J'FeiAMC

1
International Transport Systems (M06)

• Organisation of this unit

2
International Transport Systems (M06)

• Learning objectives
• Discuss the concept of logistics and explain the
  need for logistics in the distribution system
• Explain the need for integration of the links in
  the logistics chain
• Explain the difference between logistics and
  supply chain management
• Discuss logistics in the global scale
• Explain the role of transport in the logistics
  chain

3
International Transport Systems (M06)

• Transport and logistics
• Feature of logistics
• Definitions
• Logistics for an organisation
• Typical logistics network physical distribution
• Logistics and supply chain management
• Transport as part of a distribution system
• JIT
• Third party logistics (3PL)
• Integrated logistics and transport
• The role of transport in logistics

4
International Transport Systems (M06)

• Transport and logistics
• Feature of logistics
• Definitions
• a) the entire process of materials and products
  moving into, through, and out of a firm.
• b) the process of anticipating customer needs and
  wants acquiring the capital, materials, people,
  technologies, and information necessary to meet
  those needs and wants optimising the goods- or
  service-producing network to fulfil customer
  requests and utilising the network to fulfil
  customer requests in a timely way.
• c) the management of supply chain in commerce and
  industry. Logistics management has three
  constituent elements namely, procurement
  logistics, production logistics and distribution
  logistics.

5
International Transport Systems (M06)

• Feature of logistics
• Logistics for an organisation

Procurement
Internal transport
Inventories of raw materials
Distribution
External flow of goods that must be organised
and monitored
Inventories of finished products
6
International Transport Systems (M06)

• Feature of logistics
• Logistics for an organisation

7
International Transport Systems (M06)

• Feature of logistics
• Logistics for an organisation
• The relationship between the supplier and the
  demander
• Four flows between the two nodes

8
International Transport Systems (M06)

• Feature of logistics
• Logistics for an organisation
• The relationship between the supplier and the
  demander
• The transaction flow

9
International Transport Systems (M06)

• Feature of logistics
• Typical logistics network physical distribution
  

10
International Transport Systems (M06)

• Feature of logistics
• Logistics and supply chain management
• Logistics is responsible for managing the
  physical flow of products including transport and
  warehousing, and information flow.
• Supply chain management integrates product,
  information and cash flows among organisations
  from the point of origin to the point of
  consumption, with the goal of maximising customer
  satisfaction and minimising costs
• Logistics management is part of supply chain
  management.

11
International Transport Systems (M06)

• Transport as part of a distribution system
• JIT (Just-In-Time) to reduce costs and risks
  associated with storage of materials by timing
  the system such that the materials arrive at a
  facility just as they are needed in a process.
  This requires intricate and efficient timing of
  shipment.
• Integrated logistics the integration of
  following activities
• Production
• Packaging
• Handling
• Managing inventory
• Warehousing
• Transport
• Integrated logistics is characterised by the
  consolidation of goods in larger and fewer
  locations throughout the trade system. Costs can
  be reduced by the reduction of stock expenses and
  lead times. Handling costs are reduced by the use
  of modern equipment and automated facilities.

12
International Transport Systems (M06)

• Transport as part of a distribution system
• Third party logistics (3PL)
• Depending on the level of outsourcing
  (transactional, tactical, and strategic), a 3PL
  performs activities such as
• Pick and pack
• Warehousing
• Distribution
• Tracking and tracing
• And
• Provides integrated IT system to facilitate free
  information flow and create supply chain
  visibility
• Becomes partners in supply chain management

13
International Transport Systems (M06)

• Transport as part of a distribution system
• Why use 3PL?
• To save time free up resources to focus on
  firms core competency
• To do it better use others expertise and
  achieve economies of scale
• To share responsibilities keep stores and
  customers properly stocked, deliver orders in a
  perfect manner
• To re-engineer distribution network logistics
  outsourcing can be a quick way to re-engineer
  distribution networks to meet global market
  demands and gain a competitive edge.

14
International Transport Systems (M06)

• Transport as part of a distribution system
• Integrated logistics and transport
• Integrated logistics potentially creates higher
  transport demands. Why?
• Hub and spoke system!
• Goods often do not move from the supplier to the
  demander by the shortest possible route. They go
  via a terminal seaport, airport, road or rail
  terminal to be reloaded with goods from other
  regions for distribution.

15
International Transport Systems (M06)

• Transport as part of a distribution system
• Integrated logistics management
• Four factors shaped the development of integrated
  logistics distribution
• Scientific management (advanced production
  technology increased marketing costs
  distribution cost 10-30 of total costs)
• Data processing technology automated inventory
  control was realised. Computers allowed data to
  be entered once and reused for various purposes
  including order tracking, production scheduling,
  shipping, invoicing, and analysis.
• Customer satisfaction get the product to the
  customer at the right time in the right quantity
  and with the right logistical support.
• Profit profit leverage available from reduced
  logistics costs.

16
International Transport Systems (M06)

• Transport as part of a distribution system
• Integrated logistics concept

Vendor
Operations
Procurement
Customer
Physical distribution
30
40
30
Stage 1
Stage 2
Stage 3
17
International Transport Systems (M06)

• Transport as part of a distribution system
• Integrated logistics concept
• Stage 1 Physical distribution integration of
  finished goods transport, warehousing, inventory
  management, customer service (balance between
  costs and service)
• Stage 2 Internal linkages join two or all three
  of the internal material flow loops so that 60
  to 100 of the firms total inventory could be
  better managed, (elimination of buffer
  inventories between two loops, e.g. JIT)
• Stage 3 External linkages search for
  efficiencies in relationship with vendors,
  customers, and third parties. Development of
  Electronic Data Interchange (EDI), Just-in-time
  (JIT), and Distribution Requirements Planning
  (DRP).

18
International Transport Systems (M06)

• Transport as part of a distribution system
• The role of transport in logistics
• The mismatch between the place of production and
  demand due to labour specialisation, mass
  production and scale economies, creates the need
  for transport. Transport is the physical thread
  connecting the companys geographically dispersed
  operations. It adds value to the company by
  creating time and place utility.
• Time compression faster transit time minimises
  pipeline inventories time saved in delivery
  frees up time in other areas of the logistics
  chain maximising inventory velocity (how many
  times inventory turns per year, or the average
  number of days of inventory on hand) and reducing
  dwell-time (average number of days inventory sits
  idle in the pipeline).

19
International Transport Systems (M06)

• Transport as part of a distribution system
• The role of transport in logistics
• Reliability reliable and consistent delivery,
  absence of shipment loss and damage.
• Standardisation of processes, practices, and
  policies reduces risk, time and labour costs.
• JIT delivery and information support
• Flexibility for special nonrecurring,
  non-standard, or emergency situations, altered
  shipment plans or rush shipment can be provided.
• Customisation provision of customised services,
  e.g. carrier-managed inventory reordering,
  labelling etc.
• The performance of transport is a major
  determinant of the efficiency of the whole
  logistic/supply chain and eventually determines
  the competitiveness of the organisations within
  the chain.