Quality Management Systems Overview

Introduction to Logistics

• A presentation by Abenet Belay, a certified FIATA trainer, on the subject of International Freight Forwarding.

Learning Objectives

• Learners will be able to describe the role of a forwarder in logistics and define logistics systems.
• Learners will know the main steps in a logistics project.
• Learners will become acquainted with logistics terms such as Just-in-Time (JIT), pull systems, and physical distribution within a supply chain, and tailor-made services in logistics.
• Learners will be familiar with warehouse procedures, types of warehouses, and financial aspects of storage.

Module Contents

• Logistics and Forwarding
• Logistics Concept/Project
• Physical Distribution Systems
• Subsystems in Logistics
• Information Handling and Control Issues
• Value Added Logistics
• Commodity Related Systems

Logistics & Duties of Warehouse, Operator & Customer

• Rights and duties of the warehouse operator and customer
• Types of warehouses
• Warehouse documents & IT (information technology) for warehouses
• Warehouse construction, layout and safety
• Debit of warehouse charges / rent
• Inventory control

Chapter 1: Logistics & Forwarding

• Introduction to Logistics
• Historical Development of Logistics
• Major Logistics Activities
• The Freight Forwarder in the Supply Chain Process
• Logistics Service Provision Forms
• Quality Management in Logistics Services

1.1 Introduction to Logistics

• Defined by the Council of Supply Chain Management Professionals as the part of the supply chain that plans, controls, and implements an effective flow of goods and services from commencement to consumption, aiming to satisfy customer needs.

Introduction to Logistics (continued)

• In a business sense, logistics deals with the flow of goods between origin points and consumption points to meet the needs of customers and corporations, encompassing the management of physical items (e.g., food, materials) and abstract items (e.g. time, information).
• Logistics involves the integration of information flow, material handling, production, packaging, inventory, and warehousing/transportation.
• The goal of logistics in a business sense: "Having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer."

1.2 Historical Development of Logistics

• Started with the introduction of transport enabling trade between villages (early form of global trade).
• Originated from the military, referring to the supply of troops with necessities.

1.2 Historical Development of Logistics (continued)

• Alexander the Great utilized a logistics system for supporting troops.
• Romans established supply lines and depots.
• Napoleon recognized logistics as a top priority.

1.2 Historical Development of Logistics (continued)

• World War II saw a heightened focus on logistics, particularly in the Pacific theatre during "island hopping" operations. The need for efficient delivery of materials, in the right quantities at the right place and time was critical to success.

1.3 Major Logistics Activities

• Logistics covers a diverse range of activities, encompassing the transport, storage, and dealing with all aspects of manufacturing and trading of goods.

Logistics and Value Addition

• Logistics adds value through form utility, i.e., machine processing like heating, cooling, construction and demolishing, and providing location and time utilities.
• Storage of goods enables them to be available at certain points in time.

Chapter 2: Logistics Concept/Project

• Overview of logistical activities as project
• Phased approach
• Controlling of logistics projects

2.1 Overview

• Logistics (general activities) activities can be interpreted as a project
• A project defined as a group of activities performed to achieve a particular goal.
• Characteristics - complex, unique, and can be described by several technical and economic parameters. Can be determined by cost, time, and scope.

2.1 Overview (continued)

• Project concept is the mission statement of a project, to define its purpose.
• Project strategy - defines the direction, scope and purpose of a project.
• Phased approach – an increase of oversight which is done by a division of the logistics project into several phases.

2.2 Phased Approach

• Logistics projects feature significant uncertainty that changes depending on the type, scope, size, and other factors during the planning and execution stages of a project.
• Reduced availability of resources and a rapidly changing environment can impact project implementation.

2.3 Controlling of Logistics Projects

• Level of uncertainty is high in the early stages, particularly during planning.
• Uncertainty decreases nearing the end of project.
• It's critical that the project fulfill all guidelines, expectations, and goals.
• Internal and external factors influence project execution.

Chapter 3: Physical Distribution Systems

Chapter 3: Physical Distribution Systems Learning Objectives

• Understand physical distribution and its importance
• Know the different categories of logistics service providers
• Know the main techniques for inventory management

3.1 Physical Distribution (continued)

• Movement of goods from production to the customer via various actions
• Warehousing, storage, and customer materials handling are all important logistics aspects for successful physical distribution
• Physical distribution and the ability to quickly, efficiently, and economically deliver goods to the customer directly impacts customer satisfaction.

3.2 Range of Services

• Forwarders: worldwide solutions, integrating different transport methods.
• Carriers: road haulers, rail operators, shipping lines, airlines, and warehouse operators.
• Integrators/system providers: worldwide parcel distribution, using various transport modes for a standardised service

3.3 Level of Outsourcing

• 1PL: all activities performed internally.
• 2PL: some specialised operations outsourced.
• 3PL: complete tactical and operational activities outsourced.
• 4PL: all activities outsourced with a facilitator providing strategic solutions
• Decisions regarding the level of outsourcing depend on factors such as cost, required expertise, and other specifics

Chapter 4: Subsystems in Logistics

4.1 Logistics Subsystems

• Operations in logistics companies are categorised as subsystems
• Supply, production, distribution, and return logistics are the four main subsystems
• The functions can be summarised as:
  • Procurement
  • Production
  • Distribution
  • Return flows

4.2 Just-in-Time (JIT)

• Minimising stock and production series
• Minimizing stock
• Training
• Developing team spirit
• Simplifying management

4.3 Supply Chain Management

• Network of firms (logistics processes, flows, inventory, and operations) that work together to fulfil the needs of the ultimate customer.
• Efficient and effective logistics can only be achieved through collaboration between various company functions within a supply chain.
• Effective logistics aims at the optimal performance of the flows of goods within a company.
• Logistics process includes various steps for transforming goods between companies and ensuring it’s available to the users

4.4 Customer Service

• Essential aspect of logistics
• Customer service is best measured by the service provided to the customers (e.g., providing products at the right time, in the right place, in the right amount and with the right quality).
• Important links between sales and logistics.

4.4 Customer Service (continued)

• Customer service is seen as an activity and a measure of performance
• Customer service performance is frequently expressed as a percentage of deliveries that are completed on time and in the required quality.
• Customer service is a significant factor that impacts customer satisfaction.

4.4 Customer Service (continued)

• Customer service as a supply chain responsibility
• Supplier reliability
• Lead times
• Service level agreements

Chapter 5: Information Handling and Control Issues

• Importance of ICT and EDI
• POS and GPS
• Customer-centered data
• Information Technology (ICT) and EDI system
• Point Of Sale (POS) information
• Benefits of ICT
• Data management in parallel to cargo management

Chapter 6: Value-Added Logistics

• Main examples of value-added logistics
• Reasons why shippers may delay these activities for logistics service providers

6.1 Value Added Logistics

• Global expansion and liberalization
• Growing importance of supply chain management.
• More effective supply chain management needed to manage these changes.

6.1 Value Added Logistics (continued)

• Three forms of Value Added Logistics
  • Value Added Shipment
  • Value Added Servicing
  • Value Added Transformation

6.2 Important Factors

• Shipper and service provider partnership to effectively enhance the entire supply chain with sub-optimisation steps
• Foresight on the investments intended to reduce the lack of knowledge of the business transactions that may occur.
• Importance of understanding and addressing the issues of time.

Chapter 7: Commodity-Related Systems

• Automotive and Food industries (specifics)
• Information and communication technology (ICT)
• Global communications
• Market demand data, broken down by part and/or component, to reduce lead time and inventory costs

7.1 Automotive Industry

• Characteristics of the supply chain in the automotive industry
• The illustration features the flow of goods and the supply chain with related parties

7.2 Food Industry

• Traceability (critical to public health)
• Removal of irregular products (food safety control)
• HACCP (Hazard Analysis and Critical Control Points) system requirements

7.2 Food Industry (continued)

• Ensuring consistent compliance with food safety requirements during all stages
• Importance of traceability for better response to food safety issues

Chapter 8: Rights and Duties of Warehouse Operators and the Customer

• Introduction to warehouse and warehouse management
• Warehouse functions
• Duties and Liabilities of Warehouse Operators
• Terms of Warehouse Related Contracts

8.1 Introduction: Warehouse and Warehouse Management

• Significance of warehouses in today's global business practices for managing freight operations through receiving, identifying, holding, and assembling inventory.
• Warehousing provides a multitude of utilities (place utility for raw materials and space for storage of perishable goods) and other advantages to businesses
• Requirements for warehouse operations such as adequate storage and working space, infrastructure, proper procedure for safety of employees, accurate inventory data, etc.

8.2 Warehousing Functions

• Receiving, storing, order generation/processing/picking and dispatch

8.3 Duties and Liabilities of Warehouse Operators

• Operators are responsible for taking delivery of goods, storage, picking, and packing, ensuring delivery to production lines according to the needed standards, and keeping records of stock and inventory.
• Liability of warehouse owners for loss or damages

8.4 Terms of Warehouse Contracts

• Details of the legal contract terms to be included in warehousing contracts between the warehouse owner and operator and clients.
• Relevant information include required activities, description of goods, performance indicators, quality standards, prices, and other miscellaneous items (payment clauses, specific regulations).

Chapter 9: Types of Warehouses

• Types of logistics services
• Warehouse Types Based on Users (private, public)
• Warehouses Based on Goods Status (bonded)

9.1 Type of Logistics Services

• Transport centres
• Distribution centres
• Logistics centres

9.2 Type of Warehouses Based On Users

• Private warehouses owned and/or managed by the manufacturer, producer, or trader
• Public warehouses available for rental, possibly for one or multiple users; often owned by an individual, a partnership or an organisation

9.3 Types Based On Goods Status

• Bonded warehouses (type B,C, D, E)

Chapter 10: Warehouse Documents and IT (Information Technology)

• Characteristics of main warehousing documents
• Need for warehouse laws and regulations
• The role of Information Technology (IT) in warehousing documents and operations
• FIATA documents and their implementation for the warehousing system.

Chapter 11: Warehouse Construction, Layout, and Safety

• Warehouse location choice
• Construction, relative size, and layout considerations
• Warehouse equipment and systems; types of racks
• Warehouse-related safety concerns; (e.g - fire dangers, use of chemicals in storage, emergency exit access, lighting, suitable clothing and other safety precautions)

Chapter 12: Debit of Warehouse Charges / Rent

• Activity-based costing
• Warehouse tariffs

12.1 Activity-Based Costing

• Method focusing on individual costs attributable to transactions. Ensures accurate costing

12.1 Activity-Based Costing (continued)

• Costs of buildings, handling, administration, management, and overhead costs; adding them to the storage price.

12.2 Warehousing Tariffs

• Cost prices of buildings and equipment (e.g. per square meter per day).
• Indirect costs over storage and/or handling, divided into categories to accurately calculate costs specific to the type of warehoused goods and work.

Chapter 13: Inventory Control

• General characteristics of warehouses (first-in, first-out (FIFO) method, last-in, first-out (LIFO) method)
• Warrant storage
• Consignment storage
• Compulsory storage
• Inventory control as a process to maintain and monitor inventory levels according to the needed demand
• Inventory control aims to optimise customer service, inventory costs and operating costs