The DAILY OBSERVER Tuesday, March 2, 2021 Page 27

Lesson 21
with
Treisa Cornwall

LOGISTICS & SUPPLY CHAIN

Logistics is the movement of goods, people, or ► S

materials from one point of origin to another.
Supply Chain is a network of all the individuals,
organisations, resources, activities, and
technologies that manage the flow of goods/
services. It includes all the processes that
transform raw materials into final products.
 torage of goods – goods are normally stored
in warehouses to facilitate inbound flow of
goods (raw materials and parts which can be
easily moved to the production process) and
outbound flow of goods (finished goods that
need to be in a warehouse from which they will
be transported to customers).

COMPONENTS OF LOGISTICS ► Insurance – due to the risks that are involved

in the production of goods/services, (damage
► F
 orward logistics – this is organising the caused by fire, theft by employees, floods,
forward flow of goods from the producer to the delays at seaports/airports, vandalism etc.)
end-user.
businesses need to insure themselves against
► R
 everse logistics – this is where the customer losses to mitigate against financial constraints
returned a good to the producer; this may be
on the business.
that faulty goods were received; damaged
goods were received, or the goods were
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ACTIVITIES IN SUPPLY CHAIN

ACTIVITY EXPLANATION

Transformation of natural Processing raw materials to be used in the production process

resources example cutting trees to make furniture.

Securing and storing raw materials until they are needed by the
Movement and storage of
production department. These materials must be stored in the
raw materials
most suitable condition.

Processing of raw materials

and components into This is converting the raw materials into finished goods.
finished goods

This is partially finished products are yet to be completed. These

Storage of work-in-progress partially finished or semi-finished goods will oftentimes need to
and finished goods be stored before they can be completed. For example, at taste
patties work in progress will be the loaves to be baked.

Transporting/moving finished goods from the producer to

consumer. Goods to be delivered; may require moving them into
Delivery of finished goods
storage, using the service of a wholesaler or the goods can be
sold directly to consumers from the manufacturer.

THE DISTRIBUTION CHANNEL

Distribution involves getting the right product to the right consumer at the right price, quantity,
time and place as quickly as possible. The following diagrams outline the flow of goods in the
distribution channels.

Channel # 1

Wholesaler – this person buys in bulk from the manufacturer, the stores then break them up into
smaller quantity for retailers to buy.

Retailer – this is someone that specialises in selling products to consumers. Retailers often have
multiple stores or retail shop.

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FUNCTIONS/BENEFITS OF THE WHOLESALERS FUNCTIONS/BENEFITS OF THE RETAILERS

The retailer stocks a variety of goods, which benefits the

The wholesaler promotes the product to retailers.
The cost of the warehousing is passed on to the retailer.
They purchase from several manufacturers and operate
as a one-stop-shop to retailers.
Instead of the manufacturer absorbing the cost of
storing large quantities of goods to be sold, these costs
are passed on to the wholesaler.
They are conveniently located within communities,
making it easier for retailers to visit one location instead
of visiting several different manufacturers.
They can provide transport to the retailer’s location.
They can provide feedback to the manufacturer.
consumer.
They are located closer to consumers, making it easily
accessible. They may also facilitate online shopping.
They are an important source of information on
consumer needs as well as their ever-changing needs.
They can provide advice to consumers on their purchases.
They repackage goods purchased in large quantities
from the wholesaler and break them down into smaller
suitable quantities to consumers.
A retailer may sell goods on credit to consumers.
A retailer may arrange the delivery of goods to the
consumers.

Channel # 2

Channel # 3

Channel # 4

Channel #1: manufacturer to wholesaler to retailer to consumers: wholesaler stores goods in large
quantities from several manufacturers, they are then delivered to retailers in smaller quantities and the
retailer then breaks down the goods in even smaller quantities to the consumer.

Channel #2: manufacturer to wholesaler to consumers: this channel operates as a retail store with
discounted prices and bulk quantities, customers can purchase in bulk.

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Channel #3: manufacturer to retailer to consumers: For additional information please watch the
this channel has only one intermediary, usually the following YouTube videos
retailer. The manufacturer must process several
small orders on a regular basis; the retailer then https://youtu.be/4-QU7WiVxh8
provides feedback directly to the manufacturer. – What is Logistics Management?
Definition & Importance in Supply Chain
Channel # 4: Manufacturer to customers: this
channel is where the manufacturer sells directly
to the consumers. More and more businesses are
using this direct channel of distribution.

MULTIMODAL TRANSPORT

Multimodal transport is the transportation of https://youtu.be/2JcHMhtH6_s

goods under a single contract but performed with – How Container Ports Work:
at least two different modes of transportation. Logistics of Intermodal Transport
The carrier is liable for the entire carriage even
though it is performed by several different modes
of transports.

INTERMODAL TRANSPORT

Intermodal transport refers to the movement
of goods using two or more modes of
transportation from shipper to consignee
without any handling of the freight itself when
changing transportation modes.
Next lesson will be on Modes of Transportation.
Treisa Cornwall is on the staff of
St Andrew Technical High School.
 E-mail: treisacornwall@gmail.com