ITS0806.ppt

Semester 1, 2008Semester 1, 2008 J.FeiJ.Fei AMCAMC

International Transport Systems (M06)International Transport Systems (M06)

• Organisation of this unitOrganisation of this unit

Part one

Transport economics – Module 2

Transport modes – Module 3

Transport Terminals

– Module 4

Part three

International transport market– Module 8

Transport marketing and public relations– Module 9

An overview – Module 1

Part two

Global transport system– Module 5

Transport and logistics– Module 6

Transport and IT– Module 7

Part four

Transport development – Module 10

Current issues – Module 11

Transport policy and regulation – Module 12


• Learning objectivesLearning objectives

– Discuss the concept of logistics and explain the need for Discuss the concept of logistics and explain the need for logistics in the distribution systemlogistics in the distribution system

– Explain the need for integration of the links in the logistics Explain the need for integration of the links in the logistics chainchain

– Explain the difference between logistics and supply chain Explain the difference between logistics and supply chain managementmanagement

– Discuss logistics in the global scaleDiscuss logistics in the global scale– Explain the role of transport in the logistics chainExplain the role of transport in the logistics chain




Transport and logisticsTransport and logistics

– Feature of logisticsFeature of logistics• Definitions:Definitions:• Logistics for an organisationLogistics for an organisation• Typical logistics network – physical distributionTypical logistics network – physical distribution• Logistics and supply chain management Logistics and supply chain management

– Transport as part of a distribution systemTransport as part of a distribution system• JITJIT

• Third party logistics (3PL) Third party logistics (3PL)

• Integrated logistics and transportIntegrated logistics and transport

• The role of transport in logisticsThe role of transport in logistics



Transport and logisticsTransport and logistics– Feature of logisticsFeature of logistics

• Definitions: Definitions:

a) the entire process of materials and products moving a) the entire process of materials and products moving into, through, and out of a firm. into, through, and out of a firm.

b) the process of anticipating customer needs and wants; b) the process of anticipating customer needs and wants; acquiring the capital, materials, people, technologies, acquiring the capital, materials, people, technologies, and information necessary to meet those needs and and information necessary to meet those needs and wants; optimising the goods- or service-producing wants; optimising the goods- or service-producing network to fulfil customer requests; and utilising the network to fulfil customer requests; and utilising the network to fulfil customer requests in a timely way. network to fulfil customer requests in a timely way.

c) the management of supply chain in commerce and c) the management of supply chain in commerce and industry. Logistics management has three constituent industry. Logistics management has three constituent elements; namely, procurement logistics, production elements; namely, procurement logistics, production logistics and distribution logistics. logistics and distribution logistics.



– Feature of logisticsFeature of logistics• Logistics for an organisation:Logistics for an organisation:

Inventories of raw materials

Inventories of finished products

Procurement

Distribution

Internal transport

External flow of goods that must be

organised and monitored







The relationship between the supplier and the The relationship between the supplier and the demander:demander:

Four flows between the two nodesFour flows between the two nodes


International Transport Systems (M06)International Transport Systems (M06)– Feature of logisticsFeature of logistics

• Logistics for an organisation:Logistics for an organisation:The relationship between the supplier and the demander:The relationship between the supplier and the demander:

The transaction flowThe transaction flow



– Feature of logisticsFeature of logistics• Typical logistics network – physical distribution Typical logistics network – physical distribution



– Feature of logisticsFeature of logistics• Logistics and supply chain managementLogistics and supply chain management

Logistics is responsible for managing the physical flow of Logistics is responsible for managing the physical flow of products including transport and warehousing, and information products including transport and warehousing, and information flow. flow.

Supply chain management integrates product, information and Supply chain management integrates product, information and cash flows among organisations from the point of origin to the cash flows among organisations from the point of origin to the point of consumption, with the goal of maximising customer point of consumption, with the goal of maximising customer satisfaction and minimising costssatisfaction and minimising costs

Logistics management is part of supply chain management. Logistics management is part of supply chain management.



– Transport as part of a distribution systemTransport as part of a distribution system• JIT (Just-In-Time): to reduce costs and risks associated with storage JIT (Just-In-Time): to reduce costs and risks associated with storage

of materials by timing the system such that the materials arrive at of materials by timing the system such that the materials arrive at a facility just as they are needed in a process. This requires a facility just as they are needed in a process. This requires intricate and efficient timing of shipment. intricate and efficient timing of shipment.

• Integrated logistics: the integration of following activities: Integrated logistics: the integration of following activities: – ProductionProduction– PackagingPackaging– HandlingHandling– Managing inventoryManaging inventory– WarehousingWarehousing– TransportTransport

Integrated logistics is characterised by the consolidation of goods in Integrated logistics is characterised by the consolidation of goods in larger and fewer locations throughout the trade system. Costs can be larger and fewer locations throughout the trade system. Costs can be reduced by the reduction of stock expenses and lead times. Handling reduced by the reduction of stock expenses and lead times. Handling costs are reduced by the use of modern equipment and automated costs are reduced by the use of modern equipment and automated facilities. facilities.



– Transport as part of a distribution systemTransport as part of a distribution system

• Third party logistics (3PL) Third party logistics (3PL)

Depending on the level of outsourcing (transactional, Depending on the level of outsourcing (transactional, tactical, and strategic), a 3PL performs activities such tactical, and strategic), a 3PL performs activities such as: as:

– Pick and packPick and pack– WarehousingWarehousing– DistributionDistribution– Tracking and tracingTracking and tracing

And : And : – Provides integrated IT system to facilitate free Provides integrated IT system to facilitate free

information flow and create supply chain visibility information flow and create supply chain visibility – Becomes partners in supply chain managementBecomes partners in supply chain management




• Why use 3PL?Why use 3PL?– To save time: free up resources to focus on firm’s To save time: free up resources to focus on firm’s

core competencycore competency– To do it better: use other’s expertise and achieve To do it better: use other’s expertise and achieve

economies of scaleeconomies of scale– To share responsibilities: keep stores and customers To share responsibilities: keep stores and customers

properly stocked, deliver orders in a perfect mannerproperly stocked, deliver orders in a perfect manner– To re-engineer distribution network: To re-engineer distribution network: logistics logistics

outsourcing can be a quick way to re-engineer outsourcing can be a quick way to re-engineer distribution networks to meet global market distribution networks to meet global market demands and gain a competitive edge. demands and gain a competitive edge.



– Transport as part of a Transport as part of a distribution systemdistribution system• Integrated logistics and Integrated logistics and

transporttransport

Integrated logistics Integrated logistics potentially creates higher potentially creates higher transport demands. Why? transport demands. Why?

Hub and spoke system!Hub and spoke system!

Goods often do not move Goods often do not move from the supplier to the from the supplier to the demander by the shortest demander by the shortest possible route. They go possible route. They go via a terminal – seaport, via a terminal – seaport, airport, road or rail airport, road or rail terminal – to be reloaded terminal – to be reloaded with goods from other with goods from other regions for distribution. regions for distribution.




• Integrated logistics managementIntegrated logistics management– Four factors shaped the development of integrated Four factors shaped the development of integrated

logistics distributionlogistics distribution

a)a) Scientific management: (advanced production Scientific management: (advanced production technology + increased marketing costs + distribution technology + increased marketing costs + distribution cost: 10-30% of total costs)cost: 10-30% of total costs)

b)b) Data processing technology: automated inventory Data processing technology: automated inventory control was realised. Computers allowed data to be control was realised. Computers allowed data to be entered once and reused for various purposes entered once and reused for various purposes including order tracking, production scheduling, including order tracking, production scheduling, shipping, invoicing, and analysis. shipping, invoicing, and analysis.

c)c) Customer satisfaction: get the product to the customer Customer satisfaction: get the product to the customer at the right time in the right quantity and with the right at the right time in the right quantity and with the right logistical support. logistical support.

d)d) Profit: profit leverage available from reduced logistics Profit: profit leverage available from reduced logistics costs. costs.



– Transport as part of a distribution systemTransport as part of a distribution system• Integrated logistics conceptIntegrated logistics concept

Vendor Customer Physical distribution

OperationsProcurement

30% 40%30%

Stage 2

Stage 3

Stage 1




• Integrated logistics conceptIntegrated logistics concept

– Stage 1 Physical distribution: integration of finished Stage 1 Physical distribution: integration of finished goods transport, warehousing, inventory management, goods transport, warehousing, inventory management, customer service (balance between costs and service)customer service (balance between costs and service)

– Stage 2 Internal linkages: join two or all three of the Stage 2 Internal linkages: join two or all three of the internal material flow loops so that 60% to 100% of the internal material flow loops so that 60% to 100% of the firm’s total inventory could be better managed, firm’s total inventory could be better managed, (elimination of buffer inventories between two loops, (elimination of buffer inventories between two loops, e.g. JIT)e.g. JIT)

– Stage 3 External linkages: search for efficiencies in Stage 3 External linkages: search for efficiencies in relationship with vendors, customers, and third parties. relationship with vendors, customers, and third parties. Development of Electronic Data Interchange (EDI), Just-Development of Electronic Data Interchange (EDI), Just-in-time (JIT), and Distribution Requirements Planning in-time (JIT), and Distribution Requirements Planning (DRP). (DRP).



– Transport as part of a distribution systemTransport as part of a distribution system• The role of transport in logisticsThe role of transport in logistics

The mismatch between the place of production and The mismatch between the place of production and demand due to labour specialisation, mass production demand due to labour specialisation, mass production and scale economies, creates the need for transport. and scale economies, creates the need for transport. Transport is the physical thread connecting the Transport is the physical thread connecting the company’s geographically dispersed operations. It adds company’s geographically dispersed operations. It adds value to the company by creating time and place utility. value to the company by creating time and place utility.

– Time compression: faster transit time minimises Time compression: faster transit time minimises pipeline inventories; time saved in delivery frees up pipeline inventories; time saved in delivery frees up time in other areas of the logistics chain; maximising time in other areas of the logistics chain; maximising inventory velocity (how many times inventory turns inventory velocity (how many times inventory turns per year, or the average number of days of inventory per year, or the average number of days of inventory on hand) and reducing dwell-time (average number on hand) and reducing dwell-time (average number of days inventory sits idle in the pipeline). of days inventory sits idle in the pipeline).



– Transport as part of a distribution systemTransport as part of a distribution system• The role of transport in logisticsThe role of transport in logistics

– Reliability: reliable and consistent delivery, absence Reliability: reliable and consistent delivery, absence of shipment loss and damage. of shipment loss and damage.

– Standardisation of processes, practices, and policies Standardisation of processes, practices, and policies reduces risk, time and labour costs. reduces risk, time and labour costs.

– JIT delivery and information supportJIT delivery and information support– Flexibility: for special nonrecurring, non-standard, or Flexibility: for special nonrecurring, non-standard, or

emergency situations, altered shipment plans or rush emergency situations, altered shipment plans or rush shipment can be provided. shipment can be provided.

– Customisation: provision of customised services, e.g. Customisation: provision of customised services, e.g. carrier-managed inventory reordering, labelling etc. carrier-managed inventory reordering, labelling etc.

* The performance of transport is a major determinant * The performance of transport is a major determinant of the efficiency of the whole logistic/supply chain of the efficiency of the whole logistic/supply chain and eventually determines the competitiveness of and eventually determines the competitiveness of the organisations within the chain.the organisations within the chain.

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ITS0806.ppt