Introduction to Logistics June 2024 PDF

Introduction to Logistics Abenet Belay Certified Trainer of FIATA Diploma in International Freight Forwarding  Introduction to Logistics Learning Objectives: After completing studying this module, learners will be able to: Describe the role of the forwarder...

Introduction to Logistics Abenet Belay Certified Trainer of FIATA Diploma in International Freight Forwarding  Introduction to Logistics Learning Objectives: After completing studying this module, learners will be able to: Describe the role of the forwarder in logistics activities and define logistics systems. State the main steps in a logistics project. Get acquainted with terms such as JIT‚ ‘pull systems‘, physical distribution, supply chain, tailor made services in logistics Get familiar with the procedure of warehousing, types of warehouse and financial aspects of storage. Introduction to Logistics; June 2024  Introduction to Logistics Module contents: Logistics and Forwarding Logistics Concept/Project Physical Distribution Systems Subsystems in Logistics Information Handling and Control Issues Value Added Logistics Introduction to Logistics; June Commodity Related Systems 2024  Introduction to Logistics Rights and duties of the warehouse operator and the customer Types of warehouses Warehouse documents & it (information technology) for warehouses Warehouse construction, layout and safety Debit of warehouse charges /rent Inventory Control Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Learning Objectives: After completing learning this chapter, learners will be able to: Understand the definition of logistics given by scholars in the area Get aware of the historical development of logistics. Understand the main activities in logistics. Understand the difference between provision of logistics services under own management or by outsourcing and related tendering. Understand the importance of quality management in logistics. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Chapter contents: 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 Service Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 1.1 Introduction to Logistics AspertheCouncilofSupplyChainManagemen t Professionals, logistics has been defined as: “ The part of the process of supply chain that plans, controls and implements an effective and efficient flow for the purpose of storage of goods and services and other related information from the point of commencement to the point of final consumption with an aim to satisfy Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Introduction to Logistics This definition includes Inbound, (order, receive, store, transport and manage incoming supplies)- supply side Outbound, (order fulfillment, packing, shipping, delivery and customer service related to delivery) Internal and external movements Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The Supply Chain Council‘s definition of Supply chain management is: “Managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer.” Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Logistics focuses on the movement and storage of items in the supply chain. Supply chain management (SCM) is more comprehensive, covering all of the coordination between partners that have a role in this network, including sourcing, manufacturing, transporting, storing and selling. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding When used in a business sense, logistics deals with the flow of things between the point of origin and the point of consumption in order to meet requirements of customers or corporations. The resources managed in logistics can include physical items such as food, materials, animals, equipment, and liquids, as well as abstract items, such as time and information. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The logistics of physical items usually involves the integration of: Information flow, Material handling, Production, Packaging, Inventory, Transportation, and Warehousing. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding One way to look at logistics in a business sense is: “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.” Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding For business and industrial sector, logistics plays an important role in reducing costs which in turn increases profits. It is also used as an important tool in creating competitiveness as it helps create effectiveness in customer service, Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 1.2 Historical Development of Logistics With the introduction of transport, villages were able to trade with other villages and this is how global trade started. The term logistics originated from the military, where it means the supply of fighting troops with all necessary material (fuel, ammunition, foodstuff, etc.) and with lodging. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The word “logistics” originates from the Greek “logos“, that is. word, sense, counting. Logistics is first mentioned in Sun Tzu’s Art of War – 500 BC. Alexander the Great produced a logistics system to support troops rather than rely on living off the land Romans introduced supply lines and supply depots at 30 km intervals Napoleon planned his logistics campaigns well and logistics and supply was a top priority. “The amateurs discuss tactics: the professionals discuss logistics.” “Behind every great leader there was an even Introduction to Logistics; June greater logistician.” 2024 –  Chapter I: Logistics & Forwarding During World War II logistics received special attention during the war in the Pacific when American troops moved from island to island (“Island hopping”) and had to be supplied with the right quantity of material, at the right time and at the right place. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Logistic activities were divided into: materials management and physical distribution. Materials management comprising of the procurement of raw materials and the organisation of the goods flows through the production process up to the inventory of finished products. These were merely planning-driven activities and considered as the inbound side. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Physical Distribution Management focuses on organising the flow of the finished products to the clients, including the distribution system, warehouse location/allocation, return flows etc. These activities were more directly driven by the customer orders and considered as Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding During the 1960s and 1970s, many companies worldwide focused attention upon what was defined as physical distribution or outbound logistics systems. They attempted to systematically manage a set of interrelated activities including transportation, distribution, warehousing, finished goods, inventory levels, packaging, and materials Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding During the 1970s and 1980s, companies increasingly began to recognize the additional opportunities for savings by combining the inbound side (materials management) with the outbound side (physical distribution) described as the logistics system. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Initially, this provided potential savings by having a single transportation manager who could coordinate inbound and outbound transportation, could lead to more efficient operation. The inclusion of purchasing as part of the inbound logistics added significantly to the opportunity to reduce costs. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The procurement process, which involves making decisions about how much to purchase (inventory quantities) and where to purchase (transportation), has a significant impact on inbound logistics. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding During the 1980s and 1990s, a number of external factors, caused companies to expand their perspective on the logistics process to include all of the firms involved in ensuring that the final customer received: the right product, at the right cost, at the right time, in the right conditions, and in the right quantity. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding As this concept developed, it was referred to as the logistics pipeline. Under the increasing influence of marketing and strategic planning (and due to the rapidly growing number of solutions offered by ICT) logistics has evolved to supply chain management. This is a more integrated approach, looking at chains as a whole, not only within a company, but also between companies active in the same chain. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Supply Chain Management aims to provide the best possible customer service (value) at the lowest possible costs, throughout (parts of) the entire chain from raw material to end user. Due to globalization and the advancement in ICT, the world has become one global village. Due to the transition from general cargo to containers, the performance of the transport industry has seen revolutionary improvements. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 1.3 Major Logistics Activities Logistics cover a wide variety of activities. Every company that has to do with the transport, storage, trading or manufacturing of products and services employs the term logistics in one way or another. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Logistics add value in a number of ways, such as: Supporting form utility (machine processing, heating, cooling, construction, demolishing, etc.); Providing location utility (obtaining, moving and storing); Providing time utility (to be available for, have on hand at certain times, etc.). Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The development of interest in logistics after World War II contributed to the growth in activities associated with logistics. Given the scope of this growth, the following are the major logistics activities. 1) Transportation It is a very important part of the logistics system. A major focus in logistics is upon the physical movement or flow of goods, Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding This network is composed of transportation operators that provide the service for the firm. The logistics manager is responsible for selecting the mode(s) of transportation used in moving the items or for developing private transportation as an alternative. 2) Storage A second area, which has a trade-off relationship with transportation, is storage. It involves two separate but closely related activities: inventory management and warehousing. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding A direct relationship exists between transportation and the level of inventory and number of warehouses required. If firms use a relatively slow means of transport, they usually have to keep higher inventory levels and usually have more warehousing space for this inventory. They may examine the possibility of using faster transport to eliminate some of these warehouses and the inventory stored therein. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding A number of important decisions are related to storage activities (inventory and warehousing), including: how many warehouses, how much inventory, where to locate the warehouses, what size the warehouse should be, and soon. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 3) Packaging A third area of interest to logistics is industrial (exterior) packaging. The type of transportation selected will affect packaging requirements both for moving the finished product to the market and for the inbound materials. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding For example, rail or water transportation will usually require additional packaging expenditure because of the greater possibility In analyzing of damage. trade-offs for proposed changesin agencies, logistics personnel generally examine how the change will influence packaging costs. In many instances, changing to a premium transport means, such as air, will reduce packaging costs. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 4) Materials handling Materials handling is efficient important to warehouses operation. of goods movement Logistics into a concerned warehouse, the managers of goods placement are in a warehouse, with the and the movement of goods from storage to order- picking areas and eventually to dock areas for transportation out of the warehouse. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The materials handling designs must be coordinated in order to ensure congruity between the types of equipment used. In addition, the company may find it economical to use the same type of forklift trucks in the plants and in the warehouses. 5) Order fulfillment Another logistics activity area is order fulfillment, which generally consists of activities involved with completing customer orders. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Initially, one might question why the logistics area would concern itself directly with order fulfillment. However, one important physical distribution factor is the time elapsing from the time when a customer decides to place an order for a product until the time that those goods are actually delivered in a satisfactory condition, that is, the lead Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 6) Forecasti Accura forecas of inventory ng te ting requirements and is materi and essential to als parts effectively This is particularly control using true in companies invent a just-in-time (JIT) or materials ory. requirement planning (MRP) approach to control inventory. Logistics personnel should develop forecasts in those situations to ensure accuracy and effective control. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 7) Production Planning Another area of growing interest for logistics managers is production planning, which is closely related to forecasting in terms of effective inventory control. Once a forecast is developed and the current inventory on hand and usage rate is assessed, production managers can determine the number of units necessary to ensure adequate market coverage. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding In multiple-product firms, production process timing and certain product line relationships require close coordination with logistics or actual control of production planning by logistics. The integration of production planning into logistics is becoming increasingly common in large Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 8) Procurement The basic rational for including procurement in logistics is that transportation cost relates directly to the geographic location (distance) of raw materials and component parts procured for a company’s needs. In terms of transportation and inventory costs, the quantities purchased would also affect logistics cost. Including procuring within the logistics area is primarily a matter of whether this more effectively coordinates and lowers Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 9) Customer services Decisions about inventory, transportation, and warehousing relate to customer services requirements. logistics plays an extremely important role in ensuring that the customer gets the right product at the right place and time. Logistics decisions about product availability and inventory lead time are critical to customer service. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 10) Site location Another area that is important to logistics is plant and warehouse site location. A location change could alter time and place relationships between plants and markets or between supply points and plants. Such changes will affect transportation rates and services, customer service, inventory requirements, and possibly other areas. Therefore, the Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 11) Other activities Other areas that may be considered as part of logistics include parts and service support, return goods handling, and salvage and scrap disposal. Here, a very integrative approach is necessary. Logistics offers input into product design as well as into maintenance and supply service, since transportation and storage decisions affect these areas. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 1.4 The Freight Forwarder in the Supply Chain Process The logistics process - be clearanc payment it and or global domestic, regional, function e,- encompasses systems,freight other s outsourc by producers traders speciali transportation, ed andwarehousing, to zed Freight border forwarders are of the key provider s.some providers in the specialized logistics network. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding logistics and forwarding activities Logistics is used more broadly to refer to the process of coordinating and moving resources – people, materials, inventory, and equipment from one location to storage at the desired destination. freight forwarding is a set of services that coordinates the shipment of goods from one location to another. Freight forwarders are professionals who arrange the movement of goods nationally Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The freight forwarder’s role is to ensure traded goods reach their correct destination: on-time, in good condition, and in the most economically efficient way. While freight forwarders and logistics companies may seem similar or even synonymous, there are some differences between the two to keep in mind. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Unlike logistics companies, freight forwarders might be partners with a network of logistics companies, but they do not have any assets themselves. Depending on the freight and trade needs, freight forwarders coordinate the shipments of goods with a single carrier or with multiple carriers. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding While many carriers specialize in one mode of transport, such as cargo planes or freight trucking, some offer multiple modes of service. Freight forwarding professionals handle the transportation aspect of all of this for their customers. Additionally, with a deep understanding of suppliers and trade patterns, freight forwarders negotiate with their network of global partners to find solutions for the Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Along with connecting global supply chains, freight forwarders work on behalf of their customers to ensure their goods are smoothly imported and exported around the world. This makes international trade easier for entrepreneurs and industry leaders alike. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Along with coordinating the logistics, experienced freight forwarders are experts in: customs regulations, negotiating tariffs, and the different requirements to ship This knowledge by qualified air, freight land, and ocean. effectively allows forwarders toof complex shipping manage thefor their risks internationa customers. l Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Freight forwarders tend to partner with several logistics companies either nationally or internationally, which means that price checking capabilities are far better and more thorough than what you would get when working directly with a logistics company. Freight forwarders also have more knowledge and experience around specialty companies, which often vary greatly regarding types of transport, house moving, Introduction to Logistics; June fragile goods, and lead times, among other 2024  Chapter I: Logistics & Forwarding Generally, a logistics company is responsible for managing goods’ physical movement along the supply chain. In some cases, they may also manage documentation. There are multiple benefits of working with a freight forwarding company as opposed to a logistics company. A network of multiple logistics companies that helps reduce prices with Introduction to Logistics; June more diversity 2024  Chapter I: Logistics & Forwarding Pricing is more transparent, as most freight forwarders will provide customers with in-depth breakdowns of all costs Maintain data regarding specialty routes along with route optimization to help minimize delays and ensure timely arrival of goods. TSA Have a good understanding of logistics companies in many different specialty areas, including household goods, fragile goods, cold storage, and others Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding freight forwarders can also handle all of the paperwork associated with freight forwarding, including customs documentation, bills of lading, shipper’s export declarations, insurance forms, and letters of invoice. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 1.5 Logistics Service Provision Forms Outsourcing One of the most complex and important decisions facing businesses today is whether to perform logistics activities  on their own or  to get external party Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The trend for the increasing use of outsourcing provides many interesting opportunities for forwarders as logistics service providers. This endeavour is not limited to transport, but can extend to such a degree that even a portion of the production activities will be outsourced. There are a number of aspects to take into consideration for outsourcing decision. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding These considerations are: Costs An important reason for outsourcing logistic activities is the need for cost reduction. A shipper will compare the costs (cost of doing on its own against outsourcing), Available Capacity Performing logistics activities or establishing logistics system require a considerable amount of investment. (resource capacity) Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Quality (Available Knowledge) The quality of logistics services may present more problems to the shipper. If the shipper does not have specialised knowledge of logistics activities, it can be hard to compete with the level of quality offered by the professional logistics service provider. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Manageability Apart from the influence it has on the nature of the target market and the product, the lack of knowledge has an additional, rather damaging consequence; i.e. the manageability of logistics. Logistics can become so complex that specialised knowledge will be required to manage it. When this happens, shippers also tend to outsource logistics. Introduction to Logistics; June 2024  Chapter I: Logistics & Risk Forwarding Greater complexity leads to more risks, which the shipper is often not prepared to take. If the shipper wants to avoid the threat of risk, he/she will do so by outsourcing high-risk logistics activities. Secrecy Companies who are not totally convinced of their customer database’s protection will want to perform logistics themselves. A matter that should be of the utmost importance to the logistics service provider is the guarantee of total secrecy for shippers. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Identity The trade or the brand names of companies should be displayed to the public as often as possible. When own vehicles are employed to display trade and/or brand names, they are seen as mobile advertising- pillars. Existing clients usually find a vehicle bearing the trade name proof of positive contact with the supplier which may motivate the company to acquire its own fleet of vehicles, instead of employing those Introduction to Logistics; June of professional carriers. 2024  Chapter I: Logistics & Forwarding Service (responsiveness) The ability to offer additional services to the client is the other reason why shippers prefer to control their own logistics tracing activities. (i.e. following mayshipments The services vary from the during tracking and distribution), progress of to the warehouse, employment and a driver atin receiving of co-workers the who will deal with complaints as well as other, more commercial, activities. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Pros and Cons of Outsourcing Logistics Outsourcing of Logistics Services Economics Pros Reduced costs Cons More communication Pay what you More administration use Less capital tied up Increased cash flow Management Focus on core business Labour redundancy No staff or Confidentiality assets Costs Less customer more explicit contact Loss of expertise Operations More flexibility Specific experience Introduction to Logistics; June Access 2024 to innovation Damage risk  Chapter I: Logistics & Forwarding Tendering The tender process makes it relatively easy to gain an insight into potential suppliers and their price/quality ratios. Tendering helps to select the right logistics service supplier, but it can be a time-consuming process. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Step-by-step guide to the logistics tendering process can be: Preparation of Requirements (functional, technical and process- based requirements) Supporting part or all of the tender process, such as by preparing the required documentation (RFQ/RFP, Service Level Agreement), a long list and shortlist of suppliers and by circulating and supervising an evaluation model Setting up and leading Question & Answer sessions Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding 1.6 Quality Management in Logistics Service “Quality is the entirety of features and characteristics of a product or service that bear on its ability to fulfil stated and implied requirements.” According to the ISO-standard 8402 In other words: one can say that the service has good quality when it complies with the requirements specified by the Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The concepts of how to assure and to manage quality have undergone certain stages of development: Quality Assurance= Quality inspection at the end of the process (e.g. assembly line); traditional form, very expensive; in transport not possible Quality Management = Proactive management of all resources and processes which are relevant for producing quality, internal audits Business excellence = Generic focus on quality, not only on products, but also on financing, customer and employee Introduction to Logistics; June 2024 Chapter I: Logistics & Forwarding Development of quality management (source: Wagener & Herbst, Potsdam) Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding A quality management system (QMS) is a set of policies, processes and procedures required for planning and execution (production/development/service) in the core business area of an organization (i.e., areas that can impact the organization’s ability to meet customer requirements). Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding In the year 2000, the ISO-norms were reviewed a new and another set of norms, which is currently known as ISO 9000:2000 were launched. ISO The Quality set of ISO standard consists management of: Fundamentals 9000:2000 systems & terminolog y ISO Quality management Methods and 9001:2000 systems requirement s ISO Quality management Methods to 9004:2000 Introduction to Logistics; June 2024 systems improve  Chapter I: Logistics & Forwarding The most significant of the ISO 9000:2000- norms are ISO 9001 and ISO 9004. These norms deal with quality management over the course of five chapters, that is.: quality management systems; management responsibility; personnel management; production management; measuring methods, process analysis, and its improvement Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Quality can be considered as a cycle which through quality must be ensured management, requirements driven by and the client’s perceptions. TC h u se q eur sa l i t y c i r c l e t o m C o m p a n y E x p e c t e d P l a n n e d quality Quality M e a s u r e m e n t of M e a s u r e m e n t of t h e c u s t o m e r t h e c o m p a n y ’ s satisfaction ability P e r c e iv e P erfo rm e d d Q ual i t y Quality Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding A QMS integrates the various internal processes within the organization and intends to provide a process approach for project execution. A process based QMS enables the organizations to identify, measure, control and improve the various core business processes that will ultimately lead to improved business performance. Introduction to Logistics; June 2024 Chapter I: Logistics & Forwarding Model of a process orientated QM-System (ISO 9001:2000) Responsibility of the management C C Resource management u management u s s st t o Processrealization Process ot m realization o Process Produc t Input Input Outp m e Requiremen Output ut m ts A P C er D e Measure & analyze, r improve Contentme r nt Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Audits of Quality Management System Regular follow-ups should be done to find out whether the company is adhering to the requirements, as specified. These follow-ups are called an “audit”. They may occur either as: internal audits, in which the case company will launch its own investigation to find out whether all departments and officials still adhere to the specifications as set out by the quality management system; Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding external audits, in which case the ancillary suppliers are investigated to establish whether they are still adhering to the specifications as set out by the ISO 9000:2000; External audits, in which case an independent certification company will investigate whether a company still adheres to the quality demand specifications. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding In order to retain the certificate of approval, a similar extrinsic audit should be performed at least every six months. A number of specific subjects are described in the ISO 9000:2000, with which companies should comply in order to qualify for certification. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding ISO 9000:2000 for Transport If a company wants to set-up a quality management system, the full support of its management towards this endeavour will be extremely important. Management can validate their support by issuing a declaration that will verbalise the goals of its quality policy. Management will have to appoint a quality manager who will be allowed adequate time and facilities to perform his duties well. Management will also have to stipulate the duties, responsibilities and capacities of the quality manager very clearly. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The quality manager should be allowed to have a more independent and distant position. This means that the quality manager should not be expected to perform other managerial duties that could influence the quality. The quality manager should have direct access to higher management and should report to them regularly as well. According to the ISO 9000:2000-standards, Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding Documentation of a Quality Management System The Quality Manual is a very important document for the quality management of a company. This manual should meet the following requirements: it should comply with the specifications as determined by the ISO; its contents should be user-friendly, i.e. all co-workers in the company should be able to read and understand it quite easily; it should have a loose-leafed format, to allow for modifications. Introduction to Logistics; June 2024  Chapter I: Logistics & Forwarding The Quality Manual contributes significantly to the value of a company’s quality management documentation. It consists of the following documents usually: Quality Management Handbook  for external use Quality Management Procedures  for internal use, describe companies functions and procedures Work Instructions  for internal use, describe specific instruction for Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Learning Objectives: After completing learning this chapter, learners will be able to: Understand which actions and which phases build a logistics project. Understand how a logistics project can be effectively evaluated. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Chapter contents: Overview Phased Approach Controlling of logistics project Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project 2.1 Overview In many cases Logistics activities can be regarded as a project. A project is in principle a (one-time) group of actions performed to achieve a certain goal. The logistics project can be defined as a complex, special and unique sets of activities which can be described by technical and economic parameters and is determined by cost, time, and scope in Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Project Concept A project concept issimilar to a mission statement that outlines the purpose. A project concept is typically considered an element of project branding. A statement that gives a program or project its direction, depth and meaning. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Project Strategy Project Strategy can be defined as “The project perspective, direction, and guidelines on what to do and how to do it, to achieve the highest competitive advantage and the best value from the project.” Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project 2.2 Phased Approach Logistics projects are burdened with a certain degree of uncertainty. The level of this uncertainty differs depending on the type, scope, size of logistics project, the conduct and other factors. The limited availability of the necessary resources for the realization of the logistics project and changing environment makes the implementation of projects subjected to Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project To reduce the risk of the logistics project, one can increase oversight of its conduct of the logistics project and it can be divided into phases. Each phase set from first phase to last phase is called the project life cycle. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Division into phases helps to control the phase of the logistics project, but the logistics project manager must look for the whole project to control costs. Thus, before a suitable offer can be issued to the client and this can be implemented, many issues must be carefully analysed and prepared. To organise this properly, a phased approach is advisable. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project The division of the logistics project into successive phases of the project is useful in management of logistics projects (i.e., define specific activities, resources, deadlines, costs, project team). Generally, the following project phases can be distinguished:  Problem definition,  Design,  Realisation and  Aftercare. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Problem definition In this phase an analysis of the actual situation is made and the problems/bottlenecks experienced in the current situation can be identified. This also includes a description of the goals which should be achieved by the project: cost reductions, improvement of service levels etc. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project In logistics projects, first extensive data must be collected on the following: inbound/outbound goods accou flows, taking into nt seasonal fluctuations and future projections; technical requirements of the goods numbers oftoitems to bebestored; handled/stored; actual buildings, equipment, facilities etc.; actual costs, staff numbers; and actual service levels.Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Secondly, all relevant starting points and preconditions to the project need to be listed. One vital precondition is: what is the commercial strategy of the client? What is his market vision and long term objectives? The solution which will be offered should of course be in line with this strategy. Preconditions could also include a maximum investment, location Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project The project organisation will also need to be mentioned: project manager, team members, structure for communication, progress control, financial controlling, reporting etc. It is good practice to conclude this phase with a report which should be approved by the client, to ensure that all parties share the same vision on the project. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Design In this stage a solution is prepared for the problems, objectives and starting points analysed in the previous phase. In complicated projects a soluti more number of alternative options (scenarios) ons for material-may and information be flows, equipment and systems. prepared with different Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Preliminary design The alternative scenarios will provide a preliminary sketch and not in full detail; calculations and elaborations provide the level of detail required to make the right selection in terms of investments, operational costs, achievable service levels etc. The alternative solutions will be presented to the client who will decide what the most favourable option is (in line with his Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project The preliminary design of the selected option will then be further detailed in terms of e.g. organisation; equipment, lay-out & routing; working methods; budget, investments, operational costs; and implementation activities & planning The detailed design phase will be terminated with a report, including a detailed implementation plan, to be approved by the client. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Realisation In this phase the selected scenario will be implemented. Depending on the situation this may include activities such as: construction of a new building; procurement, adaptation of installationprocedures, and testing of organisation, equipment; working methods; and staff (de-)recruitment, Introduction to Logistics; June training. 2024  Chapter 2: Logistics Concept/Project Realization of logistics projects requires the simultaneous use of various resources, such as physical, financial, human. Implementation of the project is conditional on access to resources, which are usually limited in time. The realisation phase will be terminated with a report (mentioning possible deviations from the original objectives etc.), approved by the client. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Inspection is performed after each stage. It is related to the approval of the effects of the previous phase and the decision to move to the next (or discontinue the project). In some cases, it is possible that the next phase will begin before the previous is finished (parallel work of logistics projects). Such a situation is acceptable when the risk of not completed phase is low. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Aftercare After implementation the project will be evaluated. The evaluation includes not only a one- time activity concerning the project itself (the final results related to the initial objectives, the final project costs related to the initial budget etc.). Aftercare should also comprise performance management, which is a continuous, repetitive process of comparing of costs and service levels with objectives Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project This can be achieved by implementing the performance management cycle: determining a requested performance level for each relevant activity; defining performance indicators to quantify the requested performance levels; implementation of procedures and tools to measure the realised performance; comparing the real performance with the performance indicators; determining corrective actions, in case the realised performance does not meet the performance indicators. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Project Organisation A proper project organisation consists of: an internal or external client, who require the project results and with whom the measurable goals (deliveries) should be agreed; a project manager who is responsible for achieving the goals and who has the competency to decide on resources (budget, input); aa project projectplan with teamdefinite work packages consisting and of experts milestones contract (i.e. dates at which definite and in must deliverables some cases be presented); and ors. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project 2.3 Controlling of logistics project The level of uncertainty is accordingly high in the first stage, i.e. the stage of planning the realization of an order of a project type. The uncertainty on realization of a logistics project is reduced to zero in the final stage of realization. What also increases the risk of failure is the danger of not fulfilling all guidelines, expectations and goals of logistics project. Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Internal and external factors of a given a logistics project also play an important role. It is impossible to completely eliminate uncertainty. It may be reduced to minimum by taking certain actions, like implementing rules, methods and mechanisms of management. In order to increase the chance of logistics project success, project managers are motivated to reduce risks Introduction to Logistics; June 2024  Chapter 2: Logistics Concept/Project Controlling of logistics projects, is a subsystem of enterprise controlling, selected next to controlling sales, finance, marketing, controlling production, etc. It can be described as a support system for management of logistics project, which by coordinating the planning, control, collection, and processing of information, ensures the effective achievement of the objectives of the project logistics during logistics project life cycle. Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Learning Objectives: After completing learning this chapter, learners will be able to: Understand what physical distribution is and why it matters Understand the different categories of logistics service providers, related to the level of outsourcing and related to the range of services offered. Understand the main techniques for inventory management. Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Chapter contents: Physical Distribution Range of Services Level of Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems 3.1 Physical Distribution Physical distributiondeals with the series of actions that moves final productsinvolved The channels from productioninvent to the consumer. control, include orderwarehousing, ory transportation, processing, and customer service.handli material Physical distribution and the ng, s ability to get a product to a consumer quickly and economically has a direct impact on customer satisfaction. Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Physical distribution is a supply chain forecasting & management term best viewed as a system of distribution channels linked together for the efficient movement of products. These components are interrelated, meaning decisions made in one area affect the relative efficiency of others. Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Customer Service: Customer service refers to the precisely- defined standard of customer satisfaction that can be provided to customers. Once a standard is set (ex: 60% of all shipments delivered to customers within 48 hours of ordering) a physical distribution system is then set up to reach that goal at the lowest possible cost. Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Transportation: Transportation is an indispensable component of distribution management. From a cost perspective, transportation accounts for the lion share of physical distribution costs amounting between one- third and two-third of total logistics costs. Fortunately, organizations can use anyone, or a combination of the transport modes to offset some of the overall shipment cost. Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Warehousing: The warehousing component of physical distribution refers to the process of receiving inbound shipments, storing merchandise, breaking down bulk materials, and ecommerce fulfillment for delivery to the customer. A Warehouse distribution centers generally keep goods for longer periods, whereas fulfillment centers operate as central distribution locations for quick shipments Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Order Processing: Order processing is a physical distribution function that directly affects the ability of a retailer to meet the customer service standards defined by the owner. Assuming the order processing system is efficient, the owner can avoid the costs of premium transportation or high inventory levels. Accuracy plays a vital role in successful order processing, as do procedures that Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Inventory Control: Inventory control is a major component of any physical distribution system. Inventory control is used to keep inventories in a desired state while continuing to adequately supply customers. Costs include funds invested in inventory, depreciation, and possible obsolescence of the goods. Materials Handling:. Material handling comprises all of the activities associated with moving products within a production facility, warehouse, and transportation terminals. Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Physical distribution is important because it comprises the final steps a business takes before they put their product in the hands of their customer. That’s why so many businesses invest in a third party logistics provider to ensure their physical distribution is handled with care. Properly handled physical distribution streamlines and better accommodates fluctuating supply and demand throughout Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems 3.2 Range of Services A distinction among logistics service providers can be made according to the services offered. Forwarders: offering world-widelogistics solutions, integrate different means of transport Carriers: road hauliers, rail operators, shipping lines, airlines, warehouse operators Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Logistics Providers: offering logistic Service comprehensive specialized customer, solutions, includingontransport, a warehousing, certain branch VAL etc. or Integrators or System Providers: focusing on worldwide parcel distribution, applying different transport modalities (air, road etc.), very standardized services Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems Some examples are mentioned in the following illustration: Global Forwarders Global Carriers Danzas P&O Nedlloyd Panalpina Hanjin Kühne & Nagel MSC Exel Yang Ming Maersk Logistics Maersk Sealand Logistic Link CMA-CGM APL Logistics APL 4PL Logistics Services Integrators Providers UPS Frans Maas DHL Geodis Vitesse TNT Vos Logistics Federal Express Introduction to Logistics; June 2024  Chapter 3: Physical Distribution Systems 3.3 Level of Outsourcing Outsourcing is performed in relation to a certain decision level (strategic, tactical and operational). 1PL: all activities are performed under own management. 2PL: the shipper only outsources certain specialised operational activities. 3PL: a (large) logistics services provider takes over all tactical and operational activities 4PL:all activities are outsourced; a “facilitator” Introduction to Logistics; June provides strategic solutions and contracts one or 2024  Chapter 3: Physical Distribution Systems Level of Outsourcing Strate gic Tactical Operational desig tenderi Chain management, Forwarding Execution, Ownership of Syste n, ng, m logistic assets judgin g 1PL Shipper Shipper Shipper 2PL Shipper Shipper Carrier, person in charge of warehouse 3PL Shipper Logistic service provider Logistic service provider and/orsub-  Forwarder contractor 4PL Consultant, Logistic service provider Logistic provide and/ service r or facilitator  Forwarder subcontractor Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Learning Objectives: After completing learning this chapter, learners will be able to: Understand the various logistic subsystems and their inter- relations in companies Understand the characteristics of supply chain management Understand the difference between planning- and order- driven logistics, as well as the various customer order decoupling points. Understand the main customer service issues in logistics and how they are Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Chapter contents: Logistics Subsystems Just In Time (JIT) Supply Chain Management Customer Service Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics 4.1 Logistics Subsystems Operational functions of a logistics company, according to the order in which goods flow passes through a company, they are: the supply and receipt of products, materials and auxiliary materials; the storage of materials and auxiliary materials (only done at production companies); Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics the transformation (production and assembly) of materials into end products (only done at production companies); the storage of end products; and the distribution of end products. Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics These functions can be summarized into four subsystems, namely: Procurement: supply logistics Production: production logistics Distribution: (physical) distribution logistics Return flows: return logistics Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Logistics Logistics Sub- LLLooogisgisgistictict subsystem system icsss S u bSubSub--- sysysystestestemm Procurement markets s Supply Production Distribution t ke logistics m logistics logistics logistics logistics ar m al market Sale t e en m re a rk m e cu t ro P Return logistics logistics Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Supply Logistics The first subsystem in logistics that will occur in the goods flow is supply logistics that focuses on the flow of incoming products, materials or auxiliary materials. In many cases, the receiver of the materials has nothing to do with the supply itself. all costs and planning concerning the supply is the supplying company’s responsibility; (logistical service provider on behalf of the supplying company) Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics When other conditions of supply have been agreed upon, for instance FOB or Ex Works, the receiver will have to share the responsibility of planning and paying for the supply. the responsibility for this operational function rests with procurement. In many cases raw materials and auxiliary materials cannot be processed directly and therefore require a certain amount of storage time. The question of where and how something Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Production Logistics The transformation of materials and services into end products is a very complex activity that needs a lot of attention. Logistics is not primarily transformation process interested itself, physical in the organization but moreof in thetherelated flows of proper goods through the transformation process. Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics In general, a trading company does not store raw materials, nor their transformation. Still, many trade companies do have a certain type of “transformation” process going, which can also be found at production companies, namely: packing and unpacking; internal transport and information gathering. Although packing, unpacking, stapling and labelling do not count as official activities from a production perspective, the complexity still compares favourably to Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Distribution Logistics In both production and trade companies the actual moment of end product availability and the moment of delivery to the client will almost always be different. The end products are usually stored until the appropriate moment. it is the responsibility of the warehouse management to store the end products and to see to their rapid dispatch. Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics In the warehouse of a trade company, the receipt of products will be supervised by the procurement department; Dispatch is part of sales’ responsibilities. Dispatch usually starts with an order that is issued to the warehouse, indicating the type and amount of end products that are required by the client, as well as the expected time of delivery. To determine the stock level of end products, both accounting and client requirements should be considered. Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics A function that is significant for the logistics service provider in general and for the forwarder specifically is the dispatch and distribution (in logistical context, i.e. physical distribution) of the end products. The operational management of dispatch and distribution is organised by the distribution department; or the “shipping- department” of a company, as they are Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Return Logistics Return logistics focuses on he backward flow of products, components or raw materials from the customer to the supplier for a number of reasons. Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics 4.2 Just In Time (JIT) The management philosophy of JIT devotes its attention to many issues, such as: Reduced order quantities and production series; Minimising stock in the system; Initiating and maintaining a training schedule for operational employees; Developing team spirit between operation employees; Simplifying management to a level where Introduction to Logistics; June mistakes will become almost non-existent. 2024  Chapter 4: Subsystems in Logistics The goal of the JIT is to prevent the manufacturing or the utilisation of material, semi- manufactured articles and end products coming to a standstill (which would imply storage). Just-in-time (JIT) delivery is a strategy in supply-chain management intended to sync orders to suppliers with production or delivery schedules. For example, a company that sells home furniture items but doesn’t manufacture Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics As a result, efficiencies are improved and inventory costs are reduced because companies only receive goods on an as- needed basis. Companies like Toyota, Dell, and McDonald’s capitalize on a JIT delivery system. Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics 4.3 Supply Chain Management Supply chain can be defined as a network of firms that work together to meet the needs of the ultimate customer. It comprises of logistics (flows, and timing and positioning of inventories) and operations (transformation processes). Efficient and effective logistics in a company can only be achieved when compromises have been made between the Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Efficient and effective logistics in a company can only be achieved when compromises have been made between the different functions in the chain. Until 1990, this was what logistics was all about: to achieve the optimal performance of the goods flow within a company. Effectively optimizing flows between companies, transforming into goods and making them available to users is the essence of Supply Chain Management. Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Supplying the right product at reasonable price to the consumer at the right time is not the only condition to win a competition but also is the key to its survival. The Supply chain performance initiatives are trying to match supply to demand and thus reduce costs while improving customer satisfaction. Superior performance is dependent on the ability of a manufacturer in full-scale Introduction to Logistics; June 2024  Chapter 4: Subsystems in For Logistics improving productivity, numerous tools and techniques were developed and employed. Lean thinking; the organization that ends the process up without wasting resources or spending less resources for more production. Agile technique is one of supply chain technique that follows flexibility and focuses on the unpredictable change in markets and benefits of them by fast delivery and flexibility on the size and type of product. Therefore, lean (planning driven) and agile (order driven) models are considered in many companies that are looking to improve their performance. Introduction to Logistics; June 2024 14 3  Chapter 4: Subsystems in Logistics 4.4 Customer Service An exceptionally important aspect of logistics is customer service. Customer service is best experienced through the service that is offered to the client (e.g. supplying of the right products, at the right place, at the right time, in the right amount and of the right quality). This principle will mean nothing unless it is supported by a shared attitude throughout the company to improve the service to the Introduction to Logistics; June 2024 14 4  Chapter 4: Subsystems in Logistics The customer service of a company also includes technical assistance, guarantees, payment conditions, supplying spare parts, availability, etc. It is important for companies who want to make a profit that the margin between cost – and retail price be as high as possible. This margin is established when products or services are retailed at the highest price possible and acquired at the lowest price possible. The retail prices are determined by the Sales Department and the low cost prices amongst Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Customer service is one of the most important links between Sales and Logistics. Eventually the performance of logistics will be reflected in customer service and costs. Sales depend on the manner in which customer service is delivered, and the price to be paid for this customer service will be based on performance. Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Scholars have categorised all statements of companies and concluded that customer service can be divided into three levels, namely: Customer Service as an activity When customer service is considered as an activity, it is presumed that customer service should lead to the fulfilment of client demand. The manner in which the order is treated, shipped, compensated for damages, etc. are all typical aspects. In this instance, customer service is seen Introduction to Logistics; June 2024 14  Chapter 4: Subsystems in Logistics Customer Service as a Measure of Performance Customer service as a measure of performance is expressed in the percentage of orders that were supplied on time, intact and of the right quality. Customer service - a Management Philosophy Trying to express customer service as a management philosophy, means that customer service will be raised to the Introduction to Logistics; June 2024  Chapter 4: Subsystems in This Logistics means that customer service will no longer be limited by “the performance of the logistical system”, but that it will affect all other activities in the company. In other words: all activities and decisions inside and outside the company will be directed towards client satisfaction. Introduction to Logistics; June 2024 14  Chapter 4: Subsystems in Logistics Customer Service as Supply reliability Supplier reliability is a direct reflection of the supplier’s ability to meet all agreements concerning product, amount, location and time. When a supplier employs a courier company to carry the products to the client, the supplier will have to depend largely on the customer service of the courier company to provide the same measure of supplier reliability to its clients. Every deviation thereof will enforce the Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Customer Service and Lead times When a client requests a short lead time, this is usually an indication that the client has trouble managing his/her own logistics system (e.g forecasting problem). From experience we know that a short lead time can be a very important aspect for competition. Consumer emotion should also be considered. (e.g. furniture, vehicles and clothing, that the Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics It seems as if clients (companies as well as consumers) actually demand short delivery lead times. Once again the forwarder, who sees to the transport of these products, has an important part to play in the achievement of these short delivery lead times. One should keep in mind that the delivery lead time forms an essential part of the forwarder’s ability to deliver a professional service as well. Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Service Level Agreements and Performance Indicators In order to manage the service level of a logistics services provider in an outsourcing situation, service level agreements are established. These are contracts between the shipper (principal) and his logistics services provider. Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics A service level agreement will describe: A definition of the services (activities) to be provided and a description of the related processes, information etc. The agreed service level for each activity (and allowed deviation range from the standard) Actions to measure and report the performed service levels Actions to maintain the service level, Introduction to Logistics; June 15 corrections, penalties etc. 2024  Chapter 4: Subsystems in Logistics To manage the agreed and the real service levels, a continuous cycle is executed of planning, performance, measurement, analysis, adjustment (if needed). The actual performance is measured, results are compared with predetermined performance standards, and if needed actions are taken to adjust the related processes in order to achieve the agreed standard results (service levels). This requires quantifiable standard Introduction to Logistics; June 2024  Chapter 4: Subsystems in Logistics Examples of performance indicators in logistics: 97% ofall orders delivered complete at the right address within 24 hours. 90% of incoming shipments stored on the day of receipt. 95% of all complaints settled within 3 days. The administrative system should be set-up in such a way that all required data can be sampled, analysed and reported with a minimum of manual involvement. Introduction to Logistics; June 2024 15 6  Chapter 5: Information Handling and Control Issues Learning Objectives: After completing learning this chapter, learners will be able to: Understand the importance of ICT and EDI in logistics and be aware of the main applications. Get aware of the POS and GPS. Introduction to Logistics; June 2024 15 7  Chapter 5: Information Handling and Control Issues Chapter contents: Customer-Centered Data Information and Communication Technology (ICT) and EDI POS (Point Of Sale) Information Benefits of ICT Data Management in Parallel to Cargo Introduction to Logistics; June Management 2024  Chapter 6: Value added Logistics Learning Objectives: After completing learning this chapter, learners will be able to: Understand the main examples of value added logistics and the reasons why these activities are postponed by shippers to logistics services providers. Introduction to Logistics; June 2024  Chapter 6: Value added Logistics Chapter contents: Value Added Logistics Important factors for successful VAL implementation Introduction to Logistics; June 2024  Chapter 6: Value added Logistics 6.1 Value Added Logistics The emergence of VAL is closely related to the growing importance of supply chain management. Global market expansion and liberalization have extended the supply chain to cover more and more regions, as manifested by increased international procurement and marketing activities as well as offshore trade. These developments require more effective Introduction to Logistics; June 2024  Chapter 6: Value added Logistics Value Added Logistics 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. VAL is basically possible in all production processes that entail compounded products with limited finishing operations. The mass production of soap powder or butter Introduction to Logistics; June 2024  Chapter 6: Value added Logistics Value Added Logistics is offering opportunities to improve effectiveness/productivity, which can be beneficial to all parties. Examples of specialized services in value added logistics include: product labelling and packaging, assembly repacking, customs clearance, Light assembling between pickup and delivery, shipment consolidation, transportation management, Introduction to Logistics; June 2024  Chapter 6: Value added Logistics cargo tracking and tracing, Inventory management and supply chain consultancy, return processing, point of purchase displays, fresh packing, packing of valuable goods, quality control, packing to industry standard, measuring, cargo inspection, x-ray scanning, and so on. Introduction to Logistics; June 2024  Chapter 6: Value added Logistics 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; Introduction to Logistics; June 2024  Chapter 6: Value added Logistics Value Added Transformation: 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 Introduction to Logistics; June 2024  Chapter 6: Value added Logistics 6.2 Important factors for successful VAL implementation 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; processes can be by step; for various Trust specialists,cooperation implemented should develop from both sides. From encourage agreements step a joint birds eye view,can be investments composed toand to eliminate the lack of knowledge of many tenderers. Introduction to Logistics; June 2024  Chapter 6: Value added Logistics 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. Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems Learning Objectives: After completing learning this chapter, learners will be able to: Know a number of specifics in automotive logistics. Know certain specifics of the food industry. Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems Chapter contents: Automotive industry Food Industry Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems 7.1 Automotive industry The illustration below shows a general supply chain with the relevant parties, information flows (white arrows), goods flows (red Supplier arrows) and M a n ufacturer inventories W h o lesaler R etailer U s er (blue triangles).. Production.... R aw R aw F inished Trade Trade m aterial m aterial product stock stock Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems Efficient logistics management is increasingly becoming a survival factor for the automotive sector. Due to very strong competitive pressure of automakers in global market, the flexibility to management of materials and information flow in automobile assembly plants is declared as the key specification to future growth. Efficient manufacturing and logistics processes are a key competitive advantage, next to the capability of supplying the right product to the Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems Just in sequence is an inventory strategy, where components arrive at an assembly line in a specific order at the precise moment they are needed, and not before..In car producing, components from a variety of sources must be pulled together to create a complete vehicle. Parts come in a specific order, and workers on the assembly line can unpack them directly from shipping containers and install them, without a stop in storage or the need for Introduction to Logistics; June sorting. 2024  Chapter 7: Commodity Related Systems Each parts and sub-assemblies received in sequence to be delivered to production stations in assembly line as they are needed, in the sequence they will be consumed. The employees in logistics supply centre have to line up each part as it is called up by the computer – according to the series or car model, and in keeping with the vehicle type, color and specification. Products are then placed in special transportation units. Parts must be delivered to the final assembly lines within Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems In addition, quality inspection must be implemented in the sequencing step to guarantee that the sequenced components match the assembly sequence perfectly. A single wrong delivery or interruption of supply can have serious consequences. Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems Thus, 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; and the traditional order process via retail, wholesale to manufacturer, is often by- passed Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems The automotive industry has pioneered the use of information and communication technology (ICT) tools to increase the level of global communication. A key role of newer technology is to ensure that schedule information from multiple customers in multiple regions with various production systems can flow accurately and consistently into a supplier’s internal business systems to streamline processes and make it easier to react quickly. Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems Giving suppliers’ access to original market demand data, broken down by part or component, would be a major instrument for reducing inventory and reducing lead- time. To maintain delivery excellence, automotive suppliers must cultivate information systems that are comprehensive, scalable, secure, and integrated. Access to real-time production information improves visibility and responsiveness, Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems Timely communications help suppliers produce the and deliverwhen where rightinventory need and eliminating it ed, out-of-stock incidents is that facto throughput. impact ry Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems 7.2 Food Industry 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. Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems Hazard Analysis & Critical Control Point System (HACCP) The HACCP system, which is science based and systematic, identifies specific hazards and measures for their control to ensure the safety of food. HACCP can be applied throughout the food chain from primary production to final consumption and its implementation should be guided by scientific evidence of risks to human health. Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems In addition to enhancing food safety, the application of HACCP systems can aid inspection by regulatory authorities and promote international trade by increasing confidence in food safety. The successful application of HACCP requires the full commitment and involvement of management and the work force. It requires multidisciplinary expertise in agronomy, veterinary health, production, microbiology, medicine, public health, food technology, environmental health, Introduction to Logistics; 2024 June chemistry and  Chapter 7: Commodity Related Systems The application of HACCP is compatible with the implementation of quality management systems, such as the ISO 9000 series, and is the system of choice in the management The HACCP of food safetyofwithin systemconsists sev such systems. principles: the following en Conduct a hazard analysis. Determine the Critical Control Points (CCPs). Establish critical limit(s). Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems Establish a system to monitor control of the CCP. Establish the corrective action to be taken when monitoring indicates that a particular CCP is not under control. Establish procedures for verification to confirm that the HACCP system is working effectively. Establish documentation concerning all procedures and records appropriate to these principles and their application Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems Prior to application of HACCP to any sector of the food chain, that sector should have in place prerequisite programs such as good hygienic practices and appropriate food safety requirements. These prerequisite programs to HACCP, including training, should be well established, fully operational and verified in order to facilitate the successful application and implementation of the Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems The effectiveness will also rely upon management and employees having the appropriate HACCP knowledge and skills. The intent of the HACCP system is to focus control at Critical Control Points (CCPs). The HACCP application should be reviewed and necessary changes made when any modification is made in the product, process, or any step. Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems General Food Law 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. Introduction to Logistics; June 2024  Chapter 7: Commodity Related Systems The objective is, a faster reaction to food safety