transport and logistics

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Institute of Professional Financial Managers

Celestino Kuchena

IPFM0395

Certified Professional Procurement and Logistics Manager

Thesis on Strategic Logistics and Transport ManagementPL50!"

Final su#mission

$0!!

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Contents

!%0 Introduction

In the current scenario of serious competition in the global business environment, an effective

and efficient logistical system is necessary for providing and delivering quality products to

the point of destination. The organisation must be vigilant enough to eliminate any

inefficiency and improve their operational performance on a regular basis. Any organisation,

big or small, can benefit from a proper logistics system.

Three possible ways of acquiring transportation are purchase of vehicles, lease or hire of

vehicles, or outsourcing transportation. An efficient and effective logistics system must meet

the requirements of the customers for timely responsiveness, quality and creating value for

products and services. Road transport is the principal means of transport in many countries

for both goods and passengers.

Transport development must comply with safety requirements as well as environmental

protective measures. Several other aspects of transportation are subject to regulation

competition between operators, access to the profession, wor!ing conditions or the technical

standards of the vehicles. The transportation of goods began with the arrival of trade.

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As trade spread to other countries further and further away, the ways of conveying freight

also changed, developing new methods and technologies and becoming an entirely separate

economic activity. Today, freight is essential to maintain economic growth and

competitiveness. To manage the increase in volume, the industry must address the major

challenge of finding out how to organise goods flows in an efficient and above all sustainable

manner.

"otivated by either cost reduction through reuse or by value enhancement for the customer,

many supply chains increase their involvement in activities over the e#tended product life

cycle. They engage in product ta!ebac!, remanufacturing, return allowance, repair or

disposal (Corbett and Savaskan, 2002).

$or the international firm, customer locations and sourcing opportunities are widely

dispersed. The firm must attain a strategically advantageous position for the management of

comple# networ!s. %y appropriate integration of supply and demand through the widespread

use of information technology systems, retailers can provide a better service to consumers.

&lobal operations are the order of the day as businesses follow mar!ets and loo! for cheaper

conversion costs.

$%0 &oad transport legislation

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Road transport operators are required to carry an operator's licence which may be one of the

following ( standard national carriage of goods for hire or reward) standard international

this authorises the holder to travel abroad) or restricted which is available to ownaccount

operators and covers both the native state and abroad.

The weight threshold for vehicles covered by operator licensing is *.+ tonnes ma#imum gross

weight in the nited -ingdom. The criteria for obtaining an operator's licence covers the

operator's fitness to hold the licence, operating centres and their suitability) the organisation

and quality of vehicle maintenance arrangements) adherence to driver's hours and

tachography regulations.

perator licences are issued by traffic commissioners and normally run in perpetuity. They

are formally reviewed every five years. $ailure to adhere to the rules may result in the

licence being suspended, revo!ed or curtailed. /here carriage occurs between a 0uropean

nion 102 country and a non0 country, some regulations may apply to the part of the

territory of any 0 country crossed on the journey. It is not applicable on the territory of the

0 country of loading or unloading.

These regulations also apply to the national carriage of goods by road carried out temporarily

by a nonresident haulier. International carriage is underta!en subject to possession of a

community licence, and if the driver is a non0 national, in conjunction with a driver

attestation.

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$%! Legal classification of carriers

$%!%! Common carriers

The operating authority received by a common carrier may include the right to transport all

commodities or it may limit transport to specialised goods li!e steel. A common carrier is

required to publish the rates it charges for transport service, supply adequate facilities and

provide service to all points prescribed in its certificate of authority.

$%!%$ Contract carriers

They provide transport services for select customers. The contract bases on agreement

between a carrier and a shipper for a specified transportation service at a previously agreed

cost. The contract contains terms pertaining to the carrier's rates, liability, services and

equipment.

$%!%3 Pri'ate carrier

It is essentially an organisation's own transportation and is used due to cost and service

considerations. It offers more control and fle#ibility resulting in lower inventory levels,

greater customer satisfaction and efficiency at doc!s.

3%0 Transport logistics and economics

Transport economics is a branch of economics that deals with the allocation of resources

within the transport sector. 3eople and goods flow over networ!s at certain speeds, demands

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pea! and advanced tic!et purchase is often induced by lower fares. The networ!s themselves

may or may not be competitive.

Although transport systems follow the same supply and demand theory as other industries,

the complications of networ! effects and choices between similar goods 1car and bus travel2

ma!e estimating the demand for transportation facilities difficult. Transport networ!s have

positive and negative e#ternalities on nonusers.

3ositive e#ternalities include the ability to provide emergency services, increases in land

value and agglomeration benefits whereas negative impacts may include pollution 1air and

light2) safety standards) community severance and congestion. The contribution of transport

systems to potentially ha4ardous climate change is a significant negative e#ternality that is

difficult to evaluate quantitatively.

0conomists 1Small and &ome4Ibane4, 56672 consider congestion a negative e#ternality.

Transport networ!s and services can ta!e on any combination of regulated or deregulated and

public or private provision. %oth the public and private sectors in a deregulated economic

environment provide bus services in %ritain outside 8ondon. n the other hand, bus services

within 8ondon are provided by the private sector in a regulated economic environment.

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/ithin the domestic supply chain, deconsolidated and palleti4ed road transport may act as a

direct competitor to intermodal freight movements. 9omestic intermodal supply chain comes

about because it is potentially cheaper to move goods via a chain of different modes rather

than selecting the cheapest single mode.

(%0 Transport modes and s)stems

Transportation is the movement of products, materials and services from one area to another.

It provides product movement and storage. Transport infrastructure consists of the rightsof

way, vehicles, and carrier organisations that offer transportation services on a forhire or

internal basis. Its nature determines a variety of economic and legal characteristics for each

mode.

(%! Modal characteristics

(%!%! &ail

The capacity to transport large tonnage over long distances is the main reason railroads

continue to handle significant intercity tonnage and revenue. Rail operations incur high fi#ed

costs because of the e#pensive equipment, rightofway 1railroads must maintain their own

trac!s2 and terminals. :ariable operating costs are low.

(%!%$ Motor carriers

Though the cost of license fees, user fees and tolls is considerable, these e#penses are directly

related to the number of overtheroad units and !ilometres operated. The variable cost per

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!ilometre is high since a separate power unit and driver are required for each trailer or

combination of tandem trailers.

8abour requirements are also high because of driver safety instructions and the need for

substantial doc! labour. 3rimary difficulties relate to increasing equipment replacement

costs, maintenance, driver and doc! wages.

(%!%3 *ater

Its main advantage is the capacity to move e#tremely large shipments. 9eepwater vessels

are restricted to oceans and great la!es, while dieseltowed barges operating on rivers and

canals offer more fle#ibility. /ater transport fi#ed costs are between those of rail and motor

carriers.

(%!%( Pipelines

This mode operates on a twentyfourhour basis, seven days per wee! and is limited by

commodity changeover and maintenance. 3ipelines have the highest fi#ed costs and lowest

variable costs among transport modes. They are not fle#ible and are limited to products in

the form of gas, liquid or slurry.

(%!%5 +ir

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The fi#ed costs are associated with aircraft purchase and the requirements for specialised

handling systems and cargo containers. :ariable costs are high due to fuel, maintenance and

labourintensity of both inflight and ground crews.

5%0 Traffic s)stems management and control

:ehicle routing and scheduling problems are relatively complicated because of the different

types of problems that can arise. "any different aspects need to be ta!en into account and

various methods are required to provide solutions. Traffic systems management is used to

increase the capacity of state and local transportation systems by increasing the number of

pea!hour persontrips through the improvement of e#isting facilities without major

construction.

This follows congestion mitigation and improved air quality by the establishment of au#iliary

lanes on freeways through reconstruction or restriping. Au#iliary lanes include lanes for

acceleration from onramps and deceleration lanes to offramps and weaving lanes e#tending

to adjacent interchanges. Traffic flow improvements on conventional arterial roads include

widening at intersections for turn lanes, other channeli4ation, and traffic signals coordination.

;entral computer control equipment may also be utilised for remote coordination of traffic

flows.

Traffic operating centres and related surveillance equipment li!e traffic sensors and closed

circuit televisions can be set up leading to even greater remote visibility and control of traffic

movement.

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,%0 Sur'e) design and management

/riting solid and unbiased surveys may seem a daunting and unapproachable tas!. The

creation of wellstructured, simply written questions will help in collecting valid survey

responses. Relevancy and accuracy are two ideals that encompass the main outcome of

creating reliable surveys.

Reliable data on the duration, magnitude and physical distribution of pollutants in the

environment has proven invaluable for determining the precise degree of pollutant control

needed to respond to various statutory mandates. /ellunderstood questions increase both

the accuracy and frequency of survey respondents' answers.

The types of questions used in a survey will play a role in producing unbiased or relevant

responses. These range from openended 1comments to essays2 to closeended 1yes or no2

questions. The data gathered using the latter type is easier to compare than the data from

openended questions.

,%! Sur'e) la)out

"any participants li!e some !ind of insurance as regards their responses, providing that !ind

of information before the survey starts may help ease those concerns. &eneral instructions,

on how to progress through the survey, in the introduction or within each new section is

important in letting the audience !now how the survey wor!s.

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Trying to fit too much information on a single page may cause respondents to struggle

throughout the survey. The pretest is possibly one of the most critical steps in administering

a survey. The three basic goals of the pretest are to evaluate the competency of the

questionnaire, estimate survey length, and determine the quality of the surveyor (Larossi,

2006).

-%0 Strategic transport modelling

In recent years, there has been increased debate at local and national levels regarding the

interaction between the demand for travel and our living environment. In particular, there is

increasing concern about the impact of the private car on our towns and cities in terms of

congestion, atmospheric pollution, and associated health concerns, severance and loss of

amenity.

8ocal authorities are encouraged to develop land use and transportation strategies that reduce

reliance on the private car in favour of more sustainable modes such as bus, rail, cycling, and

wal!ing. These local authorities are actively involved in implementing integrated strategies,

tailored to the local conte#t, to achieve these objectives.

This is through improving facilities and services for public transport users and nonmotorised

modes whilst utilising mechanisms such as control of par!ing supply and prices, and

decreasing highway capacity. Transport modelling plays an important role in the

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demonstration of the relative merits of proposed schemes in achieving local authority

objectives.

Ideally, a conventional fourstage transport model might be used.


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This has been mainly due to e#plosive growth in the number of motor vehicles, coupled with

limitations for space that can be provided. The cost of travel, especially for the poor, has

increased considerably. This is largely because the use of cheaper nonmotorised modes li!es

cycling and wal!ing has become e#tremely ris!y. These modes have to share the same right

of way with motorised modes.

The objectives of a transport policy is to ensure safe, affordable, quic!, comfortable, reliable

and sustainable access for the growing number of city residents to jobs, education, recreation

and such other needs within cities. This requires incorporating urban transportation as an

important parameter at the urban planning stage. Travel distances can be minimised through

integrated land use and transport planning in all cities. 0quitable allocation of road space can

be realised by using people rather than vehicles as the focus. Traffic volume should be

reduced by an increase in the use of public transport and nonmotorised modes.

9%0 /eographical information s)stems

A &eographical information System 1&IS2 is a system that captures, stores, analyses,

manages and presents data with reference to a geographic location. It is the merging of

cartography, statistical analysis and database technology. &IS digitally creates and

=manipulates' spatial areas that may be jurisdictional, purpose or application oriented for

which a specific &IS has been developed.

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e#pected to be that none#perts will be able to use &IS, along with spatial criteria, and simply

integrate their nonspatial criteria to view solutions to multicriteria problems (Gao, S.

Paynter, J. and Sndara!, ". 200#). This system is intended to assist decisionma!ing.

!0%0 Maritime transport

$or 0urope, maritime transport has been a catalyst of economic development and prosperity

throughout its history. The quality of life on islands and in peripheral maritime regions

depends on good maritime transport services. Sea transport has been the largest carrier of

freight throughout recorded history. Although the importance of sea travel for passengers has

decreased due to aviation. It is effective for short trips and pleasure cruises.

Transport by water is cheaper than transport by air. =&eneral cargo' is goods pac!aged in

bo#es, pallets, cases, and barrels. ;ontainerisation revolutionised ship transport in the 56>?s.

Types can be distinguished by propulsion, si4e, or cargo type. "ost modern merchant ships

can be placed in one of a few categories. %ul! carriers are cargo ships used to transport bul!

cargo such as ore or food staples.

It is recognisable by the bo#li!e hatches on its dec!, designed to slide outboard for loading.

;ontainer ships are cargo ships that carry their entire load in truc!si4e containers. Tan!ers

are for the transport of fluids such as crude oil, petroleum products and liquefied natural gas

whereas Reefer ships are typically used to transport perishable commodities, which require

temperaturecontrolled transportation.

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These are mostly fruits, meat, and dairy products. Sea freight is the most economic form of

transportation by which goods are moved between countries in the e#port process.

;ontainerisation greatly increases the volumes of cargo by sea, the speed of transit and the

safety of the cargo in question.

:arious factors should be ta!en into account when considering the transit times for goods

being carried by sea. These include frequency of sailing, actual sailing, and whether sailing

is direct or transhipment. Some ships are cellular or multipurpose 1built to carry

containerised cargo and brea! bul! cargoes.2

!!%0 &ail transport

Rail transport is less costly in environmental terms than road transport and may offer a

competitive alternative to the latter on certain major segments of the mar!et. It seems to have

the best prospects of being able to compete with road transport when large volumes are

transported over long distances. There have been developments in rail freight systems,

including the regular scheduling of rail wagon services and the introduction of the swap body

concept of transferable roadrail units ($s%ton, &'ley, and Cro%er, 2000).

3rincipal demerits of conventional freight include damage that may be caused by shunting)

the limited number of rail heads available and the need to doublehandle since the first and

last leg of a =through' journey are by road. Rail shipments can accommodate a wide range of

types and si4es of goods dry, liquid, fro4en, and aw!wardly shapedin carload shipments.

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!$%0 +ir transport

Airfreight is confined to highvalue items, emergency shipments, and perishable products. It

offers an advantage since pilots tend to land gently therefore sensitive equipment such as

electronic devices are not damaged. The air transport of goods involves shipment of goods

via one of international airlines though the e#porter need not directly approach the airline for

boo!ing of the cargo.

;ost and $reight agents lower freight rates as they provide bul! cargo therefore increasing

cost effectiveness. 9uring the selection process, the e#porter should consider cost and timely

delivery of merchandise. The e#porter may provide for direct shipment or transhipment.

This mode offers the quic!ness of delivery, reduction of warehousing costs and lowered

insurance premiums.

!3%0 rganisational logistics

rganisations that fail to invest in their human capital and the ne#t generation wor!place

environment will face erosion of products and services as well as diminished capacity to

compete globally. They need to focus more on optimising resource utilisation and

productivity. rganisational structure planning is a continuous process that ensures that an

organisation has the right human capital in the right jobs at the right time.

9emographic trends li!e aging human capital, shrin!ing talent and worried wor!force alter

human resources requirements. This is compounded by an unpredictable change of mar!et,

economic and political events. 9ifferent models e#ist to address performance challenges.

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These include ;ommon Resource 3ooling 1;R32, nique S!ills Set 1SS2, and


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!(%0 Logistics and suppl) chain management

8ogistics is the function responsible for the flow of materials from suppliers into an

organisation, through operations within the organisation, and then out to customers.

=8ogistics is the art and science of determining requirements) acquiring them) distributing

them and finally maintaining them in an operational ready condition for their entire life'

(Stone, 1968).

It is the management of all activities, which facilitate movement and the coordination of

supply and demand in the creation of time and place utility (esket, Glasko*sky and +vie,

19-). The term =supply chain management' arose in the late 567?s and came into

widespread use in the 566?s. 3rior to that time, businesses used terms li!e =logistics' and

=operations management'.

@A supply chain is the alignment of firms that brings products or services to the mar!et...

(La!bert, Stok, and llra!, 1998).Supply chain management is @the systemic, 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(/enter, et al.,2001).

8ogistics typically refers to the activities that occur within the boundaries of a single

organisation and supply chain refers to networ!s of companies that wor! together and

coordinate their actions to deliver a product to mar!et. Traditional logistics focuses its

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attention o activities such as procurement, distribution, maintenance, and inventory

management whereas supply chain management ac!nowledges all these and includes

mar!eting, new product development, finance and customer service.

Supply chain views the supply chain and the organisations within it as a single entity. This

systems approach provides the framewor! in which to best respond to business requirements

that otherwise would seem to be in conflict with each other. Ta!en individually, different

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:isibility into lower tier suppliers is less than clear, and the top suppliers on new aircraft

programs are fle#ing their muscles to the detriment, some say, of airlines and "R suppliers.

"Rs, however, have room to grow and opportunities to cut costs and improve performance

by forming close alliances with the airlines. Top suppliers may have to change their tac!.

:iewed as a new class of monopolists, the big component riginal 0quipment "anufacturers

10"s2 are driving up the cost of repair and overhaul.

Simple cost reductions should not be the sole part of an organisation's strategy. ;ontract

initiatives are being advocated for to augment the relationship between airlines and airframe

"Rs. ;ontracts typically impose liquidated damages, or financial penalties, for holding a

plane late, but there is no @carrot for consistently delivering a plane early. If an "R can

consistently deliver planes, early such that the airline can plan around it, both sides should

benefit financially from this alignment of goals.

That would increase the "R's ability to invest in new equipment and strengthen their

performance. 3erhaps the greatest challenge in the commercial aviation supply chain, from

an "R's perspective, is the realignment that has occurred between airframe and component

0"s. In the past, buyers of new %oeing and Airbus airplanes had access to data that

allowed them with their "R providers to maintain and overhaul components independently.

As a result of the air framers' rationali4ation of their supply chains, reducing the number of

players, the air planers may have negotiated away the rights to components intellectual

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property 1I32 in e#change for favourable upfront terms. It is tougher for airlines and "Rs

to find the technical data to overhaul a component ma!ing the process much more comple#

than it was before.

ffshore mar!eting is one way for "Rs to cut costs through the adoption of lean initiatives,

including e#tensive process mapping and waste reduction. This would increase efficiency

and throughput.

!,%0 &e'erse logistics and closed loop suppl) chain management

Reverse logistics 1R82 is the @coordination and control, physical pic!up and delivery of the

material, parts, and products from the field to processing and recycling or disposition, and

subsequent returns bac! to the field where appropriate (l!ber, 2003).

Several forces have influenced the need for R8. $requently, due to legislation, the original

manufacturer is now responsible for final disposal of the product. The increasing value of

return products increases the need for safe return from the field.

There have been an increased number of customer goods returned for credit because of

increased demand for customer service and satisfaction. As products become obsolete more

quic!ly, the possibility of and potential for returns increases. The used product must be

retrieved and transported to a facility for inspection, sorting and disposition. 9iagnostic tests

may be performed to determine disposal action that recovers most value from the returned

product.

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Some products may be reconditioned or completely remanufactured. These reconditioned or

remanufactured products may be sold in secondary mar!ets where customers are unwilling to

purchase new products. 0conomic viability of a reverse supply chain is enhanced by

managing the uncertain flow of materials products may be good or bad. ;onsiderable

!nowledge of specific customers and their use of a product may be required since return flow

can be quite diverse and dependent upon the specific enduser.

!,%! Closed Loop Suppl) Chain

In closedloop supply chains, forward physical flows now generally induce future reverse

physical flows, for which the same coordination issues arise. In both cases, availability of

appropriate capacity levels for manufacturing, disassembly, remanufacturing, transportation,

and collection also needs to be coordinated.

/hen considering closedloop supply chains, the three !ey flows become richer( "aterial

flows in closedloop supply chains are not only characteri4ed by quantity, time and place, but

also by the reuse potential, which often can only be assessed after product disassembly.

Information flows in closedloop supply chains include timing of return, reusability of the

returned product and the time that the product spent in the mar!et.

This information may be very useful for operations management or product design.

$inancial flows in closedloop supply chains also include buybac! clauses, disposal costs,

and other endofuse costs. /hile pricing for the original product is relatively

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straightforward, designing contracts specifying conditions under which the product will be

ta!en bac! after use is more challenging, as the quality of the product is un!nown and often

difficult to observe.

Increasingly, it is found that the original supplier is in the best position to control the return

process. The basic reverse supply chain model operates independently of the forward supply

chain that delivered the original product. /hen a company controls the full process of

forward and bac!ward shipment, the result is a closed loop supply chain. The closed loop

supply chain generally involves a manufacturer, although sometimes it is the buyer, ta!ing

responsibility directly for the reverse logistics process.

The primary difference in this and the reverse supply chain is that in this model the entire

direct and reverse flow can be and usually is controlled by the original manufacturer. /ithin

a closed loop system, involving a consumer mar!et the primary interaction is between the

retailer and the original manufacturer.

Returns can be failed products or simply those purchased and returned. ;losed loop systems

allow organisations to trac! the product and its failure and repair e#perience, thereby

revealing how to costeffectively service and support field service.

!-%0 International logistics

International logistics is the design and management of a system that controls the flow of

materials into, through, and out of the international corporation. ;lose collaboration with

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suppliers is essential to develop Bust InTime inventory systems, which in turn may be crucial

to maintaining manufacturing costs at globally competitive levels.

Investment decisions of multinational companies are affected by international ta# rate

differentials. 0#ploiting such differences by means of crosscountry profit shifting can

decrease global ta# liability. Supply chains must be designed robustly to un!nown operating

conditions in order to avoid lost sales or e#cess capacity.

&enerally, shipping costs are higher for a processfocused supply chain networ! than a

mar!etfocused configuration, as the common components need to be shipped across plants.

9ue to an enhanced integration of national mar!ets, disparities of economic and production

conditions disappear and differences in corporate ta# rates become even more distinct.

0#ploitation of these e#ogenous mar!et imperfections via production shifting to lowta#

countries thus represents a viable alternative to multinational enterprises in order to decrease

their ta# liability. In the absence of ta#es, demand would always be satisfied by the less

e#pensive alternative that is supplying components from the production plant located within

the same country due to lower transport costs.

!.%0 &etail logistics

/ith the appropriate logistics, products should be of a better presentational quality, of lower

cost and longer shelf lives. There should be fewer instances of stoc!outs in the supply chain.

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Information transmission and dissemination technologies can be employed to reduce reaction

times to =surges' in demand. A good logistics system can reduce costs and improve service

delivery.

There is also an environmental dimension to logistics and supply chain management.

Retailing and logistics ma!e products available. Retailers are concerned with their storage

facilities, which may be warehouses, distribution centres, or simply stoc! rooms. The

question for retailers is the amount of inventory to be held and the location of this stoc! to

meet demand changes.

Since consumers generally buy products in small quantities, retailers ma!e a conceited effort

to develop products that are easy to handle in logistics terms, have reasonable pac!aging

costs and yet retain their selling ability on the shelves. Information is a necessity. Retailers

need to !now not only about demand and supply, but also about volumes, stoc!, prices and

movements.

If communications and transport can be lin!ed effectively, a retailer can move from !eeping

stoc! in a warehouse to running a distribution centre, which sorts products for immediate

delivery. All this is part of the logistics mi#. This is the @process of strategically managing

the procurement, movement and storage of materials, parts and finished inventory through the

organi4ation and its mar!eting channels (C%risto4%er, 1998).

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Retailers have increased their control over secondary distribution by channelling an

increasing proportion of their supplies through distribution centres. This restructuring has

reduced inventory levels and improved efficiency through composite distribution and

centrali4ation in specialist warehouses of slower moving stoc!. Retail operations are

e#panded in bits and pieces. This ma!es it necessary for retailers to underta!e projects

pertaining to their endeavours.

!9%0 Pro1ect management in suppl) chains

3roject management is the discipline of planning, organi4ing, securing and managing

resources to bring about the successful completion of specific project goals and objectives. A

project is a temporary endeavour with a defined beginning and end underta!en to meet

unique goals and objectives. The major challenge is to achieve all of the project goals while

honouring the preconceived project constraints.

As an ambition, project management see!s to optimi4e the allocation and integration of

inputs necessary to meet predefined objectives. A number of approaches to project

management e#ist and include agile, interactive, and phased approaches. Irrespective of the

methodology employed, careful consideration must be given to the overall project objectives,

timeline, and cost as well as the roles and responsibilities of all the participants and

sta!eholders.

!9%! Critical chain pro1ect management

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This is a method of planning and managing projects that puts more emphasis on the resources

1physical and human2 needed in order to e#ecute project tas!s. The theory of constraints is

applied to increase the rate of throughput of projects in an organisation. The system

constraints, which can be time, funding or deliverables, are identified as well as the resources.

Tas!s on the critical chain are then afforded priority over all other activities to e#ploit the

constraints.

!9%$ +gile pro1ect management

This is based on the principles of human interaction management. The project is seen as a

series of relatively small tas!s conceived and e#ecuted as the situation demands in an

adaptive manner, rather than as a completely preplanned process. 3roject management is

composed of process groups, which include initiation, planning, e#ecution, monitoring and

controlling. Initiation determines the nature and scope of the project.

It is imperative to understand the business environment and ma!ing sure that all necessary

controls are incorporated into the project. 3lanning should cover an analysis of the business

needs, a review of current operations and a cost and benefit analysis. The purpose is to plan

time, cost and resources adequately to estimate the wor! needed and to effectively manage

ris! during project e#ecution.

3roject planning consists of developing the scope statement, team selection, wor! brea!down

structure creation and ris! planning (5erner, 200-). 0#ecution follows planning. These are

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processes used to complete the wor! defined in the project management plan to accomplish

the project's requirements.

It involves coordinating people and resources, as well as integrating and performing the

activities of the projects in accordance with the project management plan. Activities to

monitor the project variables 1cost, effort and scope2 against the project management plan

must be instituted to identify corrective actions to address issues and ris!s properly.

$0%0 Inno'ations in logistics and suppl) chains

;ompanies going global are e#periencing une#pected transportation costs, higher inventory

investment, and longer and cycle times. At the same time, their local clients are demanding

lower prices, more unique e#ecution, and improved responsiveness. As a result companies

are see!ing ways to ma!e their international logistics processes more reliable, comfortable,

fle#ible and less e#pensive.

Top performers are succeeding in using international logistics transformation to drive

quantifiable business benefits for their corporations, including cost and speed advantages.

These companies are able to invest less capital in international logistics yet provide better

service to their customers.

They are arming their staff with uptodate technology and integration Cfriendly logistics

partners to support today's global intensive business environment. /inners set the strategy

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for international logistics in the conte#t of how their companies compete as businesses. They

appreciate that logistics e#cellence is a journey. As a result, they focus on transforming

specific, foundational components on which they can drive future improvements.

%est practice winners are creating better ways to leverage the s!ills 1and technology2 of

partners. They are figuring out new ways to synchronise activities and process visibility and

control with customs bro!ers, freight forwarders, ocean carriers and others. /ithout

e#ception, these logistics strategies revolve around decreasing manual processes and

increasing automation.

Internetbased technology is enabling a new level of transaction automation and partner

synchroni4ation previously not practical. ndemand global trade management platforms

and data gateways are driving more electronic collaboration for significantly reduced

information technology costs. International logistics is all about managing a networ! of third

party providers.

The foundation for controlling this process is visibility. :isibility does not stop at identifying

a shipment delay or inventory issue. Rather, an alert is the first step in a structured

notification, resolution, and root cause analysis process. A number of international logistics

leaders are focusing on e#tracting more value from their inventory.

This may mean creating better intransit visibility so they can redirect inventory around port

congestion or other bottlenec!s or to higher demand points. In other instances the focus is on

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optimi4ing where and how much inventory to hold in the first place. /ithout a solid

foundation of trade compliance and documentation, purchasing will ma!e the wrong sourcing

decisions.

As a result, goods will be delayed at customs, and the business will be put at ris! of

regulatory infractions. Trade agreement management and integration with bro!er partners to

avoid data !eying errors and costs are among the !ey trade compliance initiatives for best

practices.

$!%0 2alue chain management

The value chain analysis is a concept from business management that was first described and

popularised by "ichael 3orter (Porter, 1996). A value chain is a chain of activities for a firm

operating in a specific industry. The business unit is the appropriate level for construction of

the value chain not the divisional or corporate level.

3roducts pass through all activities of the chain in order, and at each activity, the product

gains some value. The chain of activities gives the products more added value than the sum

of the independent activities' value. The primary activities include inbound logistics,

production, outbound logistics, mar!eting and sales.

Supportive activities include administration, human resource management and procurement.

;osts and value drivers must be identified for each activity. The value chain framewor!

quic!ly made its way to the forefront of management thought as a powerful analysis tool for

strategic planning.

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The value chain concept has been e#tended beyond individual firms. It can apply to whole

supply chains and distribution networ!s. The delivery of a mi# of products and services to

the endcustomer will mobilise different economic factors, each managing its own value.

Although commonly associated with e#portoriented trade, development practitioners have

begun to highlight the importance of developing national and intraregional chains in addition

to international ones.

$$%0 Softare support for logistics and SCM

The internet is a global data communication networ! using internet protocol standards to

move data between points in the supply chain. 9evices connected to it can communicate

regardless of the data format. arrison et al (1999)argue that the improvements in the use of

information technology to capture =real time' data mean less reliance on forecasts and create a

virtual supply chain between trading partners.

/hen information is shared, process integration ta!es place between partners who focus on

their core competencies. 0lectronic data interchange is a technology that was developed to

transmit common types of data between companies that do business with each other. D"8

1e#tensible "ar!up 8anguage2 is being developed to transmit data in fle#ible formats

between computers themselves and between computers and humans.

D"8 can be used to communicate a wide range of data formats and related processing

instructions between computers once the standards have been agreed. 9ata storage and

retrieval is performed by databases, which are organised groupings of data stored in

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electronic formats. They are models for the business processes for which they collect and

store data. The model determines which transactions can be recorded since the databases

cannot record transactions, which are more detailed and aggregated than provided for.

Specific business operations that the system is designed to support determine the way that a

system manipulates and displays data flowing in it. This process monitors orders, production

schedules, raw material purchases and finished goods inventory. 3rocurement systems

streamline the procurement process ma!ing it more efficient. "anagers compare supplier

capabilities and prices easily since routine transactions are automated.

Advanced planning systems assess the plant capacity) material availability and customer

demand using linear programming techniques to create recommended schedules.

Transportation planning systems are used to compare modes of transport basing on forecast

demand.

$3%0 Forecasting

$orecasting is the process of ma!ing statements about events whose actual outcomes have not

yet been observed. Ris! and uncertainty are central to forecasting and it is generally

considered good practice to indicate the degree of uncertainty to the forecasts. $orecasting

can be used in supply chain management to ma!e sure that the right product is at the right

place at the right time.

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Accurate forecasting will help retailers reduce e#cess inventory and therefore increase profit

margins. Eualitative methods rely on the manager's intuition of the mar!et. They are

suitable where historical data about product consumption are available. ;ausal methods

assume that demand is correlated to particular environmental or mar!et factors. ;ommercial

loan demand increases if the interest rates are lowered.

A time series model presumes that demand follows a pattern and thus relies upon historical

data in a stable mar!et. Software pac!ages are utilised to determine possible demand using

statistical methods. Simulation is the use of a time series model and causal effects to imitate

the behaviour of consumers under different scenarios. It see!s to answer @what if questions

about the consumer propensity to purchase.

Aggregate forecasts have been found to offer better results than forecasts for individual

products. Shortterm forecasts are better than longterm ones however, it should be

remembered that all forecasts are wrong to a certain degree.

$(%0 Managing contracts in logistics

utsourcing of logistics functions, li!e warehousing, is fast becoming popular not only for

"ulti Fational ;ompanies with global operations, but also for all organi4ations in medium

and small sector too. Request for Euotation 1R$E2 should contain complete details of the

said project to enable the Third 3arty 8ogistics partner 1*382 to propose a solution and

prepare a solution design document. The R$E should contain a specific and detailed

requirement of the buyer with regard to services or project

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$(%! &F4 Process

The organisation issues the R$E to either all vendors in the mar!et or short listed vendors.

3ost R$E, the buyer invites all participants for a Euestion and Answer session either in a

facetoface meeting or on mail. Formally all answers to the received questions are posted to

all vendors participating to ensure fair chance for every one.

%uyer facilitates clarifications and discussions with all relevant internal business functional

groups whenever required by the vendors to be able to give them better insight into the

requirement. n due date of the R$E, vendors are required to submit detailed bid response

document. $inal selection happens after the vendor is selected internally and procurement

further negotiates with the selected vendor and comes to agreeable terms and conditions.

$5%0 Strategic transport #usiness management

%y providing for the swift and uninterrupted flow of products bac! and forth through the

chain, transportation provides a sort of lubrication to run the chain smoothly. It also permits

deeper penetration of newer mar!ets far from the point of production. Therefore, to

effectively manage this transportation system the first step would be to establish a cost

effective transportation mode.

$ailure to identify the best transportation mode can directly affect the growth of a company.


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or teams of drivers, warehouse operatives and office staff while ensuring control of costs to

meet budget and commercial targets.

The manager should guarantee that the demands of the customer are met whilst ensuring

ma#imum productivity. Transport operations deal with the way the vehicles are operated and

the procedures set for this purpose including finances, legalities and policies. This covers

operator's licence, drivers' hours and the certificate of competency.

$,%0 Conclusion

An effective logistics system is li!ely to benefit the prospects of a company. This may lead to

cost savings, enhanced efficiency and a decrease in the levels of inventory on hand. There

are several factors, which contribute to the success of any mode of logistics transport, some

being short transit time, punctuality, trac!ing of goods, proper storage and warehousing of

goods.

3roperly establishing a networ! leads to costeffectiveness, teamwor! and the provision of

customer services at the optimal level. The responsibility for the planning and

implementation of urban transport systems lies with the state and municipal bodies. This

calls for efforts at strengthening capabilities at the state and city level to address these issues

and underta!e the tas! of developing sustainable urban transport systems.

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of meeting changing consumer demands will be the focus of much effort, though the cost

bases remain uncertain.

Retailers will be concerned to ensure they obtain the right balance between lean and agile

approaches to their supply systems in order to meet the challenges of spatial reach and rapid

reaction. /hatever the broad outcomes, leading retailers will be those with quality

management able to apply change in supply, to drive effectiveness and efficiency within an

appropriately balanced concern for people, processes and technology.

/ithin a company, warehousing and transport cannot e#ist as separate operations. Instead,

logistics is all about integration, not only within a company, but also increasingly outside the

business with suppliers, logistics service providers and customers. 3artnership is a strong

component of modern retail logistics, and an ability to wor! with other individuals and other

companies is fundamental to success.

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$-%0 i#liograph)

5. %lumberg, 9onald $.+ntrodtion to /anae!ent o $everse Loistis and Closed

Loo4 S44ly C%ain Proesses. %oca Raton, $8( ;R; 3ress, G??+.

G. ;hristopher, " 156672Loistis and S44ly C%ain /anae!ent, $TH3rentice . Advances in geographic information systems, computers,

environment and urban systems, :ol. 5?, pp. 5+57J

J. ;orbett, ;. and ;. Savas!an 1G??G2. ;ontracting and coordination in closedloop

supply chains. In( Euantitative "odels for ;losed 8oop Supply ;hain "anagement.

0ds. 8. :an /assenhove and 9. &uide. 3ittsburgh, ;arnegie%osch Institute.

+. &ao, Shan. 3aynter, Bohn. K 9avid Sundaram, 1G??J2 L$le#ible Support for Spatial

9ecision"a!ingLPro. o t%e -t% a*aii +nternational Conerene on Syste!

Sienes+7 pp. 5?

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5?. 8arossi, &. G??>. ;%e Po*er o Srvey "esinA ser's &uide for "anaging

Surveys, Interpreting Results, and Influencing Respondents. /ashington 9;. The

/orld %an!

55. "ent4er, Bohn T., /illiam 9e/itt, Bames S. -eebler, Soonhong "in, Fancy/. Fi#,

;arlo 9. Smith, and Nach &. Nacharia, G??5,@9efining Supply ;hain "anagement,

Jornal o siness Loistis,:ol. GG, Fo. G, p. 57

5G. 3orter, ".0. 1566>2.

transport and logistics

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