Online souricg

Logistics

LogiS1ics Involves coordinating and organising the flow of items

between their point of origin and the point at which they are

consumed. The "items'' might Include materials, equipment, supplies

and finished goods. Many processes are Involved In organising

this movement, including sharing information, handling materials,

production processes, packaging, storage {including warehousing),

transport and security arrangements.

Supply chain operations

The "supply chain" refers to the steps Involved in getting products

and services to the end consumer. "Supply chain operations" thus

refers to the management of these steps. It Is the integration of all the

business processes involved in moving goods and services from the

original suppliers, through the suppliers that add value to the original

goods and services, to the end consumer.

The components of logistics

The major components of logistics are outlined below.

Component of logistics Details

Forward and reverse flow The fcr."lard flow of goods involves

of goods 1he stages of gathering raw materials

and supplies, making 1hem Into finished

packaged goods, then transporting and

storing them on their way to tne consumer.

The reverse flow of goods involves moving

Items In lhe opposile direction. For

example, collecting unwanted items so

111ey can be reused er recycled.

Slorage of goods Goods will usually be stored in central

locations as part of their journey forwards

or backwards. For example, tney may be

stored in a warehouse.

Services such as Insurance and o:her distnbution sef'Aces

Insurance provide cover for the goods during transit

and storage.

Information services lnformal ion will need to be managed and

shared between destinations (such as

pricing, delivery dales and the methods of

1<ansport used).

Packaging Packing goods in ways that make them

easier 10 load and transport. For example,

using strong, stackable boxes that can be

carefully labelled for dispatch and delivery.

Inventory management Inventory is a comple1e list of the stock a

business holds. Inventory management ls

all about organising how stock is stored

and accessed, as well as decisions abOUt

how mueh stock is held.

Activities involved in supply chain operations

There are many activities involved in supply chain operations. The

table below illustrates these through the example of onion soup.

Supply chain activity Details

Transformation of natural Onion seedlings are cultivated in a warm,

resources moist compost mix in polytunnels.

Movemen1 and storage of The onions are harves1ed and taken in

raw materials 1ractonrailers to tne storage units.

Processing of The onions are dried and 1ransported

raw materials and 10 a soup manvfacturing and canning

components into finished plant, where 1hey are boiled with other

goods ingredients to add flavour. The soup is

then bottled or canned.

Manufacturer

Wholesaler

Retailer

Consumer

Supply chain activity Details

S1orage of work-in- The canning plant will have a large storage

progress and finished facil~y to hold cases of onions lha1 are

goods waiting to be processed, as well as to

store finished cans of soup.

Delivering the finished Transpcrt will be required al each stage of

product from point the process to move the seedlings, onions

of origin to poin1 of and cans of soup from one place to ano1her.

destination The poim of destina!ion will be shops and

restaurants.

Links in the chain of distribution

Traditionally a chain of Cistribution involves the following links to get

the goods from their point of origin to their final destination:

• the manufacturer: the firm that makes the goods

• the vvholesaler: an in1ermedlary that s1ores the goods (the wholesaler

might also perform other operations such as packaging and labelling)

• the retailer: the business that sells the goods to the end consumer

through a range of outle,s, from supermarkets to small "mom and

pop• stores

• the consumer: 1r.e person who uses the end produe!.

However, today there are a range of atternative distribution channels

such as the following.

Manufacturer Manufacturer Manufacturer

Retailer V\lebsite

Consumer Consumer Consumer

Simplifying the chain of distribution, for example by cutting out the

wholesaler, helps to cut costs so that more profit can be taken

directly by the manufacturer. This ls particularly the case with

e-commerce, where a manufacturer can cut out wholesalers and

retailers to deal directly with consumers. Alternatively, an a-trader like

Amazon can purchase supplies from lots of manufacturers and deal

directly with consumers across the globe through its website and
associated logistics system.

The differences between traditional commerce and

e-commerce

Traditional commerce focuses on the exchange of goods or

seNices in person. E-commerce involves buying and selling goods

electronically via the Internet. The following table highlights some

of the significant differences between traditional commerce and

e-commerce.

Traditional commerce E-commerce

ProceS$lng Transaelions are Transactions are proceS$ed

transaC1ions processed manually, by automatically. by a computer.

a persol'l.

Accessibility Limited, to opening Unlimrted, available 24 hours

hours. a day, 7 days a week, 365

days a year.

Physical Goodsoan be Goods cannot be inspected

inspeclion Inspected physically physically before purchase.

before purchase.

Customer The customer talks to a The customer inleracts with a

interaC1ion person face to face. computer screen.

Payment Goods are paid for with Goods are paid for with

cash,cheqve, debtt credtt card or debit card.

card or credit card.

Delivery Instant, as goods Takes time, as goods have to

can be handed to the be delivered to the customer.