Question

Your supply chain organisation is considering expanding and trading globally. You currently operate in several regions of the world, but these operations are domestic and do not work together, although they could be used to create a single fully integrated supply chain. In addition to integrating its current operations, your organisation will need to identify new low-cost suppliers. You have been asked by your Managing Director to;

1. Appraise the types of logistic assets required to successfully operate a global logistics system.

2. Critically evaluate an operational application of various multi modal transport assets such as trains, ships, road vehicles and aircraft

Answer 1

What do you mean by Logistics system

A logistics system (LS) is a network of organizations, people, activities, information, and resources involved in the physical flow of products from supplier to customer.

International marketing is becoming more important to companies as the world shifts from distinct national markets to linked global markets. Globalization brings homogenization of consumer needs, liberalization of trade, and competitive advantages of operating in global markets. Companies are forced to think and act globally in order to survive in such a dynamic environment. All these elements have a deep impact on the development and the positioning of companies on international marketplaces where competition is cruel. Furthermore, another significant change concerns the customers since they are more demanding in term of quality, lead time and order fulfilment.

“Logistics is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of conforming the customer requirement”.

Types of logistics

Logistics has three types; inbound, outbound, and reverse logistics.

Inbound logistics

As the name suggests, inbound logistics is concerned with activities related to the incoming flow of resources needed to make a product or a service. Inbound logistics processes may include managing suppliers, costs, inventory, and transportation to ensure the right components or subassemblies arrive in your factory on time. Inbound logistics is generally complex because hundreds of parts are coming in to manufacture one final product, therefore, it tends to be more intricate than outbound flow.

Outbound logistics

Outbound logistics refers to activities in delivering the right product at the right time to customers at a minimum cost. Customer satisfaction is the primary objective of outbound logistics, that is why many organizations especially e-commerce companies are competing for last-mile or same-day delivery to their customers. Companies bring out their value proposition to their customers and back it up with their outbound logistics capability.

Reverse logistics

Reverse logistics is the process of moving products from end-user back to the origin to recover value or for proper disposal. The value is recaptured from products recovered from customers through rework, refurbishment, reuse, scrap recycling, or government incentives for recyclable products.

TRANSPORTATION ACTIVITY

Whether the movement of material and equipment is by rail, sea, air or road, adequate facilities for their free flow to and from the factory must be ensured. In general the following activities are performed by the transport in logistics .

1. Terminal Facilities : One of the major activities of transportation is making terminal arrangement. Besides the trade growth In India terminal facilities are usually reluctantly provided. The main reason could be of lack of infrastructural facilities. Another reason for this is that any delay in the unloading of trucks or wagons, or any inconvenience caused to truck operators, is not considered to affect adversely the interests of the project and therefore are not believed to be a loss to the carrier. In some cases, this may be true. Actually, however, if these facilities are liberally provided, a reduction can be obtained in freight rates. Also, the process can be minimized, if not eliminated. Adequate reception and dispatch facilities are generally not planned for even for major projects. Sometimes, there is a conscious or subconscious antagonism against the common carrier . Major facilities available in terminals:  Adequate storage space .  Loading and unloading arrangements.  Storage facilities. It has not been recognized by the planners of individual projects that considerable savings can be affected by providing adequate terminal facilities because of the low quotation of rates by the transporter who can “come in” and “get out” fast from the factory instead of waiting for hours to unload or load the goods. The overall savings in transport rates would more than justify the expenditure incurred on the provision of additional facilities. For rail movement, not only sufficient number of loading lines, but also sufficient number of marshalling, examination and holding lines must be planned for. These lines must be suitably connected with one another to ensure smooth shunting operations. The configuration of lines (yard design) is more important than the mere number of lines in the yard, for the requirements of prime mover (shunting engines) can also be cut down by a suitable design of yard.

2. Fleet management: An important feature of movement of finished products of major projects is the type of vehicle used for movement. The vehicle dimensions, capacity, type and its special characteristics, if any, have to be examined with reference to the quality and quantity of goods to be moved. In the case of sea transport, the size, speed and the type of ship to be used are very important. In the case of road transport, capacity, moving dimensions, and the speed of the trucks are of great significant. In the case of rail movement, the capacity, type and general availability of wagons must be closely examined. The capacity of vehicles and send their sectional speed together determine the throughput on a particular section. While planning movement of raw materials and finished products, it must be recognized that some sections of roads or the railways in the country have limited spare sectional capacity. With saturated sectional capacity, introduction of more vehicles tends to reduce their speed and, therefore, the total throughput. Planned movement on any section must take into account utilization of the existing sectional capacity, the expected general growth in traffic on the section, and the possible on a saturated section is inevitable, line Capacity of the section must be increased. Major Carrier decisions:  Type  Capacity  Characteristics  Speed

3. key Movers: The motive power utilized for the internal handling of vehicles and transportation to destinations is another important component of the total movement system. In the case of rail movement, locomotives required for shunting and marshalling of wagons within the plant must be of such weight, horsepower and performance characteristics as will match the specific tasks of shunting and reception and dispatch of wagons. In the case of road movement, suitable design and layout of conveyors and mechanical loaders can reduce the drudgery of annual labour and make pre-dispatch and post receipt handling operations more efficient.

4. Routing: Another important aspect of transport preparation is the routes for streams of traffic, viz., roadways, railways, waterways and airways. The goal of efficient fleet management is to ensure on-time deliveries and pick-ups while reducing costs. Solving the vehicle routing problem is critical to efficient fleet management. In order to reduce cost and guarantee timeliness, routes must be created to reduce driving time and/or driving distance.. The routes or pathways must have adequate capacities. Generally speaking, because of lack of understanding of the transportation subject, executives take it for granted that capacity of routes is unlimited. For example, they generally feel that the problem of rail transport is solved fully and finally by the supply of adequate number of wagons by the railways. They are not able to appreciate that these wagons have also to be moved over a section of railways after loading has been completed. Again, positioning of a large number of trucks at the factory gate cannot be taken as the full and final solution of the problem of road transport just as chartering and berthing of vessels 45 for sea transport is not the full and final solution of the problem of movement of cargo by sea. A very important but invisible component of movement activity is sectional capacity, which is dependent on permissible sectional speed and other characteristics of a section. In turn, sectional speed depends on the geometrics of the road (track in the case of the railway, sea route in the case of ships, type of road surface, carriage way, gradients and curves in the case of roads). Over a section of railways or roadways between two stations A and B, only a limited number of wagons, trucks, or vessels can be pushed through, depending on the availability of terminal facilities to handle these vehicles, the facilities to enable these vehicles to move on the section, and availability of sufficient number of vehicles. Unless sufficient capacity is developed on each of the different routes to move the vehicles, the additional number of vehicles provided would not necessarily lead to higher levels of transport availability. On the contrary, movement may become more sluggish. Very often, restrictions are imposed by the railways on certain routes. In the case of road transport, the carrier quotes higher rates for routes which are highly congested, or poorly maintained, or of poor design.

5. Transit time management: The relative locations of a plant and the customers or suppliers determine largely the transit time of raw materials, spare parts and finished goods. Transit time generally never receives adequate attention in the planning of major projects. There is a general impression that, if need be, transit time can be drastically cut any time by air-lifting a consignment. Apart from the fact that the neglect of transportation planning on account of this erroneous assumption leads to overall higher cost of transport, in practice, reduction in transmits time actually achieved may not justify that heavy cost of air transport. Rough estimates of transit time from unreliable information sources are generally utilized by “technical experts” for planning movements of goods. Although more detailed information may be readily available with appropriate authorities, it may not be solicited from them.

7. Distribution Pattern: The pattern of movement of the finished product by road or rail must be planned properly. For example, when the requirements of the number of rail wagons are not to be worked out, it is not sufficient to take the average lead or distance for the whole country for calculating fleet requirements. It is also not sufficient to use the figure of the existing average lead of general goods, or even that pertaining to a specific commodity. Generally speaking, on the basis of the information supplied by the project management, the common carrier plans for the movement of goods to a specific destination, or region. However, when it comes to actual transport, because of imprecise preplanning, the manufacturer wants the common carrier to transport goods to anywhere and everywhere in the country. This presents a difficult problem. This manufacturer may feel that by providing information must be supplied to the carrier so that the carrier can plan the movement in entirety. The special variability of the movement and its impact on overall transport availability must be duly recognized.

8. Nature of Product: Another aspect, which is often disregarded by project managements as well as the common carrier, is the variability arising out of the specialized nature of products to be moved. The generally low level of sophistication is transport planning in the country has made it difficult for planners to appreciate the fact that transport capacity is influenced by the nature of goods, their packing and other specialized requirements, such as special handling equipment, etc. It is imperative that we understand that the modern logistics structure rests on efficient transportation. Techniques such as JIT (Just In Time) and Efficient Consumer Response (ECR) would not be possible without the highly developed transportation industry.

9.Asset Tracking: In order to serve the customer firms are in a position to update them regarding the progress in movement of goods .The technologies like GSM really provide an enormous information that allows the service providers to identify the distance covered by any shipment as well as its current location. GPS technology is used to determine exact location. Furthermore, the actual condition of the goods can be controlled. For example, the rise in temperature in refrigerated transportation will activate an alarm within the logistics center using GSM.

iii) - TRANSPORTATION/LOGISTICS/MARKETING INTERFACES Transportation moves products to markets that are geographically separated and provides added value to customers when the products arrive on time, undamaged, and in the quantities required. In this way, transportation contributes to the level of customer service, which is one of the cornerstones of customer satisfaction: an important component of the marketing concept. Transportation is one of the largest logistics costs and may account for a significant portion of the selling price of some products. Low value-per-pound products such as basic raw materials (eg: sand and coal) are examples. Transportation costs for computers, business machines, and electronic components may be only a small percentage of the selling price. Generally, the efficient management of transportation becomes more important to a firm as inbound and outbound transportation‟s share of product cost increases.