The success of logistic operations consists in ensuring the synchronization of material flows thanks to the coordination of processes and the use of resources in the company and the supply chain, and as a consequence ensure the availability of goods in the place and time expected by the customer. An extremely important dimension of logistics management success is also the cost level, both logistic and manufacturing costs as well as transaction costs. The impact of material flow organization on transaction and production costs is a consequence of the nature of logistics processes the task of which is to support both production processes as well as transactions and customer service. Sometimes there is a difference between Managing logistics and logistics management.
Logistics management is the information and decision influence of the machinery managing the logistics sphere on the organizational units of the real sphere (positions implementing logistic processes and activities), transmitted through information channels shaped by organizational rules. These impacts cause that the tasks carried out by these units in the scope of shaping material and information flow ensure achievement of the organization’s goals. Managing logistics, however, means in this context shaping the machinery managing the logistics sphere in the organization, including activities aimed at determining the scope of logistics activities and the location of logistics in the organizational structure of the entity as well as the creation of organisational rules and setting the rules of organisational units, including the selection of competencies of employees of logistics departments.
The scope of managing logistics is included in logistics management – as a function of the organisation. In this article, logistics management means planning, organizing material flows, the purpose of which is to ensure the availability of products and services in accordance with the needs of customers while taking into account costs as the economic result of decisions made. Thus, the assumptions of the interpretation of logistics management given by the Council of Logistics Management in 1998 are considered. Nowadays, the focus is more strongly on the interpretation of supply chain management than on logistics management. However, it should be remembered that supply chain management is a much broader concept and includes integrated management of key organisational processes (including manufacturing, trade, logistics, marketing, product design, etc.) starting from the distribution and manufacturing companies to the suppliers. Logistics management is a part of the concept of the supply chain but it is its specification in the area of logistics processes.
Since the Indian logistics industry accounts for 14% of India’s GDP, involves countless government and quasi-government agencies and councils and employs millions of people, it is only right that the government focuses on modernizing operational processes with a view to reducing costs while enhancing transparency, speed and other efficiencies. One such initiative, enshrined in the Automotive Industry Standard (AIS) 140 circular, mandates the use of global positioning system (GPS) equipment in both original equipment manufacturers (OEM) and after-market commercial and public utility vehicles, with a view to enhancing operational control that could result in plugging loopholes related to delays, deviations, pilferage and adulteration.
The government of India is finally trying hard to play catch-up, and it is imperative that this endeavour is successful. Ensuring success, however, is very challenging. And a change in perspective could make all the difference. This change begins with both suppliers and users admitting that GPS is not a product, but a service. Too often, GPS traders, in their bid to clear inventory, succeed in selling GPS devices to corporations who want an economical, technical alternative to existing labour-intensive monitoring solutions. When these devices fail because they are neither configured to provide actionable inputs nor customized to meet specific needs, they are abandoned as yet another failed technology project. The first issue arises from the lack of control over firmware (device-level software) that often still resides with foreign manufacturers. The second because the simplest solution is often the cause for vested interests. And though the government has somewhat taken care of the former issue by mandating that all devices be made in India for the purpose of AIS 140 compliance, the second issue has now reached a point where it may seriously impact project credibility.
As a reminder, a GPS device is dependent on a GPS chip, which produces locational data, and a general packet radio service (GPRS) SIM card, which transfers this data. Normally, this M2M (machine-to-machine, as opposed to consumer-to-consumer) SIM cards are procured from mobile network operators (MNOs) — BSNL, Airtel, Vodafone, etc. — on whom GPS service providers and end-users rely for network availability. A user profile with a unique mobile number is burned on to this SIM for the purpose of tracking however, two mobile numbers are pre-burned on to the embedded chip so that if one MNO’s network falls below the specified strength, the unit will switch to the other MNO’s network to transfer data. MNO management and data transfer are dependent on a third-party integrator, who is neither an MNO nor a GPS device manufacturer. The current initiative could create chaos in the marketplace. A similar mandate in an eastern state in 2017 failed miserably. Today, both end-users and vehicle owners are up in arms, as they are often penalized for the performance of a device they do not control.
The digitalization initiatives of the union government have brought a huge positive change in the handling of cargo at airports and seaports across India. It has also reduced the human intervention up to some extent. The dwell time of cargo at airports has been reduced by 1/3rd of the time taken in the earlier regime. Further initiatives in this direction will help in ease of doing business, reducing transaction cost, multiplying infrastructure; and India will be able to have a bigger share in the international trade which the government wishes to triple in the upcoming times. Distribution is a way of life and Indian cargo sector cannot remain far away from this phenomenon. Digitalization has already started in some pockets of the air cargo sector in India. And I believe, in the next few years, we will witness the Indian air cargo sector embracing cargo digitalization in a big way. In the current situation, countries are proactively engaging themselves in protectionist measures and building boundaries to protect their businesses. The global trade is being impacted by the growing protectionism tendency and anti-trade measures such as imposing tariffs, restricting imports and strict regulations. It is believed that the prevailing global, political and economic situation will get stabilized soon and countries will put the perspective of international trade in the right manner. Revival will happen through various routes including forming a consortium of countries to tackle the present situation. In the transportation sector, no single mode of transport can see growth unless the multimodal system of transportation is developed in the country. Union government has to create a conducive environment for growth multimodal between air and road transport and create the path and corridors both in the virtual and physical sense to bring growth in the air cargo sector. India is a huge consumption market and we have a large population of youth in our country. So, it’s obvious that consumption will always remain on the higher side and it demands new innovative, disruptive and digitalized logistics processes. To evolve these processes, the government will have to act as a catalyst by making enabling policies for the betterment of the sector. Complex situations always erupt in any growing economy or an organization. I believe, the key to surviving in such a situation is by keeping clarity on the path one is ought to take and the benefit it will bring to the trade at large and the country. If one keeps such clarity, then in a country like India, any complex situation can be handled with ease. And, one comes in a position to evolve new sets of businesses and opportunities.
Businesses have three options when it comes to expanding into a new facility: they can invest in land and then can construct on their own; lease or purchase and make necessary renovations and build a new facility for lease. New developments can be speculative wherein the developer first constructs with standard features and then give it on lease. This type of development may have tenancy issues later on. In other instance, we have a built to suit agreement wherein occupier is committed to taking the space on lease and the box is customized as per his requirements. The tenant specifies its needs to the developer, then drawing is shared by the tenant and once agreed then the construction is started. The need for built-to-suit warehousing arises as the current lot is small, dilapidated and not in sync with the technology available. In built-to-suit warehousing, the developer is assured of tenancy even before the construction and this gives him confidence and financial security. Also, since the requirements of the tenants may vary be it the Size or Height, a BTS comes in handy in such situations. Across the warehousing industry, we are seeing a consolidation wave wherein the average space is taken up has been increased substantially. The asset is developed as per the occupier’s requirements and specifications. While implementing a build-to-suit strategy, it becomes necessary to forecast long-term growth goals and needs. In such a development, there is a pre-leased agreement with the occupier. Costs saved therein can be invested in the core area of operation. In such developments there is no requirement of development expertise and the capital required is minimum. The Occupier prepares the specifications for the development and the investor develops the property as per the occupier’s specifications. Occupier enters into a long-term lease on the property and the investor receives rental payments from the occupier. The lead-up time taken by in this process is 9-12 months. The tenant can choose his desired location keeping in mind the support infrastructure in the catchment. Using a single developer to coordinate the land acquisition, design, construction, and funding, eases off the everyday operational issues. Companies can reduce up-front costs by agreeing to lease rates at 30 to 40% of design, saving time and money, and expediting the project¹s time frame. BTS projects help companies to match their distribution and warehousing requirements with market demands. A smart warehouse is one where all gadgets and devices are connected via the Internet (Internet of Things). There is widespread use of automation and robotics in such facilities. Amazon is known for pioneering the smart warehouse model; therefore, this concept is at times referred to as the Amazon Effect. The average size for warehouse development in metros is increasing from 1-1.5 lakh sq ft. to 3-5 lakh sq ft. in comparison to non-metro markets. The ease with which it allows the option of flexibility and customization as per the business needs results into value for money. Compared to other assets the turnaround time here is fast (9-12 Months). Tenants are increasingly looking for expansion options within these parks. The development cost may vary from 1500 to 2200 per sq ft. depending upon the specifications.
India handled 20-ft standard containers at Port of Hamburg in the first half of 2019 and saw a growth of 17% in the India-Hamburg sea trade. India has conquered the 10th position in Hamburg’s ranking of its trading partners for container transport as a result of this growth. Furthermore, the weekly sailing offered by Hapag Lloyd and its partnership owners ONE, YML and COSCO from Hamburg on the IEX – South-East India–Europe Express service starting from November onwards have made the prospect for further growth better. The ten liner services which include container, general cargo, heavy cargo, and RO-RO-services connect the port with India several times a week. The two ports transport goods such as machinery and equipment, metals and metal products, chemical products, textiles and clothing. The Directorate General of Shipping ordered to prohibit on board a large number of single-use plastic products including ice cream containers, hot dish cups, microwave dishes and potato chips bags, on ships that are in Indian waters from January 1, 2020. The decision has been taken by Directorate General of Shipping following an appeal by Prime Minister Narendra Modi on August 15 to take an initiative towards freeing India of single-use plastics. The decision is supposed to be in the larger interest of the public and to protect the marine ecosystem. Items like bags, trays, containers, food packaging film, milk bottles, freezer bags, shampoo bottles, ice cream containers, bottles for water and other drinks, dispensing containers for cleaning fluid and biscuits trays are prohibited, including hot drink cups, insulated food packaging, protective packaging for fragile items, microwave dishes, ice cream tubs, potato chips bags and bottle caps. Apart from this, the Directorate has also banned the use of single-use plastic cutlery, plates and cups, up to 10 litres of bottles for water and other drinks, garbage and shopping bags and dispensing containers for cleaning fluids which are less than 10 litres volume with immediate impact. The Directorate has directed the authorities to ensure during surveys, inspection and audits of Indian ships that no single-use plastic is found or stored onboard any Indian ships. And, in case of repeated offence, it will be a case for detention. Further, the foreign ships intending to enter Indian waterways will have to declare single-use plastic items on board and no such item will be permitted to discharge at India ports.
Route planning systems shows the method in which the selected transport vehicles should supply the demand points by requested quantities of goods. To find the most cost-effective trips travelling salesman models can be used. In fact, in case of a large number of locations and other constraints, the resulting number of combinations doesn’t allow the model to be solved exactly. Route planning is an NP-hard the problem that is difficult to solve optimally. The route planning modules can use the expert rules. The most well-known classical heuristics are the Savings and Sweep algorithms and the most successful metaheuristic approach is the tabu search heuristics. Besides the travelling routes, the route planning package can graphically display the travel routes, provide various lists (routes, customers, orders, vehicles), or check the economics by calculating some statistics. Route planning systems do provide a lot of advantages to customers (improved service, increased reliability, reducing delivery times, quick response to special requests), increased transparency, independence on planner’s intuition, simpler training of new employees, reliable data for decisions or reduction of routine tasks, fewer errors). Currently, several integrated modules support transportation and route planning in information systems, e.g. JDA Transportation Planner (www.jda.com), Transportation Planning and Vehicle Scheduling library or Advanced Planner and Optimizer (APO) for SAP, Routing module for ERP, Sim Crest Route Planner fully integrated with Micro Dynamics NAV and others. Both types of transportation i.e both distribution and supply have to be planned. This functionality is usually provided by a module that is often called a Route Planning Module (RPM). This system is often included as a subsystem of another information system such as ERP (Enterprise Relation Management), CRM (Customer Relation Management) or SCM; the reason is that RPM usually needs some data that are recorded in these systems (e.g. information about customers, goods, locations). For the planning of transportation, the list of merchandise and list of available vehicles are needed. Both lists are prepared from detailed information such as dimensions of the cargo space, maximum weight of cargo, places of loading, places of delivery, quantities etc.
Cross-docking is a logistics strategy that is being used by many companies in different industries (e.g. retail firms and less-than-truckload (LTL) logistics providers). The basic idea behind cross-docking is to transfer incoming shipments directly to outgoing vehicles without storing them in between. This practice serves different purposes: the consolidation of shipments, a shorter delivery lead time, the reduction of costs, etc. In a traditional warehouse, goods are first received and then stored, for instance in pallet racks. On being requested by a customer, workers pick it from the storage and ship it to the destination. From these four major functions of warehousing (receiving, storage, order picking and shipping), storage and order picking are usually the most costly. Storage is expensive because of the inventory holding costs, order picking because it is labour intensive. One approach to reducing costs could be to improve one or more of these functions or to improve how they interact. Cross-docking eliminates the two most expensive handling operations: storage and order picking. Cross-docking refers to receiving a product from a supplier or manufacturer for several end destinations and consolidating this product with other suppliers’ product for common final delivery destinations. In this definition, the focus is on the consolidation of shipments to achieve economies in transportation costs. The Material Handling Industry of America (MHIA) defines cross-docking as “the process of moving merchandise from the receiving dock to shipping [dock] for shipping without placing it first into storage locations”. The focus is now on transshipping, not holding stock. This requires a correct synchronization of incoming (inbound) and outgoing (outbound) vehicles. However, perfect synchronization is difficult to achieve. Also, in practice, staging is required because much inbound freight needs to be sorted, consolidated and stored until the outbound shipment is complete. Cross-docking then can be described as the process of unloading freight from inbound vehicles and loading these goods into outbound vehicles, with minimal handling and with little or no storage in between. If the goods are temporally stored, this should be only for a short period of time. An exact limit is difficult to define, but many authors talk about 24 hours. If the goods are placed in a warehouse or on order picking shelves or if the staging takes several days or even weeks, it is not considered as cross-docking but as (traditional) warehousing. However, even if the products are staged for a longer time, some companies still consider it cross-docking, as long as the goods move from supplier to storage to customer virtually untouched except for truck loading. Many organization use a mixture of warehousing and cross-docking to combine the benefits of both approaches.
A barcode is a set of systems for automatic identification of goods, which also include digital media, magnetic, radiofrequency, acoustic and visual identification (a magnetic card, tag). It has the ability to quickly transmit information about the product to the electronic communication system. The bar code is an effective mean of telecommunication. By barcoding technology meant a set of tools and automated methods for collecting, recording, storing, processing, transmission and use of the information encoded by a barcode. Barcoding technology is a technology based on the use of the latest achievements of optoelectronic technology, a fundamentally new software and hardware, computer technology, automation, information systems and communication networks of all kinds. Today barcoding technologies cover all spheres of human activity, they are a universal means of business cooperation with all participants in the global economic system. The technology in general comprises the following steps:
• Object identification by giving it a digital, alphabetic or alphanumeric code;
• Representation of the code in the form of bars with a certain symbolism;
• Application of the bar code on physical media (product, packaging, labels, documents);
• Reading bar codes;
• Changing of bar codes into machine representation letters, numeric or alphanumeric data and transfer them to the computer. Performing these operations may be carried out on the basis of standard rules, regulations and requirements to ensure their full compatibility. The implementation of bar-coding is performed with the use of many different devices that can be divided into four groups: for the application of the barcode; for reading barcodes; for the collection and storage of data; for data transmission. This division is conditional since many devices provide multiple operations. A striking example of such devices are electronic shop scales, which provide weighting explanation, printing labels coated with a bar code, keyboard input, data accumulation and transfer them over the network. To use the technical means used in bar-code technology some supplies are needed. These supplies are label paper of various sizes for printers, ink ribbon and labels for thermal printing, and self-adhesive labels in various formats. The quality of consumables depends on the quality of the applied bar codes, their reliability and durability.
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.
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.