SUPPLY CHAIN MANAGEMENT

Florida

Executive Summary

SUPPLY CHAIN MANAGEMENT OVERVIEW

Transit

Times

Safety

Cost

Reliability

Accessibility

Capacity

Key Factors in SCM Decision Making

Push and Pull Ideologies

There are two main ways to attempt to answer the questions of “what to make”, “how much

to make”, and “where to make it”. The challenge is to make sure there is enough of whatever

product you are selling available for the customer to buy, without making too much and ending up

with leftovers you cannot sell.

Push SCM

Goal: ALWAYS have enough product available for

the customer to buy

Benets: No potential sales are lost because

there is not enough product available, and

production costs are lower because the supply

order is not constantly changing

Applications: Works well with products that have

fairly predictable demand and do not spoil or

change with trends

Pull SCM

Goal: Adjust production to reect changing

customer demand

Benets: Production quantities can be

changed frequently, there is added exibility for

product tweaks, and there is less waste with

products that spoil, change with trends, or have

unpredictable demand

Applications: Works well with expensive items

because, in this case, it is more costly to have

too much product than not enough

Supply Chain Management (SCM) practices govern the selection of an appropriate mode for the movement of

goods and materials within a given industry or geographical area. SCM has undergone an evolutionary pattern.

The pattern has progressed from utilizing a single mode in a single region following the movement of raw

materials, through manufacturing facilities, to the consumer; to multi-modal solutions across a global landscape.

Florida is home to a variety of industrial, manufacturing, warehousing, and transportation sectors. Many of these

are not single points but facilitate the supply chain for local, state, and national needs. Understanding the needs

of SCM, particular to the state’s participants, will assist in guiding future planning for infrastructure or promotion

of a particular mode.

Examples of Modal use in Supply Chain Management

Modal Characteristics

MODE

AIR TRUCK RAIL WATER PIPELINE

COST ($/LB) >$1.00 $0.10 - $0.03 $0.01 - $0.005 <$0.005

RELIABILITY ▲ Higher  Variable ▼ Lower ▲ Higher

FREIGHT

PROFILE

▼ Weight

▲ Value

▲ Time Sensitivity

▲ Inventory Cost

 Weight

 Value

 Sensitivity

 Inventory Cost

▲ Weight

▼ Value

▼ Time Sensitivity

▼ Inventory Cost

Variable

characteristics

associated with the

specialized nature

of the commodity

TRANSIT

TIMES

FAST SLOW

Domestic and International Modal Mix in Florida (millions of tons)

A common limiter of modal selection

is availability.

Research indicates that the

distribution of mode choice in

supply chains is not likely to change

dramatically in the next 15 years.

Source: Trade & Logistics Study,

Florida Chamber 2009

Midwest

Airports

SUPPLY CHAIN: APPAREL RETAIL

Container

Freight

Stations

East Coast

Ports

West Coast

Ports

Midwest – National DC

Brand 1

Catalogue

Only

Brand 2

Catalogue

Only

Brand 1

Store

Only

Brand 2

Store

Only

Residential

Mall Store

CBD Store

Mall Store

SKU Level Sorts

Break Bulk

US Customs

Mall Stores

Reverse Logistics

18 Wheeler Intermodal RailAircraftSmall Truck

Overseas Crude

Production

SUPPLY CHAIN: GASOLINE & PETROLEUM FUELS

Ethanol Plant

Domestic Crude

Production

Renery

Additives Plant

Tank Farm

Gas Station

Truck Ship/Barge Direct Rail Pipeline

SUPPLY CHAIN MANAGEMENT IN FLORIDA

Case Studies for SCM

Decision Making

Seven industry clusters were identied

for economic growth in Florida by the

Department of Economic Opportunity and

Enterprise Florida. The rst ve rely heavily

on freight transportation systems and were

used in the case studies detailed below.

1. Cleantech

2. Life Sciences

3. Aviation/Aerospace

4. Logistics and Distribution

5. Defense and Homeland Security

6. Information Technologies

7. Financial/Professional Services

Cleantech

• Energy: Focusing on mechanical

methods for energy production;

bio-fuel, wind power and solar

cell.

• Efciency: Industries working

on technology and materials to

conserve energy by producing

low consumption xtures,

highly efcient design and

construction materials, and

other conservation measures.

• Environment: Technologies

and industries related to

environmental conservation,

e.g. waste, waste-water, or

environmental monitoring.

CASE STUDY:

ENERGY SOLAR PANELS FOR A SINGLE FAMILY RESIDENCE

Overseas manufacturer of silicon wafer may use ocean vessels or

air cargo depending on the time frame and size of order from the

domestic warehouse. Trucks are used to move domestic supplier

of wholesale components such as wiring, hardware, and simple

electrical components. Final stage is the transportation and

installation of the panels to a specic customer which is done by

truck.

SUPPLY CHAIN: ENERG Y

Port

Suppliers –

Domestic

Warehouse

Site

Truck AirShip

Manufacturer –

Overseas

Plant

SUPPLY CHAIN: E NERGY

Port

Suppliers –

Domestic

Warehouse

Site

Truck AirShip

Manufacturer –

Overseas

Plant

SUPPLY CHAIN: E NERGY

Port

Suppliers –

Domestic

Warehouse

Site

Truck AirShip

Manufacturer –

Overseas

Plant

Life Sciences

• Biotech: Closely associated

with businesses which

focus on development of

products, typically based on

microorganisms, to improve the

quality of health for individuals.

These products tend to serve

industrial needs.

• Pharmaceuticals: Development,

manufacture, and distribution

of compounds to combat health

related concerns.

• Medical Devices: From low to

high tech mechanical devices to

substitute, permanently replace

or otherwise affect a solution to

a medical condition.

Aviation/

Aerospace

• Aviation: Industries associated

with commercial airline and

private aircraft segment. This

includes not only recognized

airlines and airport support

services, e.g. executive air

services, but facilities involved

in pilot education-ight training

and MRO (Maintenance, repair,

overhaul) services for aircraft.

• Aerospace: Encompassing

space related industries,

this segment also includes

parts manufacturers, aircraft

manufacturers, missile

technologies, and other

assembly-manufacturing related

industries.

CASE STUDY:

PHARMACEUTICAL PRODUCTION AND DISTRIBUTION

Production may occur domestically or overseas, transportation

is provided by trucks or aircraft. Pharmaceuticals have high

value relative to weight and volume; either air or truck is used

to transport them over large distances. The distribution network

is complex because there are so many different places where

pharmaceuticals are matched with their nal user.

CASE STUDY:

AERONAUTICS ASSEMBLY

Domestic and international supplies of raw materials and

specialized parts are transported by truck or air depending on value

and weight. Multiple layers of assembly plants due to the highly

complex nature of airplane production supported by truck or plane

depending on the specic product or customer needs. Delivery of

nal product to distributors or directly to customers who may be

located in the U.S. or overseas occurs through air and truck modes.

SUPPLY CHAIN: PH AR MACEUTICAL S

Distribution

Center

Consumers

Retail, Hospitals

Direct to

Consumers

via Mail

Suppliers –

Compounds

Packaging

Plant

Truck Air

SUPPLY CHAIN: P H A RMACEUTICAL S

Distribution

Center

Consumers

Retail, Hospitals

Direct to

Consumers

via Mail

Suppliers –

Compounds

Packaging

Plant

Truck Air

SUPPLY CHAIN: AERONAUTICS – ASSEMBLY

Plant

Suppliers –

Overseas

Suppliers –

Overseas

Suppliers –

Overseas

Suppliers –

Domestic

Suppliers –

Domestic

Suppliers –

Domestic

Truck Air

SUPPLY CHAIN: AERONAUTICS – ASSEMBLY

Plant

Suppliers –

Overseas

Suppliers –

Overseas

Suppliers –

Overseas

Suppliers –

Domestic

Suppliers –

Domestic

Suppliers –

Domestic

Truck Air

SUPPLY CHAIN: AERONAUTICS – ASSEMBLY

Plant

Suppliers –

Overseas

Suppliers –

Overseas

Suppliers –

Overseas

Suppliers –

Domestic

Suppliers –

Domestic

Suppliers –

Domestic

Truck Air

SUPPLY CHAIN: PHARM AC EUTICAL S

Distribution

Center

Consumers

Retail, Hospitals

Direct to

Consumers

via Mail

Suppliers –

Compounds

Packaging

Plant

Truck Air

Logistics and

Distribution

• Value Added Logistics Services:

Businesses or organizations

which service the needs of the

transportation provider or user,

while not necessarily a part

of the formal provider or user

company. e.g. 3PL (Third Party

Logistics), customs brokers,

distributors, back ofce.

• Defense Logistics: Businesses

that serve the defense industry

or a related agency. These

may participate through

the manufacture or re-

manufacturing efforts for parts

or sub assemblies. This includes

those that provide training and

other forms of technical support

to the defense sector.

• Specialized Logistics

IT: Businesses providing

technical and computer

support for systems related

to transportation. Typically

include TMS (Transportation

Management Systems), FMS

(Freight Management Systems),

IMS (Inventory Management

Systems), and homeland

security needs.

• Wholesale Trade and

Transportation: Providers of

transportation services and

those which are classied users

of infrastructural assets, e.g.

airports, highways, ports.

CASE STUDY:

COMMUNICATIONS SYSTEMS

This distribution network works in parallel to civilian networks.

Materials must be procured and manufactured in a typical supply

network. Additional components may include distribution and

installation at domestic Department of Defense (DOD) sites or

deployment overseas.

SUPPLY CHAIN:

THIRD PARTY LOGISTICS

Suppliers –

Domestic

Suppliers –

Overseas

Truck ShipRailAir

Warehouse

Assembly

consumer

SUPPLY CHAIN:

THIRD PARTY LOGISTICS

Suppliers –

Domestic

Suppliers –

Overseas

Truck ShipRailAir

Warehouse

Assembly

consumer

SUPPLY CHAIN:

THIRD PARTY LOGISTICS

Suppliers –

Domestic

Suppliers –

Overseas

Truck ShipRailAir

Warehouse

Assembly

consumer

Defense and

Homeland Security

Defense: Industries immediately

associated with the Department

of Defense (DOD). This supports

20 military installations and

three unied command centers

located within the state.

Homeland Security:

Encompassing primarily labor

oriented efforts, this is an

emerging classication of

businesses supplying agencies

with materials to defend the

country’s borders, cyber-

environments, and other areas

through which a threat may pass.

1. http://www.eorida.com/Homeland_Security_

Defense.aspx?id=9354, March 16, 2012

CASE STUDY:

COMMUNICATIONS SYSTEMS

This distribution network works in parallel to civilian networks.

Materials must be procured and manufactured in a typical supply

network. Additional components may include distribution and

installation at domestic Department of Defense (DOD) sites or

deployment overseas.

SUPPLY CHAIN: DEFE NSE – AEROSPACE PART S

Department of Defense

Distribution Center

Raw Materials

Plant –

Manufacturing &

Assembly

Truck Air

SUPPLY CHAIN: DEF E NSE – A EROS PACE PART S

Department of Defense

Distribution Center

Raw Materials

Plant –

Manufacturing &

Assembly

Truck Air

SUPPLY CHAIN: DEFENSE – AEROSPACE PARTS

Department of Defense

Distribution Center

Raw Materials

Plant –

Manufacturing &

Assembly

Truck Air

Courtesy of www.af.mil

Florida Department of Transportation

Systems Planning Ofce

605 Suwannee Street

Tallahassee, FL 32399

Phone: (850) 414-4100