MODULE: LOGISTICS

MODULE: LOGISTICS

1

Define logistics

Logistics refers to the overall process of managing how resources are acquired, stored and transported to their final destination. It entails locating and identifying potential suppliers and distributors, determining their accessibility and effectiveness in running of business production. (kara.2018).

DEPARTMENT OF LOGISTICS

Figure 1

Illustrations

Table 1

Goals of logistics

1. Increased efficiency

Logistics is all about maintaining the quality of products as they are being transported from one place to another and in the most convenient and fastest way possible. In order to improve logistical efficiency, some value-added services such as packaging, marking, and quality inspection needs to be performed as such efficiency is achieved. (Wimsatt, 2018)

2. Improved customer service

Customer satisfaction means that products will be at the customer’s disposal in due time and in good condition. The quickest way to attract customers is by making fast deliveries. In this regard, logistics ensures that the items of delivery reach the intended owner at the most convenient time and in the perfect condition possible, thus improving customer service. (Callado, 2017).

3. Increased sales

Efficiency attracts more customers, thus increasing sales. In this regard, the effort towards enticing customers should be given priority, e.g., improved packaging, delivery within a short period, and delivery of products in perfect condition. (Kutso, B, 2019).

4. Improved relationships

In business, a good relationship is critical towards its success supported by trust and a positive attitude. For instance, a manufacturer needs to have a good relationship with the transporter of the product. Therefore, through proper logistics, one can stay involved in the process by continually strengthening the relationship amongst the parties involved. (Spillan, 2018).

2. Definition and types of inventory

An inventory is any good or service rendered by a firm and that is necessary for the existence of trade between the firm and its customers. (Sadeghi, 2017).

Types of manufacturing inventory

• Raw materials: these are components from which manufactured products are processed. They are often cheaper than the final product, and without them, production may be impossible. For instance, cotton is a raw material for textile products.
• Work in progress: these are semi-finished goods in the process of transforming raw materials into finished products. This stage creates a production lag that impedes the smooth flow of sales but can be rectified by speeding up the manufacturing process.
• Finished goods: finished products are the endpoint of manufacturing process, it is an asset that is ready to be dispatched to the market.
• Packing material: this is an inventory used to pack finished products. There are two types of packing: primary packing: this is packing without which the good is not safe for use. Secondary packing: packing done for the sake of safety while goods are on transit.
• Maintenance, repair and operating supplies goods (MRO): these are goods that support various functions of the production cycle. They may include machinery, helmets, stationery, and lubricants among others.

3. Functions of warehouse

Definition of warehouse

A warehouse is a place where goods are preserved and accumulated in a systematic and orderly manner. (Bukhari, 2020).

• Storage: a key function of a warehouse is to store surplus goods that are not needed immediately. In the warehouse goods may be stored from the time of purchase or production till the time of consumption.
• Risk bearing: warehouses are operated and constructed in way to minimize the risks of theft, deterioration, exploration and fire. The warehouse-keeper is responsible for any inconveniences to the goods stored thus ensuring goods safety.
• Financing: warehousing acts as a source of finance to business men. Goods stored in warehouses can act as collateral in advancements of loans by banks and other financial institutions to goods owners. The owners enjoys such privileges after presenting a warehouse –keepers’ warrant.
• Grading and branding: since goods are often accumulated at the warehouse it is easy to facilitate grading, branding, mixing, blending, and packaging of goods for sale. Goods can also be packed as per the owners’ instructions.
• Transportation: warehouses has a function of making arrangements of collecting goods from the point of production and also sending goods to the place of delivery. Transportation of goods is more convenient to warehousing since goods are in bulk thereby saving on time spent on loading and offloading. (Asim, 2020).

4. The impacts of growing e-commerce on logistics

Traditional logistics was a simple and linear movement of goods from manufactures to consumers but today logistics has adopted various routing systems to respond to the rising demand .The boom of e-commerce is projected to increase its sphere of influence on logistics to $ 726 billion by the end of 2020. (Capgemini, 2020).

  The impacts of growing e-commerce on logistics

• Increase in number of distribution centres

E-commerce is tremendous around urban centres, this has forced logistics to service providers to strategically increase the number of distribution centres to serve the increased demand as well as save on time and transportation cost. (Wang, G, 2020).

• Improved reverse logistics

The more the goods are purchased the greater the returns, logistics sector of business has had to adopt efficient separation and processing procedures for returned products to reduce costs and keep returns loses at minimum. The process is nevertheless not easy and this calls for efficient use of data and better end-to-end visibility as solutions. (Roger, 2018).

• Establishment of better end-to-end visibility in supply chain

The boom of e-commerce has led to complexities of Omni-channels retailing in the supply chain, this calls for more efficient and optimization in networking. The logistics sphere has had to adopt robust information systems in conjunction with more efficient route plans and fleet management to ensure high quality logistics services. (David, 2018).

• High cost of logistics operations

Online merchants promote their services through free shipping, easy returns, multi-delivery options and other such policies. The number of distribution centres and Omni-channels retailers has also been on the rise to respond to the high demand of ‘same day delivery’ which causes rise in logistics’ costs. (Roger, 2018).

5. Modalities of transport

Modes of transport are the deferent ways of transporting goods or people across a specific geographic location. (Mihlfield, 2018). They include;

• Road transportation: this is the most versatile mode of transport due to least constraints hence being an outstanding preference in transporting small loads over a shorter distances. Road transport is the only mode that can perform door-to-door deliveries. This mode is mostly common in e-commerce business due to shipment of many small parcels although the shipper must ship a lot of freight to economize the cost. (Polo, 2016).
• Maritime transportation: this is by large extent a shipping by water and serves 90% of all international trade transportation. It is the most efficient mode of transportation for carrying cargo despite being the slowest. This mode faces more large challenges such as increased tariffs due to carbon emissions in the ocean. It is approximated that the carbon emission produced by cargo ships is equivalent to emission produced by 50 million cars. (statista, 2018)
• Air transportation: air transportation is the fastest growing and most time efficient shipping mode. Recently there has been an increase in the popularity of flight making it the most convenient for shipment. However this modes faces challenges such high cost, high regulation of weight and volume of freight and high emission of carbon.
• Rail transportation: the first railway was invented in the early 19^th century, in the modern times rail transportation is exclusively used in transit of bulky cargo over a long distance. Rail transport is restricted to rail infrastructure and traced paths. However it is not affected by traffic and points of diversion unlike road transport. It is therefore most dependable for long distance transit with minimized damage on goods. (Capella, 2017).
• Pipeline: pipeline transport is vital in, movement of fossils fuel such as gas and oil from one point to another. The cost of shipping heavily relies on construction costs, diameter of the pipeline and the viscosity of the fluid involved. Pipeline is most efficient in transporting flammable fluids due to high demand of safety measures in other modes. (Mihlfield, 2018).

Factors to consider when choosing an appropriate mode of transport

The choice of mode of transport depends upon the choice that can move the greatest volume of product with the greatest speed over the greatest distance at the lowest cost. (Trade logistics, 2016).

• Nature of goods

This include the size, weight and bulkiness of goods while also considering how dangerous, fragile and the value of the products. Light and small goods are transported by road and air while rail and maritime modes are suitable for heavy and bulky goods.

• Reliability and services, regularity

A mode of transport may be cheap but not reliable. For instance we cannot use rail transport for door-to-door delivery. The urgency and speed of delivery influences the choice of mode of transport. Example air and marine transport are more affected by weather than road transport making road transport the most popular mode.

• Safety

Safety is mostly considered depending on the location of delivery and value of goods. Sea transport is the most risky followed by rail, road then air. The safety of goods in transit may also require special packaging and facilities such refrigeration.

• Cost of transport

The cost of transport highly depend on type and amount of goods to be transported and other hidden costs such as insurance premiums. Air transport, though expensive, is the most efficient for transportation of light, valuable and perishable goods. Rail transport is the economical in transit of bulky goods over a long distance while road transport for short distance deliveries.

• Location of destination

Road and rail are mostly used for local transport while air and maritime transport are most efficient for international transits. For instance if the destination of goods is in another continent, then road and rail are eliminated from the options.