HND SHIPPING ADMINSTRATION

/TRANSPORT AND LOGISTICS

MANAGEMENT

CONSULTANTS:GHANA SHIPPERS' INSTITUTE,

ACCRA GHANA
LECTURE MATERIALS
 The focus of this course will be to provide students
with a thorough understanding of how to adopt
Information and Communications Technology (ICT)
to improve the efficiency of information flow and
control in the logistics/supply chain efficiency
environment.
 The course further exposes students to the role of the
internet in modern logistics management, as well as
the various logistics software's which can be
employed to increase efficiency in supply chain.
The following topics should be considered:
 The role of Information Communication Technology

in the Supply Chain

 Electronic Data Interchange

 Point of Sale Information

 Value Added Logistics

 Commodity Related Systems

 Apart from the ERP-systems, there have been other,
revolutionary, developments in the ICT (Information
and Communication Technology) industry that have
offered more possibilities to logistics than ever
before. EDI (Electronic Data Interchange) appeared
during the 90’s of the previous century.
 We will cover this in the next paragraph. EDI has the
ability to survive for a long time, but will eventually
be overwhelmed by a range of new possibilities.
 It will not serve the purpose of this module to explain
the advantages of each technology as all were created
through the clever combinations of advanced
technology applications; a process that is currently
continually being improved upon. A few of the
building blocks are:
 Internet - a worldwide information infrastructure
 GPS / Galileo- American and planned European
satellite positioning system with location determining
capabilities
 Improved data transmission - any type of data (from
reefers to entire B/L’s can be (wireless/glass fibre cable)
received verbally, anywhere.
 RFID-chips- readable and writable chips containing fixed
and varying information; the size of a pin-head; costing 5
cents a piece in 2004
 Optical scanners - to read barcode information on movable
objects
 Supply chains have always been very vulnerable to
damage and robbery. Estimations have indicated that,
(measured in terms of sales value) approximately 2% of
all produced goods have not been settled eventually.
 One of the main reasons why large investments are
being made in management systems that have new
technologies to their disposal, is the expectation that
the percentage of what is called “shrinkage” by the
Americans, will plummet as a result.
 EDI entails the electronic exchange of structured
information. Details regarding the nature, quantity,
etc. of the goods won’t have to be communicated via
telephone or fax in this case, but solely via computer.
 Through EDI, the computers of the sender and the
receiver of information have been connected with
each other. A data line can now assist the sender in
sending standard reports to the receiver’s computer.
The receiver will be able to process the dispatched
information immediately, which means that it will no
longer be necessary to capture the information.
 Commercial data lines have never been used in an
EDI set-up. The arrival of the Internet has seen the
return of the electronic infrastructure. EDI itself,
however, has not!
 Too many applications have been created. A distinct
example is the electronic declarations that are made at
Custom and Revenue Services.
 These are 100% web-based. Standardisation is
performed by the UTC (Uniform Transport Code)
Foundation.
 At the moment attempts are being made to integrate
EDI with the ERP-systems and to convert existing
EDI’ s into web-based applications, of which there are
currently not many around.
 An extraordinary form of EDI is Electronic Fund
Transfer (EFT). Seeing that product ordering is
performed electronically, it only makes sense that
payment for these orders is done in the same manner.
Issues regarding security cause people to be more
reserved about EFT, than with other EDI-applications.
 Electronic Data Interchange has been defined as ‘the
application on to application exchange of computer
held information in a structural format via a
telecommunication network’.
 In reality, it means that the data passes from an
application on one computer in to an application on
another computer without printing or manual
manipulation.
 It require structured data – normally in a neutral data
standard – to allow further processing.
 Basically, it permits paperless trading with no
boundaries or time zones.
 As we progress through the 1990s the pattern of
world trade will change, with an increasingly global
supply chain. Many companies will source
components in one part of the world, assemble them
in another and sell them yet in another.
 It is already starting to have a significant macro-
economic impact on world trade patterns, a complex
process.
 The development of an effective integrated global
supply chain including all the processes involved in
the trade and payment cycle has to be carefully
planned, predicted and controlled.
 Traditional management thinking and past based
procedures are too slow, error prone and inflexible for
a global supply chain to operate competitively.
 This is exemplified when one bears in mind some 11
– 14 participants are involved in any single
export/import process.
 Overall, it embraces : banks - exporter – forwarder –
custom – port – customs – forwarder – importer.
 Planning and coordinating the movement of goods
and flow of payment through such a complex system
to a predictable level of certainty is virtually
impossible without the disciplines which only EDI
provides.
 The use of EDI can provide important cash savings
and also enable a company to provide better levels of
customer service and gain a competitive edge over its
rivals.
 Looking further ahead companies may look to EDI to
provide new business opportunities. The benefit of
EDI can be divided in to three areas: strategic;
operational; and opportunity.
 They include the overall functioning of the business
and affect the very business the company is
undertaking. These can include a faster trading cycle,
‘just in time’ manufacturing, terms of trade being
dictated by bargaining power and the need to respond
to highly competitive market entrants.
 Operationally the benefits include reduced costs.
These can be split down in to paper and postage bills
cut dramatically; a reduction in money tied up in
stock; and manual processing costs.
 There will be improved cash flow, security and error
reduction, mainly from the elimination of rekeying or
transcribing information from one medium to another
and acknowledged receipt. One benefit which is easier
to quantify is that as companies insist on EDI trading,
a company offering this service will increase its
chances of obtaining a wider choice of trading
partners. They may even lose them if they do not use
EDI.
 The cost of installing the EDI facility will vary by
company and its scale of operations. At the top end of
the scale the EDI facility can be integrated in to a
complex mainframe computer software system.
 Installation investment will be high, but it will ideal
for a large or multinational company. A small
company can get in to EDI by purchasing a PC and an
EDI enabling package, or just by buying an EDI
enabling package to run its existing PC.
 Companies must estimate how much of the
information typed in to their computer is being
entered from another computer printed document.
 Industry estimates indicate that 70 percent of the data
entered comes from another printed document. The
possibilities for errors are high. These may simply
waste time, but they could end up being very serious
with orders made out and goods invoiced in the wrong
quantities at the wrong price and being sent to the
wrong addresses.
 By using EDI costs or raising invoices and statements
reduce dramatically. As far as payments are
concerned the major banks are already invoved.
 In 1992 the port of Singapore indicated that EDI
yielded the following benefits:
i. Paper reduction costs 25%
ii. Error reduction costs 33%
iii. Inventory reduction 23%
iv. Improve customer relationships 23%
v. Competitive advantage 19%
vi. Improved supplier relationship 15%
vii.Improved trade facilitation 15%
viii.Others 6%
 Overall the benefits EDI bring to international trade
can be summarized as under:
1) The standard messages that are being developed are
both for national and international trade.
2) Standard procedures being introduced between seller,
buyer, trade related services, customs etc to support
implementation of the messages.
3) The hardware, software and network service nationals
required are not restricted to national boundaries and
should not require to be altered for communication
with parties abroad.
4) Language independence is built in through the use
of United Nation data elements and international
code sets – e.g. terms of payment and deliveries,
harmonized coding system for commodities and
services, codes for identifying parties and locations
etc.
5) The reduction of the paperwork required in cross-
boarder trade and across the transport chain.
When using EDI, the company is making use of an
electronic post office.
 A system where you send your information to a
postbox, which collects its information and sends it on
to your customer.
 So you send the information when you want to and
there is no need for you to be directly connected to
customer’s computer. This electronic network mailbox
is known as the “Network’
 There are numerous Value Added Networks (VAN)
providers worldwide. The information sent over an
EDI system is structured, and the actual structure of
the message will depend on which type of business
you are in.
 All the network providers can supply information on
specific industries. Once you take the step to get
involved, a suitable package can often be provided by
your existing systems supplier often working with
your current applications.
 The network providers all have a range of
options.EDI reduces the need for large stocks of
goods, makes ordering faster, payment faster,
generally speeds up the business cycle and provides
close relationships between supplies and their
customers.
 An example of EDI is best exemplified by examining
one of the Value Added Network (VAN) involved in
global freight involving Freight Network Ltd.
 Recent studies have shown that more 50% of
documentary credits are incorrect on first presentation.
 This results in lost orders, costly delays and lower profits
for exporters.
 EDI helps exporters to eliminate these frustration and
expensive errors. Standard documents for exporters and
other shippers serving domestic markets can be created
more accurately, amendments made more rapidly and the
data to be transmitted quickly and reliably.
 Orders can be fulfilled faster and more cost effectively.
 Much of the information needed by the freight
forwarder already exists on the customer’s computer.
Currently forwarders must re-input the information on
to their own computer, print out the documents and
then dispatch them.
 The creation of additional documents involves re-
inputting much of the data that already exists. In
addition, errors often require documents to be re-
created adding to the waste of time and money.
 EDI reduces paperwork, expensive telephone calls
and wasteful communication costs.
 Forwarders can receive the essential data from their
customers as an electronic message direct to their
computers via Freight Network.
 They can also create their own databases using the
Freight Network Software. Either way costly
inputting and re-inputting can be eliminated.
 Existing computerized forwarding systems can be
connected to the service both simply and
inexpensively.
 Many of the largest carriers have developed their own
EDI systems for the transmission of data internally
and for ‘paperless trading’ relationships with their
customers.
 The problem with most customers-based systems is
that they require the carrier’s dedicated terminal to be
installed in the offices of the shipper or freight
forwarder.
 Many of the carriers have recognized the difficulties
involved for all parties in this approach.
 Freight Network gives carriers the ability to send and
receive messages to and from all their customers and
suppliers rapidly and easily. It also enables the
carriers to use the vital data without re-keying.
 EDI has grown rapidly on a bilateral basis where
buyer and seller agree to exchange standard data
electronically between their respective computers.
 These developments have until now benefited the
largest companies.
 Freight Network makes these vital benefits available
to all types of companies and organizations- without
them having to invest in expensive computers and
software development.
 It provides its software to forwarders and their
customers and associates to enable them to take
advantage of the benefit of EDI.
 Electronic information and transfer provides a
competitive edge for domestic and international
partners.
 The messages can easily be created from data already
stored on a company’s existing computer system.
Alternatively, the messages can be created on a modest
personal computer using software supplied free of charge
by Freight Network.
 When the messages is ready for transmission, one dials up
the Freight Network system via telephone line and a
modem to transmit the messages.
 The Freight Network computers convert the data in the
messages into standard formats and automatically set up
the communications according to the destinations provided.
 The messages is sent to an electronic mailbox or
direct to a computer. If the recipient has only a fax or
telex machine, the Freight Network computers
automatically make the necessary conversation.
 Nineteen fully operational messages are available

through the network as detailed below:

1. Customer / Freight Enquiry: the exporter, importer
of freight forwarder can enquire about any aspect of a
future freight movement or service availability.
2. Acknowledgement of Enquiries: the forwarder or
carrier sends or receives a customer or freight
enquiry message.
3. Quotation Request: a message to enable importer,
exporter or forwarder to place a freight quotation
request with suppliers of services.
4. Quotation Respond: this enables the forwarder or
carrier to respond to a quotation request.
5. Pre-Booking Advice: exporter or forwarder
provides provisional details and timing for the
cargo, to secure space.
6. Firm booking: exporter or forwarder provides firm
booking of freight requirements including detailed
instructions for placement of empty equipment and
collection when loaded and asks for confirmation by
return.
7. Confirmation of booking: forwarder or carrier
provides confirmation that space has been booked,
and that other arrangements are acceptable.
Electronic transfer provides rapid and accurate
confirmation to the customer that his booking is
accepted.
8. Transport Order: this enables the exporter,
forwarder or importer to send a standard message
for any type of transport requirement.
9. Shipping Instruction: exporter or forwarder
provides final details of goods to be shipped,
instruction for handling and documentary
requirements. Accurate export cargo shipping
instructions sent electronically greatly reduce the
risks of error misinterpretation.
10. Bill if lading/House Bill/Waybill: forwarder or
carrier provides bill of lading, way bill or house bill
 details to the customer and other interested parties.
Electronic transfer of information provides accurate
details to the customer at the earliest opportunity,
replacing the paper document. Electronic transfer of
the information prior to issue of the negotiable bills
documents allows the customer to vet the content
against other documentary requirements and make
amendments if necessary.
11.Air way Bill: forwarder or carrier provides details to
the customer for air movement of goods to
destination.
12. Freight Invoice: forwarder or carrier provides
details of charges as a summary invoice. Electronic
transfer of invoice details allows automation of the
payment cycle and, dependent on the terms of trade,
allows earlier confirmation by the exporters of
charges to incorporated in to the commercial invoice
to the buyer.
13. Groupage Manifest: shipping companies, airlines,
forwarders or haulers can send the carrier manifest
message, irrespective of mode of transport.
14. Confirmation of dispatch: this message confirms time
and place of dispatch to the destination.
15. Schedule Charges: forwarders or carrier provides the
customer with a schedule of the charges to be made by
third parties involved in the movement of the goods.
Electronic notification of forthcoming charges gives
early advice to the shipper.
16. SAD: exporter, forwarder or carrier, depending on
responsibilities allocated in the shipping operation,
provides export and/or import details of the customs
documentation to customs authorities and/or overseas
partners.
Electronic transfers of customs documentation provides
faster and more accurate clearance to load or to
import.
17. Changes in Transport mode movement: forwarder
or carrier provides details of any changes in
sailing/flight schedules which affect a consignment
to the customer. Electronic transfer provides
accurate, automated identification of consignment
affected as quickly as possible, allowing all parties
to check potential implications such as letter of
credit expiry.
18. Electronic Mail: use by any party in the transport
chain to any other part or relay any other
information or instructions not specifically catered
for by structured message.
19. Status message: the forwarder, exporter, or importer
can establish the status of a consignment at any
given time from dispatch to final destination.
 The growth of EDI and the establishment of
international data standards under the EDIFACT
organization has led to a new shipping lines EDI
initiative EDISHIP.
 EDISHIP has been formed by ten major lines in order
to create the cooperative business environment in
which critical mass support for EDI can be achieved.
Exporters can electronically interchange information
on booking and cargo shipping instructions, as well as
receiving bill of lading and invoice data.
 The opportunity is also available to interchange key
data with banks to speed the complete documentary
process.
 EDI facilities are also available to help importers with

schedules information, consignment progress tracking

and customs clearance routines. The major benefits of
EDISHIP initiative include:
1. Reduce paper work, bringing saving in administration
costs through less handling of documents.
2. Reduce overheads through elimination of all double
handling of information of re-keying of information
to the systems.
3. Improved accuracy: the once-only data entry process
eliminates the need for repeated checking of
information, reducing, error tracing and correction
procedures.
4. Faster receipt of information: this can result in
saving in terms of lower stock levels in industry,
quicker clearance by customs and the speedier
production of statistics for government.
5. Speedier invoice/payment cycle, thus presenting
opportunities to the seller to reduce borrowing and
interest payment on loans made to finance the
movement of goods.
6. Greater control of transportation through speedier
communication with a reduction in possible delays
and subsequent economies.
7. A common type of data transfer based on
internationally recognized standards.
8. A more efficient service with faster updating and on-
passing of shipping information.
9. More stable relationships between organizations
leading to mutually more favorable terms of trade.
Most documents in the documentary credit process are
capable of being effectively transmitted by EDI,
except for the bill of laden, as the document of title
function requires an original document to operate
effectively. As this function is the basis of security
for payment/receipt of goods in the documentary
credit process, it is clear that a solution must be
 be found to this problem before totally electronic
trading is feasible. A possible solution is the sea
waybill.
 To conclude our review of EDI in management terms,
it yields the following: high management/business
profile; ease of management data analysis access;
accurate/speed/efficiency; quickens decision-making
process; raises international profile and access; high
technology; value added benefits; and cost effective.
 Failure to become involved result in the business or
company not being competitive in the market.
 Tracking and tracing allows a vehicle, load, shipment
or article from storage can be followed over a period
of time (tracking) and / or recovered (tracing).
 Information about the status of the shipment and its
completion can be relayed to the client in this manner.
 Tracking and tracing activities are performed using
barcodes or “radio frequency tags” for identification
and registration purposes, and provides input in
respect to stock, delivery and receiving control, as
well as checking the location and status.
 One or the other is communicated, for example, via
satellite communication, location systems (GPS),
mobile phone or car phone.
 The most accurate information in respect to customer
demand can be obtained from the point of sale: the
pay-desk.
 At present there are so many applications of which the
pay-desk should not only be aware of, but also be able
to perform an upstream transfer of information
regarding a sale in the chain.
 The production plan and additional stock control can
subsequently be managed. This form of stock
replenishment is also known as Electronic
Replenishment or Automatic Replenishment.
 It may look simple, but standardisation requires a lot
from the players involved in the chain. Everyone
should be prepared to make their ERP-system and
other stock control systems accessible for this type of
data.
 In reality, only the largest companies have adequate
economies of scale to compensate for investment
costs.
 
 Software is used for logistics automation which helps
the supply chain industry in automating the workflow
as well as management of the system.
 There are very few generalized software available in
the new market in the said topology. This is because
there is no rule to generalize the system as well as
work flow even though the practice is more or less the
same.
 Most of the commercial companies do use one or the
other of the custom solutions.
 But there are various software solutions that are being
used within the departments of logistics. There are a
few departments in Logistics, namely: Conventional
Department, Container Department, Warehouse,
Marine Engineering, Heavy Haulage, etc.The
software are as follows:
 Conventional department :CVT software / CTMS
software
 Container Trucking: CTMS software
 Warehouse : WMS /WCS e.g. SUN, FIFO, LIFO etc
 Value Added Logistics (VAL) is a relatively new
concept for logisticians. Many companies – especially
in America – have already been introduced to the
basic principle behind the concept some time ago.

 VAL can be defined as performing manufacturing

operations in the distribution stage based on customer
orders, aimed at making products client- or country
specific.
 The final processing phase in the entire production
process is shifted from a production unit to a later
stage, i.e. an international distribution centre. At the
same time, the decoupling point of orders in the
supply chain is often pushed upstream.

 A VAL-unit can transform a product’s form, function

and location in an effort to supply it according to
production, logistical and service-technical
specifications.
 VAL is basically possible in all production processes
that entail compounded products with limited
finishing operations. The mass production of soap
powder or butter by Unilever will, however, not be
considered.
 The most important reasons for the existence of VAL
are locked up in the demands that are increasing in the
field of service providing, as well as the maintenance
of excellent relations with the competition, which are
all aiming for more rapid supply of client-specific
products in the end.
 To put it another way, VAL is offering opportunities to
improve effectiveness/productivity, which can be
beneficial to all parties.
 Low amounts of stock on hand, low distribution costs
or economies of scale in production and service
providing are a few examples of what can be achieved
when productivity/effectiveness is improved.
 Three basic forms of VAL can be roughly
distinguished:
Value Added Shipment:
 Re- packing and packaging, labelling, re-
conditioning, assembling displays or kits with several
products, controlling etc.
Value Added Servicing:
 Technical quality control, sampling, testing, activities

related to customer service;

End- assembly and configuration from separate
units, repair of returned goods; examples:
final assembly of components to motor cycles in
order to reduce transport volumes, insertion of
manuals and electrical cords only after order
receipt, in order to make the goods customer- /
country- specific at the latest moment, in order
to reduce inventories.
 Value Added Shipment is the basic service that
companies in the actual distribution branch are
offering to which other, more advanced services are
added.

 Value Added Transformation, relatively seen,

contributes the most to the added value, seeing that
the form and function of different products are altered
in the process.
 Apart from the more obvious VAL-services
such as warehousing (packaging, module
building, total distribution, etc.) - that are
actually more suited to the area of transport
companies and logistic service providers -
training, empowering chain management,
financing, technical support advice and
telecom-services are examples of activities that
may enhance a product or a service.
 In the development of VAL, both the shipper and the
service provider should think pro-actively and should
focus on improving the entire supply chain. Sub-
optimisation should be prevented;
 The advantages of VAL need to be proved to the
shipper. These advantages will mainly comprise lower
stock volumes in the chain, coping with fluctuations,
shortened lead times, enhanced customer service,
acceleration of information exchange and financial
settlement, etc.
 For many tenderers VAL implies an investment in
areas such as marketing, production processes,
logistical processes and also information technology,
contracts, cooperation agreements, etc.

 Trust should develop from both sides. From a birds

eye view, processes can be implemented step by step;
for various specialists, cooperation agreements can be
composed to encourage joint investments and to
eliminate the lack of knowledge of many tenderers.
 Time is required to organise service providing. It will
yield a win-win situation to both shipper and
logistical service provider on the medium to long
term.

 The importance of the time issue should be clearly

tangible between parties during negotiations and they
should be prepared to commit themselves and to risk
investment.
 The illustration below shows a general supply chain
with the relevant parties, information flows (white
arrows), goods flows (red arrows) and inventories
(blue triangles).
Supplier Manufacturer Wholesaler Retailer User

. Production . . . .

Raw Raw Finished Trade Trade

material material product stock stock
 The automotive industry differs from the general
principles in certain aspects: many production
processes are executed parallel (bodies, components,
engines, transmissions etc.) and come together in the
final assembly; the traditional order process via retail,
wholesale to manufacturer, is often by-passed.
 The approach for the Smart car is described below:
Smart cars are built to customer order.
 The process is as follows:
• The customer answers 15 questions;
• Software develops a product proposal;
• The customer can alter the product with a limited
array of options;
• The customer orders the vehicle on-line or at a
Smart centre;
• Production is based on POS data (Point of Sale)
• Re. www.smart.com
 A major item in the supply chain of food products is
the traceability of the products. This is requested by
authorities in order to safeguard public health.
 In case of irregularities it must always be possible to
remove the products which cause possible danger to
human health, due to contamination or other dangers,
directly from the supply chain.
 In this respect 2 EU guidelines are mentioned.
 All companies in the food industry or food
distribution sector are bound by these guidelines.
HACCP is a risk analysis & control procedures
system on food safety.
 The system was developed by the US NASA to
prevent any hazardous situations for astronauts
resulting from foodstuffs.

 It comprises the following 7 steps:

 (1) Identification of critical control points;
 (2) Establishment of limit values;
 (3) Establishment of preventive measures;
 (4) Establishment of monitoring procedures;
 (5) Establishment of corrective actions;
 (6) Establish verification procedures;
 (7) Keeping records.
 A critical control point is a point in the production or
handling process where hazards for human life from
microbiological, chemical or physical contamination
can be controlled (=prevented) by adequate
countermeasures, e.g. by cooking in the process.
 The General Food Law is also part of the EU
legislation from 2005. The General Food Law can be
regarded as an addition to HACCP.
 One of the main issues is the tracking & tracing of
food products, in all phases of production and
distribution which had not yet been required in
HACCP.
 The objective is: a faster reaction to food safety
incidents. All products should be provided with
information of their origin, lot numbers, serial
numbers etc.
 This information should enable rapid, selective
removal of the products from the retail points, as well
as tackling of the problem at the source, if needed up
to the supplier of the raw materials.
 In this situation, automatic identification systems such
as bar-coding or radio frequency identification using
computer chips, could improve traceability
significantly, reducing required labour at the same
time.
 ISO 22000:2005 specifies requirements for a food safety
management system where an organization in the food
chain needs to demonstrate its ability to control food
safety hazards in order to ensure that food is safe at the
time of human consumption.
 It is applicable to all organizations, regardless of size,
which are involved in any aspect of the food chain and
want to implement systems that consistently provide safe
products. The means of meeting any requirements of ISO
22000:2005 can be accomplished through the use of
internal and/or external resources.
ISO 22000:2005 specifies requirements to enable an
organization:
 to plan, implement, operate, maintain and update a

food safety management system aimed at providing

products that, according to their intended use, are safe
for the consumer,
 to demonstrate compliance with applicable statutory

and regulatory food safety requirements,

 to evaluate and assess customer requirements and

demonstrate conformity with those mutually agreed

customer requirements that relate to food safety, in
order to enhance customer satisfaction,
 to effectively communicate food safety issues to their
suppliers, clients and relevant interested parties in the
food chain,
 to ensure that the organization conforms to its stated
food safety policy,
 to demonstrate such conformity to relevant interested
parties, and
 to seek certification or registration of its food safety
management system by an external organization, or
make a self-assessment or self-declaration of
conformity to ISO 22000:2005.
 The ISO 22000 integrates all HACCP requirements
and is in conformity with the ISO 9000 series on
quality management systems, so that companies can
combine ISO 9001 and ISO 22000 into an integrated
quality management system.
source: www.iso.org