SECTION 7: LOGISTICS AND SUPPLY CHAIN

Logistics
Logistics is the flow of funds, goods and information between origin and
consumption. Logistics involves information, material handling, production, packaging,
inventory, transportation, warehousing and often security.

Supply chain operations

Supply chain operations include the systems, structures and processes to plan and
execute the flow of goods and services from supplier to customer.
Components of Logistics:

Forward Flow
Logistics has been defined as that part of the supply chain process that plans, implements,
and controls the efficient, effective flow and storage of goods, services, and related
information from the point-of origin to the point-of-consumption in order to meet
customers’ requirements

Reverse Flow
Logistics has been defined as the movement of product or materials in the opposite
direction for the purpose of creating or recapturing value, or for proper disposal. Reasons
for a reverse flow include:

- The return of goods that are not required

- The return of damaged items
- The return of items or parts of items to enable recycling

Inventory control
Inventory management is needed to keep enough inventories to meet customer
requirements, and simultaneously its carrying cost should be lowest.

It is basically an exercise of striking a balance between the customer service for not
losing the market opportunity and the cost to meet the same.

Warehousing
Warehousing is the storing of finished goods until they are sold. It plays a vital role in
logistics operations of a firm. The effectiveness of an organization’s marketing depends
on the appropriate decision on warehousing.
Transportation
For movement of goods from the supplier to the buyer, transportation is the most
fundamental and important component of logistics.

When an order is placed, the transaction is not completed until the goods are physically
moved to the customer’s place. The physical movement of goods is done through various
transportation modes.

Material handling and storage system

The speed of the inventory movement across the supply chain depends on the material
handling methods. An improper method of material handling will add to the product
damages and delays in deliveries and incidental overheads.

Insurance
This provides coverage against physical damage or loss of goods during shipping,
whether by land, sea or air or even during storage.

Activities involved in supply chain operations

 Transformation of natural resources – This involves the extraction of raw
materials from the earth and preparing of these raw materials to be converted to
inputs for the manufacturing process.
 Movement and storage of raw materials – This involves the movement of raw
materials from the point of extraction to warehousing facilities where it can be
stored and used at later time in the manufacturing process.
 Processing of raw materials and components into finished goods – The final
product is eventually made from the conversion of the raw materials to final
product eg. Bakery products such as cakes and desserts.
 Storage of work-in-progress and finished goods – While the goods are being
produced and after the goods are produced, they must be stored before they can be
distributed to wholesalers or retailers.
  Delivering the finished product from point of origin to the point of destination
– this involves getting the final product from the manufacturer through the
distribution chain to the consumer.

THE DISTRIBUTION CHAIN

Intermodal – is the movement of cargo from origin to destination by several modes of

transport where each of these modes have a different transport provider or entity
responsible, each with its own independent contract.. Multiple carriers contracted to
fulfill a single journey.

Multimodal – is the movement of cargo from origin to destination by several modes of

transport where each of these modes have a different transport provider or entity
responsible, but under a single contract. A Single carrier contracted to fulfill a single
journey.
MODES OF TRANSPORT AND THEIR SUITABILITY FOR DIFFERENT
GOODS

Air
Advantages
 Deliver items quickly over long distances
 Give high levels of security for sensitive items
 Can be used for a wide range of goods

Disadvantages
 Air transport can involve higher costs than other options, and is not suitable for all
goods
 Flights are subject to delay or cancel
 There are taxes to be paid in each airport
 Fuel and currency surcharges will usually be added to freight costs
 Further transportation may be needed from the airport to the final destination

Rail
Advantages
 Rail transport is a cost-effective and efficient way to move goods.

Disadvantages
 Routes and timetables available can be inflexible, especially in remote regions
 Can be more expensive than road transport
 Mechanical failure or industrial action can disrupt services
ROAD
Advantages
 Low cost
 Extensive road networks
 Possibility to schedule transport and tracking the location of goods
 Safe and private delivery

Disadvantages
 Long distances overland can take more time
 There can be traffic delays and breakdowns
 There is the risk of goods being damaged, especially over long distances
 Toll charges are high in some countries
 Different road and traffic regulations on some countries

MARINE (CRUISE AND CARGO)

Advantages
• Possibility to ship large volumes at low costs
• Shipping containers can also be used for further transportation by road or rail

Disadvantages
• Shipping by sea can be slower than other transport systems and bad weather can add
further delays
• Routes and timetables are usually inflexible
• Tracking the goods’ progress is difficult
• Port duties and taxes
• Further transportation overland might be needed to reach the final destination
• Basic freight rates are subject to fuel and currency surcharges
PIPELINE
Advantages
1. They are ideally suited to transport liquids and gases.
2. Pipelines can be laid through difficult terrains as well as under water.
3. It involves very low energy consumption.
4. It needs very little maintenance.
5. Pipelines are safe, accident-free and environmental friendly.

Disadvantages
1. It is not flexible, i.e., it can be used only for a few fixed points.
2. It’s capacity cannot be increased once it is laid.
3. It is difficult to make security arrangements for pipelines.
4. Underground pipelines cannot be easily repaired and detection of leakage is also
difficult.

DIGITAL DELIVERY
This is the delivery or distribution of digital media content such
as audio, video, software and video games. The term is generally used to describe
distribution over an online delivery medium, such as the Internet, thus bypassing physical
distribution methods, such as paper, optical discs, and VHS videocassettes.
 TRANSPORT DOCUMENTS

IMPORT LICENSES – an import license is a permit from a government body giving

permission for goods to be imported into a country.
BILL OF LADING – this is a document that needs to be signed by a carrier to form a
receipt for the goods it will be carrying. The bill is made out by the business that is
sending the goods. It will set out where the goods are to be delivered and will list the
goods and the quantities of each.

STRAIGHT BILL OF LADING

ORIGINAL - NOT NEGOTIABLE

Bill of Lading Number:      

FROM:
1. Shipper / Generator Location 2. Shipper / Generator Mailing
Address (if different)
A Top Generator
567 Oak Drive
Carterville, MI 48222 Phone No.:      
Emergency Response Phone:       Generator ID (if applicable):      

TO:
3. Consignee / Facility Name and Address 4. Consignee / Facility ID#
Best Disposal
123 Main Street MIK23321456
Smithtown, MI 48333 Phone No.:
9. Notes:      

DELIVERED BY:
5. Carrier/Transporter Name and Address 6. Carrier Transporter ID#:
A Great Transporter
123 Elm MIK987789987
Jonesville, MI 48222 Phone No.:
8.
7a. 7b. Containers 9. 10. 11.

BASIC DESCRIPTION Total Unit other

UN or NA number, Proper Shipping Name, Hazard Class,
HM Packing Group (if any) No. Type Quantity Wt./Vol.

1. Antifreeze 40 DM 2200 g Gallon

2.

3.

4.

18. Special Handling Instructions and Additional Information:

 By signing below, Shipper hereby declares that the contents of this consignment are fully and accurately described above by the proper
shipping name and are classified, packaged, marked and labelled/placarded, and are in all respects in proper condition for transport
according to applicable governmental regulations. As shipper, I hereby certify that the liquid industrial by-product(s) are fully and accurately
described on this shipping document, in proper condition for transport, and that the information contained on the shipping document is
factual.
SHIPPER (Print Employee Name) Signature Month Day Year

Sam Redding
Carrier / Transporter (Print Driver Name)
X
Redding
Signature Sam 5 Month 1Day
6 1Year
6

John James/ Facility

Consignee Doe Acknowledgement of Receipt (Print Name) John James
Doe
Signature 5 Month 16
Day 16
Year

Jane Smith
Smith
Jane 5 26 16
White Copy: Consignee/Facility Original ● Yellow Copy: Consignee to Shipper ● Pink Copy: Carrier/Transporter ● Green
Copy: Shipper Initial Copy

AIRWAY BILLS – this is the air transport equivalent of a bill of lading. An airway bill
serves two main purposes:
1. As a receipt issued by an airline for goods that it will carry to a particular
destination
 2. As evidence of the contract of carriage between the shipper and the carrier

ROLE OF TRANSPORT IN MARKETING

1. Physical Supply of Products

Transportation carries necessary raw materials to factory for production of goods and
supplies finished goods to consumers. It creates place and time utility of goods by
transporting from one place to another. It easily carries finished to the hands of those who
need and use them. This significantly increases aggregate sales of goods. In fact,
transport is such a key of marketing, which helps in carrying goods to the scattered
consumers in different places, narrows the gap between producers and consumers and
facilitates to distribute goods to the consumers at minimum cost and time.

2. Specialization
Transportation facility encourages division of labor and specialization on geographical or
regional basis. Transportation cost highly affects localization of industries. Production of
goods may center at such place where the environment is the best and production cost is
minimum. This makes maximum utilization of local resources possible, which is both
economically and socially necessary.

3. Mobility of Labor And Capital

Transportation facility provides mobility to labor and capital. If more labor force is
available at any place, transport helps to carry it economically to necessary place. The
means of transport carry labors from one place to another. This encourages labor and
capital to use and invest in more productive sectors.

4. Stabilization in Price
Transportation helps to bring stability in price of different products. It transports goods
from more supplied places to scarcely supplied areas. This establishes coordination
between demand and supply, and brings stability in prices. It helps to supply necessary
goods regularly to the consumers. Besides this, consumers get necessary goods at lower
prices, because it encourages competition among producers and makes mass production
at lower cost possible.
Importance of transport in domestic, regional and foreign trade
Beside economic importance, transportation has also social, political and cultural
importance. It establishes social and utility by narrowing geographical distance. It
consolidates social and cultural utility and strengthens national integration. It helps to
establish relationship with foreign countries. Transportation also helps widen knowledge
and skill in different sectors. In this way, it helps establish social utility, uniformity and
integrity and strengthens national security.

IDENTIFY ADVANTAGES AND CHALLENGES OF SUPPLY CHAIN

OPERATIONS

Advantages: better quality of life; wealth creation; new and innovative job opportunities
including entrepreneurship, for example, telemarketing.

1. Expanded sourcing opportunities. A world market offers businesses

opportunities to secure a diverse selection of workers, materials, and products.
This larger selection of goods and services often means the opportunity to select
higher-quality or lower-cost options.

2. The opportunity to reach new customers in new markets. Just as globalization

offers more materials and laborers, it also offers new customers in new locations
with new needs.

3. More room to grow. New technologies and a shrinking globe mean that it is
easier for companies to grow generally: to produce more, offer more, and sell
more. Expanding borders also means expanding businesses and corporations.

4. More opportunities to save money. Globalization’s biggest benefit is that

increases options: options for source materials, options for workers, and options
for transportation. More options mean more chances to save on spending and
increase profits.

Disadvantages: globalization, counterfeiting, product complexity, rapid product

obsolescence, regulatory complexity, management blunders, changing market conditions,
natural disasters, and political instability.
1. Large-scale management issues. The opportunity to grow business goes hand-
in-hand with the issue of greatly increased supply chain complexity when it comes
to management. Companies must scale up all aspects of their business as it grows
across borders, which can cause problems that stretch the globe. Inventory issues
and distribution issues are high on the list of problems encountered by going
global.

2. Greater risk. Having materials, factories, and customers all over the world means
being at the mercy of global events, from natural disasters, to port closures, to
political uprisings. Globalization requires that supply chain managers have
detailed risk management plans in place and that they are prepared when disaster
strikes.

3. Global competition. You are not the only entity with access to supplies, products,
and labor around the world – you now have a lot of competition scattered across
the globe. Globalization necessitates that supply chains are highly efficient and
and well-run in order to stay competitive in a global market.

4. Information collection challenges. With different aspects of your supply chain

scattered around the world, and with an increasingly complex process for getting
products to customers, data collection and oversight can be huge new challenges.
While big data analytics is helping some supply chain managers tackle the issue of
information collection, it is still a large problem that has emerged alongside
globalization.

5. Legal issues. Operating across borders means operating in countries that very
likely have different laws and regulations. For example, secret product details may
not be safe in China, where they have less stringent intellectual property laws. In
another example, a country where you have a factory may have very different
employment laws than another where you have an identical factory.

IMPACT OF LOGISTICS AND SUPPLY CHAIN OPERATIONS

 ON THE COMPETITIVENESS OF BUSINESS

Here are a number of solutions that if used will help a company gain the competitive
advantage:

 Shipper Associations / Consortiums: By being a part of a shipper’s association, a

business can benefit from lower transportation rates due to the competitive
negotiations and economies of scale.

 Transportation Management Systems (TMS): Such platforms allow a business

to manage their data flow more efficiently and allows for visibility of performance
and cost. Keeping an eye on costs, transit times, delivery performance, freight
claims, and compliance will allow for strategic thinking and put a company a step
ahead front of its competitors.

 Auto-Tender Functionality: This feature allows freight to be tendered directly to

carriers, greatly reducing the time spent scheduling a shipment. When set up
using a least cost carrier, the savings combined with the efficiency gain provide a
great advantage.

 Advanced Tracking: Visibility and transparency are becoming more and more
important in business. Advanced tracking features have been adopted to give
customers real-time information on where their goods are.

2PL - A second-party logistics provider is an asset-based carrier, which actually owns

the means of transportation. Typical 2PLs would be shipping lines which own, lease or
charter their ships; airlines which own, lease or charter their planes and truck companies
which own or
lease their trucks.

3PL - A third-party logistics provider provides outsourced or 'third party' logistics

services to companies for part or sometimes all of their supply chain management
functions.

4PL - A fourth-party logistics provider is an independent, singularly accountable, non-

asset based integrator who will assemble the resources, capabilities and technology of its
own organization and other organizations, including 3PLs, to design, build and run
comprehensive supply chain solutions for clients.

IDENTIFY THE PROBLEMS LIKELY TO BE ENCOUNTERED IN

DISTRIBUTION

 Availability of airport, harbor and docking facilities

 Delayed shipment,
 Spoilage,
 Misdirection of goods,
 Inadequate warehousing facilities,
 Lack of proper security measures,
 Industrial unrest
 Ineffective communication

OUTLINE MEASURES TO MITIGATE PROBLEMS IN DISTRIBUTION

 Government intervention.
 Communication network including use of the internet.
 Insurance.
 Selecting the most appropriate channel of distribution based on product.
 Use handling services with good reputation.
 Careful labelling and documentation.
 Avoid holding large stocks.
 Employing Security Company, use of security cameras.
 IMPACT OF INFORMATION TECHNOLOGY ON

LOGISTICS AND SUPPLY CHAIN OPERATIONS

Global Positioning Systems (GPS)

Logistics management, when distracted driving is an issue, helps fleets locate vehicles to
update vendors and customers regarding shipments. Updated GPS systems are able
to accurately direct a driver on a safe route, without showing roadways that don’t really
exist or roadways that are not complete.

Geographic Information System (GIS)

GIS as a tool can be used to map manufacturing, warehouse locations, clients, supplier
locations and distribution centers, showing product supply or manufacturing facilities.
Geographic Information Systems helps in analyzing and representing the information
visually, allowing for greater understanding of the operating environment around the
corporate. GIS can be used to analyze the routes. Route analysis helps us to generate the
most efficient route (best route / shortest route) that the vehicle should take between the
company and it supply chain link. Alternative routes can also be generated and analyzed.
Alternative routes help in rerouting of the supplies in case of problems (either man –made
or natural) on one route. GIS helps in identifying the locations of new depots and
warehouses based on the factors like source of incoming materials and the target market
to which the stocks will move that is the different links in the supply chain.

Portnet

The National Single Window for Foreign Trade Procedures, this is a computer tool which
enables the e-processing of authorizations, permits, certificates, customs documents and
other deliveries by the competent organizations of the State, to undertake specific import
and export operations. The developed system guarantees the technological and legal
security of different documents upon the integration of a digital signature and e-payment.
Benefits of Portnet

 Increasing the efficiency of the logistics chains of economic operators and public
and private service providers.
 Speeding up cross-border movement of exported and imported goods
 Providing an environment favorable to the competitiveness of economic operators
with the possibility to deliver just in time.
 Reducing uncertainty regarding timeframes and logistic costs.
 Improving business climate, good governance and increasing transparency in
company-administration relationships.
 Simplifying and speeding up procedures and formalities of the entry and
withdrawal of goods.
 Improving the traceability of operations at any time, anticipation and planning
capacities due to the quality and good flow of information.
 Saving paper costs. ·
 Saving costs of transports and archiving documents. ·

Telemarketing, e-commerce

 Increasing transparency into all operations through the internet and mobile
devices.

 Omni channel retailing, keeping customers involved in management decisions and

reducing downtime by using all the resources of the company to fill more orders.

 Enhanced reverse logistics, increasing customer service and giving warehouse

managers a means of handling returns regardless of their origin.

 Automated inventory systems, ensuring stock levels are appropriate, and self-
optimizing slotting systems that can tell warehouse managers what needs to be
moved, as well as when and where.
Global logistics providers such as Fedex, DHL, and Amazon Logistics

Global logistic providers now allow for logistical services to be provided at a much lower
cost than in previous decades and encourages businesses to outsource their logistic needs
to these global providers. These firms have enhanced their technically capabilities and
economies of scale to offer global logistical services at competitive rates. They have also
utilized efficient systems that would for large scale, complex logistical task to be
undertaken with relative ease.

Logistics Hub

A Logistics Centre is the hub of a specific area where all the activities relating to
transport, logistics and goods distribution – both for national and international transit –
are carried out, on a commercial basis, by various operators.

Logistics hubs, for example, Jamaica is a premier logistics node within the Americas set
up to capitalize on the trade and business opportunities that will emanate from the
expansion of the Panama Canal.

With strategic investment and global partnerships, the Jamaica logistics hub will include:

 maritime and air cargo logistics hubs;

 strategic storage, handling and processing points for bulk commodities;
expansive special economic zones facilitating assembly, warehousing, sorting,
distribution and other value-added services, particularly for industries catering to
time-sensitive and high-value cargo;
 aviation-related maintenance repair and overhaul, ship repair and dry-docking;
 a robust digital network to support efficient global value chain tracking and tracing as
well as e-commerce operations.