Port Development

Several changes have occurred in container transport and its role in the supply chain in recent years. These include a shift in the forces driving demand, speed of delivery and a reduction in the level of operational defects. Arguably, these developments are associated with the processes of economic and industrial globalization which are creating a new global business environment. At the macroeconomic level, globalization has resulted in new economic geography and the formation of new global economic hierarchies. There has been an ascendancy of Asian economies, such as China and India as main industrial and economic centres, and a corresponding decline in the industrial strength of Northern-American and European economies. At the microeconomic level, increased competitive pressures have led to an increase in outsourcing. This outsourcing strategy is pursued by businesses seeking to become more productive by the successful exploration of the competitive and regional advantages of the firms in their network of suppliers and distributors. The global competition puts pressure on firms to outsource for which the establishment of global supply chains is a necessary condition. In this context, managers are faced with making complicated decisions relating to the disaggregation of their firms’ functional activities and identification of optimum locations for each predefined business function which intensifies the international division of labour as a modern market phenomenon. Additionally, ownership of firms is becoming more global and ownership strategies are also becoming more diverse and complex, ranging from wholly-owned units via FDI to outsourcing, subcontracting and joint ventures as options. A key characteristic of this 10 the phenomenon is the significant increase in the distance covered by global supply chains since the late 1980’s, with a continued trend. This has increased by 5 to 10 times in length and may average anywhere between 5,000-8,000 miles. “Longer distance within supply chain means larger unit transport costs, larger in-transit inventory levels and associated inventory carrying costs”. To succeed in this global business environment in which production is separated by thousands of miles from consumer markets, firms’ global supply chain strategies not only aim at reducing manufacturing costs but also at achieving a smooth commodity flow at minimum cost (Marcus, 2010). Thus transport productivity has become more important and strategic than ever in the contemporary complex global economy as it connects players in the supply chain and enables the flow of goods between raw material suppliers, manufacturers and customers. For example, late delivery may paralyze entire production processes which can be rated as bad as early arrival resulting in higher inventory costs. Thus, the strategic decision to choose the suitable mode, carrier and trading network is crucial in order to guarantee minimum defects in supply chain management.

Artificial Intelligence in Supply chain

Application of Financial Technology in Supply Chain The supply chain as a whole is made up of both the physical supply chain and the financial supply chain. The physical supply chain consists of the physical movement of goods from supplier to the customer; the financial supply chain runs in the reverse direction and consists of the movement of financial flows from the customer to supplier. The financial supply chain is a concept that has only recently become topical. Financial technologies are internet companies with new technology and innovation that streamline financial systems and make funding the supply chain more efficient. Many Fin Techs functions as cloud-based software platforms and can enable “procure-to-pay” systems that incorporate both purchasing management and accounts payable functionality and they provide an integrated solution that begins with a purchase requisition and terminates with payment to suppliers. Administering these functions becomes easier as they close the loop between procurement and accounts payable and provide a structure that streamlines these processes. Financial technology companies help in facilitating transactions between a company and its suppliers. It also helps the buyer and supplier to improve their working capital by making it possible to extend its payables and at the same time accelerate payment to the latter. This provides greater liquidity and less variability in the timing of payments. The financial instruments, practices, and technologies help in the proper management of the working capital and liquidity tied up in the supply chain process for collaborating business partners. Supply chain finance is becoming an increasingly popular topic in treasury. Supply chain finance is discussed and evaluated with the focus on FinTech provider as opposed to a bank view. FinTech providers have caused a major disruption within the industry in recent years, and are rapidly expanding their scope of influence and garnering a greater market share. However, there remains a relatively low market awareness of these solutions and the capabilities they provide, as their role in the SCF landscape is still evolving. The treasurer has an important part to play in financial supply chain management. In recent years, the treasurer’s responsibility has increased from a payables/receivables focus to encompass the entire financial supply chain. A financial supply chain approach to treasury entails looking beyond specific areas and considering the whole chain to gain an understanding of the impact each process has in order to identify where savings can be made.

Emerging trends in logistics

Information and communication technologies (ICT) are of key importance for the development of the competitiveness of logistics enterprises. Traditional businesses, not enhanced by ICT, will find it difficult to respond to the needs of the modern market. The change in technology has become very important because of its speed, cost-effectiveness, transparency, green orientation and the way in which it analyses and processes data. In parallel, logistics is evolving into e-logistics. There are various definitions of e-logistics, but one all-encompassing is that e-logistics is actually a transformation of the classic tools used for logistics processes in a modern way, and backed-up by Internet-based technologies. Logistics doesn’t become electronic with the use of internet technologies in the logistics process. E-logistics is essentially a complex entity (system), which includes manufacturers (distributors), logistics centers, resellers, carriers, consumers among which there is an electronic exchange of data via Internet or dedicated electronic networks with the help of mobile (wireless) and wired communication technologies with the aim to reduce data errors and improve efficiency in decision-making. Smartphones have gained their popularity due to convenience and the possibility that the user is available everywhere and can attend to the tasks immediately. Smartphones enable product browsing, selection and shopping on-the-go. Not only individual consumers, industrial customers expect to get shipments faster, with more flexibility and transparency at a lower price. When someone, for example, buys a product through an online shop, they can track the entire course of the shipment starting from order, to warehousing, transportation, and final delivery at the door (last-mile delivery). The idea that private and corporate buyers want to keep track of what is happening with their shipment is not surprising. Such a level of transparency and availability of information is required at B2B (Business to Business) and B2C (Business to Client) levels. Mobile Solutions for Logistics offer the following features. Warehouse Management Solutions: Knowing the warehouse in and out Door Delivery Mobile Solutions: Speed- up your door delivery services Mobile Asset Tracking Solutions: Know the location of every shipment Mobile Fleet Management Solutions: Get the most from the fleets Customer Servicing Solutions: Meet the needs of the modern-day customer. Supply chain management intensively uses mobile devices for faster and better business process organization. For example, Oracle Mobile Supply Chain applications enable users to perform many common warehouses and shop floor transactions using wireless devices at the point of use, offering real-time transaction processing, better accuracy in data and increased mobility and convenience.

Procuring in warehouse

Material resources are part of the working capital of the enterprise. Revolving funds – these are the means of production, which are consumed in each production cycle, the entire transfer their value to the finished product and the production process change or lose their consumer properties. In current assets include:

1) Basic and auxiliary materials, fuel, energy and semi-finished products obtained from;

2) Low-value tools and spare parts for the repair of equipment;

3) Work in progress and semi-finished products of own production;

4) Containers.

Procuring in warehouseThe largest share of the material resources of the enterprise constitutes the basic materials. These are the objects of labour, reaching for the manufacture of products and forming its main content. Organization and planning of material resources are one of the most important branches of industrial activities. All the work of the organization and planning of material resources is carried out in the direction of creating conditions for maximum savings while improving product quality. An analysis of the use of materials primarily determines their savings or cost overruns. To this end, calculate how much material should be spent in a company achieved production volume and product mix, subject to planning regulations, and compare it with the number of actual costs. Planned expenses are translated by the actual output only basic materials, process fuel and the types of auxiliary materials, the consumption of which is directly related to the production of the major products of the organization. Consumption of other materials does not depend directly on the volume of production, and therefore is not subject to recalculation. Factors that determine savings in the material can be reduced to the following major groups: physical, technological, engineering and design, organizational and economic. The first group of factors – the material determines the choice of best materials, which would reduce their consumption, particularly to reduce the consumption of scarce materials and to reduce the number of material costs in the cost of production. Using technology factors is the choice of materials saving options such processes, which reduce the waste, produced during the production. Completion of the analysis is to develop practical measures to improve the use of material resources, based on them to establish new, progressive norms, reflecting the advanced production experience and scientific and technological achievements, to be implemented in the upcoming planning period. Established industry standards allow for a more reasonable to develop plans and performance evaluation of the enterprise. They should have the character of recommendations so that, depending on the operating conditions of each company could adjust them with careful study deviations from the norms of the industry average.

Shipping Industry
Shipping Industry

International shipping industry leads to around 90% of the world trade. The concepts of import and export of goods and free trade are not a possibility without the contribution of the international shipping industry. Shipping and mercantile industry continues to facilitate the people of the world by bringing benefits to the businesses around the world by giving them top-class services and unmatched freight costs. The performance and efficiency of the shipping industry have increased the level of trade between the countries by bringing an economic turnaround which has improved the economic conditions of many countries around the world. The fleet of ships that are assisting in international trade is around 50,000 merchant ships which are used to transport cargo from one corner of the world to the other. 150 countries on the globe are using them; the fleet is ably manned by over a million dedicated seafarers representing almost every nation in the world. The shipping and mercantile industry in Pakistan was blossoming till 1974 when the competition between public and private sector was ended by nationalization of all industries. The old and traditional players vanished from the scene after that and soon the government had to overturn its decision but the faith of investors was faded by then. The late ’90s and early 2000s saw the revival of the sector by the new private investment policy which gave many incentives to the private investors in the country. Shipping is one of the world’s most expensive and capital intrinsic sector which requires heavy investment in assets, a country like Pakistan which is its developing state cannot rely alone on the Government sector for this as the Government has different developmental priorities as well. In light of this, the government has offered incentives to the private sector to help its cause in this area. The government has come up with a policy from a joint collaboration of both public and private sector along with all the stakeholders to attract the investment in this important sector by giving incentives, making sound and consistent policies and assuring regulations and procedures to gain the confidence of the investors. This policy is called the merchant shipping policy which unlike the previous policies did cater to the issues of all the stakeholders in this vital field. This policy is likely to improve the gaps and will encourage a sound flow of foreign trade by giving access to the international markets. The only specific regulation in this policy is for national carriers (government-owned) which according to UNCTAD (United Nations Conference on Trade and Developments); ensures that Government-owned cargo will be transported by the national carriers.

Characteristics of Shipping Industry

Sea or ocean is a permanent way and it requires no capital expenditure in its construction like those of railways or roads or air transportation. No annual maintenance is required. It is open to all and there is freedom of movement except for restrictions imposed by the countries on their territorial waters. Although the sea routes are not required to be constructed or maintained, yet for safety and security, seas have been mapped, regular routes marked out and safety provisions like lighthouses and radio communications have been provided on the sea routes according to international conventions and agreements. Terminal facilities: terminal facilities needed for ships are generally maintained by port authorities and shipping companies can avail them on payment of charges. Ports, harbours, docks and wharf, loading and unloading facilities and port installations like lighthouses and radio communications are maintained by the port authorities and offered to the individual shipping companies on payment. The shipping companies need not invest in terminal facilities and it is this respect also that shipping differs railways and roadways. Nature of capital expenditure: capital expenditure in shipping industry depends on the type and size of the vessels selected, the nature of trade served and the time when the purchase is made. Some of the important expenditures are a Smaller capital investment: shipping requires the small capital expenditure in the initial stages. Only a small investment in the purchase of ships has to be made. Once the ship leaves a seaway, ways of the voyage are provided by nature at free of cost. Since permanent way is free and is open to all under international agreements, no investment is made in construction or maintenance of sea routes. A few routes for a very short distance of seaway traffic – the Panama, Suez, Corinth, Kiel canals are artificial and subject to tolls, but their use is normally open to all on equal terms. A little expenditure is required to be made in lighthouses and radio communications, but they are maintained according to international conventions and agreements. The terminal facilities for harbouring the ships, dock facilities, loading and unloading facilities are maintained by the port authorities and shipping companies are required to pay some dues for using them. Thus keeping in view the great importance of shipping, the capital investment is relatively very small. The capital investment in shipping is a small multiple of annual receipts, particularly as compared to railways. While the capital in railways is ten times great in value as the annual gross earnings in ships it is roughly equal to the gross annual earnings. But its fixed investment is relatively high in comparison with the gross earnings as against the manufacturing industries and the distributing trades in which the fixed capital forms only a small portion of annual output.

Warehouse Operations

In most warehouses products are received and, if they cannot be cross-docked and immediately shipped out, are put away into storage until they are needed to fill a customer’s order, at which time they are picked from storage, packed, sorted, and unitized, if necessary, and then shipped to customers. For more efficient order picking a separate forward picking, the storage area can be used. It is replenished from a reserve storage area. Periodically, partially filled storage locations containing the same type of item are consolidated into a single location to improve space utilization, items are moved to different storage locations to improve handling efficiency in a process termed re warehousing, and the contents of storage locations are counted in order to verify the accuracy of inventory records in a process termed cycle counting. The majority of space in a typical warehouse is occupied by Storage for pallet and case picking. Warehouse control is an interplay between inventory control and location management. The warehouse management system (WMS) is the software system that enables real-time, paperless control of warehouse operations. The WMS of a single warehouse interface with the corporation’s enterprise resource planning (ERP) software where the item, carrier, and customer master files common to all of the firm’s warehouses reside. This information is used to create and maintain an inventory master file and a location master file. The WMS uses these files along with control logic to execute the required warehouse operations, which include interfacing with the various automated material handling equipment subsystems and generating pick lists for order picking. Advance shipping notices (ASNs) are sent to the WMS from suppliers as part of the receiving function, and the WMS sends ASNs to customers as part of the shipping function of a warehouse. A separate transportation management system (TMS) is typically used to determine shipping details. At its lowest level, warehouse operations involve the storage of an object at a location or the movement of an object between locations. Inventory is the quantity of each item stored in the warehouse, and the inventory master file acts as the repository for all inventory in the warehouse. It contains the total quantity and storage locations of each item stored in the warehouse and is used together with the location master file to control material transport operations. The location master file provides the link between the WMS’s logical representation of the warehouse and the physical layout of the warehouse. The item master file is used to identify valid items that are handled in the warehouse and includes information about the item that is needed for picking purposes. The carrier master file includes transportation-related information (e.g., rate schedules) that is used for shipping completed orders, and the customer master file is used to store customer preferences for how orders are to be shipped so that it does not need to be included in each order.

Sea Cargo

Sea cargo is the freight carried by ships which involve travelling by sea other than mail, persons and personal baggage. A global sea carrier is a person, business or organization that offers transportation services via sea on a worldwide basis. A shipper is a person or company who is either the supplier or the owner of the cargo that is to be shipped. With rates for sea cargo transportation at approximately one-tenth of air freight rates, fewer accidents and less pollution maritime transportation is regarded as a cheap, safe and clean transportation mode, compared to other modes of transportation. Increasing globalization and inter-dependence of various world economies is leading to tremendous positive growth in the sea cargo industry. International and domestic trade of many nations depend on this mode of transportation. According to American Association of Port Authorities (2006), in the United States, which is the largest trading nation in the world for both imports and exports – accounting for almost one-fourth of world trade, sea cargo leads to the movement of almost 99% of the international cargo. U.S. ports and waterways handle more than 2.5 billion tons of trade annually, and this volume is projected to double within the next fifteen years. Increase in seaborne trade worldwide has led to similar trends in the growth of the world fleet. In 2005, world seaborne trade increased to 7.11 billion tons of loaded goods (a 3.8 % annual growth rate) and the world fleet expanded to 960.0 million deadweight tons (a 7.2% increase) (United Nations Conference on Trade and Development (2006)). Although the fleet mix and size have changed over time considerably, the efficient utilization of the ships remains to be one of the main determinants of a carrier’s profitability. A ship involves major capital investment, in millions of US dollars, and its daily operating costs can be in tens of thousands of dollars. Hence, the development of optimization-based decision support systems is necessary for efficient fleet management. There has been tremendous growth in the sea cargo industry both in number as well as in size of transhipment ports. A transhipment port is a port where cargo is transferred from one ship to another. By the usage of the crane, cargo is transferred either directly from one ship to another or temporarily stored at the port before being loaded onto outbound ships for further transportation. Use of containers makes this transfer very convenient and cost-effective. Transhipment services provide carriers with additional routing options, reduced transit times and act as a facilitator of international trade.

Warehousing system
Warehousing system

Typical planning issues in warehouses are inventory management and storage location assignment. Well-Organized inventory management may result in a reduction of warehousing costs. For example, by applying sophisticated production planning and ordering policies we may reduce the total inventory while guaranteeing a satisfactory service level. The service level specifies the percentage of the orders to be supplied directly from stock. Reduced inventory levels not only reduce inventory costs but also improve the efficiency of the order-picking operation within the warehouse. As such in a smaller warehouse, the travel times for order-picking are smaller. Apart from this, an effective storage location assignment policy may reduce the mean travel times for storage/retrieval and order-picking. Also, by distributing the activities evenly over the warehouse subsystems, congestion may be reduced and activities may be balanced better among subsystems, thus increasing the throughput capacity. The planning policies define a framework for the control of the warehouse processes. Inventory management and storage location assignment policies determine which products arrive and where these should be stored. Control problems typically deal with the sequencing of order picking and storage/retrieval operations, and hence with the routing of manual order pickers or S/R machines, the allocation of products to storage positions in a class-based or random location system, the internal movement of items to more attractive retrieval positions, the dwell point of S/R machines, etc. An item picking operation is an operation in which single items are picked from storage positions (less-than-case picking), as opposed to a pallet-picking operation in which pallet loads are moved in and out. A warehousing system is the combination of equipment and operating policies used in an item picking or storage/retrieval environment. With respect to the level of automation, we may distinguish three types

of warehousing system:

1. Manual warehousing systems (picker-to-product systems),

2. Automated warehousing systems (product-to-picker systems),

3. Automatic warehousing systems.

Globalization - SLMT

Globalization is a major trend affecting not only the world economy but logistics and SCM as well. Factors such as the advent of container shipping and computing power, the removal of tariff barriers, and the move to outsourcing manufacturing and services to other countries have all contributed to an increase in global trade since the end of World War II. Merchandise exports grew by a factor of 3,300% since that time and global container trade has increased on average 5% per year over the last twenty years and at its peak in the mid-2000s comprised 350 million twenty-foot equivalent containers per year. Container shipments declined during the recession in 2008 and 2009 however the market has recovered and in 2010 was 200 million TEU. Global trade flows are also important in terms of shipping and port capacities. The Maersk Group developed a forecast of container traffic by 2015. In the major global trade corridors there are 42 million TEU movements forecast between Asia and Europe, 31 million TUE between Asia and North America, and 45 million TEU intra-Asia, which likely reflects trade between Asian countries related to sub-contracting manufacturing and providing logistics services such as consolidation for other marketplaces. These forecasts suggest there might be bottlenecks emerging in port capacity to handle increased container traffic. While the Maersk Group has led the shipping sector in building large vessels that can carry up to 18,000 TEU, such large ships may not able to go through the Panama or Suez Canals and thus take longer to reach destinations. Further, many ports around the world do not have berths or handling equipment sufficient to service such ships. The logistics performance as per the delivery reliability has gone down due to increasing customer requirements, greater volatility, and problems with infrastructure. Over two-thirds of respondents to their survey noted that their firm’s logistics capability is negatively influenced by poor transportation infrastructure, which may be a problem in emerging countries. One way of determining the logistics capability of any country is the World Bank’s Logistics Performance Index (LPI), which is a weighted average of individual country scores on six key dimensions: the efficiency of clearance processes, quality of trade and transport-related infrastructure, the ease of arranging competitively priced shipments, the competence and quality of logistics services, the ability to track and trace the consignments and their timeliness in reaching the desired destination within a scheduled or expected delivery time.

CILTianSarath Vishnu K.S