping goods in stock).Inventory cost is the value of the goods. Books for new WHIM students – cost of book (inventory) plus storage (warehousing). Processing and information cost – each time we order, we have to follow procedure, fill in forms, etc. Processing cost can be high. Egg. When we are transporting our boxes home, have to have bill of lading. This has a cost (processing and information cost). Lot quantity cost – economies of scale. Purchasing/transporting/buying a big amount and will benefit from economies of scale, this is called lot quantities. Put all these 5 elements together and this is total cost.The objective of logistics is not to optimize a cost element, it's not to minimize a cost element, but rather to optimize the total cost and minimize the total cost. Minimize the total cost – this is what logistics is all about. This is easier said than done. KIT, the idea is to reduce the inventory cost to zero if possible. At the same time warehousing cost is being reduced – this is a good system. What other cost will be affected – transport cost. All these cost elements are interrelated and interdependent. So interaction and interdependence are also important.Change of inventory will affect transport cost, lot quantity cost, etc. KIT system for example – daily consumption of rice. Let's say we eat egg of rice each time. Based on KIT, each time we need rice, we should buy only egg. Do we do this? No, then against KIT principle. We buy 200 kilos – 2 cost occur – inventory cost and the money spent on the rice cannot be used (capit al tied up – cash flow problem). If this money was put in the bank it would generate some interest. Where is the rice put? The place occupied by the rice can't be used for something else.In production if you buy too much to get economies of scale from purchasing, we'll incur a high inventory cost. If we are not buying kilos, we buy a quantity in between – say 2 kilo. Optimal total cost. If we buy egg each time inventory cost is zero – have to buy each time we need to cost. That is time and transport cost. Lot quantity cost will change as there is no savings to be got through economies of scale. And each time we buy there are other costs like information and processing (maybe not in the case of rice, but generally). Put all these costs together, and find a good place in between. We do this by Cost Trade-off.Cost Trade Off Slide Ex. Manufacturing activity involves making projectors in Mammal, Sweden and need to supply them to the rest of Europe. No distribution ce ntre, or warehouses, or depots, o because we cover the entire Europe, each time we have an order from someplace in Europe, we pack the projector and send it off. What do we save – inventory, we do not keep inventory. What do we have to spend more – transportation cost will be very expensive. We therefore have to find out if we have a warehouse somewhere in them from Mammal to the customer; we send it from that storage which is closer so we save transportation cost.How many such warehouses we need to cover Europe? It depends on the elements: transport, inventory, lot quantity, warehouse costs. In optimizing all these costs together is a logistics decision. Ex. In the case of the depots, we might have 8, 10, 12 to cover the entire Europe. What cost elements we have in the case of the distribution of projectors in Europe. First the systems cost, the processing and information cost. When there is a centre there needs to be a computer system, a financial system, etc. If the re is no centre, the system cost is very low.The more centre, the higher the system cost and this is a storage cost. If there is only one storage at the headquarters in Mammal, the cost would be relatively low. As the numbers of depots are being increased the storage cost will be very high. Inventory cost – more depots, more stock – higher inventory cost. Trucking cost – tree has trunk and branches. Trunk means main transportation, branches mean local delivery. Transport cargo from production to main distribution centre = trunk transport and then from distribution centre to each individual apartments = local delivery.Trucking cost – the more centre, the more trucking cost. If there are no depots, each time to ship from mammal to each individual location will be very high. The more depots, the less the local delivery cost will be. The total distribution cost is the addition of all cost, this is what we call total logistics cost. When we have the total logi stics cost curve it corresponds to the number 8 meaning there should be eight distribution centre. So this is the solution – 8 centre. As costs change, oil, etc, the optimal numbers of centre will change. Its not static, its dynamic (the Total Didst. Curve).Logistics – one has to plan, implement, control. If the individual costs are changed then total cost will be different – high/low. E. G. If the interest becomes low – inventory cost will be affected as the capital will become cheap. If oil cost increase, interest rate decrease – could end up with more centre which means saving more rainspout cost, esp.. Local delivery cost. Transport cost in total will be less. Inventory cost is dependent on interest rates. May have 9/10 depots. # of depots depend on cost elements. Cost trade off is important. With depots total cost is lower, so this will save cost.Having depot is a cost but the cost is lower than not to have them. E. G. KEA used to rent warehou ses, now they build – benefit of depreciation. Next Slide Logistics cost in the USA Logistics cost include transportation cost, inventory, warehousing, distributing, etc. How much logistics cost people pay as a percentage of a country GAP – 10% in the US. Inventory cost increase faster than the transportation cost bet. 1980 and 2005- why? Better inventory control, interest rate lower so inventory cost lower. Interest was low in the rest of the world until about 2005. Deflation = lower inventory cost.In other countries this percentage is much higher. China – 18% of GAP spent on logistics (used to be 20%). China is more representative of developing countries. So in developing countries logistics systems are not as efficient as those in industrialized countries. 9. 5% is similar in Europe and Japan (COED countries). In developing countries it's much higher. Includes all logistics cost element – transport, inventory, etc. – big room for improvement. Ne xt slide Customer service is another concept. Customer service is the output of logistic based, performance-based, philosophy based.Activity based e. G. After sales service, marketing, public relations. Performance based – what is the standard? Ex. Dell computer is performance based, delivered in 48 hours – performance-based customer service. Can be measured. Ex. , ports – waiting time for ships – rush. Philosophy based on what customers require is the customer service – according to customers taste – before, during, and after transaction. What is transaction? Buy goods, pay. Customer service can take place before this, during, after. Changes in CSS level affect total logistics cost. Next slide CSS High, Low.Cost Low/High – the higher the customer service level, the higher the cost. No ship should wait in port for more than 3 hours. This will cost a lot of money – will have to build more berths. Define customer service level. T ry to minimize total cost based on this pre-condition. Why CSS level increase and inventory level affected. The higher the CSS, the higher the inventory level. Goal: increased SSL, so high inventory level. It's a decision the company makes – customer service level is very important. (Refers to graph on the right) Try to find a way to push the line by introducing a better way of production e. . Using IT, new production method. Reduce cost but still satisfy goal – IT, use better system. Next slide: industry norm, etc. Customer's response to stock out. Is a risk being run of losing the customer? All different ways to define the customer service level. KIT System Developed by Toyota. Called the Kanata system. When a container of parts is chosen to be used from inbound stockinet in-out in-out This is the production. Eng the assembly line how do you get different stages to work together in harmony. The system has two cards. KIT works with 2 cards – the move cards and the production cards. Hen you see the move card, time to move the container or the other card, time to produce. Work centre 1 the card moves along the production line from one work centre to the next. Toyota manage to have minimum inventory along the assembly line. They have one container of part. Cards are turning around and the parts are being moved from one centre to another. For logistics a better understanding of Just in time is very important. 9 Cot 2008 There are two circulations of cards. How do the 2 circulations make the KIT system work? Why does it work? Key elements: to reduce inventory therefore reduces the capital tied up in inventory.Planning, staff commitment including suppliers, suppliers' ability to meet the demand. Some inventory is kept because there is a container. One piece at a time is being used from the container so the rest must be inventory. What is the average inventory? What is the customer requirement? It's the size of the container. The container is fu ll – how big is the container. How is the size of the container defined? The size of the container is planned based on production. Supply 20 units at the beginning and then it's consumed and a new container comes. The container is consumed during a cycle. The cycle is the time needed.The average inventory is a half of the container what ever the amount it contains. Typical KIT, there should be no inventory so why is inventory kept? When we need egg rice why don't we get exactly that? Other costs would increase too much. KIT – to keep as little inventory as possible. The size of the container depends on what? Transportation two don't match then the size of the container needs to be changed. If the transport sakes more time then increase the size of the container and vice versa. Transport time important. Volvo had KIT between Gent and Mammal. How much inventory should be in the Volvo factory in inventory?A lot. Why? Engine parts are made in Sweden to be used in Belgium. This transport takes one week by ship. As it takes one week, there should at least be spare parts for one week. Toyota has KIT. In the city of Toyota in Japan within 30 kilometers of the factory all Toyota parts are made there. This is the perfect KIT system. KIT emphasizes the reliability of the transport system. The two containers must have the same matching size. If parts can't be produced in time, the cart must be moved earlier. At the moment one container is taken to the in stock point, another container load of part should be produced.Suppose the production takes more time than when one cart comes back? Egg. If production takes 20 hours, parts can be made in 10 hrs. The time information is sent – information flow is the key. Plan to know how long production will take. In Japan, transport is guaranteed (Toyota). What is supplier commitment? Shortcomings of the KIT system? Now we assume we only need 20 parts in 10 hours, how about if the demand change and we need 30 parts in 10 hours. If the speed of production is variable the whole system is challenged. If the demand is certain/flexed then it can be planned – production rate and transportation.But what if production rate changes? This is a challenge for some of the production down the line that may need more time and material which might have to come from far. Not easy to adjust production. Shortcomings: Does only one supplier have to be used with KIT? No, Honda uses more than one supplier. In KIT, anything that goes wrong will collapse the entire system. In KIT the entire chain has to be KIT, it can't be at only one stage of the production. If not it forces other suppliers downs the line to keep inventory. KIT of big companies push inventory down the line if the don't plan effectively.Because smaller suppliers want to satisfy big companies, they are forced to keep inventory. KIT has to be along the entire supply chain. KIT may be only at the very large suppliers who push the inventory down the line to smaller suppliers. Toyota case: 1/52 weeks car production stopped because of a fire at one supplier – ripple effect. The decision of Toyota to do nothing was based on the total minimum cost of they did various studies. CCITT Case: The reliability of transportation and the uncertainty factors make logistics system key. The importance of information. Logistics concept drivers enablers, under total cost and customer level.KIT will never work without IT. Everything works together with IT supporting the processes under total cost and customer level. The process, concept or IT cannot work separately. Information is critical for success as well as the reliability of demand. Forecast and planning important to know when demand change. Transportation is also important for this system. If the transport distance is long, the container has to be big. The size of the container is influenced by time (transport). Transport is via sea – only use air in case of emergency. If transport takes a long time or is unreliable then more inventory needs to be kept.Gent is the biggest Volvo manufacturer. Terrines transport the parts from Sweden to Belgium. The shorter the interval of the shipping service, the lower the level of inventory required. This can make the transport expensive. So it's the total cost that is important that will Supply chain 2 definitions (see slide): it's a network, not port to port. In logistics there is no procurement. The 2 key words in logistics are flow and storage. Supply chain includes manufacture. Transformation = manufacturing. 1st law of dynamics – don't create anything, only change the form. Supply chain includes much more than logistics.Logistics narrowly defined. Supply chain is broader. Procurement also concerned with about origin of the goods. Optimization Integration Collaboration Synchronization Optimization – optimize one stage, the entire thing is not optimized so integration has to take place then consol idation then synchronization (concerted manner, happening in the same time). Relationship along supply chain. Start from optimization to synchronization. The idea of supply chain is relatively recent compared to logistics. 1960/ass people start to talk about total cost. E. G. In stage one warehousing and transport are separate functions.Management focus was operations performance. No integration. Logistics integrated both to see how they can be optimized. This is called total cost management. So the focus changed to optimizing total cost and customer service. Customer service put together with cost. Organization design is a centralized function. 80,s integrated logistics function. This moved today to supply chain MGM. Put logistics together to get supply chain. Supply chain broader than logistics. Stage 1 -separately treated, not optimized. Optimization done within the company. Optimize internal functions – transportation and inventory.Intra company and intra functional. This function is a logistics function. The logistics function today is moving still in the company but inter functional. Everything in the company put together – integration. Toyota inter company – higher level of integration. Toyota owns the supplier – easier to do KIT. Companies are integrated supply chain – Inter company and inter functional. Dell and their suppliers are integrated. Also Wall-Mart. The producers don't take orders from Wall-Mart – the ‘cards' in KIT comes from individual supermarkets. Producers can check storage level of Wall-Mart outlets.Everything is totally integrated. No personal intervention to place order etc. The system is integrated – good supply chain – inter company. Next Slide From fragmented logistics to integrated supply chain. In the fist stage do one function at a time – inventory or warehouse or transport. In the later stage, intra functional – the whole function optimized. From fragm ented logistics to integrated SCM. Suppliers, manufacturer, distributor, retailer, customer are all integrated with he other functions in the company and go to the next stage you integrate between the functions in the companies and between the companies.This is interception and will become in the true sense a supply chain. Supply chain broader today than the logistics. SC have to work with other companies. To satisfy your customers require more than one company: need supplier, manufacturer, distributor, and retailer. E. G. Markers – their system integrated with some of their key customers – key client management. Copra's definition of supply chain. Within an organization there is a supply chain. Egg. WHOM, teaching, supply services, library, canteen, etc. Al depots. Work together to satisfy customer. SC decisions – have to have supply chain design and strategy.Strategic level, medium term, short term – operational, daily and based on the company's competi tive strategy. Michael porter: define competitive strategy in terms of product differentiation or cost cutting leadership. How to achieve strategy: SC strategy. Balance bet. Efficiency and responsiveness. How to respond to demand? Efficiency includes cost-effectiveness, I. E. Cheap. Fast response – this is provided at a cost. Efficiency might compromise cost. Decision making is from lower level to higher. Many competitive strategies come from SC strategy. Wall-Mart is from logistics.Dell is from Supply chain Beer game: Once demand is variable SC difficult to maintain. KIT difficult to maintain. Long time to reach an equilibrium. In the end have to keep large inventory. Once demand is unstable KIT is not suitable. SC Design. Planning is important. SC design is about planning. When suppliers design their supply chain maritime and port services is a part of that. So mapping is important. Stockholders point is storage. Horizontal line represents move. When it stops – verti cal lines = storage or waiting. Egg. BBC container tracking. This is SC mapping.Horizontal line is lead-time (time from production centre 1 to production centre 2). Lead time depends on inventory to determine when order is to be placed. SC starts from the fiber and end with the clothes on the shelf. Through this we see pipeline length and volume. E. G, coca cola. Postponement of safety stock What is postponement? H and Ezra – they use postponement principle. Clothes must be in fashion. Don't know faction of 09. Try to postpone as much as possible the manufacturing time. Forecast, ii, postpone. Dell also uses this strategy. Don't develop their machines until last moment.Can use the latest technology and the price gets cheaper. Anticipate time needed and kind of product needed. Decision is postponed to the last moment. Postponement principle can reduce stock. Has bearing on transport too. Better information flow will impact SC. Next slide Sometimes for material flow speed might not be appreciated. Transport is used as storage to adjust transport time to match with performance. Sometimes it's because of the price. E. G. Iron ore in China, there is too much now. Information speed is always good but for material sometimes it needs to be fast and other times not so fast.Compression of lead-time in manufacturing activity. Supply chain map – length (vertical) volume (horizontal) – try to compress it to see possibilities to reduce some of the variable. Ocean transport can't be adjusted as speed can't be reduced. SC design. Lead-time is transport. Port of Amsterdam case study summary Market research – likelihood to attract new carriers / guarantee – balance and supply (elasticity). When port built no congestion in Europe – more port than ships. Impossible to get firm commitment – plenty choices. More supply than demand. Demand price inelastic. Shipping companies never give guarantees.Optimization, integration, collaborati on, synchronization. Have to synchronize. Increase speed of one operations but the speed of other things remained unchanged. No synchronization. If the discharged boxes cannot be moved this is a logistics problem. The concept of logistics: most important – total cost. Port of Amsterdam forgot total cost. Typical failure case that should never have been done. Restricted berths – bigger ships cannot fit in today – size is restrictive. How wide and long should ship be. (Panama Canal has size restriction and is thus a constraint – ships in the Asian Logistic: Inventory and Total Logistics Cost Supply chain is a network of logistic systems. Logistics concerns one company's system. Supply chain includes different companies. E. G. Dell computer – the logistics is Just their company but the supply chain includes all the part suppliers. Their logistics system is a part of dells supply chain. It includes also the retailers and supplier. Other company's logistics included in Dell's supply chain. Logistics is an early version of the supply chain. Logistics originated in the US military. Flow of cargo (people, weapon in war is logistics. ) Organizing a course/seminar – logistics needed for success.Today all the successful companies find their competitiveness from logistics, not from the product itself. E. G. Walter (retailer, wholesaler, supermarket chain) – their competitive edge comes from logistics. They are not selling anything different from others. They have a superior logistics system. Logistics make them succeed. Dell also, service is good, price attrac tive – success comes from logistics. Another definition people define logistics differently but they mean the same thing. Slide Logistics/Concept 4 Instead of saying process, they say optimization, etc. Process of location.Says movement and storage of resources instead of saying goods/services and information. They call logistic activities economic activities. Transport is one of then, port services, production, storage, distribution, etc. – take place bet. The point of origin and point of destination and consumption. Logistics is about the 5 RSI. What are the 5 RSI? Logistics is about getting right goods at right place at right time in right form at right price. Military is really about this. In commercial entities we emphasize on the price a lot. This is also the definition of logistics.Right goods, right in quality in correct quantity. Different level of logistics. In-bound, out-bound logistics. Logistics of production (table, book, car, etc. ), there are two levels of logistics. Logistics within the production process – in the factory. How do you optimize the production within the factory? We call this operational logistics or workers together. How do you put temporary storage along the assembly line? All this is logistics. E. G. WHIM library – lack of space. How to maximize space? Library space layout. It's about logistics. Different factories have different layouts – this is logistics.We are interested in logistics before the production starts. The cargo coming into the factory and when the production is finished, the cargo moving out to the next step – all towards the final consumption. This is what we call in-bound and out-bound logistics. This is what we are interested in. Maritime transport takes part in inbound and out-bound logistics than for production logistics. We are interested in how to move material to production and from production to consumers. When we try to understand logistics, we look at some lo gistics questions for example a typical question is about where to find the raw material needed.Raw material may be in different places. Some places might have different quality and prices. The difference between that place and the production might be different and therefore remonstration time and cost might be different. Where to find energy supply? Labor supply? Should you move your factory offshore to benefit cheap labor? If you do that be careful that higher prices might have to be paid on other services for example transportation. Where to set up production bases? In shipping, where should the port be located? Where to build warehouse and distribution centre. E. . Toyota car has their distribution centre for the Nordic countries at the port of Mammal. Before that they had centre in all the countries. So many distribution centre, different logistics cost than if there is a concentration of activities. Where to have branch organizations? The answers consider a lot of activities i ncluding transportation. We are in maritime transport so we are affected by the customers decision. Other types of logistics questions for ex. How to transport from A to B and choice of transport mode – air sea, road. Egg. Oslo to Mammal – road, sea. Air, rail.Different modes of transport have different logistics implications. Ex field trips – logistics question, how to transport students – sea (too long), air, road, rail. How to transport container? Hub and spoke – benefit from economies of scale. More cargo handling costs. The best solution must be a logistics solution. Best way to transport cargo from A to B. Flow and storage from point of origin to destination to comply with customers' requirement. Moving from A to B different options – different solution. When should transport start – how long should it take. Route? Storage? How, when needed?Mat of cargo to be transported at one time? Economies of scale? Packing needed? Logistics is everywhere. Farmer from southern Sweden – buy fertilizer in Sweden, buy from Germany (expensive land transport), buy from US where its much cheaper, but he has to pay more transportation cost. Where to find the material? Emphasis is on maritime transport – movement of goods. Shipping co. Transport goods – need info to do so. Port and shipping concerned with flow and storage of goods. October 28, 2008 Session 2 Slide Logistics/Concept 9 There always has to be a logistics concept. And a logistics concept is what?It's about total cost concept. This is the most important concept. It looks easy but total cost concept is not always observed, so people make mistakes as a result. It is a customer service requirement. Logistics concept is also about outsourcing, integration, global about concept, it is also about processes. The processes we call drivers. It drives the logistics process. It can't all be about concept. It has to be something tangible. Logistics is abou t processes. We are doing these everyday, ex. Manufacturing and transportation, distribution, inventory control, procurement.These are all activities, but the difference between these and logistics are that we are doing these in an integrated manner under the concept of logistics. So we have the concept and the drivers. The difference between these activities and logistics, we are doing them under the total cost and the customer service concept, so this is relatively new. Third is IT. We call IT enablers – that enables us to do the processes under the concept of logistics. Sometimes we can't do the processes (drivers) without IT. Ex. Dell computers. They obtained their competitive edge from logistics.Logistics means to get a computer from the production to the customers without any retailers. No middlemen. Order online, design own computer. The aim of logistics is to minimize the total cost. Can only do this with IT tools. So the three components have to come together using t he IT tools. We need to understand the role of IT in the whole process. Ex. Just in Time system. This is Inventory control under the concept of egoistic using information technology. The 3 components have to work together. How do we take all these functions (MFC, transportation, distribution, warehousing, etc. In an integrated manner under the concept of logistics using IT tools. Ex. Individual delivery. Concept is to minimize total cost. Total cost is manufacturing, transport, didst. , etc. How do we minimize that? Use IT. Dell used IT to find out that their total cost will be minimized if they cut out the middle man. IT enables the cutting out of the middle man. Good online service. Shipping line is not making anything – it is a part of transport. Shipping companies as a company have logistics problems also. Shipping has a double role to play.Shipping is a part of the logistics chain of a customer, but at the same time they have their own logistics problem. Shipping's logis tics problems include arranging bunkers, choosing port of call, types of service to provide, empty container management, repositioning of containers, terminal logistics, fleet logistics, agency logistics, but shipping as a service provider is part of the logistics of customers. Ex. KEA – furniture maker – shipping important. Shipping has a double role to play. Ex. Wimp's logistics service. Logistics in third world countries is not good enough. Read World Bank Report.The three components of logistics are important. Dell manages their total cost through logistics, so does Wall-Mart. All the processes have to be IT enabled. Control-implementation-control. HP has a fixed model on the shelf. Dell, make your own – different customer service. One is enabled by IT. Logistics has 3 components – concept, process, IT. Slide logistics/Concept 10 Supply chain – different sources to choose from. Take one then the next step and the next. This is the flow of cargo from origin to destination – the flow of information from user to origin. Information flow and cargo flow go in opposite directions.Ex. Dell – the information goes from the customer to Dell and the cargo from Dell to the customer. How will the producer know what kind of products the consumer will need? The consumer will have to tell. Opposite directions. Dell transport one computer to each customer so the customer pays more for transportation, but other costs like the shops and overhead related costs do not exist. If we compare this cost with the cost is very important. Total cost concept can be better understood by looking at slide Logistics/Concept 1 1 . This is a Total cost in Logistics and Supply Chain System.Marketing and logistics are closely related. This picture is very true. What is marketing? It is about the 4 As – product, price, promotion, place. So in this marketing there is one component about place which is about logistics. In the logistics about the place and the customer service (where the customer wants the cargo to be) and there are other cost elements. Ex. Related to place, transport cost has to be incurred – also warehousing cost, flow and storage. Other costs like inventory costs will be incurred. What is the difference between inventory cost and warehousing cost – inventory cost for keeping goods in stock).Inventory cost is the value of the goods. Books for new WHIM students – cost of book (inventory) plus storage (warehousing). Processing and information cost – each time we order, we have to follow procedure, fill in forms, etc. Processing cost can be high. Egg. When we are transporting our boxes home, have to have bill of lading. This has a cost (processing and information cost). Lot quantity cost – economies of scale. Purchasing/transporting/buying a big amount and will benefit from economies of scale, this is called lot quantities. Put all these 5 elements together and this is total cost.The objective of logistics is not to optimize a cost element, it's not to minimize a cost element, but rather to optimize the total cost and minimize the total cost. Minimize the total cost – this is what logistics is all about. This is easier said than done. KIT, the idea is to reduce the inventory cost to zero if possible. At the same time warehousing cost is being reduced – this is a good system. What other cost will be affected – transport cost. All these cost elements are interrelated and interdependent. So interaction and interdependence are also important.Change of inventory will affect transport cost, lot quantity cost, etc. KIT system for example – daily consumption of rice. Let's say we eat egg of rice each time. Based on KIT, each time we need rice, we should buy only egg. Do we do this? No, then against KIT principle. We buy 200 kilos – 2 cost occur – inventory cost and the money spent on the rice cannot be used (capit al tied up – cash flow problem). If this money was put in the bank it would generate some interest. Where is the rice put? The place occupied by the rice can't be used for something else.In production if you buy too much to get economies of scale from purchasing, we'll incur a high inventory cost. If we are not buying kilos, we buy a quantity in between – say 2 kilo. Optimal total cost. If we buy egg each time inventory cost is zero – have to buy each time we need to cost. That is time and transport cost. Lot quantity cost will change as there is no savings to be got through economies of scale. And each time we buy there are other costs like information and processing (maybe not in the case of rice, but generally). Put all these costs together, and find a good place in between. We do this by Cost Trade-off.Cost Trade Off Slide Ex. Manufacturing activity involves making projectors in Mammal, Sweden and need to supply them to the rest of Europe. No distribution ce ntre, or warehouses, or depots, o because we cover the entire Europe, each time we have an order from someplace in Europe, we pack the projector and send it off. What do we save – inventory, we do not keep inventory. What do we have to spend more – transportation cost will be very expensive. We therefore have to find out if we have a warehouse somewhere in them from Mammal to the customer; we send it from that storage which is closer so we save transportation cost.How many such warehouses we need to cover Europe? It depends on the elements: transport, inventory, lot quantity, warehouse costs. In optimizing all these costs together is a logistics decision. Ex. In the case of the depots, we might have 8, 10, 12 to cover the entire Europe. What cost elements we have in the case of the distribution of projectors in Europe. First the systems cost, the processing and information cost. When there is a centre there needs to be a computer system, a financial system, etc. If the re is no centre, the system cost is very low.The more centre, the higher the system cost and this is a storage cost. If there is only one storage at the headquarters in Mammal, the cost would be relatively low. As the numbers of depots are being increased the storage cost will be very high. Inventory cost – more depots, more stock – higher inventory cost. Trucking cost – tree has trunk and branches. Trunk means main transportation, branches mean local delivery. Transport cargo from production to main distribution centre = trunk transport and then from distribution centre to each individual apartments = local delivery.Trucking cost – the more centre, the more trucking cost. If there are no depots, each time to ship from mammal to each individual location will be very high. The more depots, the less the local delivery cost will be. The total distribution cost is the addition of all cost, this is what we call total logistics cost. When we have the total logi stics cost curve it corresponds to the number 8 meaning there should be eight distribution centre. So this is the solution – 8 centre. As costs change, oil, etc, the optimal numbers of centre will change. Its not static, its dynamic (the Total Didst. Curve).Logistics – one has to plan, implement, control. If the individual costs are changed then total cost will be different – high/low. E. G. If the interest becomes low – inventory cost will be affected as the capital will become cheap. If oil cost increase, interest rate decrease – could end up with more centre which means saving more rainspout cost, esp.. Local delivery cost. Transport cost in total will be less. Inventory cost is dependent on interest rates. May have 9/10 depots. # of depots depend on cost elements. Cost trade off is important. With depots total cost is lower, so this will save cost.Having depot is a cost but the cost is lower than not to have them. E. G. KEA used to rent warehou ses, now they build – benefit of depreciation. Next Slide Logistics cost in the USA Logistics cost include transportation cost, inventory, warehousing, distributing, etc. How much logistics cost people pay as a percentage of a country GAP – 10% in the US. Inventory cost increase faster than the transportation cost bet. 1980 and 2005- why? Better inventory control, interest rate lower so inventory cost lower. Interest was low in the rest of the world until about 2005. Deflation = lower inventory cost.In other countries this percentage is much higher. China – 18% of GAP spent on logistics (used to be 20%). China is more representative of developing countries. So in developing countries logistics systems are not as efficient as those in industrialized countries. 9. 5% is similar in Europe and Japan (COED countries). In developing countries it's much higher. Includes all logistics cost element – transport, inventory, etc. – big room for improvement. Ne xt slide Customer service is another concept. Customer service is the output of logistic based, performance-based, philosophy based.Activity based e. G. After sales service, marketing, public relations. Performance based – what is the standard? Ex. Dell computer is performance based, delivered in 48 hours – performance-based customer service. Can be measured. Ex. , ports – waiting time for ships – rush. Philosophy based on what customers require is the customer service – according to customers taste – before, during, and after transaction. What is transaction? Buy goods, pay. Customer service can take place before this, during, after. Changes in CSS level affect total logistics cost. Next slide CSS High, Low.Cost Low/High – the higher the customer service level, the higher the cost. No ship should wait in port for more than 3 hours. This will cost a lot of money – will have to build more berths. Define customer service level. T ry to minimize total cost based on this pre-condition. Why CSS level increase and inventory level affected. The higher the CSS, the higher the inventory level. Goal: increased SSL, so high inventory level. It's a decision the company makes – customer service level is very important. (Refers to graph on the right) Try to find a way to push the line by introducing a better way of production e. . Using IT, new production method. Reduce cost but still satisfy goal – IT, use better system. Next slide: industry norm, etc. Customer's response to stock out. Is a risk being run of losing the customer? All different ways to define the customer service level. KIT System Developed by Toyota. Called the Kanata system. When a container of parts is chosen to be used from inbound stockinet in-out in-out This is the production. Eng the assembly line how do you get different stages to work together in harmony. The system has two cards. KIT works with 2 cards – the move cards and the production cards. Hen you see the move card, time to move the container or the other card, time to produce. Work centre 1 the card moves along the production line from one work centre to the next. Toyota manage to have minimum inventory along the assembly line. They have one container of part. Cards are turning around and the parts are being moved from one centre to another. For logistics a better understanding of Just in time is very important. 9 Cot 2008 There are two circulations of cards. How do the 2 circulations make the KIT system work? Why does it work? Key elements: to reduce inventory therefore reduces the capital tied up in inventory.Planning, staff commitment including suppliers, suppliers' ability to meet the demand. Some inventory is kept because there is a container. One piece at a time is being used from the container so the rest must be inventory. What is the average inventory? What is the customer requirement? It's the size of the container. The container is fu ll – how big is the container. How is the size of the container defined? The size of the container is planned based on production. Supply 20 units at the beginning and then it's consumed and a new container comes. The container is consumed during a cycle. The cycle is the time needed.The average inventory is a half of the container what ever the amount it contains. Typical KIT, there should be no inventory so why is inventory kept? When we need egg rice why don't we get exactly that? Other costs would increase too much. KIT – to keep as little inventory as possible. The size of the container depends on what? Transportation two don't match then the size of the container needs to be changed. If the transport sakes more time then increase the size of the container and vice versa. Transport time important. Volvo had KIT between Gent and Mammal. How much inventory should be in the Volvo factory in inventory?A lot. Why? Engine parts are made in Sweden to be used in Belgium. This transport takes one week by ship. As it takes one week, there should at least be spare parts for one week. Toyota has KIT. In the city of Toyota in Japan within 30 kilometers of the factory all Toyota parts are made there. This is the perfect KIT system. KIT emphasizes the reliability of the transport system. The two containers must have the same matching size. If parts can't be produced in time, the cart must be moved earlier. At the moment one container is taken to the in stock point, another container load of part should be produced.Suppose the production takes more time than when one cart comes back? Egg. If production takes 20 hours, parts can be made in 10 hrs. The time information is sent – information flow is the key. Plan to know how long production will take. In Japan, transport is guaranteed (Toyota). What is supplier commitment? Shortcomings of the KIT system? Now we assume we only need 20 parts in 10 hours, how about if the demand change and we need 30 parts in 10 hours. If the speed of production is variable the whole system is challenged. If the demand is certain/flexed then it can be planned – production rate and transportation.But what if production rate changes? This is a challenge for some of the production down the line that may need more time and material which might have to come from far. Not easy to adjust production. Shortcomings: Does only one supplier have to be used with KIT? No, Honda uses more than one supplier. In KIT, anything that goes wrong will collapse the entire system. In KIT the entire chain has to be KIT, it can't be at only one stage of the production. If not it forces other suppliers downs the line to keep inventory. KIT of big companies push inventory down the line if the don't plan effectively.Because smaller suppliers want to satisfy big companies, they are forced to keep inventory. KIT has to be along the entire supply chain. KIT may be only at the very large suppliers who push the inventory down the line to smaller suppliers. Toyota case: 1/52 weeks car production stopped because of a fire at one supplier – ripple effect. The decision of Toyota to do nothing was based on the total minimum cost of they did various studies. CCITT Case: The reliability of transportation and the uncertainty factors make logistics system key. The importance of information. Logistics concept drivers enablers, under total cost and customer level.KIT will never work without IT. Everything works together with IT supporting the processes under total cost and customer level. The process, concept or IT cannot work separately. Information is critical for success as well as the reliability of demand. Forecast and planning important to know when demand change. Transportation is also important for this system. If the transport distance is long, the container has to be big. The size of the container is influenced by time (transport). Transport is via sea – only use air in case of emergency. If transport takes a long time or is unreliable then more inventory needs to be kept.Gent is the biggest Volvo manufacturer. Terrines transport the parts from Sweden to Belgium. The shorter the interval of the shipping service, the lower the level of inventory required. This can make the transport expensive. So it's the total cost that is important that will Supply chain 2 definitions (see slide): it's a network, not port to port. In logistics there is no procurement. The 2 key words in logistics are flow and storage. Supply chain includes manufacture. Transformation = manufacturing. 1st law of dynamics – don't create anything, only change the form. Supply chain includes much more than logistics.Logistics narrowly defined. Supply chain is broader. Procurement also concerned with about origin of the goods. Optimization Integration Collaboration Synchronization Optimization – optimize one stage, the entire thing is not optimized so integration has to take place then consol idation then synchronization (concerted manner, happening in the same time). Relationship along supply chain. Start from optimization to synchronization. The idea of supply chain is relatively recent compared to logistics. 1960/ass people start to talk about total cost. E. G. In stage one warehousing and transport are separate functions.Management focus was operations performance. No integration. Logistics integrated both to see how they can be optimized. This is called total cost management. So the focus changed to optimizing total cost and customer service. Customer service put together with cost. Organization design is a centralized function. 80,s integrated logistics function. This moved today to supply chain MGM. Put logistics together to get supply chain. Supply chain broader than logistics. Stage 1 -separately treated, not optimized. Optimization done within the company. Optimize internal functions – transportation and inventory.Intra company and intra functional. This function is a logistics function. The logistics function today is moving still in the company but inter functional. Everything in the company put together – integration. Toyota inter company – higher level of integration. Toyota owns the supplier – easier to do KIT. Companies are integrated supply chain – Inter company and inter functional. Dell and their suppliers are integrated. Also Wall-Mart. The producers don't take orders from Wall-Mart – the ‘cards' in KIT comes from individual supermarkets. Producers can check storage level of Wall-Mart outlets.Everything is totally integrated. No personal intervention to place order etc. The system is integrated – good supply chain – inter company. Next Slide From fragmented logistics to integrated supply chain. In the fist stage do one function at a time – inventory or warehouse or transport. In the later stage, intra functional – the whole function optimized. From fragm ented logistics to integrated SCM. Suppliers, manufacturer, distributor, retailer, customer are all integrated with he other functions in the company and go to the next stage you integrate between the functions in the companies and between the companies.This is interception and will become in the true sense a supply chain. Supply chain broader today than the logistics. SC have to work with other companies. To satisfy your customers require more than one company: need supplier, manufacturer, distributor, and retailer. E. G. Markers – their system integrated with some of their key customers – key client management. Copra's definition of supply chain. Within an organization there is a supply chain. Egg. WHOM, teaching, supply services, library, canteen, etc. Al depots. Work together to satisfy customer. SC decisions – have to have supply chain design and strategy.Strategic level, medium term, short term – operational, daily and based on the company's competi tive strategy. Michael porter: define competitive strategy in terms of product differentiation or cost cutting leadership. How to achieve strategy: SC strategy. Balance bet. Efficiency and responsiveness. How to respond to demand? Efficiency includes cost-effectiveness, I. E. Cheap. Fast response – this is provided at a cost. Efficiency might compromise cost. Decision making is from lower level to higher. Many competitive strategies come from SC strategy. Wall-Mart is from logistics.Dell is from Supply chain Beer game: Once demand is variable SC difficult to maintain. KIT difficult to maintain. Long time to reach an equilibrium. In the end have to keep large inventory. Once demand is unstable KIT is not suitable. SC Design. Planning is important. SC design is about planning. When suppliers design their supply chain maritime and port services is a part of that. So mapping is important. Stockholders point is storage. Horizontal line represents move. When it stops – verti cal lines = storage or waiting. Egg. BBC container tracking. This is SC mapping.Horizontal line is lead-time (time from production centre 1 to production centre 2). Lead time depends on inventory to determine when order is to be placed. SC starts from the fiber and end with the clothes on the shelf. Through this we see pipeline length and volume. E. G, coca cola. Postponement of safety stock What is postponement? H and Ezra – they use postponement principle. Clothes must be in fashion. Don't know faction of 09. Try to postpone as much as possible the manufacturing time. Forecast, ii, postpone. Dell also uses this strategy. Don't develop their machines until last moment.Can use the latest technology and the price gets cheaper. Anticipate time needed and kind of product needed. Decision is postponed to the last moment. Postponement principle can reduce stock. Has bearing on transport too. Better information flow will impact SC. Next slide Sometimes for material flow speed might not be appreciated. Transport is used as storage to adjust transport time to match with performance. Sometimes it's because of the price. E. G. Iron ore in China, there is too much now. Information speed is always good but for material sometimes it needs to be fast and other times not so fast.Compression of lead-time in manufacturing activity. Supply chain map – length (vertical) volume (horizontal) – try to compress it to see possibilities to reduce some of the variable. Ocean transport can't be adjusted as speed can't be reduced. SC design. Lead-time is transport. Port of Amsterdam case study summary Market research – likelihood to attract new carriers / guarantee – balance and supply (elasticity). When port built no congestion in Europe – more port than ships. Impossible to get firm commitment – plenty choices. More supply than demand. Demand price inelastic. Shipping companies never give guarantees.Optimization, integration, collaborati on, synchronization. Have to synchronize. Increase speed of one operations but the speed of other things remained unchanged. No synchronization. If the discharged boxes cannot be moved this is a logistics problem. The concept of logistics: most important – total cost. Port of Amsterdam forgot total cost. Typical failure case that should never have been done. Restricted berths – bigger ships cannot fit in today – size is restrictive. How wide and long should ship be. (Panama Canal has size restriction and is thus a constraint – ships in the Asian

The Role of the Nephron

The Roles of the Nephron of the 120 ml of blood that is filtered by the kidneys each minute, only I ml (that's less than I%) turns into urine that will eventually leave the body (after approximately 300 – 400 mis of it accumulates to fill the bladder! ) That leaves 119 ml of fluid called filtrate to be returned back to the blood stream. Good thing, otherwise you would have to micturate (pee, urinate) once every 3 minutes and drink 1 L of fluid every 10 minutes in order to maintain Homeostasis!!!The one million nephrons in each human kidney are amazingly efficient at selectively removing wastes from the blood while at the same time conserving water, salt ions, glucose and other needed materials. The nephrons accomplish this task in 3 main steps; these 3 steps are also called the 3 main roles of the nephron: Filtration, Reabsorption and Secretion. Fiftratffln Filtration is aecomplished by the movement of fluids from the blood into the Bowman's capsule. Beabsorpttort Reatuorptias wolves the selective transfer of essential solutes and water back into the blood.Secretion Secretion Involves the movement of wastes from the blood into the mphron. 1. Filtration The renal artery carries blood into the kidney (approximately 600 mis of blood enters a kidney each minute). The renal artery then branches into arterioles which then branch intoaspecialized capillaries called the glomerulus. Because of the great difference in diameter between the renal artery and the glomerul us, blood entering the glomerulus is under very high pressure. This pressure forces about 20% of the blood plasma (about 120m1 of the 600 ml) out of the glomerulus and across the membrane of Bowman's capsule.Bowman's capsule acts to â€Å"filter† or separate some of the substances that are located in blood plasma from others. This is because some substances are small enough to fit through the pores of the membrane of Bowman's capsule and some are too large and thus do not enter Bowman's capsul e with the rest of the blood plasma. Water, salt ions (sodium, potassium and choride), glucose molecules, amino acids and urea molecules are all small enough to go through the membrane pores into Bowman's capsule. Blood cells (rbc, wbc and platelets) and proteins on the other hand are too large to leave the capillaries or enter Bowman's capsule.The fluid inside of Bowman's capsule gets a name change; it is now called â€Å"filtrate† because it is blood plasma that has been filtered, This filtrate is identical to blood plasma minus the blood cells and proteins. Filtrate is said to be isotonic to blood plasma with respect to its concentration of water, salt ions, glucose, amino acids and urea. The filtrate will then proceed from Bowman's capsule through the rest of the nephron in the following order: proximal convoluted tubule, loop of henle, distal convoluted tubule and finally the collecting tubule.From the collecting tubule, the filtrate will enter the pelvis of the kidney a nd be called urine. 2. Reabsorption Useful materials such as sugars and salt ions are reabsorbed back into the blood stream. That is, materials that could still be used by the body are sent back to the blood. Reabsorption happens as filtrate passes sequentially through the nephron. Materials re-entering the blood stream do so through the capillary network surrounding the nephrons. In short, â€Å"good† stuff is sent from the nephron back into the blood. A.Proximal Convoluted Tubule (PCn: As the filtrate enters the PCT approximately 80% of the salt ions (sodium and potassium), glucose and amino acids are ACTIVELY TRANSPORTED out of the PCT and back into the blood stream by special â€Å"pumping† cells located in the walls of the PCT. The process of active transport requires energy. Energy in the form of ATP is supplied by the numerous mitochondria that are embedded in the walls of the PCT. Because of ionic attraction, negatively charged chloride ions (CI-) will flow pas sively out of the PCT as they are attracted by the positively charged sodium and potassium ions (Na+, K+).As the concentration of the above mentioned solute molecules drops inside of the PCT, water then diffuses out of the PCT and into the capillary network passively by the process of OSMOSIS. The lining of the PCT contains microvilli to increase the surface area over which this reabsorption can occur. B. Descending Loop of Henle: As the filtrate travels into the descending Loop of Henle, both sodium and potassium ions passively diffuse from the salty tissues of the surrounding medulla BACK INTO the Loop of Henle. (Although this is eabsorption of materials, the materials are not going back into the blood stream at this point). At the same time, water continues to move out of the Loop of Henle and into the capillary network by osmosis. The filtrate at this point is more concentrated (hypertonic) with respect to salt ions than it was in the PCT, both because water has been removed fro m it, and because salt ions have been again added to it. C. AscendineLoop of Henle As the filtrate proceeds up into the ascending Loop of Henle, the choride ions are actively pumped back out of the nephron.Because of ionic attraction, sodium ions then passively follow the chloride ions out of the tubule and into the tissues of the medulla. These ions only move into the medulla and not back into the blood stream. Since the ascending Loop of Henle is impermeable to water, water cannot leave this part of the nephron. Because of this, the filtrate gets more dilute again. Because the opposite happens in the ascending and descending Loops of Henle, the process is called the COUNTER CURRENT MECHANISM. The process is also known as the CHLORIDE SfUFT.D. Distal Convoluted Tubule (DCT) As the filtrate passes through this part of the nephron, water continues to passively diffuse out of the nephron and back into the blood. Water continues to diffuse out of the DCT because the surrounding tissues of the medulla are now very salty due to so much sodium and chloride ions accumulating there. The salty tissues attract the water out of the DCT because the medulla is hypertonic with respect to salt concentration when compared with the salt concentration of the filtrate (now hypotonic).Water that enters the medulla will then diffuse back into the blood stream. Because of the continual re-absorption of water, the filtrate becomes more and more concentrated with wastes, mainly urea. The amount of water that diffuses can be regulated by a hormone called ADH. The amount of water that diffuses from the DCT back into the blood depends on the needs of the body; if the body is dehydrated, more water will go back into the blood, and less will be left in the nephron to make less urine.The opposite occurs if the body is over hydrated. E. Collectin g Tubule C The same thing that occurs in the DCT also occurs in the CT 3. Secretion Occurring at the same time as reabsorption is a process called secretion. Secretion is when a cell releases a substance to its outside†¦ in this case, non-useful and toxic substances are ACTIVELY TRANSPORTED from the blood into the nephron – usually in the regions of the distal and proximal convoluted tubules.Substances which are secreted include excess acid (H+) or base (OH-) ions, excess glucose (high glucose levels are found in diabetic urine or urine of someone who has recently consumed a large amount of sugar-this is the kidney's way of helping to ensure that the blood sugar level doesn't get too high), ammonia, and drugs (this is why urine is used from many drug tests – the breakdown of many drugs including marijuana, cocaine, heroin, sleeping pills, codeine and many other medications can be detected even in minute amounts in the urine).The process of secretion ensures that materials that are potentially harmful to the body are quickly disposed of by being â€Å"dumped† into the fluid that is about to become uri ne. Secretion happens mainly in the regions of the DCT and CT but some also occurs in the PCT. In short, secretion involves â€Å"bad† stuff being removed from the blood being sent to the urine. of the loop after chlorine. The sodium rushes The Counter Current Mechanism of the Nephron out by diffusion because of its ‘fatal attraction' to chlorine.The chlorine and the sodium ions collect and dominate the fluids outside the loop The loop of Henle works toward the goal of water conservation. Animals that live in a terrestrial environment need to be careful not to waste water. It is clearly a waste,if water is in short supply, to release too much water with the urine. As a result there needs to be a mechanism to encourage water out of the urine and back into the blood. The loop of Henle creates that animals.There i s no way of actively capturing water in the urine that is passing through the collecting ducts. It would almost seem too late to capture the water that is alread y on its way out of the body. However, the nifty nephron creates a trick with its loop of lienle to get the water out of the collecting duct before it leaves the kidney, kidney. The ascending loop of Henle actively transports chlorine ions out of the filtrate with carrier proteins. Chlorine builds up in the fluids of the medulla by active transport.Because it is a negative ion, it creates a cause for the sodium ion, which is positive, to rush out It does so by creating a salty environment in the medulla area of the mechanism in terrestrial of I-fenle creating a salty environment. This salty environment catches the attention of the water that is passing through the nearby collecting duct. salt. The collecting duct is permeable to water but not permeable to the Water can. not resist moving into the The salt creates an osmotic salty medulla. pressure that pulls the water out of the collecting duct by osmosis. Water has a ‘fatal attraction' to salty solutions. ) Once the water is out of the duct it is no longer destined for elimination but can' now be picked up by the nearby. ,Mood capillaries and returned to be used by;. body systems. Meanwhile, back at the loop of`-†¢Henle, trouble is starting. The ascending loop is running out of salt. There is no need to worry. The salt trick can continue because the descending loop in its wisdom is stealing back the salt that the ascending loop is so generously releasing.This helps to keep a constant flow of salt inside the loop for the ascending lope to pump out . Because of the generosity gfthe ascending loop and the stinginess of the descending loop a salt trade or salt current is established as the salt moves ouc of the ascen ding loop and into the descending loop, This salt current established by the loop of lienle maintains an environment that attracts water out of the ducts containing urine and back into the blood.This process is called the counter current mechanism. (ER 25 EXCRETION AND WE BALANCING OF WATE R AN Cl ruti†n i Tubular secretion Nctwp -i> Urea _, How Materials Move Into and Out of the Nephron As Urine Forms. As a Al. nephron extends through the kidney's cortex and medulla and dumps urine into the collecting duct, various substances enter and leave the filtrate. Broken lines represent segments of the nephron wall that are permeable to water, while solid lines represent wall segments impermeable to water.Narrow arrows represent passive diffusion of materials into or out of the nephron tubule, while wide arrows represent active transport against concentration gradients. Filtration activities are shown in blue, tubu. l ‘eabsorption activities in green, and tubular secretion in yellow. U ne is shown as yellow. traces nephron function and material movements step by step. The t FU†,t. Ic r1

Computer Virus and Prentice Hall Essay

Reports of computer security failures appear frequently in the daily new. Cite a reported failure that exemplified one (or more) of the principles listed in the chapter: easiest penetration, adequate protection, effectiveness, weakest link. There has been a lot of reports of security breaches in the news, for example the Sony Playstation Network, RSA Lockheed Martin compromise, Hyundai and so on, these have been of recent and these all show how vulnerable we are to security threats out there on the world wide web which has very little to do with borders of the country or state. The Internet is a gateway of information all over the word where people are connected and providing and absorbing information. Many of the security restrictions that apply in a physical sense do not in the cyber world. I have picked the Sony Playstation Network (PSN) compromise as my topic of discussion to show the areas covered in chapter one that talk about penetration, protection, effectiveness, weakest link. A successful penetration into the PSN by the attacker, has compromised peoples credit card information, birthdates, addresses, phone numbers and more. The successful penetration was delivered disguised in the form of a purchase as stated by Sony Chief Information Officer Shinji Hajesima (Ogg, 2011). The systems were unable to detect the attack going through as it went through has a purchase transaction. This show lack of adequate protection, in the article it also mentions that the vulnerability that was exploited by the hacker was also known. This shows that it is absolutely important to make sure that the patches for known vulnerabilities are deployed and the systems are patched accordingly, though one may argue if the patching introduces other forms of vulnerability. The successful exploitation of the system led to the loss of personal details of up to 70 million (Schreier, 2011) customers, this information could be used for identity theft, credit card theft, and besides that the down time for customers who are using the system that they have paid for. The effectiveness of this attack is shown by the shutdown of the PSN for a number of days. This shows that the effectiveness of the protection on this system was lacking, the inability to pickup on the intrusion as it happened and thus showing us a weak link in the system security. The article shows us the combination of things that have come into play that have led to the successful compromise of the PSN network. Starting with the vulnerability that was known by Sony with the systems and left unattended, secondly the inability of the intrusion detection system to pick up the actual attack or the delivery of the malformed data that exploited the vulnerability to permit access to the attacker, lastly the storage of data in an unencrypted but hashed form which is reversible to obtain the credentials and personal details of the PSN users or customers.

Freedom of Expression and Social Norms in the Second Life Essay - 1

Freedom of Expression and Social Norms in the Second Life - Essay Example Although the virtual world has been in existence for quite some time, its significance had not been clear until I read the book by Boellstroff. I realized that the virtual world means more than just communication to its residents. Freedom of communication and expression is the primary force behind the existence of the virtual world. Communication in the real world is usually subject to communication barriers due to differences in cultural, ethnic, social, and personal communication skills. However, this is not the case in virtual worlds such as second life. In the virtual world, a person or resident has the ability to choose an identity unlike in the real world. This makes it possible for people to communicate freely in the virtual world irrespective of their social norms in the real world. By being able to choose a race, color, gender, profession, social class, and other factors, many barriers are eliminated, at least to some extent. Absolute freedom in the virtual world is limited due to factors such as language barrier, internet connectivity, among others. The capability to choose one’s identity in the virtual world is also significant in the enhancement of anonymity in the virtual world. From the book, I learned that lack of identity in the virtual world is of great importance in the enhancement of communication. In the virtual world, people have the choice to remain anonymous. This makes it possible to express themselves freely unlike in the real world. I was surprised to learn that in the virtual world it is possible to maintain a friendship with your best real friend anonymously. Most importantly, it is possible to interact freely with your enemies and other people who are out of reach in the real world. The author of the book emphasizes this point by stating that people can hide their identity to the extent of their genders (Boelstroff, 2008: 61).

Consumer Reports Essay Example | Topics and Well Written Essays - 500 words

Consumer Reports - Essay Example But those whose treatment consisted of mostly talk therapy did almost as well if they had 13 or more visits with the therapist." (1) More scientific data is needed before health professionals can determine whether or not this is true. Both problems are much more complex than the article indicates. Either can be strictly psychological and, therefore, benefit more from talk therapy than drugs. They may also stem from a strictly physical problem and, therefore would appear to benefit more from drugs. Or the third scenario would be that they are both caused by a combination of the physical and psychological. If this is true, then a healthy response to treatment would respond better to both treatments: talk therapy and drugs. Some early analyses seemed to suggest that medications were better if the client were severely depressed. Giving away their pro-drug bias, the American Psychiatric Association jumped on the results and recommended drugs as the first line of treatment in people who are severely depressed. Now, all too quietly, the truth emerges.

A Day in the Sleep Clinic CS4 Case Study Example | Topics and Well Written Essays - 500 words

A Day in the Sleep Clinic CS4 - Case Study Example Clearly, perception is can be negative or positive, and the most positive it is then, the more efficiently a crisis can be averted. Dr. Williams had a negative attitude towards his clients whose children ended up not getting help. The most likely outcome is that the children will be taken back home, and their conditions will also worsen. People who view things at an optimistic angle can make sound decisions and be able to communicate with any person in a more effective way (Jones, 2012). If Dr. Williams was more positive and be patient with his clients then the children could have gotten the correct medication. Negative attitude brings negative emotions that are possible to avoid. The culture, ethnicity, race, and socioeconomic status have contributed to health illiteracy. Many individuals from these backgrounds do not can acquire process and comprehend basic health information (Hayward & Miles, 2000). Language barrier, for instance, sometimes leads to insufficient healthcare services because patients do not understand the doctors. It is easy to find that people from the minority races and ethnic groups are hospitalized due to limited literacy on healthcare. Health care disparities are making it difficult for patients to navigate and get medical attention. Ethnic and racial minorities also receive less medical care because sometimes they do not believe in any therapy provided by doctors. It is cultural beliefs that make some people use primitive measures to cure diseases affecting them. Research shows that Hispanic, African American and Asian patients have less trust in their physicians because they practice culture biomedicine that is difficult to relate wit h the practice of medicine (Kingston &Nickens, 2001). Socioeconomic status especially income and education levels affect health care system. Thus, people with low income are likely to have poor healthcare treatment. There are various

Food too Expensive for Students Essay Example | Topics and Well Written Essays - 1000 words

Food too Expensive for Students - Essay Example For most students, having high food expenditure is usually a much bigger problem as they always take care of other minor expenses acquired in normal life from the little money obtained from parents. Students do not usually work or rather cannot find the much-needed free time to assume part time jobs. They are habitually immersed in academic work or rather they are not willing to do any other extra activities. However, they are left with many expenses and little money to take care of the expenses. The canteens and school cafeterias usually overcharge for their services due to a misguiding notion that students have little expenses and that they have a lot to spend. In most schools around the world, a particular commodity has a higher price in a school canteen than in a normal shop outside a learning institution. Cafeterias and canteens are not in most cases considered part of the school system, but as a way of making maximum profits by exploiting students. However, students may find the food prices at school cafeterias expensive due to the poor family status where the parent to these students are jobless or the available work pay peanuts. In some cases, parents may have an ailment such as cancer and the student may at times be required to take care of the entire family expenses. For single parents who can barely meet their daily expenses, they are over bundled with the task of taking their children through school. These students are usually in hardship taking care of the food e xpenses and even taking part time jobs is not enough to end entirely the student’s hardships. The students receive a little amount of money especially if the parents are not well of, or if they feel that they are spending too much on their child’s education. The fees may at times be too much as compared to the parents’ income. Since students to commute to school, they usually require money to take care of transport means. With the higher food prices, it is a key problem especially for the poor planners and spendthrifts who find themselves with so many expenses and little to spend. Some students may forego meals to reduce the daily expenses, which food is the main contributor. This has led to poor nutrition of students, which further reduces their performance, as food is very important for the proper working of the brain. The body requires energy that is essential for proper functioning of the body metabolic processes that greatly influence the proper execution o f activities or tasks. The cheap foods in the school environments are usually the junk foods. They are the leading cause of such a crisis as obesity. They may also lead to other disease such as high blood pressure. Most students opt to purchase what is less expensive as the food choice is greatly influenced by the economic factor that is the cost of food. This has led to poor nutrition to most students leading to ailments associated to the poor diet due to the reduced immunity associated with the lack of certain essential nutrients. The high cost the food has been greatly associated with the high cost of living, the rising trend of the fuel prices, poor state of food security and other international issues. However, the school administration working together with the government should come up with strategies to reduce the cost of food to the students to reduce the hardship to the students and to

Mangerial Economics Assignment Example | Topics and Well Written Essays - 250 words

Mangerial Economics - Assignment Example Since sports is an inelastic product, the increase of price for the sports package from $10 to $25 did not have an effect on the quantity demanded. As noted by Gelles and Mitchell (260), although it increases the MC, the fixed costs remain the same. When we have zero fixed costs, the marginal cost is constant. When StarHub raised the price of the sports package from $7 to $15, the MC remained the same since all cable TV providers pay the content providers a royalty based on the number of subscribers of the content. The increase in content resulted in more subscribers subscribing to the service thus an increase to 504, 000 as at December 2007. Considering that sports is an inelastic product, an increase in price is unlikely to cause a substantial change in the quantity of demand. Therefore, the change that was relevant to StarHub’s pricing of cable television services was the increase of sports package from $10 to $15 since the marginal cost was low. The thematic basic packages need to be reduced from $32.95 to $ 22.95 monthly. The price of the sports package need not to be doubled but increased from $7 to $12 so to reduce the marginal costs. Furthermore, the basic packages need to be increased annually by $3. Lastly, being an inelastic product, the sports package need to be increased from $10 to $30 to cater for the initial costs and operational costs. According to Gilles and Mitchell (261), a firm does charge a price that is beyond the marginal

Entrepreneurship - Growth through international among entrepreneurial Essay

Entrepreneurship - Growth through international among entrepreneurial firms - Essay Example A number of studies have been carried out in order to explore the process of internationalization among SMEs and the importance and benefits of such moves. These studies have clearly depicted the internationalization phenomenon. However the performance implications of the phenomenon remain under explored. The reason why the performance remains underexplored is owing to the several motivations and goals that drive business owners towards internalization. Since each entrepreneur has his or her own goal for going international, it is not easy to study the performance of such SMEs in the foreign market (Carrier, 2004). Despite the fact that there are multiple motivations that drives businesses towards internationalization there are two main goals that are known to play an active role towards this practice. The two common motivations are achieving firm growth and improving the profitability of the business (Wolff & Timothy, 2000) states that firm growth remains the most important motivati on towards internationalization. Two avenues have been widely used in the internationalization of a firm. These two avenues are exporting and foreign direct investment (Beamish, 2000). This paper explores the growth of firm through internationalization. To make this possible, the treatise relies on literature from journals that talk about the various avenues of internationalization, the motivation towards internalization and the implications and results of internalization in the various businesses and firms that go into it. This paper relies on scholarly journals and articles that explore the topic of internalization and business growth. A total of 20 academic journals that explore business growth through internationalization are used in this paper. In selecting the academic journals that are used in the paper, a Meta-analysis of the various business journals on the topic of discussion

Of Mice and Men is a famous novel written by John Steinbeck Essay Example for Free

Of Mice and Men is a famous novel written by John Steinbeck Essay Of Mice and Men is a famous novel written by John Steinbeck; Steinbeck was born in 1902 in Salinas Valley, California and he set Of Mice and Men during the Great Depression. He based the storyline on his personal experiences and ventures. The novel was later adapted into a motion picture starring John Malkovich and Gary Sinise. This essay will examine various aspects of the film; the films treatment of the story, characterisation, camera work, symbolism, special effects and the use of music. The film does not follow the book exactly as several scenes from the novel have been edited to add climax and tension. For example some important aspects of the book have been changed. The first change is George and Lennie going into the boss house to meet him instead of the boss meeting them in the bunkhouse; George doesnt scold Lennie for talking in front of the boss when he strictly told not to say a word; George is introduced to Slim over dinner but in the book they first meet in the bunkhouse; George comes into Crooks room to get Lennie while in the book Candy joins Lennie and Crooks and they all discuss the dream, then even Crooks starts to believe in the dream and asks if he can be part of it. Some scenes from the book are not included at all, for example Curleys wife doesnt threaten Crooks in the film whereas in the book she threatens to frame Crooks for rape purely out of spite because the men reject her company. The hallucinations that Lennie has of Aunt Clara and the rabbit telling him how bad he has been in the last chapter of the novel are not portrayed in the film and when Slim and the other men console George after he has killed Lennie is not shown in the film either. Although some scenes have been cut from the original storyline others scenes have been added to the film. For example the opening of the film which shows the girl running in the red dress and the men chasing George and Lennie (this is only hinted at in the book); the train scene where George and Lennie jump on the train escaping to Salinas Valley and grabbing their work tickets in town; the work scenes which show the power of Lennies strength; Curleys wife talking to George alone in the barn; Curley practicing his boxing skills on his punching bag and George and Lennie speaking to Curleys wife after they have just left Crooks room. This treatment of the story shows us that not all scenes in a novel makes a good or interesting scene in a film so a novel can not just be filmed as it is, it often needs changing to make it a film the audience wants to watch. In film the director usually tries to bring a romantic element into the film to keep the audience guessing, will the couple get together or not? For example, there is an underlying sexual tension between George and Curleys wife in a couple of scenes. The characterisation is fairly faithful to the way they are described in the book. The way Lennie is portrayed is as a large, tall man with the strength of a giant. He is shown to be innocent like a child but as strong as an ox. The actor playing Lennie, John Malkovich matches Lennies description in the book, A huge man, shapeless of face, with large, pale eyes, with wide, sloping shoulders. Gary Sinise also fits Georges physical description, Small and quick, dark of face, with restless eyes and sharp, strong features. He is shown to be the brains and Lennie the brawn. He is like the responsible father of Lennie, always taking care of him and trying to keep him out of trouble e.g. the scene where George gets Lennie out of Weed because he got into serious trouble for touching a womans red dress. Candy, the swamper, is faithful to his description in the book, A tall, stoop-shouldered old man and so is his character. Curley, the Boss son is described as, A thin young man with a brown face, with brown eyes and a head of tightly curled hair (hence the name) but the actor in the film has straight hair. However some characters differ from the way they are described in the book. In the book Slim, the jerk line skinner, is described as Prince of the ranchhe moved with a majesty only achieved by royalty and master craftsmen and he has a lot of authority and respect among all the ranch men in fact, His authority was so great his word was taken on any subject, be it politics or love. In the film his authority and respect doesnt come across as much as it does in the book. The actor playing Slim didnt look the way the reader would have imagined him, His long, black, damp hair straight back. His hatchet face was ageless. His hands, large and lean, were as delicate in their action as those of a temple dancer. Curleys wife is physically the same as how she is described in the book. However, the audience has more sympathy for her in the film than in the book because she doesnt threaten Crooks in the same vindictive, spiteful way. Her vulnerability is also highlighted when she is seen breaking down in tears after Curley has broken her records. In addition Crooks, the stable buck, (his nickname is derived from his crooked spine) is much more bent over then the audience would have expected. He is crueller than in the book e.g. he enjoys tormenting Lennie about George possibly not returning ever again therefore is seen to be quite malicious. The camera work is very cleverly done and emphasises certain aspects of the story very well e.g. the close up of Lennie crushing Curleys hand and the close up of Lennie breaking Curleys wifes neck, make the scenes more dramatic. The lighting affects the mood of the story like the semi-darkness in the barn when Lennie kills the puppy and the bunkhouse when Carlson takes Candys old dog to be shot display a sombre mood. The golden glow of the men playing horseshoes outdoors displays a happy and optimistic mood. There are also several interesting special effects used in the film to intensify the drama. For example the fight between Curley and Lennie is exciting to watch as you see the blood dripping from Curleys crushed hand, the killing of Curleys wife as she panics and he breaks her neck and the shooting of Lennie when George shoots him in the back of the head. Most scenes in the film symbolise things for different characters for instance the dark side of the mens lives when they are on the train and the light flickers symbolises an uncertain future ahead, violence could flare at any time. It could also symbolise a gloomy, depressing future. Scenes with a lot of light symbolise happier times, signs of hope or the men just enjoying life for a change. The rabbits symbolise the dream and a symbol for Lennie of a better life. The dead mouse symbolises death and a sense of foreboding (that something bad is about to happen). Music is a key element in any movie because it helps to build up tension e.g. the famous theme tune of Jaws or the music used in Physco as the person is being murdered the beat is set by every stab. Music also shows the mood and is there to accompany the action on screen e.g. when the men are chasing George and Lennie at the beginning of the film the music gets louder and louder. In contrast to this is the use of complete silence to set the mood e.g. when they are on the train and when they are hiding in the ditch. The silence can represent calm or tension. The music when they are discussing the Dream is very relaxing and soothing, which again reflects the mood. Overall the novel is a tragedy because you feel sympathy for George because he had to kill his friend who had become like a brother to him. The film relays the novel, keeping along the lines of the story but is still a film worth watching even if the audience has not read the book. This is because the director has altered and added scenes to include tension, drama and climax. People who have read the book would be satisfied that the characters and storyline follow the book almost to every aspect.

Collaborative Planning Forecasting And Replenishment Commerce Essay

Collaborative Planning Forecasting And Replenishment Commerce Essay Consider a company XYZ which produces various automotive parts. One such part is ABC, for which there is a rise in inventory level. The marketing team decides to launch a promotional campaign to boost the sales and ABC and curtail this rising inventory level. This promotional campaign was a great success and there was an increase in the sales of product ABC. The production department noticed this rise in sales of product ABC and they started producing more of ABC in anticipation of rising demand. This again resulted in an increase in inventory level (negated the entire motive of the campaign). This is a perfect example of the importance of information sharing (collaboration and Communication). A similar kind of issue occurs, when we do not share information in a supply Chain, resulting in Bullwhip Effect. In an organization, if different departments have different owners with different views and goals, they all try to maximize their individual profits. In the path of achieving this, they get deviated from their common goal of maximizing the overall profit of the entire Supply Chain. This deviation from the true goal leads to lack of coordination Inappropriate flow of information Due to incomplete sharing of information between stages (inter-organization and intra-organization), information is distorted. Today, for a given organization, there are a thousand of products. This increase in variety of products makes it next to impossible for the companies to exchange all information among all its suppliers Such inappropriate flow of information results in BULLWHIP effect. Here, fluctuations in orders increase as we move up the supply chain from consumer to retailer to wholesalers to manufacturers. Proctor and Gamble was the first to observe the bullwhip effect in its supply chain for Pampers diapers. They found that the raw material replenishment order at the supplier side had huge fluctuations as compared to fluctuation in demand at retail stores. Same way, HP also found that the fluctuations varied significantly with being very little at resellers point and increasing as moving up in the chain towards integrated circuit division (ICD). Here also, while the variation in product demands were very little, replenishment orders placed with ICD saw much more variability. A similar phenomenon can be seen in apparel and grocery industry. Lack of Coordination and its effects on Performance The Bullwhip effect A supply chain is said to be lacking in coordination if each stage (level) is concerned about optimization of its own objective. In doing so, various individual entities get deviated from a common objective or organizational goal to satisfy consumers by satisfying their needs and there by generating maximum profit for the organization. Information distortion is also one of the causes of Lack of Coordination, as in the case of diaper supply chain of PG. Areas affected by Bullwhip effect Manufacturing cost Inventory cost Replenishment lead time Transportation cost Labor cost Levels of product availability ( service level) Relationship across the supply chain Manufacturing Cost As a result of Bullwhip effect, Manufacturing unit of PG have to produce to satisfy the demand of diapers with much more variability. PG can respond to such variability by either holding of excess inventory or by producing more capacity, both of which leads to increase in manufacturing cost. Inventory cost The Bullwhip effect also results in increase in inventory cost. With increased variability in demand, P%G has to carry a higher level of inventory than would actually require in absence of Bullwhip effect. Thus, we can see a major increase in Inventory cost. A higher level of inventory will also mean an increased warehouse space requirement (again an increase in cost). Replenishment Lead Time The Bullwhip effect results in increased replenishment lead time. With the increase in variability in demand due to Bullwhip effect, scheduling at suppliers and PG are much more difficult as compared to a level demand. There are situations when the available resource (inventory) is not enough to meet the demand and there by resulting in higher replenishment lead time. Transportation cost The Bullwhip effect results in higher transportation cost. With the increased fluctuations in demand due to Bullwhip effect, there is a proportional fluctuation in the requirement of transportation. This results in a rise in transportation cost Labor Cost Labor cost increases in presence of Bullwhip effect. Labor cost at PG and its suppliers increase due to fluctuations in demand. Also, labor cost for receiving at retailers end increases due to this increased uncertainty. Now all these stages have option of either operating at excess labor or variable labor, both of which results in increase in labor cost. Level of Product availability One of the major outcomes of Bullwhip effect is the Out Of Stock situations. As we know, with increase in fluctuations in orders, PG is not capable of satisfying the needs of all its retailers on time, which in turn increases the likelihood of retailers going OOS resulting in a sales loss in the supply chain. Relationship across the supply chain The Bullwhip effect, having a negative effect on performance at all levels of supply chain results in bitterness in the relationship between these various stages of supply chain. Since each stage is working independently and is trying to achieve its individual goal, they are under an impression that they are doing it in right way. They start blaming other department of inefficiency and there by resulting in loss of trust. Performance Measure Bullwhip effect Manufacturing cost Increase Inventory Cost Increase Replenishment Lead Time Increase Transportation Cost Increase Shipping and Receiving Cost Increase Level of Product availability Decrease Profitability DecreaseThus, we can say that the Bullwhip effect has a significant effect on the overall profitability of the supply chain. There is an increase in cost and decrease in responsiveness. Obstacles to achieving coordination in Supply Chain Factors leading to local optimization at various stages of supply chain or increase in information delay are the root cause of difficulty in coordination in supply chain. The five major categories of obstacles are Incentive obstacles Information processing obstacles Operational obstacles Pricing obstacles Behavioral obstacles Incentive obstacle When there is a variation in incentive offered at different stages in a supply chain, there is an increase in variability in the productivity and reduction in total supply chain profits. Local Optimization: Suppose that the incentive of a floor manager at a local grocery store depends up on the profit they generate for that particular store. Here, the managers take all their purchasing and inventory decisions to achieve this goal only and not for the benefit of the entire supply chain. Buying and stocking decisions which are based on single stage optimization can never result in over all supply chain profitability. Improper sales force incentive: Very often, sales force incentive are designed in a manner to achieve local goals. Sales force incentive are based on the quantity sold to the distributors and not the end consumers. For example, consider an umbrella manufacturing firm, which offers its sales force an incentive on the sales target achieved in off season. To maximize their bonuses, sales force convinces distributors to buy more umbrellas even though there is no demand. This results in order variability with more demand in off season and less demand when actually there are sales. This kind of sales forces incentive result in order variability more than customer demand variability. Information processing obstacles Information processing obstacles occurs in a situation when there is a distortion in information regarding demand as it moves from customers to retailers to distributors to manufacturers. Forecasting based on orders and not on customer demand When there is a Bullwhip effect is a supply chain, the only communication between different stages is the orders they receive. Each stage sees its responsibility as fulfilling orders to its downstream. In such a scenario, a very small change in customer demand will result in large variability in orders placed by the distributors. The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results in a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer. Lack of information sharing Suppose a retailer increases the size of order for a particular product due to its planned promotion. Now, if the manufacturer is not aware of this planned promotion, it will see this increase in order as increase in customer demand and place orders with suppliers accordingly. So, when the retailer finishes its promotion, both manufacturer and distributor has a piled up inventory. Operational obstacles Operational obstacles occur at the time of placing and filling of orders. There are a number of fixed costs associated with placing of order, receiving or transportation of an order. Different retailers may prefer orders in lots to minimize such costs. Thus at the suppliers end there is large variability in order as compared to demand variability at retailers end. Now, if there a number of retailers associated with the same supplier, and due to placement of orders in lots, there might be some days when order may be erratically high as compared to other days as compared to demand. Such situations may also lead to large replenishment lead time. Pricing obstacles Lot size based quantity discounts occurs when there are discounts offered on large lots of order placed. These resulting large lots magnify the Bullwhip effect. There are a number of trade promotions and short term discounts. Such offers always boost orders, which are nowhere in sync up with the real demand. Such forward buying result in large orders during promotional activity or special discount rates but very small orders after that. Behavioral Obstacles Behavioral obstacles are problems in learning within organizations which later on contribute to the Bullwhip effect. Each stage of supply chain acts locally and is not aware of the consequences of its action on others. Different stages of the supply chain react to the current situation locally rather than trying to identify the root cause. Due to lack of common understanding and mutual trust, each stage plays a blame game on each other with no one taking the responsibility of these fluctuations. Lack of trust with in supply chain makes them all opportunistic at the expense of the overall supply chain profitability. This also results in duplication of efforts. Since individual entities do not share ideas and work in isolation, many a times they turn up doing the same task. Means to Overcome obstacles of Collaborative information sharing Collaborative Planning, Forecasting and Replenishment Means to overcome these obstacles Improved information accuracy Alignment of goals and incentive across the channel Building strong partnership and mutual trust Improving Operational Performance All these efforts can be achieved by Collaborative Planning, Forecasting and Replenishment. So what exactly is Collaborate Planning, Forecasting and Replenishment (CPFR)? Here, both sellers and buyers at all the levels come together and collaborate along all or few of these activities. Strategy and Planning Demand and Supply Management Execution Analysis At strategy and planning stage, all the partners involved discuss upon the scope of collaboration and assign roles and responsibilities and define checkpoints. They align all their activities including promotions, new product introduction, store opening and closing and inventory policies. Then, at demand and supply management, sales forecast using point of sales data give an accurate picture of demand. Now, as the forecasts become firm, they are converted to actual orders. Then, processes like production, shipping, receiving and stocking are executed. Now the last but most important task is analysis of KPI. There is always a need for identifying exceptions and evaluating metrics that are used to access performance. One successful CPFR implementation has involved Henkel, a German detergent manufacturer, and Eroski, a Spanish food retailer. Prior to CPFR, Eroski saw frequent stock outs of Henkel products, especially during promotions. At the inception of CPFR in December 1999, 70 percent of the sales forecast had an average error of over 50 percent and only 5 percent of the forecasts had an error below 20 percent. But, just within four months of CPFR implementation, the numbers changed drastically. Forecast errors above 50 percent reduced to 5 percent and more than 70 percent of the time, forecast error was below 20 percent. Customer service level also increased to 90% with an average inventory of just 5 days. CPFR implementation Scenarios Mentioned below are the most common CPFR implementation scenarios CPFR scenario Where applied in Supply Chain Industries where applied Retail event collaboration Highly promoted channels All industry other than those that practice EDLP DC replenishment collaboration Retail DC or distributed DC Drugstores, hardware, grocery Store replenishment collaboration Direct store delivery or DC to store delivery Mass merchants, Club stores Collaborative assortment planning Apparel and seasonal goods Specialty retail Common CPFR Scenarios Retail event Collaboration: In any retail supermarket, there are a number of events such as promotional activities and they affect demand very much.OOS and excess inventory, unplanned logistics cost and order placement costs are sometimes very high and may affect the overall profitability in the supply chain. Here the two parties involved identify specific brands that are to be included in collaboration. Each and every minute detail like promotion time and place, display tactics, advertisement are shared. Once, information sharing is done, a demand forecast is prepared and shared with in the two parties. PG is one such example which has implemented Retail event collaboration with many big retail chains including Wal-Mart. DC replenishment Collaboration This is one of the simplest and mostly used collaboration scenarios, where partners need to collaborate for forecasting on demand and DC withdrawals. This collaboration is comparably easy to implement since this collaboration requires aggregate forecast and does not require sharing of point of sales data. And slowly, with due course of time, this collaboration can be moved up to all other storage points in supply chain (from retail shelves to Inventory warehouse) Store Replenishment collaboration Store replenishment collaboration is one step ahead of DC replenishment collaboration. Here, collaboration is on store level point of sale forecast. These forecasts are used placing store orders. Benefits of store Replenishment collaboration is increased replenishment accuracy, improved service level and less Out of Stock situations, reduced inventory and greater visibility of point of sales data. Collaborative Assortment Planning For fashion apparels and seasonal products, demand follows a seasonal pattern. Thus, collaborative planning in these categories follows seasonality Hence, the forecasts rely more on collaborative understanding of industry trends, customer tastes and less on horizontal data. Why is CPFR important? Consider a consumer walking in to a retail grocery outlet to find that the product which he is looking for is not available (out of stock). For the consumer, it is great inconvenience and for the store owner, it is a loss of revenue. Such a situation is not only a plague in retail industry, but also a nightmare for manufacturing sector. Out Of Stock of one particular inventory in the manufacturing line can lead to zero overall production (bottlenecks). Mostly (70% to 75%), out of Stock occur at retailer level. Reasons for Out of Stock at retailer level: Lengthy Ordering Processes/Cycles Underestimated demand Un stocked shelves even though the products are at the store So, what is required to tackle such problems? End to end information channel Point of Sale information coming from retailer to the supplier. CPFR is one such process where we use common tools to capture data at all stages in the supply Chain. Pioneers to this practice are Wal-Mart and Tesco. They first linked their Point of Sale data from Retail stores to their Warehouses. This laid down the bricks to the building of an open information infrastructure. The second and more critical task in implementation of CPFR is managing cultural change. There has to be a willingness to share information. A mutual trust between different stakeholders is a must, since the required information to be shared is confidential most of the time. Benefits of Collaborative Planning, Forecasting and Replenishment Lower inventory levels Increased sales Less overhead Reduced human errors ( data exchange) Better insight in customer demand resulting in better resource utilization, reduced inventory requirements. Improved and direct communication with customers Opportunity to provide category management Reduced replenishment time Less redundancy Increase service level and reduced stock outs Lower Inventory Level By having knowledge of exact inventory status of customer, the supplier has better control on lead time of his inventory. He knows his exact inventory requirements due to lower uncertainty. A better forecasting leads to lowering the need for safety stocks (also termed as buffer stock is the level of extra stock maintained to mitigate the risks of stock outs due to uncertainties in forecasting). All these factors combine to result in lower inventory. Increased Sales CPFR in place ensures the product availability at any given point. This results in a better customer experience and customer satisfaction. A satisfied customer becomes your loyal customers. A loyal, regular customer generates more revenue than a first time customer. Also, less stock outs at outlets result in less customers returning without any purchase. This results in increased sales. Better Resource Utilization Proper knowledge of customer demand due to end to end information sharing, results in a better forecasting. An improved forecasting numbers result in more planned decisions, clarity of mind in terms of inventory requirements and so a better RU plan. Increased Service Level Collaborative Planning, forecasting and Replenishment builds up a better forecasting model. In CPFR system, at each level, a supplier has access to real time sales and inventory data of a customer. As soon as the inventory goes below the safety level, a replenish order call is triggered. It helps customers to operate at higher service levels and lower inventories. Now, these are the benefits every supplier aspires for. Challenges in implementation of CPFR It is a universal truth that no benefit comes without a cost. Same way, with so many benefits associated with Collaborative Planning, Forecasting and Replenishment, there are also few risks and hurdles to its implementation. With sharing of information at such a large scale, its misuse is one such risk. Often, one entity may have relationship with various competitors. Another risk involved is viability of change in technology. If one of the partners in collaboration changes its technology, the other is forced to do so or it may lose its collaboration. Thirdly, with the requirement of close interaction of the partners, a variation in their cultures can also play a very important role in making decisions of CPFR implementation. The inability to foster a collaborative culture across the partner organizations can be a major hurdle to the success of CPFR. However, one of the biggest challenges is that the demand information which is shared between the partners is often not used in an inte grated manner within the organizations. It is imperative to have integrated supply and demand, logistics and corporate planning within the organizations. This will help in maximizing the overall profit generated in the supply chain. Factors affecting Distribution Network design Elements of customer service influenced by network structure: Response time Product variety Product availability Customer experience Order visibility Return ability Supply chain costs affected by network structure: Inventories Transportation Facilities and handling Information Supply Chain Costs affected With a better visibility due to information sharing, the inventory requirement decreases, thereby reducing overall inventory cost. Also, a common supplier may have information (real time) of all its customers and can very easily club in various orders. This can be achieved by using MILK RUN model of distribution One truckload stopping at multiple points to replenish various customers. This helps him to reduce his transportation cost also. Implementation of centralized information systems (ERP, SAP) may eliminate the hassles of manually data entry and transfer. Though, the onetime cost of implementation of such systems might be very high, they reduce the human error probability. Such errors may result in inaccuracy in forecasting which will again result in higher inventory costs and out of stocks (loss of sales). Elements of Customer Services influenced Response time and Product availability CPFR builds up a better forecasting model. The actual demand information is used to generate replenishment orders. This helps vendors to improve their response time and less out of stock situations in the retail outlets. Customer Experience When a customer walks in to a retail store, there is a lesser chance of him finding an out of stock situation. Product availability (right product at right place) helps to increase customer satisfaction. Order Visibility With CPFR in place, the supplier can see the customer demand in actual and can anticipate the orders. This helps in reduction in errors in forecasting. A well informed and collaborated partners increases order visibility. All this is possible only due to Collaborative information sharing in the system.