CLTD cheat sheet

Seven Rs of logistics output: right product, right quantity, right condition, right place, right time, right customer, right cost.

Utility mapping: production creates form utility, logistics creates place and time utility, marketing creates possession utility.

Total cost approach: compare alternatives on the sum of procurement, transportation, inventory carrying, warehousing, order processing, and service-failure costs, not on unit price or freight rate alone.

Classic trade-off: faster transit raises freight cost but lowers pipeline inventory, safety stock, and order cycle time; slower, cheaper modes shift cost into inventory.

Bullwhip effect causes: demand forecast updating, order batching, price fluctuation and forward buying, rationing and shortage gaming.

Freight demand is derived demand: it exists only because goods must move, so transport volume tracks underlying product demand, not transport price alone.

Customer service has three elements: pre-transaction (policy, organization), transaction (order cycle time, fill rate, order status), post-transaction (returns, warranty, repair).

3PL vs 4PL: a 3PL executes logistics functions such as transport and warehousing; a 4PL (lead logistics provider) integrates and manages multiple service providers without necessarily owning assets.

EOQ = square root of (2 × annual demand × order cost ÷ annual holding cost per unit); it minimizes total annual ordering plus holding cost.

Total annual inventory cost = (D ÷ Q) × S + (Q ÷ 2) × H, where D is annual demand, Q order quantity, S order cost, H holding cost per unit per year.

Reorder point = (average daily demand × lead time in days) + safety stock.

Safety stock under demand variability = Z × standard deviation of demand × square root of lead time; higher target service level raises Z (90% ≈ 1.28, 95% ≈ 1.65, 99% ≈ 2.33).

Days of supply = on-hand inventory ÷ average daily demand; use it to flag overstock and to size replenishment frequency.

ABC classification rule: A items are roughly the top 10–20% of SKUs by annual dollar usage but about 70–80% of value and get frequent review; C items get periodic review and larger safety stock.

S&OP cycle: reconcile the unconstrained demand plan with supply, capacity, and financial plans into a single approved operating plan, refreshed monthly.

Center-of-gravity location: site coordinates are volume-, weight-, or cost-weighted averages of customer coordinates, minimizing total transport distance or cost.

DRP extends MRP logic downstream: it time-phases planned orders at each warehouse, then consolidates them into upstream replenishment requirements.

Order cycle components in sequence: order transmittal, order entry and processing, order picking and packing, transportation, and customer delivery.

Warehouse process flow: receiving, put-away, storage, replenishment, picking, packing, staging, loading, shipping.

Picking method selection: zone picking when order volume is high and SKUs are dense; batch picking when many small orders share SKUs; wave picking when orders must meet carrier cutoff times.

Cross-docking requires accurate ASN and labeling, pre-received purchase orders, and synchronized inbound and outbound schedules; it removes put-away and storage cost.

Slotting rule: assign high-velocity, high-cube, and heavy items to the golden zone near the shipping dock; assign slow movers to high or remote locations.

Cube utilization = (cargo volume ÷ vehicle internal volume) × 100; a 53-foot dry van holds roughly 3,800–4,000 cubic feet or about 26 standard pallets, so weight or cube can be the binding constraint.

Incoterms 2020 risk transfer: EXW at seller's premises; FCA when goods are handed to the buyer's carrier; FOB when goods are on board the vessel (sea and inland waterway only); DAP at named destination ready for unloading; DDP after import clearance and duty payment.

The bill of lading functions as a receipt for goods, evidence of the contract of carriage, and, when negotiable, a document of title.

Dock-to-stock cycle time = elapsed hours from trailer arrival at the dock to inventory being verified, put away, and available to promise.

Perfect order index = % on-time × % complete × % damage-free × % documentation-accurate; because it is multiplicative, one failure drives the whole score down.

OTIF counts a delivery as successful only if it is both within the agreed window and in the full ordered quantity; partial shipments are failures.

Inventory turnover = cost of goods sold ÷ average inventory value; days inventory outstanding = 365 ÷ turnover.

Cash-to-cash cycle = days inventory outstanding + days sales outstanding − days payables outstanding; shorter cycles free working capital.

SCOR process structure: Plan, Source, Make, Deliver, Return, Enable; performance attributes are reliability, responsiveness, agility, cost, and asset management.

Cost-to-serve uses activity-based costing to assign order handling, delivery, and service costs to individual customers or segments, exposing accounts that are unprofitable at current service levels.

Cycle-count accuracy = (counts within tolerance ÷ total counts) × 100; A items are counted most frequently, and tolerances should be tighter for high-value SKUs.

A usable KPI is measurable, actionable, aligned to strategy, and benchmarkable; typical logistics KPIs include cost per order, cost per order line, cost per unit shipped, and on-time delivery percentage.

Benchmarking compares internal metrics against internal best-performing sites, direct competitors, or published industry standards to size performance gaps and set targets.