TOPIC:
LOGISTICS AND SUPPLY CHAIN
Logistics
This is 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 consumption in order to
meet customers’ requirements.
Supply Chain Management
Supply chain management is defined as the systematic, strategic coordination of the traditional business
functions and the tactics across these business functions within a particular company and across
businesses within the supply chain, for the purposes of improving the long term performance of the
individual companies and the supply chain as a whole.
Components of Logistics
Forward and reverse flow of goods
Forward Logistics also known as Traditional Logistics, deals with the flow of products from the factory to
the consumer. Reverse logistics is the process of moving goods from their typical final destination for
the purpose of capturing value, or proper disposal.
Storage of goods
Services such as insurance and related information between destinations.
Customer service
Demand forecasting
Distribution communications
Inventory control
Material handling
Order processing parts and service support
Plant and warehouse site selection (location analysis)
Purchasing
Packaging
Warehousing and storage
Activities involved in supply chain
Transformation of natural resources
Movement and storage of raw materials
Processing of raw materials and components into finished goods.
Storage of work-in-progress and finished goods
Delivering the finished product from point of origin to point of destination
The chain of distribution
Manufacturer
Wholesaler
Retailer
Consumer
Multimodal transport
Multimodal transport is the transportation of goods under a single contract, but performed with at least
two different modes of transport; the carrier is liable for the entire carriage, even though it is performed
by several different modes of transport.
Intermodal transport
Intermodal transport involves the transportation of freight in an intermodal container or vehicle, using
multiple modes of transportation (e.g., rail, ship, and truck), without any handling of the freight itself
when changing modes.
Modes of transport and their suitability for different goods:
1. Road transport
Advantages
Can reach all destinations within a country
Fast for short distance
Flexible and direct
Disadvantages
Weight limitation
Air pollution
Expensive for long distances
2. Rail transport
Advantages
Cheaper than road for long distances
Cheaper for bulky goods
Cheaper for customer
Flexible timetable
Disadvantages
Slow for short distances
Expensive to maintain
3. Pipeline
Advantages
Convenient for customers
Best for transporting water, oil or gas.
Disadvantages
Broken line can lead to leakage
High installation cost
Inflexible
Products cannot be easily changed
4. Sea
Advantages
Cheap especially suited for bulky and heavy good e.g. lumber and mineral.
Disadvantages
Slow form of transport
May require special containers
5. Air
Advantages
Quickest form of transport
Suitable for light and perishable goods
Disadvantages
Expensive
Weather conditions can interfere with schedules.
Relies on other forms of transport to take goods to the final destination
6. Digital delivery
Transport documents
Import licenses
Bill of lading
Airway bills
Role of transport in marketing
To fast track sourcing of commodities
Ensure security of supply
Cost reduction
Importance of transport in domestic, regional and foreign trade
Advantages of supply chain operations
Better quality of life
Wealth creation
New and innovative job opportunities including entrepreneurship, for example, telemarketing.
Disadvantages of supply chain operations
Globalization
Counterfeiting
Product complexity
Rapid product obsolescence
Regularity complexity
Management blunders
Changing market conditions
Natural disasters
Political instability
The impact of logistics and supply chain operations on the competitiveness of business
(i) Logistics improve competitiveness
(ii) Competitive advantage
(iii) Comparative cost advantage outsourcing through:
Second party
Third party
Fourth party (for example, imported concentrates)
Problems encountered in distribution:
Relationship between the availability of airport, harbor and docking facilities and the efficient
distribution of goods.
Delayed shipment
Spoilage
Misdirection of goods
Inadequate warehousing facilities
Lack of proper security measures
Industrial unrest
Ineffective communication
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.
The impact of information technology on logistics and supply chain operations
Technology is a means to enhance business competitiveness and performance. It plays a major role in
success of supply chain by enhancing the overall effectiveness and efficiency of the logistics system.
In logistics many new technologies are used in developed countries.
Forms of technology
(i) Global Positioning Systems (GPS)
(ii) Geographic Information Systems (GIS)
(iii) Portnet
(iv) Telemarketing, e-commerce;
(v) Global logistics providers such as Fedex, DHL and amazon Logistics
(vi) Logistics hubs, for example, Jamaica.
