outsourcing: logistical functions that can be performed better or less expensively by third party logistics companies
- Third party logistics companies: firms that facilitate the movement of merchandise from manufacturer to retailer but are independently owned [transportation,warehousing,consolidation of order and documentation]
- transportation: retailers demand reliable customized service, sometimes they pay airfreight to get merchandise to stores quicker
-
warehousing: vendors typically use
public warehouses: owned and operated by 3rd party, allows vendors to provide service to retailers without having to invest in warehousing facilities
- freight forwarders: companies that purchase transport services
- integrated third party logistics services: best transportation firms provide public warehousing and fright forwarding
- bullwhip effect: buildup on inventory in an uncoordinated channel [when retailers and vendors don't
coordinate]
- uncoordinated supply chain is caused by
1. delays in transmitting orders and receiving merchandise
2. overreacting to shortages: retailers order more than they need to prevent stockout leading vendors to think demand is increasing
3. ordering in batches: retailers wait and place large order to reduce transportation costs leading vendors to believe sales are irregular
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