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Logistics is the management of the flow of resources between the point of origin and the point of destination in order

to meet some requirements, for example, of customers or corporations. The resources managed in logistics can include physical items, such as food, materials, equipment, liquids, and staff, as well as abstract items, such as time, information, particles, and energy. The logistics of physical items usually involves the integration of information flow, material handling, production, packaging, inventory, transportation, warehousing, and often security. The complexity of logistics can be modeled, analyzed, visualized, and optimized by dedicated simulation software. The minimization of the use of resources are common motives.

Origins and definition


The term logistics comes from the late 19th century: from French logistique, from loger 'to lodge'.
[1]

Logistics is considered to have originated in the military's need to supply itself with arms, ammunition, and rations as it moved from a base to a forward position. In the ancient Greek, Roman, and Byzantine Empires, military officers with the title Logistikas were responsible for financial and supply distribution [citation needed] matters. The Oxford English Dictionary defines logistics as "the branch of military science relating to procuring, maintaining and transporting material, personnel and facilities." However, the New Oxford American Dictionary defines logistics as "the detailed coordination of a complex operation involving many people, facilities, or supplies", and the Oxford Dictionary online defines it as "the detailed organization and [2] implementation of a complex operation". Another dictionary definition is "the time-related positioning of resources." As such, logistics is commonly seen as a branch of engineering that creates "people systems" rather than "machine systems". According to the Council of Logistics Management, logistics includes the integrated planning, control, realization, and monitoring of all internal and network-wide material, part, and product flow, including the necessary information flow, in industrial and trading companies along the complete value-added chain (and product life cycle) for the purpose of conforming to customer requirements. Logistics is the process of planning, implementing, and controlling the effective and efficient flow of goods and services from the point of origin to the point of consumption. [edit]Main

logistics targets

Logistics is one of the main functions within a company. The main targets of logistics can be divided into performance-related and cost-related targets. A few examples are high due date reliability, short delivery times, low inventory level, and high utilization of capacity. When decisions are made, there is a trade-off between targets. [edit]Logistics

viewpoints

Inbound logistics is one of the primary processes of logistics, concentrating on purchasing and arranging the inbound movement of materials, parts, and/or finished inventory from suppliers to manufacturing or assembly plants, warehouses, or retail stores.

Outbound logistics is the process related to the storage and movement of the final product and the related information flows from the end of the production line to the end user. [edit]Logistics

fields

Given the services performed by logisticians, the main fields of logistics can be broken down as follows: Procurement logistics Production logistics Distribution logistics After sales logistics Disposal logistics Reverse logistics Global logistics Domestics logistics

Procurement logistics consists of activities such as market research, requirements planning, make-orbuy decisions, supplier management, ordering, and order controlling. The targets in procurement logistics might be contradictory: maximizing efficiency by concentrating on core competences, outsourcing while maintaining the autonomy of the company, or minimizing procurement costs while maximizing security within the supply process. Production logistics connects procurement to distribution logistics. Its main function is to use available production capacities to produce the products needed in distribution logistics. Production logistics activities are related to organizational concepts, layout planning, production planning, and control. Distribution logistics has, as main tasks, the delivery of the finished products to the customer. It consists of order processing, warehousing, and transportation. Distribution logistics is necessary because the time, place, and quantity of production differs with the time, place, and quantity of consumption. Disposal logistics has as its main function to reduce logistics cost(s) and enhance service(s) related to the disposal of waste produced during the operation of a business. Reverse logistics denotes all those operations related to the reuse of products and materials. The reverse logistics process includes the management and the sale of surpluses, as well as products being returned to vendors from buyers. [edit]Military

logistics

Main article: Military logistics In military science, maintaining one's supply lines while disrupting those of the enemy is a crucialsome would say the most crucialelement of military strategy, since an armed force without resources and transportation is defenseless. The defeat of the British in the American War of Independence and the [citation needed] defeat of the Axis in the African theatre of World War II are attributed to logistical failures. The historical leaders Hannibal Barca, Alexander the Great, Freighnk Nieman, and the Duke of Wellington are considered to have been logistical geniuses. Militaries have a significant need for logistics solutions and so have developed advanced implementations. Integrated Logistics Support (ILS) is a discipline used in military industries to ensure an

easily supportable system with a robust customer service (logistic) concept at the lowest cost and in line with (often high) reliability, availability, maintainability, and other requirements, as defined for the project. In military logistics, logistics officers manage how and when to move resources to the places they are needed. Supply chain management in military logistics often deals with a number of variables in predicting cost, deterioration, consumption, and future demand. The United States Armed Forces' categorical supply classification was developed in such a way that categories of supply with similar consumption variables are grouped together for planning purposes. For instance, peacetime consumption of ammunition and fuel will be considerably lower than wartime consumption of these items, whereas other classes of supply such as subsistence and clothing have a relatively consistent consumption rate regardless of war or peace. Some classes of supply have a linear demand relationship: as more troops are added, more supply items are needed; or as more equipment is used, more fuel and ammunition are consumed. Other classes of supply must consider a third variable besides usage and quantity: time. As equipment ages, more and more repair parts are needed over time, even when usage and quantity stays consistent. By recording and analyzing these trends over time and applying them to future scenarios, the US Armed Forces can [3] accurately supply troops with the items necessary at the precise moment they are needed. History has shown that good logistical planning creates a lean and efficient fighting force. The lack thereof can lead to a clunky, slow, and ill-equipped force with too much or too little supply.

Business logistics

A forklift stacking a logistics provider's warehouse of goods on pallets.

One definition of business logistics speaks of "having the right item in the right quantity at the right time at [4] the right place for the right price in the right condition to the right customer". As the science of [citation needed] process , business logistics incorporates all industry sectors. Logistics work aims to manage the fruition of project life cycles, supply chains, and resultant efficiencies. Logistics as a business concept evolved in the 1950s due to the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain, leading to a call for experts called "supply chain logisticians". In business, logistics may have either an internal focus (inbound logistics) or an external focus (outbound logistics), covering the flow and storage of materials from point of origin to point of consumption
[citation needed]

(see supply-chain management). The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation, and the organizing and planning of these activities. Logisticians combine a professional knowledge of each of these functions to coordinate resources in an organization. There are two fundamentally different forms of logistics: one optimizes a steady flow of material through a network of transport links and storage nodes, while the other coordinates a sequence of resources to carry out some project. [edit]Production

logistics

The term production logistics describes logistic processes within an industry. Production logistics aims to ensure that each machine and workstation receives the right product in the right quantity and quality at the right time. The concern is not the transportation itself, but to streamline and control the flow through value-adding processes and to eliminate nonvalue-adding processes. Production logistics can operate in [citation existing as well as new plants. Manufacturing in an existing plant is a constantly changing process. needed] Machines are exchanged and new ones added, which gives the opportunity to improve the production logistics system accordingly. Production logistics provides the means to achieve customer response and capital efficiency. Production logistics becomes more important with decreasing batch sizes. In many industries (e.g., mobile phones), the short-term goal is a batch size of one, allowing even a single customer's demand to be fulfilled efficiently. Track and tracing, which is an essential part of production logistics due to product safety and reliability issues, is also gaining importance, especially in theautomotive and medical industries. [edit]Logistics

management

Main article: Logistics Management Logistics is that part of the supply chain that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customer and legal requirements.{{citation needed|own by many names, including: Materials management Channel management Distribution (or physical distribution) Supply-chain management

The Chartered Institute of Logistics and Transport (CILT), established in the United Kingdom in 1919, received a Royal Charter in 1926. The Chartered Institute is one of the professional bodies or institutions for the logistics and transport sectors that offers professional qualifications or degrees in logistics management. [edit]Warehouse

management systems and warehouse control systems

Main articles: Warehouse management system and Warehouse control system Although there is some overlap in functionality, warehouse management systems (WMS) can differ significantly from warehouse control systems (WCS). Simply put, a WMS plans a weekly activity forecast

based on such factors as statistics and trends, whereas a WCS acts like a floor supervisor, working in real time to get the job done by the most effective means. For instance, a WMS can tell the system that it is going to need five of stock-keeping unit (SKU) A and five of SKU B hours in advance, but by the time it acts, other considerations may have come into play or there could be a logjam on a conveyor. A WCS can prevent that problem by working in real time and adapting to the situation by making a last-minute decision based on current activity and operational status. Working synergistically, WMS and WCS can resolve these issues and maximize efficiency for companies that rely on the effective operation of their [5] warehouse or distribution center. [edit]Logistics

automation

Main article: Logistics automation Logistics automation is the application of computer software and/or automated machinery to improve the efficiency of logistics operations. Typically this refers to operations within a warehouse or distribution center, with broader tasks undertaken by supply chain management systems and enterprise resource planning systems. [edit]Logistics

outsourcing

Logistics outsourcing involves a relationship between a company and an LSP (logistic service provider), which, compared with basic logistics services, has more customized offerings, encompasses a broad [6] number of service activities, is characterized by a long-term orientation, and thus has a strategic nature. [edit]Third-party

logistics

Main article: Third-party logistics Third-party logistics (3PL) involves using external organizations to execute logistics activities that have [7] traditionally been performed within an organization itself. According to this definition, third-party logistics includes any form of outsourcing of logistics activities previously performed in house. For example, if a company with its own warehousing facilities decides to employ external transportation, this would be an example of third-party logistics. Logistics is an emerging business area in many countries. [edit]Fourth-party

logistics

The concept of a fourth-party logistics (4PL) provider was first defined by Andersen Consulting (now Accenture) as an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions. Whereas a third-party logistics (3PL) service provider targets a single function, a 4PL targets management of the entire process. Some have described a 4PL as a general contractor that manages other 3PLs, truckers, forwarders, custom house agents, and others, essentially taking responsibility of a complete process for the customer. [edit]Emergency

logistics

Emergency logistics is a term used by the logistics, supply chain, and manufacturing industries to denote specific time-critical modes of transport used to move goods or objects rapidly in the event of an [citation needed] emergency. The reason for enlisting emergency logistics services could be a production delay or anticipated production delay, or an urgent need for specialized equipment to prevent events such as

aircraft being grounded (also known as "aircraft on ground"AOG), ships being delayed, or telecommunications failure. Emergency logistics services are typically sourced from a specialist provider.

Logistic automation:
Logistics automation is the application of computer software and/or automated machinery to improve the efficiency of logistics operations. Typically this refers to operations within a warehouse or distribution center, with broader tasks undertaken by supply chain management systems and enterprise resource planning systems. Logistics automation systems can powerfully complement the facilities provided by these higher level computer systems. The focus on an individual node within a wider logistics network allows systems to be highly tailored to the requirements of that node.

Components

Factory automation with KUKA industrial robots for palletizing food products like bread and toast at a bakery in Germany

Logistics automation systems comprise a variety of hardware and software components: Fixed machinery Automated cranes (also called automated storage and retrieval systems): provide the ability to input and store a container of goods for later retrieval. Typically cranes serve a rack of locations, allowing many levels of stock to be stacked vertically, and allowing far high storage densities and better space utilization than alternatives.

Conveyors: automated conveyors allow the input of containers in one area of the warehouse, and either through hard coded rules or data input allow destination selection. The container will later appear at the selected destination.

Sortation, or sorting systems: similar to conveyors but typically have higher capacity and can divert containers more quickly. Typically used to distribute high volumes of small cartons to a large set of locations.

Industrial Robots: four to six axis industrial robots, e.g. palletizing robots, are used for palletizing, depalletizing, packaging, commissioning and order picking.

Typically all of these will automatically identify and track containers based upon barcodes, or increasingly, RFIDtags

AS/RS Automated Storage and Retrieval Systems. Vertical Carousels based on the paternoster system or with space optimisation, these can be thought of as large scale vending machines, giving the same easy access to physical objects as we have become accustomed to with respect to data.

Motion check weighers may be used to reject cases or individual products by checking them for underweight conditions and rejecting the item. They are often used in kitting conveyor lines to ensure all pieces belonging in the kit are present. Large wholesalers and retail club stores insist on receiving the exact amount of product in each package as specified. Mobile technology Radio data terminals: these are hand held or truck mounted terminals which connect by wireless to logistics automation software and provide instructions to operators moving throughout the warehouse. Many also have in-built bar code scanners to allow identification of containers. Bar codes allow the automatic capture of data without use of the computer keyboard, which is slow and error prone.

Software Integration software: this provides overall control of the automation machinery and for instance allows cranes to be connected to conveyors for seamless stock movements. Operational control software: provides low-level decision making, such as where to store incoming containers, and where to retrieve them when requested. Business Control software: provides higher level functionality, such as identification of incoming deliveries / stock and scheduling order fulfillment, assignment of stock to outgoing trailers.

[edit]Benefits

of logistics automation

A typical warehouse or distribution center will receive stock of a variety of products from suppliers and store these until the receipt of orders from customers, whether individual buyers (e.g. mail order), retail branches (e.g. chain stores), or other companies (e.g. wholesalers). A logistics automation system may provide the following:

Automated goods in processes: Incoming goods can be marked with barcodes and the automation system notified of the expected stock. On arrival, the goods can be scanned and thereby identified, and taken via conveyors, sortation systems, and automated cranes into an automatically assigned storage location. Automated Goods Retrieval for Orders: On receipt of orders, the automation system is able to immediately locate goods and retrieve them to a pickface location. Automated despatch processing: Combining knowledge of all orders placed at the warehouse the automation system can assign picked goods into despatch units and then into outbound loads. Sortation systems and conveyors can then move these onto the outgoing trailers. If needed, repackaging to ensure proper protection for further distribution or to change the package format for specific retailers/customers.

A complete warehouse automation system can drastically reduce the workforce required to run a facility, with human input required only for a few tasks, such as picking units of product from a bulk packed case. Even here, assistance can be provided with equipment such as pick-to-light units. Smaller systems may only be required to handle part of the process. Examples include automated storage and retrieval systems, which simply use cranes to store and retrieve identified cases or pallets, typically into a highbay storage system which would be unfeasible to access using fork-lift trucks or any other means.

Green logistics describes all attempts to measure and minimize the ecological impact of logistics activities. This includes all activities of the forward and reverse flows of products, information and services between the point of origin and the point of consumption. It is the aim to create a sustainable company value using a balance of economic and environmental efficiency. Green logistics have its origin in the mid 1980s and was a concept to characterize logistics systems and approaches that use advanced technology and equipment to minimize environmental damage during operations.

[1]

Demand for action

3 main sections of green logistics

Organisations have to face changing circumstances for several years. In addition to increasing diversity and dynamics, environmental issues become more important. Social, political and economic demands for sustainable development force organizations to reduce the impact on the environment of their supply chains and to develop sustainable transport and supply chain strategies.[2] There are strong interactions between logistics, environment and natural resources. In addition, the approach of logistics is interdisciplinary, holistic and cross-company. Realising environmental objectives can be done in synergy with other strategic and financial goals. This is the basis of the great potential of this new logistics problem and challenge.[3]
[edit]Ecological

concern

The "ecological concern" in logistics determines how far the logistics or the supply chain of a company is faced with the issue of environmental protection and resource conservation. Basically, a supply chain is affected of various influencing factors in this context. The main influencing factors are the stakeholders of the organization and the rising costs of energy and commodity.[4] Some of the key stakeholders in this context:

The state with growing international and national regulations Customers and consumer with increasing awareness and demand for ecofriendly products and (logistics) services. Employees who want to work in an environmentally and socially responsible company Society with increasing claims for more corporate social responsibility (CSR). Companies themselves; dealing with their own motivation

There is also the pressure of lenders, investors, insurers and investors. Indications of this are new forms of investment in the capital market, such as the Dow Jones Sustainability Index, that tracks the stock performance of the world's leading companies in terms of economic, environmental and social criteria.[5] The dimension of ecological concern of a company is the product of these complex and varying factors.
[edit]Approaches

Logistics has a whole range of measures to protect the environment and resources. Some are new, others long-known. These actions can be assigned to different levels - maturity, range, scope, capital expenditure and resource requirements.

Corresponding to the holistic approach of green logistics, logistics has five starting points to implement measures for environmental protection and resource conservation:

customer, market and product (level 1) structures and planning (Level 2) processes, control and measurement (level 3) technologies and resources (level 4) employees, suppliers and service providers (level 5)

Examples:[6]

More efficient packing Route optimization Load optimization Formation of corporate networks, which are connected by logistics service Optimizing physical logistics processes by providing a sophisticated IT support

The first four levels form a hierarchy and influence each other sequentially. Decisions on one level define the scope for further decisions on the following levels. Decisions at higher levels reduce the freedom for the following levels. Example: The determination of the packing mass of a product on the Level one defines the volume and weight of a product and therefore the maximum number of items per carrier (e.g. container). Thus, the decision made on level one influences the maximum capacity of a container. The impacts on the environment - as CO2 emissions per transported product therefore are strongly influenced by the decisions made on level one. But also decisions made on levels two and three, such as route optimization have an impact on CO2 emissions.[7]

Document automation : Document automation (also known as document assembly) is the design of systems and workflows that assist in the creation of electronic documents. These include logic based systems that use segments of pre-existing text and/or data to assemble a new document. This process is increasingly used within certain industries to assemble legal documents, contracts and letters. Document automation systems can also be used to automate all conditional text, variable text, and data contained within a set of documents. Automation systems allow companies to minimize data entry, reduce the time spent proof-reading, and reduce the risks associated with human error. Additional benefits include: savings due to decreased paper handling, document loading, storage, distribution, postage/shipping, faxes, telephone, labour and waste.

Document assembly
Document assembly was pioneered in the late 1970s in Utah by the company that would later become known as HotDocs. The basic functions are to replace the cumbersome manual filling in of repetitive documents with template-based systems where the user answers software-driven interview questions or data entry screen. The information collected then populates the document to form a good first [1] draft'. Today's more advanced document automation systems allow users to create their own data and rules (logic) without the need for programming. While document automation software is used primarily in the legal, financial services, and risk management industries, it can be used in any industry that creates transaction-based documents. Popular document automation solutions on the market today include HotDocs, Business Integrity, Inforama, Exari, Intelledox, Rapidocs, TheFormTool, Xpertdoc, XpressDox, ActiveDocs and dox42. A good example of how document automation software can be used is with commercial mortgage documents. A typical commercial mortgage transaction can include several documents including: promissory note environmental indemnity trust deed mortgage guaranty

Some of these documents can contain as many as 80 to 100 pages, with hundreds of optional paragraphs and data elements. Document automation software has the ability to automatically fill in the correct document variables based on the transaction data. In addition, some document automation software has the ability to create a document suite where all related documents are encapsulated into one file, making updates and collaboration easy and fast. Simpler software applications that are easier to learn can also be used to automate the preparation of documents, without undue complexity. Clipboard managers such as textBEAST allow the user to save frequently-used text fragments, organize them into logical groups, and then quickly access them to paste into final documents. [edit]In

supply chain management

There are many documents used in logistics. They are called: invoices, packing lists/slips/sheets (manifests), content lists, pick tickets, forms/reports of many types (e.g. MSDS, damaged goods, returned goods, detailed/summary, etc.), import/export, delivery, bill of lading (BOL), etc. These documents are usually the contracts between the consignee and the consignor, so they are very important for both parties and any intermediary, like a third party logistics company (3PL) and governments. Document handling within logistics, supply chain management anddistribution centers is usually performed manual labor or semi-automatically using bar code scanners, software and tabletop laser printers. There are some manufacturers of high speed document automation systems that will automatically compare the laser printed document to the order and either insert or automatically apply an enclosed wallet/pouch to the shipping container (usually a flexible polybag or corrugated fiberboard/rigid container). See below for external website video links showing these document

automation systems. Protection of Privacy and Identity Theft are major concerns, especially with the increase of e-Commerce, Internet/Online shopping and Shopping channel (other, past references are catalogue and mail order shopping) making it more important than ever to guarantee the correct document is married or associated to the correct order or shipment every time. Software that produce documents are; ERP, WMS, TMS, legacymiddleware and most accounting packages. A number of research projects have looked into wider standardisation and automation of documents in the freight [2][3] industry. [edit]In

legal services

The role of automation technology in the production of legal documents has been widely recognised. For example, Richard Susskinds book The End of Lawyers looks at the use of document automation software that enables clients to generate employment contracts and Wills with the use of an online [4] interview or decision tree. Susskind regards Document Assembly as one of 10 'disruptive technologies' [5] that are altering the face of the legal profession. In large law firms document assembly systems are increasingly being used to systemise work, such as complex term sheets and the first drafts of credit [6][7] agreements. With the liberalisation of the UK legal services market spearheaded by the Legal Services Act 2007 large [8][9] institutions have broadened their services to include legal assistance for their customers. Most of these companies use some element of document automation technology to provide legal document [10] services over the Web. This has been seen as heralding a trend towards commoditisation whereby technologies like document automation result in high volume, low margin legal services being packaged [11][12][13] and provided to a mass-market audience. [edit]In

insurance

Insurance policies and certificates, depending on the type, policy can also be hundreds of pages long and include specific information on the insured. Typically, in the past, these insurance document packets were created by a) typing out free-form letters, b) adding pre-printed brochures c) editing templates and d) customizing graphics with the required information, then manually sorting and inserting all the documents into one packet and mailing them to the insured. The various documents included in one packet could include the following kinds of documents: Welcome letter Contract Certificate State specific policy documents Listing of items insured and insurance amounts Amendments Riders ID card Company information Marketing material (other products)

A lot of work can go into putting on packet together. In most policy admin systems, the system will generate some kind of policy statement as a starting point, but might need to be customized and enhanced with other required materials. Document automation softwaer was used to automate insurance policy documents, and was installed at World Insurance, Woodmen of the World, Universal Underwriters Group in the insurance market. Other systems included Document Sciences, Docucorp, Insystems, EMC and Adobe LiveCycle products. [edit]Vendors Vendors of document automation systems include Business Integrity, HotDocs, Epoq Group, Exari, Pathagoras, Intelledox, TheFormTool,PSIengineering Xpertdoc, dox42 and Exstream Software. "Freight" redirects here. For the price paid in a voyage charter, see Freight rate.

Cargo being unloaded from a ship using acargo net at Haikou New Port, Haikou City,Hainan, China

Cargo (or freight) is goods or produce transported, generally for commercial gain, by ship or aircraft, although the term is now extended to intermodaltrain, van or truck. In modern times, containers are used in most long-haul cargo transport.

Transportation types

[edit]Marine

Container ship at the Port of Helsinki in Finland

Seaport terminals handle a wide range of maritime cargo. Automobiles are handled at many ports and are usually carried on specialized roll-on/roll-off ships. Break bulk cargo is typically material stacked on pallets and lifted into and out of the hold of a vessel by cranes on the dock or aboard the ship itself. The volume of break bulk cargo has declined dramatically worldwide as containerization has grown. One way to secure break bulk and freight in intermodal containers is by using Dunnage Bags. Bulk cargo, such as salt, oil, tallow, and scrap metal, is usually defined as commodities that are neither on pallets nor in containers. Bulk cargoes are not handled as individual pieces, the way heavy-lift and project cargoes are. Alumina, grain, gypsum, logs, and wood chips, for instance, are bulk cargoes. Neo-bulk cargo comprises individual units that are counted as they are loaded and unloaded, in [1] contrast to bulk cargo that is not counted, but that are not containerized. Containers are the largest and fastest growing cargo category at most ports worldwide. Containerized cargo includes everything from auto parts,machinery and manufacturing components to shoes and toys to frozen meat and seafood. Project cargo and the heavy lift cargo include items like manufacturing equipment, air conditioners, factory components, generators, wind turbines, military equipment, and almost any other oversized or overweight cargo which is too big or too heavy to fit into a container.

[edit]Air

Cargolux Boeing 747-400F with the nose loading door open

Main article: Air Cargo Air cargo, commonly known as air freight, is collected by firms from shippers and delivered to customers. Aircraft were first used for carrying mail as cargo in 1911. Eventually manufacturers started designing aircraft for other types of freight as well. There are many commercial aircraft suitable for carrying cargo such as the Boeing 747 and the bigger An-124, which was purposely built for easy conversion into a cargo aircraft. Such large aircraft employ quick-loading containers known as unit load devices (ULDs), much like containerized cargo ships. The ULDs are located in the front section of the aircraft. Most nations own and utilize large numbers of military cargo aircraft such as the C-17 Globemaster III for logistical needs. [edit]Train Main article: Freight train

A picture of a P&O Nedlloydinter-modal freight well car atBanbury station in the year 2001

Trains are capable of transporting large numbers of containers that come from shipping ports. Trains are also used for the transportation of steel, wood and coal. They are used because they can carry a large amount and generally have a direct route to the destination. Under the right circumstances, freight transport by rail is more economic and energy efficient than by road, especially when carried in bulk or over long distances. The main disadvantage of rail freight is its lack of flexibility. For this reason, rail has lost much of the freight business to road transport. Rail freight is often subject to transshipment costs, since it must be transferred from one mode of transportation to another. Practices such as containerization aim at minimizing these costs. Many governments are currently trying to encourage shippers to use trains more often because of the [2] environmental benefits. [edit]Road Main article: Truck

Many firms, like Parcelforce, FedEx and R+L Carriers transport all types of cargo by road. Delivering everything from letters to houses to cargo containers, these firms offer fast, sometimes sameday, delivery. A good example of road cargo is food, as supermarkets require deliveries every day to keep their shelves stocked with goods. Retailers of all kinds rely upon delivery trucks, be they full size semi trucks or smaller delivery vans. [edit]Shipment

categories

Freight is usually organized into various shipment categories before it is transported. An item's category is determined by: the type of item being carried. For example, a kettle could fit into the category 'household goods'. how large the shipment is, in terms of both item size and quantity. how long the item for delivery will be in transit.

Shipments are typically categorized as household goods, express, parcel, and freight shipments: Household goods (HHG) include furniture, art and similar items. Very small business or personal items like envelopes are considered overnight express or express letter shipments. These shipments are rarely over a few kilograms or pounds and almost always travel in the carriers own packaging. Express shipments almost always travel some distance by air. An envelope may go coast to coast in the United States overnight or it may take several days, depending on the service options and prices chosen by the shipper. Larger items like small boxes are considered parcels or ground shipments. These shipments are rarely over 50 kg (110 lb), with no single piece of the shipment weighing more than about 70 kg (154 lb). Parcel shipments are always boxed, sometimes in the shippers packaging and sometimes in carrier-provided packaging. Service levels are again variable but most ground shipments will move about 800 to 1,100 kilometres (497 to 684 mi) per day. Depending on the origin of the package, it can travel from coast to coast in the United States in about four days. Parcel shipments rarely travel by air and typically move via road and rail. Parcels represent the majority of business-to-consumer (B2C) shipments. Beyond HHG, express, and parcel shipments, movements are termed freight shipments.

[edit]Less-than-truckload

freight

Main article: Less than truckload shipping Less than truckload (LTL) cargo is the first category of freight shipment, which represents the majority of freight shipments and the majority of business-to-business (B2B) shipments. LTL shipments are also often referred to as motor freight and the carriers involved are referred to as motor carriers. LTL shipments range from 50 to 7,000 kg (110 to 15,000 lb), being less than 2.5 to 8.5 m (8 ft 2.4 in to 27 ft 10.6 in) the majority of times. The average single piece of LTL freight is 600 kg (1,323 lb) and the

size of a standard pallet. Long freight and/or large freight are subject to extreme length and cubic capacity surcharges. Trailers used in LTL can range from 28 to 53 ft (8.53 to 16.15 m). The standard for city deliveries is usually 48 ft (14.63 m). In tight and residential environments the 28 ft (8.53 m) trailer is used the most. The shipments are usually palletized, stretch [shrink]-wrapped and packaged for a mixed-freight environment. Unlike express or parcel, LTL shippers must provide their own packaging, as carriers do not provide any packaging supplies or assistance. However, circumstances may require crating or other substantial packaging. [edit]Air

freight

Air freight shipments are very similar to LTL shipments in terms of size and packaging requirements. However, air freight or air cargo shipments typically need to move at much faster speeds than 800 km or 497 mi per day. Air shipments may be booked directly with the carriers, through brokers or with online marketplace services. While shipments move faster than standard LTL, air shipments dont always actually move by air. [edit]Truckload

freight

In the United States, shipments larger than about 7,000 kg (15,432 lb) are typically classified as truckload (TL) freight. This is because it is more efficient and economical for a large shipment to have exclusive use of one larger trailer rather than share space on a smaller LTL trailer. By the Federal Bridge Gross Weight Formula he total weight of a loaded truck (tractor and trailer, 5-axle rig) cannot exceed 36,000 kg (79,366 lb) in the United States. In ordinary circumstances, long-haul equipment will weigh about 15,000 kg (33,069 lb), leaving about 20,000 kg (44,092 lb) of freight capacity. Similarly a load is limited to the space available in the trailer, normally 48 ft (14.63 m) or 53 ft (16.15 m) long, 2.6 m (102.4 in) wide, 2.7 m (8 ft 10.3 in) high and 13 ft 6 in/4.11 m high over all. While express, parcel and LTL shipments are always intermingled with other shipments on a single piece of equipment and are typically reloaded across multiple pieces of equipment during their transport, TL shipments usually travel as the only shipment on a trailer. In fact, TL shipments usually deliver on exactly the same trailer as they are picked up on. [edit]Shipping

costs

Often, an LTL shipper may realize savings by utilizing a freight broker, online marketplace or other intermediary, instead of contracting directly with a trucking company. Brokers can shop the marketplace and obtain lower rates than most smaller shippers can obtain directly. In the LTL marketplace, intermediaries typically receive 50% to 80% discounts from published rates, where a small shipper may only be offered a 5% to 30% discount by the carrier. Intermediaries are licensed by the DOT and have requirements to provide proof of insurance. Truckload (TL) carriers usually charge a rate per kilometre or mile. The rate varies depending on the distance, geographic location of the delivery, items being shipped, equipment type required, and service times required. TL shipments usually receive a variety of surcharges very similar to those described for LTL shipments above. In the TL market, there are thousands more small carriers than in the LTL market. Therefore, the use of transportation intermediaries or brokers is extremely common.

Another cost-saving method is facilitating pickups or deliveries at the carriers terminals. By doing this, shippers avoid any accessorial fees that might normally be charged for liftgate, residential pickup/delivery, inside pickup/delivery, or notifications/appointments. Carriers or intermediaries can provide shippers with the address and phone number for the closest shipping terminal to the origin and/or destination. Shipping experts optimize their service and costs by sampling rates from several carriers, brokers and online marketplaces. When obtaining rates from different providers, shippers may find quite a wide range in the pricing offered. If a shipper in the United States uses a broker, freight forwarder or other transportation intermediary, it is common for the shipper to receive a copy of the carrier's Federal [3] Operating Authority. Freight brokers and intermediaries are also required by Federal Law to be licensed by the Federal Highway Administration. Experienced shippers avoid unlicensed brokers and forwarders because if brokers are working outside the law by not having a Federal Operating License, the shipper has no protection in the event of a problem. Also, shippers normally ask for a copy of the broker's insurance certificate and any specific insurance that applies to the shipment. [edit]Security

concerns

Governments are very concerned with the shipment of cargo, as it may bring security risks to a country. Therefore, many governments have enacted rules and regulations, administered by acustoms agency, to the handling of cargo to minimize risks of terrorism and other crime. Of particular concern is cargo entering through a country's borders. The United States has been one of the leaders in securing cargo. They see cargo as a concern to national security. After the terrorist attacks of September 11th, the security of this magnitude of cargo has become highlighted on the over 6 million cargo containers enter the United States ports each [4] year. The latest US Government response to this threat is the CSI: Container Security Initiative. CSI is a program intended to help increase security for containerized cargo shipped to the United States from [5] around the world. Europe is also focusing on this issue, with a number of EU-funded projects [6] underway. [edit]Stabilization There are many different ways and materials available to stabilize and secure cargo in the various modes of transportation. Conventional load securing methods and materials such as steelstrapping and plastic/wood blocking & bracing have been used for decades and are still widely used. Present load securing methods offer several other options including polyester strapping and lashing, synthetic webbings and dunnage bags, also known as air bags or inflatable bags.

Application in container

Polyester Strapping and Dunnage Bag application

Polyester Lashing Application

Reverse logistics
From Wikipedia, the free encyclopedia

Reverse logistics stands for all operations related to the reuse of products and materials. It is "the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics." [1] The reverse logistics process includes the management and the sale of surplus as well as returned equipment and machines from the hardware leasing business. Normally, logistics deal with events that bring the product towards the customer. In the case of reverse logistics, the resource goes at least one step back in the supply chain. For instance, goods move from the customer to the distributor or to the manufacturer.[2] Lets look at an example; a manufacturer produces product A which moves through the supply chain network reaching the distributor or customer. Any process or management after the sale of product A involves Reverse Logistics. If product A happened to be defective the customer would return the product. The manufacturing firm would then have to organise shipping of the defective product, testing the product, dismantling, repairing, recycling or disposing the product. Product A will travel in reverse through the supply chain network in order to retain any use from the defective product. This is what reverse logistics is about.

Business implications
In today's marketplace, many retailers treat merchandise returns as individual, disjointed transactions. "The challenge for retailers and vendors is to process returns at a proficiency level that allows quick, efficient and cost-effective collection and return of merchandise. Customer requirements facilitate demand for a high standard of service that includes accuracy and timeliness. Its the logistic company's [3] responsibility to shorten the link from return origination to the time of resell." By following returns management best practices, retailers can achieve a returns process that addresses both the operational [4] and customer retention issues associated with merchandise returns. Further, because of the connection between reverse logistics and customer retention, it has become a key component within Service Lifecycle Management (SLM), a business strategy aimed at retaining customers by bundling even more coordination of a company's services data together to achieve greater efficiency in its operations. Reverse logistics is more than just returns management, it is "activities related to returns avoidance, [5] gatekeeping, disposal and all other after-market supply chain issues". Returns management increasingly being recognized as affecting competitive positioning provides an important link between marketing and logistics. The broad nature of its cross-functional impact suggests that firms would benefit by improving internal integration efforts. In particular, a firm's ability to react to and plan for the influence [6] of external factors on the returns management process is improved by such internal integration. Thirdparty logistics providers see that up to 7% of an enterprise's gross sales are captured by return costs. Almost all reverse logistics contracts are customized to fit the size and type of company contracting. The [7] 3PL's themselves realize 12% to 15% profits on this business. "Studies have shown that an average of 4% to 6% of all retail purchases are returned, costing the [8] industry about $40 billion per year." [edit]Return

of unsold goods

In certain industries, goods are distributed to downstream members in the supply chain with the understanding that the goods may be returned for credit if they are not sold. Newspapers and magazines serve as examples. This acts as an incentive for downstream members to carry more stock, because the risk of obsolescence is borne by the upstream supply chain members. However, there is also a distinct risk attached to this logistics concept. The downstream member in the supply chain might exploit the situation by ordering more stock than is required and returning large volumes. In this way, the downstream partner is able to offer high level of service without carrying the risks associated with large inventories. The supplier effectively finances the inventory for the downstream member. It is therefore important to analyze customers accounts for hidden costs. Refusal of the products in the cash on delivery process (COD) In case of e-commerce business, many websites offer the flexibility of Cash on delivery(COD) to the customer. Sometimes customer refuse the product at the time of delivery,as there is no commitment to take the product.Then the logistic service providers do follows the process of "Reverse logistics" on the refused cargo. It is also known as Return to origin (RTO).In this process the e-commerce company adds the refused cargo to its inventory stock [9] again, after proper quality checks as per the company's rules.

Supply chain management (SCM) is the management of a network of interconnected businesses involved in the provision of product and service packages required by the end [2] customers in a supply chain. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally." SCM draws heavily from the areas of operations management, logistics, procurement, information technology and strives for an integrated approach.

Origin of the term and definitions


The term "supply chain management" entered the public domain when Keith Oliver, a consultant at Booz Allen Hamilton, used it in an interview for the Financial Times in 1982. The term was slow to take hold and the lexicon was slow to change. It gained currency in the mid-1990s, when a flurry of articles and books came out on the subject. In the late 1990s it rose to prominence as a management buzzword, and operations managers began to use it in their titles with increasing regularity.[3][4][5] Common and accepted definitions of supply chain management are:

Managing upstream and down stream value added flow of materials, final goods and related information among suppliers; company; resellers; final consumers is supply chain management.

Supply chain management is the systematic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole (Mentzer et al., 2001).[6]

A customer focused definition is given by Hines (2004:p76) "Supply chain strategies require a total systems view of the linkages in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer. As a consequence costs must be lowered throughout the chain by driving out unnecessary costs and focusing attention on adding value. Throughput efficiency must be increased, bottlenecks removed and performance measurement must focus on total systems efficiency and equitable reward distribution to those in the supply chain adding value. The supply chain system must be responsive to customer requirements."[7]

Global supply chain forum - supply chain management is the integration of key business processes across the supply chain for the purpose of creating value for customers and stakeholders (Lambert, 2008).[8]

According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing,procurement, conversion, and logistics management. It also includes the crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. More recently, the loosely coupled, self-organizing network of businesses that cooperate to provide product and service offerings has been called the Extended Enterprise.

A supply chain, as opposed to supply chain management, is a set of organizations directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer. Managing a supply chain is 'supply chain management' (Mentzer et al., 2001).[6] Supply chain management software includes tools or modules used to execute supply chain transactions, manage supplier relationships and control associated business processes. Supply chain event management (abbreviated as SCEM) is a consideration of all possible events and factors that can disrupt a supply chain. With SCEM possible scenarios can be created and solutions devised. In many cases the supply chain includes the collection of goods after consumer use for recycling. Including 3PL or other gathering agencies as part of the RM re-patriation process is a way of illustrating the new end-game strategy.
[edit]Problems

addressed

Supply chain management must address the following problems:

Distribution Network Configuration: number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers. Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, direct store delivery (DSD), closed loop shipping; mode of transportation, e.g., motor carrier, including truckload, Less than truckload (LTL), parcel; railroad; intermodal transport, including trailer on flatcar (TOFC) and container on flatcar (COFC); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and

transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or third-party logistics (3PL)).

Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than LTL shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These tradeoffs are key to developing the most efficient and effective Logistics and SCM strategy.

Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc. Inventory Management: Quantity and location of inventory, including raw materials, work-inprocess (WIP) and finished goods. Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.

Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional.
[edit]Activities/functions

Supply chain management is a cross-function approach including in managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the endconsumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement. Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries. SCOR is a supply chain management model promoted by the Supply Chain Council. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain activities can be grouped into strategic, tactical, and operational levels. The CSCMP has adopted The American

Productivity & Quality Center (APQC) Process Classification FrameworkSM a high-level, industry-neutral enterprise process model that allows organizations to see their business processes from a cross-industry viewpoint.[9]
[edit]Strategic

Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities. Strategic partnerships with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics.

Product life cycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management activities. Segmentation of products and customers to guide alignment of corporate objectives with manufacturing and distribution strategy. Information technology chain operations. Where-to-make and make-buy decisions. Aligning overall organizational strategy with supply strategy. It is for long term and needs resource commitment.

[edit]Tactical level

Sourcing contracts and other purchasing decisions. Production decisions, including contracting, scheduling, and planning process definition. Inventory decisions, including quantity, location, and quality of inventory. Transportation strategy, including frequency, routes, and contracting. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. Milestone payments. Focus on customer demand and Habits.

[edit]Operational level

Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute). Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers.

Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory. Production operations, including the consumption of materials and flow of finished goods. Outbound operations, including all fulfillment activities, warehousing and transportation to customers. Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers. From production level to supply level accounting all transit damage cases & arrange to settlement at customer level by maintaining company loss through insurance company. Managing non-moving, short-dated inventory and avoiding more products to go short-dated.

[edit]Importance

Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy.[10] In Peter Drucker's (1998) new management paradigms, this concept of business relationships extends beyond traditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies. During the past decades, globalization, outsourcing and information technology have enabled many organizations, such as Dell and Hewlett Packard, to successfully operate solid collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities (Scott, 1993). This inter-organizational supply network can be acknowledged as a new form of organization. However, with the complicated interactions among the players, the network structure fits neither "market" nor "hierarchy" categories (Powell, 1990). It is not clear what kind of performance impacts different supply network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players. From a systems perspective, a complex network structure can be decomposed into individual component firms (Zhang and Dilts, 2004). Traditionally, companies in a supply network concentrate on the inputs and outputs of the processes, with little concern for the internal management working of other individual players. Therefore, the choice of an internal management control structure is known to impact local firm performance (Mintzberg, 1979). In the 21st century, changes in the business environment have contributed to the development of supply chain networks. First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances and business partnerships, significant success factors were identified, complementing the earlier "Just-In-Time", Lean

Manufacturing and Agile manufacturing practices.[11] Second, technological changes, particularly the dramatic fall in information communication costs, which are a significant component of transaction costs, have led to changes in coordination among the members of the supply chain network (Coase, 1998). Many researchers have recognized these kinds of supply network structures as a new organization form, using terms such as "Keiretsu", "Extended Enterprise", "Virtual Corporation", "Global Production Network", and "Next Generation Manufacturing System".[12] In general, such a structure can be defined as "a group of semi-independent organizations, each with their capabilities, which collaborate in ever-changing constellations to serve one or more markets in order to achieve some business goal specific to that collaboration" (Akkermans, 2001). The security management system for supply chains is described in ISO/IEC 28000 and ISO/IEC 28001 and related standards published jointly by ISO and IEC
[edit]Historical

developments

Six major movements can be observed in the evolution of supply chain management studies: Creation, Integration, and Globalization (Movahedi et al., 2009), Specialization Phases One and Two, and SCM 2.0.
[edit]Creation era

The term supply chain management was first coined by Keith Oliver in 1982. However, the concept of a supply chain in management was of great importance long before, in the early 20th century, especially with the creation of the assembly line. The characteristics of this era of supply chain management include the need for large-scale changes, re-engineering, downsizing driven by cost reduction programs, and widespread attention to the Japanese practice of management.
[edit]Integration era

This era of supply chain management studies was highlighted with the development of Electronic Data Interchange (EDI) systems in the 1960s and developed through the 1990s by the introduction of Enterprise Resource Planning (ERP) systems. This era has continued to develop into the 21st century with the expansion of internet-based collaborative systems. This era of supply chain evolution is characterized by both increasing value-adding and cost reductions through integration. In fact a supply chain can be classified as a Stage 1, 2 or 3 network. In stage 1 type supply chain, various systems such as Make, Storage, Distribution, Material control, etc. are not linked and are independent of each other. In a stage 2 supply chain, these are integrated under one plan and is

ERP enabled. A stage 3 supply chain is one in which vertical integration with the suppliers in upstream direction and customers in downstream direction is achieved. An example of this kind of supply chain is Tesco.
[edit]Globalization era

The third movement of supply chain management development, the globalization era, can be characterized by the attention given to global systems of supplier relationships and the expansion of supply chains over national boundaries and into other continents. Although the use of global sources in the supply chain of organizations can be traced back several decades (e.g., in the oil industry), it was not until the late 1980s that a considerable number of organizations started to integrate global sources into their core business. This era is characterized by the globalization of supply chain management in organizations with the goal of increasing their competitive advantage, value-adding, and reducing costs through global sourcing.However it was not until the late 1980s that a considerable number of organizations started to integrate global sources into their core business.
[edit]Specialization era (phase I): outsourced manufacturing and distribution

In the 1990s, industries began to focus on core competencies and adopted a specialization model. Companies abandoned vertical integration, sold off non-core operations, and outsourced those functions to other companies. This changed management requirements by extending the supply chain well beyond company walls and distributing management across specialized supply chain partnerships. This transition also re-focused the fundamental perspectives of each respective organization. OEMs became brand owners that needed deep visibility into their supply base. They had to control the entire supply chain from above instead of from within. Contract manufacturers had to manage bills of material with different part numbering schemes from multiple OEMs and support customer requests for work -in-process visibility and vendor-managed inventory (VMI). The specialization model creates manufacturing and distribution networks composed of multiple, individual supply chains specific to products, suppliers, and customers who work together to design, manufacture, distribute, market, sell, and service a product. The set of partners may change according to a given market, region, or channel, resulting in a proliferation of trading partner environments, each with its own unique characteristics and demands.
[edit]Specialization era (phase II): supply chain management as a service

Specialization within the supply chain began in the 1980s with the inception of transportation brokerages, warehouse management, and non-asset-based carriers and has matured beyond

transportation and logistics into aspects of supply planning, collaboration, execution and performance management. At any given moment, market forces could demand changes from suppliers, logistics providers, locations and customers, and from any number of these specialized participants as components of supply chain networks. This variability has significant effects on the supply chain infrastructure, from the foundation layers of establishing and managing the electronic communication between the trading partners to more complex requirements including the configuration of the processes and work flows that are essential to the management of the network itself. Supply chain specialization enables companies to improve their overall competencies in the same way that outsourced manufacturing and distribution has done; it allows them to focus on their core competencies and assemble networks of specific, best-in-class partners to contribute to the overall value chain itself, thereby increasing overall performance and efficiency. The ability to quickly obtain and deploy this domain-specific supply chain expertise without developing and maintaining an entirely unique and complex competency in house is the leading reason why supply chain specialization is gaining popularity. Outsourced technology hosting for supply chain solutions debuted in the late 1990s and has taken root primarily in transportation and collaboration categories. This has progressed from the Application Service Provider (ASP) model from approximately 1998 through 2003 to the OnDemand model from approximately 2003-2006 to the Software as a Service (SaaS) model currently in focus today.
[edit]Supply chain management 2.0

(SCM 2.0)

Building on globalization and specialization, the term SCM 2.0 has been coined to describe both the changes within the supply chain itself as well as the evolution of the processes, methods and tools that manage it in this new "era". The growing popularity of collaborative platforms is highlighted by the rise of TradeCards supply chain collaboration platform which connects multiple buyers and suppliers with financial institutions, enabling them to conduct automated supply chain finance transactions.[13] Web 2.0 is defined as a trend in the use of the World Wide Web that is meant to increase creativity, information sharing, and collaboration among users. At its core, the common attribute that Web 2.0 brings is to help navigate the vast amount of information available on the Web in order to find what is being sought. It is the notion of a usable pathway. SCM 2.0 follows this notion into supply chain operations. It is the pathway to SCM results, a combination of the processes, methodologies, tools and delivery options to guide companies to their results quickly as the complexity and speed of the supply chain increase due to the effects of global competition,

rapid price fluctuations, surging oil prices, short product life cycles, expanded specialization, near-/far- and off-shoring, and talent scarcity. SCM 2.0 leverages proven solutions designed to rapidly deliver results with the agility to quickly manage future change for continuous flexibility, value and success. This is delivered through competency networks composed of best-of-breed supply chain domain expertise to understand which elements, both operationally and organizationally, are the critical few that deliver the results as well as through intimate understanding of how to manage these elements to achieve desired results. Finally, the solutions are delivered in a variety of options, such as no-touch via business process outsourcing, mid-touch via managed services and software as a service (SaaS), or high touch in the traditional software deployment model.
[edit]Business

process integration

Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes. An example scenario: the purchasing department places orders as requirements become known. The marketing department, responding to customer demand, communicates with several distributors and retailers as it attempts to determine ways to satisfy this demand. Information shared between supply chain partners can only be fully leveraged through process integration. Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems and shared information. According to Lambert and Cooper (2000), operating an integrated supply chain requires a continuous information flow. However, in many companies, management has reached the conclusion that optimizing the product flows cannot be accomplished without implementing a process approach to the business. The key supply chain processes stated by Lambert (2004)[14] are:

Customer relationship management Customer service management Demand management style Order fulfillment Manufacturing flow management Supplier relationship management Product development and commercialization Returns management

Much has been written about demand management. Best-in-Class companies have similar characteristics, which include the following: a) Internal and external collaboration b) Lead time

reduction initiatives c) Tighter feedback from customer and market demand d) Customer level forecasting One could suggest other key critical supply business processes which combine these processes stated by Lambert such as:
a. Customer service management b. Procurement c. Product development and commercialization d. Manufacturing flow management/support e. Physical distribution f. Outsourcing/partnerships g. Performance measurement h. Warehousing management a) Customer service management process

Customer Relationship Management concerns the relationship between the organization and its customers. Customer service is the source of customer information. It also provides the customer with real-time information on scheduling and product availability through interfaces with the company's production and distribution operations. Successful organizations use the following steps to build customer relationships:

determine mutually satisfying goals for organization and customers establish and maintain customer rapport

produce positive feelings in the organization and the customers b) Procurement process

Strategic plans are drawn up with suppliers to support the manufacturing flow management process and the development of new products. In firms where operations extend globally, sourcing should be managed on a global basis. The desired outcome is a win-win relationship where both parties benefit, and a reduction in time required for the design cycle and product development. Also, the purchasing function develops rapid communication systems, such as electronic data interchange (EDI) and Internet linkage to convey possible requirements more rapidly. Activities related to obtaining products and materials from outside suppliers involve resource planning, supply sourcing, negotiation, order placement, inbound transportation, storage, handling and quality assurance, many of which include the responsibility to coordinate with suppliers on matters of scheduling, supply continuity, hedging, and research into new sources or programs.

c) Product development and commercialization

Here, customers and suppliers must be integrated into the product development process in order to reduce time to market. As product life cycles shorten, the appropriate products must be developed and successfully launched with ever shorter time-schedules to remain competitive. According to Lambert and Cooper (2000), managers of the product development and commercialization process must:
1. coordinate with customer relationship management to identify customer-articulated needs; 2. select materials and suppliers in conjunction with procurement, and 3. develop production technology in manufacturing flow to manufacture and integrate into the best supply chain flow for the product/market combination. d) Manufacturing flow management process

The manufacturing process produces and supplies products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes and must accommodate mass customization. Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. Also, changes in the manufacturing flow process lead to shorter cycle times, meaning improved responsiveness and efficiency in meeting customer demand. Activities related to planning, scheduling and supporting manufacturing operations, such as work-in-process storage, handling, transportation, and time phasing of components, inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement of physical distribution operations.
e) Physical distribution

This concerns movement of a finished product/service to customers. In physical distribution, the customer is the final destination of a marketing channel, and the availability of the product/service is a vital part of each channel participant's marketing effort. It is also through the physical distribution process that the time and space of customer service become an integral part of marketing, thus it links a marketing channel with its customers (e.g., links manufacturers, wholesalers, retailers).
f) Outsourcing/partnerships

This is not just outsourcing the procurement of materials and components, but also outsourcing of services that traditionally have been provided in-house. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage, and outsource everything else. This movement has been particularly evident in logisticswhere the provision of transport, warehousing and inventory control is increasingly

subcontracted to specialists or logistics partners. Also, managing and controlling this network of partners and suppliers requires a blend of both central and local involvement. Hence, strategic decisions need to be taken centrally, with the monitoring and control of supplier performance and day-to-day liaison with logistics partners being best managed at a local level.
g) Performance measurement

Experts found a strong relationship from the largest arcs of supplier and customer integration to market share and profitability. Taking advantage of supplier capabilities and emphasizing a longterm supply chain perspective in customer relationships can both be correlated with firm performance. As logistics competency becomes a more critical factor in creating and maintaining competitive advantage, logistics measurement becomes increasingly important because the difference between profitable and unprofitable operations becomes more narrow. A.T. Kearney Consultants (1985) noted that firms engaging in comprehensive performance measurement realized improvements in overall productivity. According to experts, internal measures are generally collected and analyzed by the firm including
1. Cost 2. Customer Service 3. Productivity measures 4. Asset measurement, and 5. Quality.

External performance measurement is examined through customer perception measures and "best practice" benchmarking, and includes 1) customer perception measurement, and 2) best practice benchmarking.
h) Warehousing management

As a case of reducing company cost & expenses, warehousing management is carrying the valuable role against operations. In case of perfect storing & office with all convenient facilities in company level, reducing manpower cost, dispatching authority with on time delivery, loading & unloading facilities with proper area, area for service station, stock management system etc. Components of supply chain management are as follows: 1. Standardization 2. Postponement 3. Customization
[edit]Theories

Currently there is a gap in the literature available on supply chain management studies: there is no theoretical support for explaining the existence and the boundaries of supply chain

management. A few authors such as Halldorsson, et al. (2003), Ketchen and Hult (2006) and Lavassani, et al. (2009) have tried to provide theoretical foundations for different areas related to supply chain by employing organizational theories. These theories include:

Resource-based view (RBV) Transaction Cost Analysis (TCA) Knowledge-Based View (KBV) Strategic Choice Theory (SCT) Agency Theory (AT) Institutional theory (InT) Systems Theory (ST) Network Perspective (NP) Materials Logistics Management (MLM) Just-in-Time (JIT) Material Requirements Planning (MRP) Theory of Constraints (TOC) Performance Information Procurement Systems (PIPS) Performance Information Risk Management System (PIRMS) Total Quality Management (TQM) Agile Manufacturing Time Based Competition (TBC) Quick Response Manufacturing (QRM) Customer Relationship Management (CRM) Requirements Chain Management (RCM) Available-to-promise (ATP) and many more

However, the unit of analysis of most of these theories is not the system supply chain, but another system such as the firm or the supplier/buyer relationship. Among the few exceptions is the relational view, which outlines a theory for considering dyads and networks of firms as a key unit of analysis for explaining superior individual firm performance (Dyer and Singh, 1998).[15]
[edit]Supply

chain centroids

In the study of supply chain management, the concept of centroids has become an important economic consideration. A centroid is a place that has a high proportion of a countrys population and a high proportion of its manufacturing, generally within 500 mi (805 km). In the U.S., two major supply chain centroids have been defined, one near Dayton, Ohio and a second near Riverside, California. The centroid near Dayton is particularly important because it is closest to the population center of the US and Canada. Dayton is within 500 miles of 60% of the population and manufacturing capacity of the U.S., as well as 60 percent of Canadas population.[16] The region includes the Interstate 70/75 interchange, which is one of the busiest in the nation with 154,000 vehicles passing through in a day. Of those, anywhere between 30 percent and 35 percent are trucks hauling goods. In addition, the I-75 corridor is home to the busiest north-south rail route east of the Mississippi.[16]
[edit]Tax

efficient supply chain management

Tax efficient supply chain management is a business model which considers the effect of tax in design and implementation of supply chain management. As the consequence ofglobalization, businesses which are cross-national should pay different tax rates in different countries. Due to the differences, global players have the opportunity to calculate and optimize supply chain based on tax efficiency[17] legally. It is used as a method of gaining more profit for company which owns global supply chain.
[edit]Supply

chain sustainability

Supply chain sustainability is a business issue affecting an organizations supply chain or logistics network and is frequently quantified by comparison with SECH ratings. SECH ratings are defined as social, ethical, cultural and health footprints. Consumers have become more aware of the environmental impact of their purchases and companies SECH ratings and, along with non-governmental organizations (NGOs), are setting the agenda for transitions to organically-grown foods, anti-sweatshop labor codes and locally-produced goods that support independent and small businesses. Because supply chains frequently account for over 75% of a companys carbon footprint many organizations are exploring how they can reduce this and thus improve their SECH rating. For example, in July, 2009 the U.S. based Wal-Mart corporation announced its intentions to create a global sustainability index that would rate products according to the environmental and social impact made while the products were manufactured and distributed. The sustainability

rating index is intended to create environmental accountability in Wal-Mart's supply chain, and provide the motivation and infrastructure for other retail industry companies to do the same.[18] More recently, the US Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Obama in July 2010, contained a supply chain sustainability provision in the form of the Conflict Minerals law. This law requires SEC-regulated companies to conduct third party audits of the company supply chains, determine whether any tin, tantalum, tungsten or gold (together referred to as conflict minerals) is made of ore mined/sourced from the Democratic Republic of the Congo (DRC), and create a report (available to the general public and SEC) detailing the supply chain due diligence efforts undertaken and the results of the audit.[19] Of course, the chain of suppliers/vendors to these reporting companies will be expected to provide appropriate supporting information.
[edit]Components [edit]Management components

The SCM components are the third element of the four-square circulation framework. The level of integration and management of a business process link is a function of the number and level, ranging from low to high, of components added to the link (Ellram and Cooper, 1990; Houlihan, 1985). Consequently, adding more management components or increasing the level of each component can increase the level of integration of the business process link. The literature on business process re-engineering,[20] buyer-supplier relationships,[21] and SCM[22] suggests various possible components that must receive managerial attention when managing supply relationships. Lambert and Cooper (2000) identified the following components:

Planning and control Work structure Organization structure Product flow facility structure Information flow facility structure Management methods Power and leadership structure Risk and reward structure Culture and attitude

However, a more careful examination of the existing literature[23] leads to a more comprehensive understanding of what should be the key critical supply chain components, the "branches" of the previous identified supply chain business processes, that is, what kind of relationship the

components may have that are related to suppliers and customers. Bowersox and Closs states that the emphasis on cooperation represents the synergism leading to the highest level of joint achievement (Bowersox and Closs, 1996). A primary level channel participant is a business that is willing to participate in the inventory ownership responsibility or assume other aspects of financial risk, thus including primary level components (Bowersox and Closs, 1996). A secondary level participant (specialized) is a business that participates in channel relationships by performing essential services for primary participants, including secondary level components, which support primary participants. Third level channel participants and components that support the primary level channel participants and are the fundamental branches of the secondary level components may also be included. Consequently, Lambert and Cooper's framework of supply chain components does not lead to any conclusion about what are the primary or secondary (specialized) level supply chain components (see Bowersox and Closs, 1996, p. 93). That is, what supply chain components should be viewed as primary or secondary, how should these components be structured in order to have a more comprehensive supply chain structure, and how to examine the supply chain as an integrative one (See above sections 2.1 and 3.1).
[edit]Reverse supply chain

Reverse logistics is the process of managing the return of goods. Reverse logistics is also referred to as "Aftermarket Customer Services". In other words, anytime money is taken from a company's warranty reserve or service logistics budget one can speak of a reverse logistics operation.
[edit]Systems

and value

Supply chain systems configure value for those that organize the networks. Value is the additional revenue over and above the costs of building the network. Co-creating value and sharing the benefits appropriately to encourage effective participation is a key challenge for any supply system. Tony Hines defines value as follows: Ultimately it is the customer who pays the price for service delivered that confirms value and not the producer who simply adds cost until that point[7]
[edit]Global

applications

Global supply chains pose challenges regarding both quantity and value: Supply and value chain trends

Globalization

Increased cross border sourcing Collaboration for parts of value chain with low-cost providers Shared service centers for logistical and administrative functions Increasingly global operations, which require increasingly global coordination and planning to achieve global optimums Complex problems involve also midsized companies to an increasing degree,

These trends have many benefits for manufacturers because they make possible larger lot sizes, lower taxes, and better environments (culture, infrastructure, special tax zones, sophisticated OEM) for their products. Meanwhile, on top of the problems recognized in supply chain management, there will be many more challenges when the scope of supply chains is global. This is because with a supply chain of a larger scope, the lead time is much longer. Furthermore, there are more issues involved such as multi-currencies, different policies and different laws. The consequent problems include:1. different currencies and valuations in different countries; 2. different tax laws (Tax Efficient Supply Chain Management); 3. different trading protocols; 4. lack of transparency of cost and profit.
[edit]Certification

There are several certification programmes for Supply Chain Management staff development including APICS (the Association for Operations Management), ISCEA (The International Supply Chain Education Alliance) and IOSCM (Institute of Supply Chain Management). APICS' certification is called Certified Supply Chain Professional, or CSCP, and ISCEA'S certification is called the Certified Supply Chain Manager (CSCM). Another, the Institute for Supply Management, is developing one called the Certified Professional in Supply Management (CPSM)[24] focused on the Procurement and Sourcing areas of Supply Chain Management, also called Supply management. Purchasing Management Association of Canada is the main certifying body for Canada with the designations having global recipricocity. The designation Supply Chain Management Professional (SCMP) is the main designation with several others that progress toward the SCMP. Topics addressed by selected professional supply chain certification programmes: [24][25] (updated)
Institute Institute The The American Internatio Internatio Institute of for Supply for Supply Associatio Associatio Society of nal Supply nal Supply Supply Managem Managem n for n for Transportati Chain Chain Chain ent (ISM) ent (ISM) Operations Operations on and Education Education Managem Certified Certified Managem Managem Logistics Alliance Alliance ent

Awarding Body

Purchasing Profession ent ent (AST&L) (ISCEA) Manager al in (APICS) (APICS) Certification Certified (CPM) Supply Certified Certified in Supply Managem Production Supply Transportati Chain ent and Chain on and Manager (CPSM) Inventory Profession Logistics (CSCM) Managem al (CSCP) (CTL) ent (CPIM)

(ISCEA) Certified Supply Chain Analyst (CSCA)

(IOSCM)

Procuremen High t

High

Low

High

Low

High

High

High

Strategic Sourcing

Low

High

Low

Low

Low

High

Low

Low

New Product Low Developme nt

High

Low

High

Low

Low

Low

Low

Production, Low Lot Sizing

Low

High

Low

High

Low

Low

High

Quality

High

High

High

High

Low

Low

Low

High

Lean Six Sigma

Low

Low

Low

Low

Low

High

High

Low

Inventory Manageme High nt

High

High

High

High

High

High

High

Warehouse Manageme Low nt

Low

Low

Low

High

Low

High

High

Network Design

Low

Low

High

Low

High

High

High

Low

Transportati High on

Low

High

Low

High

High

High

High

Demand Manageme Low nt, S&OP

High

High

High

High

High

High

High

Integrated SCM

High

Low

Low

High

High

High

High

High

CRM, Customer Service

Low

Low

Low

High

Low

High

Low

High

Pricing

Low

Low

Low

Low

Low

Yes

Yes

Low

Risk Manageme Low nt

High

High

Low

Low

Low

Low

High

Project Manageme Low nt

High

High

Low

Low

Yes

Low

High

Leadership, People High Manageme nt

High

High

Low

Low

High

Low

High

Technology High

Low

Low

High

High

High

High

High

Theory of Low Constraints

Low

Low

Low

Low

High

High

Low

Operationa l High Accounting

High

Low

Low

Low

High

Low

Low

Freight claim:
A Freight claim is a legal demand by a shipper or consignee to a carrier for financial reimbursement for a [1] loss or damage of a shipment. Freight claims are also known as shipping claims, cargo claims, transportation claims, or loss and damage claims. The intention of a freight claim is for the carrier to make the shipper or consignee whole that is to say, their position is as good as it would have been if the carrier had carried out their tasks according to the [2] Bill of Lading. For this reason, claimants are generally expected to file a claim to recover their costs, not [3] including profits, although in some rare cases claiming profits may be considered acceptable. Claimants are also expected to take reasonable measures to mitigate the loss. For example, if the damaged product has retained some value, the carrier would only be required to pay for the difference between the original value and the damaged value. The claimant would then be free to salvage the [4] damaged product by selling it at a reduced cost.

Filing a Freight Claim


Each carrier typically provides a form specifically for filing freight claims. However, by law, no particular form is necessary, as long as the following four details are present: The shipment must be specified The loss or damage type must be specified The total of the amount claimed must be specified A clear demand for payment must be present

Information to identify the shipment may include the freight bill PRO #, the vehicle number, and the delivery date. In addition to this basic information, the following documentation should also be provided: Shipment invoice Delivery receipt Bill of lading Invoice showing the value of the product being claimed Invoices for costs incurred (ie repairs or replacements of the product)

Additional supporting documentation may also be included or required. [edit]Filing

[5]

Deadlines

Different rules and filing deadlines will apply depending on the shipping mode. This is due to differences in how specific shipping modes are governed. Rail and motor carriers are governed by the Carmack Amendment. The Carmack Amendment states that claimants have a minimum of 9 months from the date of delivery to file a freight claim. Conversely, ocean carriers that service the US are governed by the Carriage of Goods by Sea Act [6] (COGSA). This act requires that claimants file a claim within 3 days of delivery. [edit]Consignee

and Shipper Responsibilities

At the time of delivery, the consignee should examine the shipment for loss or damage. If there is evidence of loss or damage, the consignee should note it on the delivery receipt; this will be used as [7] evidence to back up the claim. The consignee is still required to accept the shipment, even if there is evidence of loss or damage. If the consignee signs off on the delivery receipt and discovers a claim later, then the burden of proof falls to the shipper or consignee to prove that the damage was in fact caused by the carrier as opposed to the [7] shipper or consignee. When damage is not immediately recognizable, this is known as a concealed damage claim. The shipper is required to pay the shipment invoice in full, regardless of whether or not the shipment was lost or damaged. The appropriate course of action is for either the shipper or the consignee to then file a freight claim against the carrier for reimbursement. [edit]Carrier

Liability

How much the carrier is liable for also depends on the shipping mode and the governing bodies. The Carmack amendment states that motor or rail carriers are liable for the full loss. Conversely, COGSA [8] states that the carrier is liable for no more than $500 per package. There are four scenarios in which a carrier is not deemed liable for damages to goods: Act of nature Act of the public enemy Fault of the shipper A defect in the goods themselves
[9]

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