Logistics Supply Chain

FMCSA compliance: Verify active MC authority, insurance minimums ($1M — above FMCSA's $750K minimum), safety rating (never Unsatisfactory), and broker bond ($75K) before first load and quarterly thereafter.

Portfolio strategy: 60–70% asset carriers, 20–30% brokers, 5–15% specialty. Build 3-deep routing guides for lanes with >2 loads/week. No single carrier exceeds 40% of any critical lane.

RFP process (8–12 weeks): Analyze 12 months of lane data → lane-level bid packages (not portfolio bids) → evaluate on 40–50% cost / 25–30% service history / 15–20% capacity commitment → award in waves → 30-day parallel period.

Carrier exit triggers (after documented corrective action): OTD <85% for 60 days, tender acceptance <70% for 30 days, claims ratio >2% for 90 days, FMCSA lapse, double-brokering confirmed.

2. Inventory and Demand Planning

Translate commercial intent into executable purchase orders while minimizing stockouts and excess inventory.

Forecasting method selection:

Safety stock: SS = Z × σ_d × √(LT + RP). For lead time variability: SS = Z × √(LT_avg × σ_d² + d_avg² × σ_LT²). Service level targets: A-items 95–97.5%, B-items 95%, C-items 90–92%, CZ 85%.

ABC/XYZ classification: A = top 20% SKUs driving 80% revenue. X = CV <0.5 (predictable). AX: automated replenishment with tight SS. AZ: human review every cycle. CZ: candidate for discontinuation.

Promotional lift: Strip promo volume from baseline before fitting models. Typical lifts: 15–40% for price reduction only, 80–200% for TPR + display + circular, 300–500%+ for doorbusters. Always model post-promo dip (default: 40% of incremental lift, concentrated in week 1).

Forecast accuracy metrics: WMAPE <25% target, >35% red flag. Bias ±5% healthy, >±10% for 4 weeks signals structural model problem. Tracking signal exceeds ±4 → re-parameterize or switch methods.

Escalation triggers: Projected stockout on A-item within 7 days → alert within 4 hours. Vendor lead time increase >25% → notify within 1 business day. Promo forecast miss >40% → debrief within 1 week.

3. Logistics Exception Management

Resolve freight exceptions — delays, damages, losses, and carrier disputes — quickly while protecting financial interests.

Exception taxonomy: Delay (transit) ~40% of all exceptions. Damage (visible, concealed, temperature). Shortage / overage. Refused delivery. Lost (full or partial shipment). Contaminated.

Claims process:

• Carmack Amendment (US domestic): Carrier liable for actual loss. Shipper must prove: goods in good condition at tender, arrived damaged/short, amount of damages.
• Filing deadline: 9 months from delivery date (49 USC § 14706). Miss it and the claim is time-barred.
• Required docs: Original BOL, delivery receipt with exception noted, commercial invoice, inspection report, photographs, repair estimates.
• Carrier response: 30 days to acknowledge, 120 days to pay or decline.

Eat-the-cost vs. fight-the-claim thresholds:

• <$500 and strong carrier relationship → absorb (admin cost exceeds recovery)
• $500–$2,500 → file, accept settlements >70%
• $2,500–$10,000 → full claims process, reject <80%

• $10,000 → VP-level awareness, reject <90%, legal review if denied

• Any amount + 3rd+ exception from same carrier in 30 days → treat as carrier performance issue

Priority sequencing (multiple active exceptions): (1) Safety/regulatory, (2) Production shutdown risk, (3) Perishable <48 hours shelf life, (4) Highest financial impact by customer tier, (5) Oldest unresolved exception.

Exception rate targets: <25 per 1,000 shipments (red flag: >40). Mean resolution time <72 hours (red flag: >120). Financial recovery rate >75% (red flag: <50%).

4. Production Scheduling

Sequence jobs, balance lines, optimize changeovers, and resolve disruptions to maximize constraint throughput.

Theory of Constraints (DBR): Identify the drum (constraint — work centre with highest load/capacity ratio, typically >85%). Buffer time = 50% of production lead time for the constraint operation. The rope limits new work release to the constraint's rate. A minute lost at the constraint is a minute lost for the entire plant.

Buffer zones: Green (<33% consumed) = well-protected. Yellow (33–67%) = expedite upstream. Red (>67%) = immediate management action, potential overtime upstream.

Job priority sequencing:

1. Past-due jobs first (ordered by penalty exposure)
2. Jobs feeding the constraint when buffer is yellow/red
3. Dispatching rule by product mix: EDD for high-variety short-run, SPT for long-run few products, setup-aware EDD for mixed with sequence-dependent setups
4. Tie-breaker: higher customer tier, then higher margin

Changeover optimization: Build setup matrix (changeover time and cost for each product pair). Apply nearest-neighbour heuristic then 2-opt swaps. Validate against due dates — due date compliance trumps changeover optimization.

SMED methodology: Classify setup elements as internal (machine stopped) or external (machine running). Convert internal to external where possible. Typical result: 40–60% setup time reduction from reclassification alone.

Disruption response (within 30 minutes): Assess impact window → freeze jobs in-process or within 2 hours of start → re-sequence unlocked jobs using priority framework → communicate revised schedule → lock for minimum 4 hours.

OEE: Availability × Performance × Quality. World-class: 85%+. Typical discrete manufacturing: 55–65%. A 2% yield improvement at the constraint equals a 2% capacity expansion.

Key performance targets:

5. Returns and Reverse Logistics

Authorize, inspect, disposition, and recover value from returned goods while detecting fraud and managing vendor recovery.

Condition grading:

• Grade A (Like New): Original packaging intact, all accessories, passes functional test → restock as new (85–100% recovery)
• Grade B (Good): Minor cosmetic wear, functional → open box / renewed (60–80% recovery)
• Grade C (Fair): Visible wear, missing minor accessories → liquidate or refurbish if cost <20% of recovered value (30–50%)
• Grade D (Salvage): Non-functional or heavily damaged → parts harvest or recycle (5–15%)

Disposition routing by category:

Fraud scoring — flag for review at 65+, hold refund at 80+:

• Serial number mismatch on electronics: +40 points
• Product weight differs >5% from expected: +25 points
• Return rate >30% (rolling 12 months): +15 points
• No-receipt return: +15 points
• New account (<30 days old): +10 points

Vendor recovery: Pursue claims >$500. Batch claims $200–$500. Offset claims <$200 against next PO. Raise threshold to $1,000 for overseas vendors. RTV claim window is typically 90 days from receipt — do not let eligible product sit past this window.

Key metrics:

Automatic escalation: Return value >$5,000 → supervisor approval before refund. Fraud score ≥80 → hold and route to fraud review immediately. Recalled product identified → do not process as standard return.