Logistics is the management of business operations, such as the acquisition, storage, transportation and delivery of goods along the supply chain. The key elements of the logistics are discussed in the report to make the process effective. There should be a good strategy to make the logistics effective. The NAF clothing company have retail stores in every major city in UK. It has decided to open new branches in all over the world. The logistics operations will differ in every country. So the best transportation method and the logistics system are to be analyzed before opening the branches in the other countries.
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Companies always have the threat of global competition so they must always be analysing their competitors if their focus is selling or manufacturing overseas. Now the domestic components of the business turn to be a part of the large global supply chain. This involves a lot of tactics in the local operations. There are many things that are to be considered in the supply chain they are feasibility, technology and visibility. These are needed to be employed in order to form a supply chain that functions efficiently, technology is becoming upgraded day by day and hence they will allow different alternatives of systems to communicate and share information. Visibility means to identify where the goods are. This is very critical for companies to in order for companies to manage their supply chain by identifying the important points throughout the supply chain so that they can reduce the risk of delays. In regard to flexibility companies need to integrate the alternate locations to switch destinations both domestic and global in order to get the goods to their ultimate destination.
At global level companies need to collect large amount of data and transform it to useful information to streamline their operations and to reduce inventory. Managing the supply chain is thus regarded as managing information than moving goods. Also globally operational differences come into picture. Though the concept is the same the out show is different between domestic and global logistics but international trade is more complicated than domestic as it requires different modes of transportation and multiple hand changes. Also the skills and knowledge needed to manage differs from a global to the domestic structure. Globally logistics industry has grown to a high degree of sophistication far in the westernised countries than Asia and Africa. Thus information is not well recognised in Asia and other developing countries. Thus there are chances of missing the information flow and ultimately customers can’t be confident of what they will receive when the shipment actually arrives as there will be gaps in the visibility. In global logistics there are three main operations i.e., getting the goods to the port of the country of origin, shipping from the port to the destination port.
2.1. Inventory holding:
In a distribution system it is important for a company to hold stocks at adequate level and not in a higher level. It is very important to hold stock as it is necessary to balance between demand and supply as there is always a difference between the volumes of supply and demand. The other important reasons are
To lower the total production costs
To regulate the variations in demand
To control the different supply times
To lower buying costs and to have an advantage of bulk buying
To be aware of seasonal variations
To help in the smooth functioning of the production and operating systems
To minimise delays in production due to out of stock of spare parts.
To facilitate the availability of work in progress.
There are a number of types of inventory positions held at different strategy positions in a company mainly at the point with customers and suppliers. They are
Work in progress stocks
Rotatables and repairs
It can also be classified as
2.2. Inventory replenishment system
An effective inventory replenishment system aims at balancing the cost of holding stock and the service provided to the customers. The inventory replenishment system was designed to minimise the effect of the high or low level of stock outcomes and to identify the most appropriate level of inventory for all the products that are to be stocked. The negative aspect of low level of stock is that the supplies cannot be made at the specified date and there for e it might lead to a loss of the existing business as well as future business opportunities. And since goods have to be ordered now and then frequently this will increase the cost of purchase as it may involve huge ordering and delivery expenses. On the contrary high stock level are also a major disadvantage as the capital is locked up with the stock and it cannot be used up anywhere else and would tend to remain idle for a long time. Also the goods might become outdated or expired and hence may result in loss and the last disadvantage is that there may be a need to provide and maintain large storage space thus involving more expenses. It is always difficult to calculate the amount of demand based on the available next level of demand. So companies need to hold a higher level of transparency in maintaining information to suppliers and stock holding and demand all through the supply chain.
3. Different types of transportation modes:
The mode of transportation is defined by “which a shipment is moved from point ‘A’ to point ‘B’, such as by air, rail, road, or sea”. The transportation modes vary for both national and international distribution. The transportation modes inside the UK are mostly by land. The Land transportation includes road transportation and Rail transportation.
Road transportation mode is better than rail transportation modes. The Road transportation mode is the mode that has expanded over the last 50 years. The road transportation is made by trucks. The trucks are used for the distribution of goods from the warehouse to the local stores. This transportation mode is easy if the roads are good and the trucks have the large capacity of storage. The goods are distributed from the manufacturing unit to the distribution centres. The goods are then distributed from the distribution centres to the local stores. Road transportation modes have some advantages.
This method is cost effective. The capital cost of the vehicle is low. The low vehicle costs make the company to expand the road transportation.
Easy to monitor the location of goods.
Easy to communicate with the driver
Ideal for short distances
Rail transportation is another transportation method used for long-distance shipping. This offers the same speed as the trucks. This is also in-expensive like road transportation. The rail transportation is used to move the goods which are heavy and to move for a long distance. The good are then moved to another truck to get into the local shops. Due to this, for so many transportations the rail transportation is not used. But to move a long distance the rail transportation is the best method. The Rail transportation is the transportation method after the road transportation method in UK.
So the Trucking is the best mode of transportation for the NAF clothing company. The roads are good and also can get product anywhere through the trucks. So the communication with the driver is easy and the other advantages are given above. So the trucking is the best transportation method in the national transportation.
International transportation modes:
International logistics modes are used to distribute the goods throughout the world. The international transportation modes are by Air and Sea. The services in the International ocean transportation are through linear ships and tramp ships. The Linear ships travel on a regular voyage and it has a pre established schedule with the determined ports. The Tramp ships service do not operates on a regular schedule. It travels to the place wherever the company wants the cargo to be delivered. Different types of vessels are used in this. They are container ships, Roll-on/Roll-off ships, Combination ships, Break bulk ships, Crude carriers, Lash ships, Dry bulk carriers and Gas carriers. Different types of containers are General purpose container, Reefer container, Tank container and Dry bulk container.
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In shipping mode, there is a competition between the conference shipping and the non-conference shipping. The conference shipping is the group of shipping companies operating vessels in the same trade lanes and they agree not to compete in price and they charge the same price for all same type of cargos. This is reliable and will be useful at the time of entering into the international logistics transportation. The non conference shipping is provided by the other members who are not in the conference. They offer different rates for the same type of cargo. So a newly entered person cannot get into that immediately. It takes time to analyze the cost and quality of different services provided by them.
The Air transportation is the next method in the international transportation. The Air transportation is expensive but it will be suitable for immediate delivery. The goods which are to be delivered quickly for emergency purpose Air transportation is the best way. There are different types of air craft’s in the international Air transportation. They are Passenger air planes, Combis, Air freighters and Charters. So the Air transportation is the best transportation for the food products but for the clothing industry The Air transportation is expensive.
So for the NAF clothing company, the Shipping transportation is the best transportation method for the international transportation. The shipping transportation is in-expensive and also can get more profit from the goods. The developing countries like India and China will choose the shipping transportation is the best method. The Air transportation is expensive but it will be suitable for the food products and for immediate delivery. So the shipping transportation is the best transportation method for international Logistics.
Monitoring and Control system in Logistics:
Monitoring and control process is the procedure to obtain the detailed information about the process used. There are some approaches used in the process control monitoring. The main two approaches are balanced scorecard and the SCOR model. The SCOR model is one which is suitable for taking supply chain strategic decisions:
The supply chain operations reference model (SCOR) is a management tool used to address, communicate, and improve supply chain management decision within a company and also with the customers and suppliers of the company. This model says the business process should satisfy the customer requirements. This is the best model for the supply chain strategic decision making. This integrates business concepts of bench marking, measurement and process re-engineering into its framework. This focuses on the five main areas of the supply chain management. Those five areas are plan, source, make, deliver and return. These are the areas which repeat again and again for every process.
The planning comes first in every model. The demand and supply planning management has to be included first in this. The resources for the entire supply chain have to be planned and determined in the first stage. This also includes business rules to improve the efficiency of the supply chain.
This includes how to manage the inventory, supplier agreements, supplier performance and supplier network. This also deals with things like when to receive the goods, verify the goods and when to transfer the product. This also describes material acquisition, procurement unit cost and vendor lead time.
This includes production activities, packaging, stocking and releasing. This also includes managing the production activities, facilities and equipment requirement. This includes production management also.
This step includes order management, warehousing techniques and transportation modes. This involves managing product lifecycles, transportation, inventories, assets, importing and exporting requirements.
Companies have to be prepared to handle the return of defective products, packages or containers. This includes managing assets, return inventory, transportation and regulatory requirements.
The benefits of the SCOR model are
(1) It includes every step in the supply chain process.
(2) Most of the companies prove that this model has identified the problems in the supply chain.
(3)This model enables a two to six times of return on investment.
The operation of control systems starts with setting the objectives. Collect the data and compare with the objectives. Find the differences between the current data and the objectives. Then take the corrective action to attain the objectives. These are tre basi operations of the control system.
Tracking and tracing technologies:
There are different types of tracking and tracing technologies used in the Logistics transportation systems. The efficient technology will provide the details of the product at every stage. The main technologies are discussed below one by one.
Electronic Data Interchange:
Electronic Data Transmission is the transmission of data between organizations from one computer system to another computer system. The EDI is used for electronic fund transfer between the financial institutions. The companies use EDI to increase efficiency and to save cost. The communication can occur in less time with fewer errors. There is no labour cost in EDI. The data accuracy is more when compare to the paper documents. So EDI makes suppliers attractive to other companies and retailers.
Every product has a bar code in it. The bar code reader is used to scan the bar code in the product. The Bar code reader consists of a scanner, decoder and a cable that connects reader to the computer. When a product is scanned the details of the product stored in the database. The details already stored in the database. But after scanning that there is a confirmation that the product has reached the destination.
Radio Data Terminals:
Radio data terminals are very effective in the control and monitoring applications. The hand held Radio Data Terminal is very useful because it’s portable and handy. It is used in many industries where an information is needed while on the movement of products from one place to another place. This has an internal rechargeable battery pack and an integral antenna. This also has a keypad with 20 programmable keys. This has so many features which help to communicate quickly.
Radio Frequency Identity technology:
Radio frequency Identification technology (RFID) is a technology that used to communicate between a reader and an electronic tag attached to the object. This is used to track the location of an object. There are three types of RFID tags. They are passive RFID tags. They are passive RFID tags, active RFID tags and also batter assisted passive (BAP) RFID tags. The passive RFID tags have no power source and active RFID tags contain a battery. The battery assisted passive RFID tags requires an external source to wake up and provides a greater range and has a high forward link capability. These are the technologies used to track the goods in the industries. By these methods we can know about where the product is moving.
NAF clothing company plc has to follow SCOR model for the better performance. The effective mode of transport to be used for national requirement is through Trucking Freight and inters modal freight. For Global Distribution air freight is expensive but less in use, so Sea transportation is the better one. This must have control on stock, maintaining stock. So the company must follow the global logistic process for expanding its market world-wide.
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