Category: University of Mumbai BMS Notes

While third-party logistics outsourcing is accepted business practice (though not without risk), corporations are now looking to outsource to a single partner who will assess, design, build, run and measure integrated comprehensive supply chain solutions on their behalf. This evolution in supply chain outsourcing is Fourth-party Logistics or 4PL.

A 4PL provider is a supply chain integrator. The 4PL assembles and manages all resources, capabilities and technology of an organisation’s Supply Chain and its array of providers.

An experienced and reliable 4PL provider will bring value and a reengineered approach to your organisation as it will manage the logistics process, regardless of what carriers, forwarders or warehouses are used. As the centralised contact with the client, 4PL has overall responsibility for logistics performance and the ability to impact the entire supply chain and not just single elements. Consider how many discrete discussions you need to have in your company to ensure your product gets into consumers hands.

Like Business Process Outsourcing, a 4PL solution aims to manage people, process and technology. Importantly, 4PL outsourcing must not be seen as a pure cost reduction issue and if it is considered as such then it is prone to failure. Adopting a 4PL approach brings a different perspective, knowledge, experience and technology to the existing in-house function. Successful 4PL partnerships will see both parties work side by side motivated by mutual success and reward.

Some of the 4PL benefits include: access to a broader base of potential suppliers; back-end system integration; increased market transparency for goods and services; standardisation and automation of order placement; reduced procurement costs and order cycle times. If your business and people are sufficiently mature you might also integrate the 4PL into the S&OP process. Think how powerful that could be.

Organisations are exploring this solution because it can improve their own bottom line through increased and sustainable business efficiency. A word of warning; do not go down this road unless your existing supply chain is already robust AND people are sufficiently experienced to cope with a very different way of doing business.

The five most common advantages companies discover with 4PL logistics utilization are:

1. Trusted Advocacy

4PL providers take logistics services to the next level by continually striving to improve their client’s supply chain procedures. Commitment between 4PL providers and their client is long-term, and it goes beyond transaction provisions.

4PL keep their client’s interests at the forefront of their focus because the relationship between a 4PL provider and a company is a valued partnership. This synergy emerges because parties committed to achieving the same goal.

Data collection and analysis is integral to optimizing a company’s supply chain management procedures. 4PL’s collect valuable data from all parts of a company’s supply chain, including other supply chain partners. Following collection, they use that data to operate within the best interests of their client.

4PL’s offer the convenience and security of an in-house logistics department with all of the benefits of outsourcing. Having a partner that will vouch and advocate for your company’s bottom line without the costly commitment of equipment and assets required for effective logistics is just one benefit of a 4PL service.

2. Customer Connectivity

The ways that customers and retailers connect is evolving, as is the supply chain management process. Online options have created new consumer habits. Customers are spending less time face-to-face with retailers and they are relying more heavily on online interfaces for their customer service connections.

While many believe online communications are harming the customer-company dynamic, 4PL providers can improve customer relations for their B2C clients by keeping consumers in close contact with their purchases.

When 4PL’s take on a client’s logistics needs they also take on the needs of their customers. For that reason, customer engagement is a top priority for qualified 4PL providers. Keeping customers informed about their purchase, from the moment they click “BUY” to the moment it lands in their hands, is a service that exemplifies quality customer care, as well as leads to better brand loyalty from consumers.

3. Improved Core Competencies

Operational improvements designed to streamline work and eliminate inefficiency allows 4PL logistics clients to reduce their spending habits. This can leave company resources free and available for redistribution.

4PL service adoption aids companies hoping to redistribute much needed resources away from wasteful logistic practices and directly into the company’s core competency efforts. By focusing on a company’s core foundations, while allowing 4PL experts to handle the distribution of products, clients find they can keep everyone focused on their primary tasks. When logistics are directed properly, productivity can only increase.

Just like business’ know their product and clients, so too do 4PL providers. Trusting 4PL providers to oversee an area they are experts in improves company efficiency.

4. Corporate Expansion

When growth is a company’s goal, 4PL providers can make that vision a reality with little disruption to daily operations. 4PL’s have access and relationships within the supply chain industry to easily assist business’ during times of growth and expansion.

4PL’s are supply chain architects that build reliable networks to support a growing company’s logistical needs. They possess good connections to national and international partners. Developing systems for the efficient execution of the flow of goods can be seamlessly accomplished with the right 4PL provider.

5. Corporate Clarity

4PL providers act as the single contact point between their client and their client’s supply chain process. Fourth-party logistics providers oversee and manage the complexities of a company’s logistical operations.

Having a singular contact point to coordinate each logistics step throughout every link of a company’s supply chain, from material sourcing, manufacturing considerations, and last-mile solutions, provides a unique look into a company’s overall operations.

4PL providers take that picture and use its information to find points where efficiency improvements can be made. Fresh eyes with a clear vision and focus on operational excellence, like those found at 4PL firms, can create efficiency strategies that go far beyond finding a low-cost shipping service.

4PL and Supply Chain Future

E-commerce retail options has created amazing opportunities and business endeavours that are operating on a global scale. Overnight, seemingly small businesses have been able to connect with clients and gain impressive exposure in locales far from their home. Such rapidly growing expansions online are great, but they don’t always translate with the limitations created by vast physical distances.

4PL providers are effectively increasing order fulfillment and shipping times, streamlining supply chains, and reducing unnecessary overhead costs that both companies and customers, are thrilled about. While those benefits are good on their own, it’s nice to see 4PL providing benefits beyond their intended scope.

Improved customer satisfaction, increased resources for furthering core competencies, and easy, scalable options for taking advantage of growth opportunities, are all benefits for those who use 4PL for effective supply chain management.

The supply chain management system thrives on the coordinated effort of the suppliers, the manufacturers, the transporters and the distributors to make the product available to the end user. In this entire setup, the ultimate objective is to give a finished product to the customer on his demand. So in order to achieve this goal, each party involved in this process must understand the importance of its role and thereby adhere to it diligently.

A global supply chain management system is not limited by the geographical boundary of a particular area or nation but addresses a company’s global operations. Why do companies go for global operations? The reasons can be many. One major reason is business expansion. This is the driving force that makes a company decide in favour of a global operation. However, fierce competition and demand for better products at affordable prices have made many MNCs to relook and redesign their global operation system. The idea is to provide better products to consumers thereby increasing their market share. So every MNC tries to have a time bound system in place to oversee everything starting from getting raw materials to manufacturing, inventory, order management and ultimately distribution and delivery to the customer. The whole process is integrated and functions in a seamless manner.

The global supply chain management system has to be a cost effective and efficient way of doing business. The entire process starting from procurement of raw materials to the distribution of the finished product has to be cost effective. Therefore many companies open up overseas manufacturing units and service centers to manufacture products on time and provide timely service to its customers.

The positive trends:

• Better brains at cheaper cost: In some countries, a company can have a cheaper labour cost as compared to some other developed nations. This is a lucrative option for a company. That is why many MNCs have outsourced a part of their operation to other countries where they can reduce the cost of operation without compromising on quality.
• Better Products for Consumers: As it is a global market and each company is trying to increase its market share, the key to success is increasing their customer base. So companies try to manufacture better products at competitive rates to gain new customers and to hold on to the old ones.
• Improvement in technology: In order to survive in the fiercely competitive global market, companies have to invest in technology and quality operations thereby giving better products to the consumer.
• Better Performance: This global exposure makes every company to enhance its product quality and improve performance. They have to continuously explore avenues to manufacture better products and provide the customers what they really need on time, every time.

The global supply management system opens up new business vistas not only for the parent company but is also responsible for providing each trader to give his best so that the entire chain works in a coherent and seamless manner. In this system, each one benefits provided each one contributes on time.

Technological Trends

Blockchain Technology

The emergence of blockchain technology has enabled logistic companies to failsafe digital contracts. The use of this upcoming technology allows the different stakeholders of the logistics industry such as manufacturers, suppliers, customers, auditors, warehouse managers, and others to create a transparent and efficient system for recording transactions, tracking assets, and managing all documents involved in the logistics process. The implementation of the blockchain technology is one of the most prominent logistics trends gaining traction in the global blockchain technology market in transportation and logistics industry as it can increase the efficiency and transparency of supply chains and is expected to impact everything from warehousing to delivery top payment positively during the next few years.

Digitalization of the Logistics Industry

With digitalization shaping almost all the industries across the globe, logistics industry is no exception. Rising digital literacy and consumer awareness about the usage of different online platforms for making customized purchasing decisions, the digitalization of the logistics industry has emerged as the key trend gaining utmost traction. The use of digitization in the logistics industry is further expected to bring about significant reduction in procurement and supply chain costs while giving a considerable boost to the overall revenues. The integration of digital channels in the logistics industry is another critical logistics trends further allowing the logistics service providers to lend transparency to the customers while optimizing solutions for increased safety and efficiency.

Emergence of 3PL and 5PL

The proliferation of third-party logistics (3PL) and fifth-party logistics (5PL) is expected to accelerate the global logistics market during the predicted period. During 2017, the 3PL was able to contribute the highest to the global logistics market share. 3PL is responsible for encompassing a broad range of end-to-end transport and logistics needs including transporting goods, maintaining inventory logs and travel insurance, and offering a shield against property loss. Furthermore, according to Technavio’s express delivery market in Brazil, 3PL is one of those advancements in supply chain outsourcing, which provides decreased procurement expenses as well as reduced delivery times.  The rising complexities in the global supply chain market are further ensuring the adoption of 5PL, wherein, providers of 5PL solutions often link e-businesses to achieve minimum cost targets.

Efficient Last Mile Deliveries

With the continuously increasing proliferation of e-commerce companies, the provision of efficient last mile deliveries is witnessing a major upswing to become one of the most critical aspect of creating differentiation of services among the competitors. Furthermore, getting a package within the same day of delivery is almost common in the present days, resulting in the growth of the same-day delivery market in the US. Businesses are also witnessing a greater emphasis on including same day delivery options across industries including pharmaceuticals and food and beverages. Furthermore, along with the same-day delivery, the consumers are also expecting a higher level of services while encouraging large retailers including Walmart and Amazon to add DIY last mile delivery divisions in their own companies instead of outsourcing. Consequently, the continuous efforts of logistics companies to offer efficient last mile deliveries is another logistics trends expected to offer promising logistics market’s growth during the predicted period. The need for getting the orders not just right but perfect will also allow companies to offer ultimate customer satisfaction.

Integration of Drones and Smart Glasses

The rising integration of drones and smart glasses in the logistics industry has improved the flexibility and speed of delivery, in turn, impacting the growth of last mile logistics market during the predicted period. Self-driving vehicles, autonomous vehicles and trucks have been able to maintain high reliability and same-day delivery in both urban and rural areas. Furthermore, integration with smart glasses backed by augmented reality will make deliveries in the transportation and logistics industry much easier by hands-free route searches, face recognition for error-free deliveries and personalized deliveries. The adoption of AI integrated smart glasses will increase the operational efficiency of first and last mile logistics along with flexibility and speed of delivery.

Adoption of Data Analytics and Big Data Logistics

The use of Big Data and Data Analytics in the logistics industry is allowing several stakeholders involved in the business to make informed purchase decisions. Companies are now using big data to anticipate busy periods, potential future supply shortage and other insights for making strategic decisions to improve their market positions and offer a significant competitive advantage over other counterparts. Furthermore, as per the Council of Supply Chain Management Professionals, over 90% of shippers and third-party logistics firms predict that data-driven decision-making is extremely crucial to supply chain activities as the big data improves quality and performance by offering effective supply and demand forecast, inventory management, route optimization, and efficient labor management, in turn, boosting the growth of the global third-party logistics market during the predicted period.

Logistics Automation and IoT

Automation has been gaining traction in the logistics industry as well with the continuous adoption of Internet of Things (IoT). The inception of logistics 4.0 is one of the key logistics trends transforming the global supply chain market. Shortcomings including transportation delays, operator errors, poor monitoring of cargo, outdated IT failures, and thefts are being overcome by the integration of IoT in the logistics industry. Furthermore, this next generation of successful supply chain management is expected to leverage IoT and edge computing for yielding real-time automated insights. For instance, US-based Union Pacific has introduced an IoT-based system to predict equipment failures and reduce derailment risks by using visual and acoustic sensors on tracks. Such rising adoption of logistics automation and IoT has boosted the emergence of connected logistics.

The Golden Quadrilateral, which connects four major cities in India, is the fifth-longest highway in the world. This column presents research that finds that by improving connectivity, the highway has helped with the efficient distribution of industries across locations. It has facilitated the shift of land and building intensive industries from the core to peripheries of cities, and has made medium-sized cities more attractive locations for manufacturing activity.

Transport investments within cities and across cities are essential for economic growth, job creation, and poverty reduction. Beyond simply facilitating cheaper and more efficient movements of goods, people, and ideas within cities, transport affects the distribution of economic activity across cities.

Many researchers have shown that transport investment plays an important role in spatial development and urbanisation. Henderson et al (2001) find that industrial decentralisation in South Korea is attributable to massive transport and communications infrastructure investments. Baum-Snow et al (2012) show that transport infrastructure aided the decentralisation of industrial production and population in Chinese cities. Several other studies find positive economic effects in ‘non-nodal’ locations due to transportation infrastructure in China (e.g. Banerjee et al 2012, Roberts et al 2012). Desmet et al (2012) have argued that manufacturing in India is slowly moving away from high-density districts to districts that are less congested, allowing industrial activity to spread more equally across space. Recently, Datta (2011) found a decline in the number of days of inventory stock held by firms in India as a result of a large scale highway construction (Golden Quadrilateral Project).

The Golden Quadrilateral (GQ) is a national highway network connecting most of the major industrial, agricultural and cultural centres of India. It forms a quadrilateral connecting the four major metro cities of India, viz., Delhi (north), Kolkata (east), Mumbai (west) and Chennai (south). Other cities connected by this network include Ahmedabad, Bengaluru, Balasore, Bhubaneswar, Cuttack, Durgapur, Jaipur, Kanpur, Pune, Kolhapur, Surat, Vijayawada, Ajmer, Vizag, Bodhgaya, Varanasi, Agra, Mathura, Dhanbad, Gandhinagar, Udaipur, and Vadodara. The main objective of these super highways is to reduce the distance and time between the four mega cities of India.

At 5,846 kilometres (3,633 mi), it is the largest highway project in India and the fifth longest in the world. It is the first phase of the National Highways Development Project (NHDP), and consists of four- and six-lane express highways, built at a cost of ₹600 billion (US$8.4 billion). The project was planned by 1999, launched in 2001, and was completed in 2012.

The Golden Quadrilateral project is managed by the National Highways Authority of India (NHAI) under the Ministry of Road, Transport and Highways. The vast majority of the system is not access controlled, although safety features such as guardrails, shoulders, and high-visibility signs are in use. The Mumbai–Pune Expressway, the first controlled-access toll road to be built in India, is a part of the GQ Project but not funded by NHAI, and is separate from the old Mumbai – Pune section of National Highway 48 (India). Infrastructure Leasing & Financial Services (IL&FS) has been one of the major contributors to the infrastructural development activity in the GQ project.

Route

Only National Highways are used in the Golden Quadrilateral. The four legs use the following National Highways (new numbering system):

Delhi – Kolkata: NH 44 from Delhi to Agra & NH 19 from Agra to Kolkata

Delhi – Mumbai – Chennai: NH 48

Kolkata – Chennai: NH 16

Road transport is the principal mode of movement of goods and people in India, accounting for 65% of freight movement and 80% of passenger traffic. While national highways constitute about 1.7% of the road network, they carry more than 40% of the total traffic volume.

Highways and spatial development

Can investment in infrastructure such as highways play a role in facilitating the shift of manufacturing activity from large, dense cities to medium-sized cities? We group districts into three groups, based on their population density.

GQ upgrades have increased the number of new entries the most in high- and medium-density districts that lie 0-10km from the GQ network. For instance, moderate-density districts like Surat in Gujarat or Srikakulam in Andhra Pradesh that lie on the GQ highway registered an increase in new output and new establishment counts of more than 100% after GQ upgrades. On the other hand, the GQ upgrades are not linked to heightened entry or performance in low-density areas. These results suggest that the improved connectivity enables manufacturing establishments to efficiently locate in cities with medium population density, but that agglomeration economies prevalent for the sector discourage entry in low-density places.

An Inland Container Depot (also known as ICD) is a container handling and storage facility situated at inland points away from sea ports. Inland Container Depots help importers and exporters to handle their shipments near their location.

ICD is formed to help importers and exporters to handle their shipments near their place of location. If the sea port is away from the places of importers and exporters Inland Container Depot (ICD) helps them to save time and money in the procedures and formalities. In Inland Container Depot (ICD), a combination of services of sea custodian, customs department, carriers, freight forwarders, customs brokers etc. are carried out to facilitate exporters and importers for smooth handling of cargo. ICD is also act as Dry port or CFS in many countries.

Advantages

Warehouses

• Each warehouse is 13mtr high with G+6 palletized racking systems, super-flat flooring and state-of-the-art material handling equipment
• Fully insulated roofs to ensure comfortable ambient temperature
• Each warehouse has customs officials for the ease of customers
• All warehouses are earthquake resistant and designed as per seismic zone 4 requirements.
• Availability of temperature controlled storage space

Container yard

• Fully paved container yard offering an annual throughput capacity of 120,000 TEUs per annum
• The hubs have container yards with pavement quality concrete flooring for stacking containers in a G+5 stacking system using state-of-the-art Rubber Tyre Gantry Cranes (RTGCs) and reach stackers
• Dedicated scrap handling yard, empty yard and segregated maintenance and repair yard
• Specialized storm water drainage system with a capacity to handle rainfall with peak intensity of 156 mm/hr or 10 cubic meters per second

Reefer handling

State of the art, tower-based dedicated reefer container handling area consisting of 96 reefer points, expandable to 200 reefer points based on demand, backed by two diesel generator sets of 500 KVA capacity offering 100 per cent power back up for handling any power outage situations.

• Hazardous cargo handling: Primary and secondary firefighting systems along with fire engines manned by trained professionals.
• CCTV surveillance, by stringent security and safety measures
• Security and access control to prohibit unauthorized access
• Office space for customs, shipping line/agents, CHA(s), surveyors, etc.
• Fully functional customs electronic data interchange facility.
• Comprehensive IT system with network infrastructure.
• Supporting infrastructure like weighbridge, road network, uninterrupted water and power supply systems and 100% power back-up using diesel generator sets
• Other business ancillary services like on-site banks, insurance and currency exchange services

Container Freight Stations

A container freight station is a facility where freight shipments are consolidated or de-consolidated, and staged between transport legs. A CFS is typically located in proximity to an ocean, port, or airport where cargo containers are transported to and from.

Do you have shipping containers that need a home at which to consolidate, and from which to ship out? A container freight station is a location, usually a warehouse, where products and other goods are collected, stored, and where they wait to be shipped to the next location. This process is a major part of the product shipping industry and it’s important to understand how the process works. They are an integral part of any LCL (Less than Container Load) shipping.

When an order prepared for shipping is less than a full container, it is most often more cost effective to ship by LCL. In this instance, the freight is taken to a warehouse where it waits for consolidation, or in some cases, for the rest of the goods to catch up. The container is then loaded onto a truck or ship and sent to its destination.

A good, trustworthy container freight station is run by professionals who understand what it takes to safely store and efficiently ship your products. They skillfully handle the shipment of your products and follow your delivery instructions.

CFS Receiving Services include:

• Moving empty containers from a Container Yard to a Container Freight Station
• Drayage of loaded containers from the Container Freight Station to the Container Yard
• Tallying
• Issuing dock receipt or shipping order
• The physical movement of cargo in or out of a Container Freight Station
• Stuffing, sealing and marking of containers for labelling and identification
• Storage of containers
• Ordinary sorting and stacking of containers pre or post shipment
• Preparing containers internal load plan

Principles of Logistics Information System

Availability Logistics information must be readily and consistently available. Information may be regarding order status, inventory status, etc Rapid availability is very important to respond to decisions. Information availability can reduce customer requirements and improve management uncertainties in operations and planning

Accuracy Logistics information must reflect the current status of all the activities like inventory levels, customer orders etc. E.g.: The actual level of inventories should match with the LIS reported inventory levels. However, if there is a large difference between the actual inventories and those indicated by the information system inventory levels, buffer stock or safety stock would be required to cover up the uncertainty.

Timeliness The logistics information must be timely to provide quick management feedback. Timeliness is measured in terms of delay that takes place between the commencement and occurrence of an activity and when the activity is actually visible in the logistical information system. E.g.: a company may receive a certain order which a customer desires to be executed urgently. However, the database information system of the company is not fed with the details regarding the urgency of the order for whatever reasons. This will cause delay in the actual execution of the order. This delay indicates ineffectiveness in the planning process. Similar delays can occur when the goods are moved from VVIP to finished goods. All this calls for timely management controls so that corrective actions can be taken to minimize loss. Hence timely information is very necessary to reduce uncertainty.

Logistics information system

Converting data to information, portraying it in a manner useful for decision making, and interfacing the information with decision-assisting methods are considered to be at the heart of an information system. Logistics information systems are a subset of the firm’s total information system, and it is directed to the particular problems of logistics decision making.

There are three distinct elements that make up this system:

• The input
• The database and its associated manipulations
• The output

Logistics: The Inputs

The inputs are data items needed for planning and operating logistics system obtained from sources like customers, company records, and published data and company personnel.

Logistics: The Database and Its Associated Manipulations

Management of the database involves selection of the data to be stored and retrieved, choice of the methods of analysis and choice of the basic data-processing procedures.

Logistics: The Outputs

The outputs of a logistics information system include:

• Summary reports of cost or performance statistics
• Status reports of inventories or order progress
• Exception reports that compare desired performance with actual performance
• Reports that initiate action

The element of information and control is needed by all the elements to act as triggers to various operational procedures. We have mentioned the information needed for inventory. Order levels help decide what orders need to be picked and packed in warehouses and enable the planning and organisation of transport. Information and control’s role are to help design information systems that can control operational procedures. They are also key in the forecasting of demand and inventory as already mentioned.

Along with transport infrastructure, an efficient information and communication infrastructure is vital for the development of logistics concepts and for the performance of logistics processes. This infrastructure is to a great extent based on telecommunication infrastructure and can be set up using different networks (landline, mobile telephony, radio network, microwave radio relay), depending on the services offered (GSM, UMTS) and on the data transfer. There is, however, a tendency towards the development of a uniform network infrastructure through which all services can be offered and utilized. This network infrastructure is based on the Internet Protocol (IP) which replaces the circuit-switched networks with a packet-switched network infrastructure.

Telecommunication networks can exhibit different structures (network typology) which utilize various types of hardware and access methods for data connection and transmission. These, in turn, determine the rate of transmission, the data throughput, and data security concepts. Thus, local networks (LANs – Local Area Networks) consist of several computers and external devices (printers, scanner etc.) which are interconnected in one building. Internet access is given via a router. In contrast to LANs, WANs (Wide Area Networks) cover a large geographical area. Commercial WANs are designed for maximum capacity utilization and consist of circuit-switched connections, point-to-point connections, packet-switched connections, and Virtual Private Networks (VPN). In order to support these services and to achieve high transmission speeds, optical transmission media (fiberglass) are used more and more frequently for broadband infrastructure.

All these hardware and software installations are usually hosted in IT rooms, server rooms, or in data centers which display a specific infrastructure. The infrastructure of data centers includes the provision of rooms, energy supply, air conditioning, and object security

The development of IT and computer technologies does not only substantially influence the kind of services rendered in data centers. it also affects the property and room layout. Data centers are a specific type of real estate which are also termed collocation centers, IT centers, IT hotels, server hotels, telehouses, and so forth.

We can also see an increase in the number of data center parks in which companies rent cages, several rooms, or entire buildings which are then equipped or (re-) constructed according to the customer’s specifications. These types of solutions offer the advantage of redundant provisioning of building infrastructure as well as the possibility to provide office space with emergency workplaces. These workplaces can be utilized in emergency situations (disaster recovery, business continuity) in order to continue business without interruption, which is also becoming increasingly important in a logistical context.

Satellite Systems and Satellite Navigation

World-wide telecommunication is to a great extent based on satellite systems. This technology makes it possible to set up a comprehensive infrastructure that offers services with high data transmission rates. A logistical example of this is the ERMTS (European Railway Transport Management System), which offers several projects and services in the area of railroad information systems, as for example the international GSM-R-network (Global System for Mobile Communication Railways). This network is a platform for commercial railroad radio systems.

Apart from the support of telecommunication services, satellites also offer satellite navigation as one of their core functions. This method enables the determination of an object’s position. Using suitable technologies and programs, modern satellite navigation makes it possible to determine the coordinates of locations based on their distances to at least three satellites. The construction of the European satellite system Galileo, due to be operational by 2013, is of paramount significance for the commercial use of satellite systems. Galileo will be a system of the European Union which adds to the already existing state-owned US satellite system GPS (Global Positioning System) and to the Russian system Glonass (Globalnaja Nawigazionnaja Sputnikowaja Sistema). The system will comprise 30 satellites. Galileo will make it possible to offer different services which vary in regard to accuracy, number of signals, and reliability of service.

Commercial satellite navigation services are especially suitable for logistics and can be used for the navigation of continental transport, telematics platforms, for locating purposes in aviation and shipping, and as research platforms for transport and logistics systems. The additional availability of these applications in comparison to existing systems is mainly due to the system’s high accuracy and its world-wide availability. Central to these applications is the localization and tracking of goods which are transported in a multi-modal manner. This requires constant location of the respective carriers and of the goods transported, and all parties involved in the supply chain need to be able to continuously obtain information across all transport modes and independent of their location (location information).

Multi-Modal Logistics Parks (MMLPs) are a key policy initiative of the Government of India to improve the country’s logistics sector by lowering overall freight costs, reducing vehicular pollution and congestion, and cutting warehousing costs. The government’s Ministry of Road Transport and Highways (MoRTH) is developing multi-modal logistics parks at selected locations in the country under its Logistics Efficiency Enhancement Program (LEEP). India is burdened with high logistics costs, which account for about 13% of the value of goods sold in the economy compared with 8% in other major economies. The average cost to export/import one container in India is about 72% higher than in China.

LEEP, which is spearheaded by the MoRTH and the National Highways Authority of India (NHAI), aims to enhance freight transport in India by reducing costs and time, and improving the tracking and traceability of consignments through infrastructural, procedural, and information technology interventions.

The government defines an MMLP as a freight-handling facility encompassing a minimum area of 100 acres (40.5 hectares), with various modes of transport access, and comprising mechanized warehouses, specialized storage solutions such as cold storage, facilities for mechanized material handling and inter-modal transfer container terminals, and bulk and break-bulk cargo terminals. Logistics parks will further provide value-added services such as customs clearance with bonded storage yards, quarantine zones, testing facilities, and warehousing management services. Provisions will also be made for late-stage manufacturing activities such as kitting and final assembly, grading, sorting, labelling and packaging activities, re-working, and returns management

Logistic parks are basically Industrial areas or defined areas for activities relating to transport, logistics and the distribution of goods which can be regional, national and/or international transit, and carried out by various operators. Owners or occupants of buildings and facilities (warehouses, break-bulk centers, storage areas, offices, car parks, etc.) are generally the operators. Logistics Park is centered in the areas of logistics operations. Logistics parks have a specific scale as the size determines the facilities, functions, and services that are possible to carry.

The contemporary logistics park has two chief functions:-

• The logistics organization
• The logistics management functions

Function of logistic parks

• Now with Logistics Parks, the shippers are able to plan out their inventories without any hindrance.
• The requirements of demand and supply are being met on time.
• Logistics Parks can prove to be a huge success if they are located in the industrial belts, and near airports, ports, and ICDs.
• They pave the route for other industries like equipment suppliers, construction companies, consultants, and trucking companies
• The logistics parks offer a larger amount of space for storing goods and products. They are larger and better managed than common warehouses.
• The logistics parks are also suitably connected through all the essential means of transportation. These parks are more concentrated in urban places and thus further connected with shipping and transferring of goods.
• With mediators being eliminated or marginalized due to streamlining the supply chain in India, goods movement has become more cost-efficient.
• They improve environmental quality by reducing the number of trucks on roads.
• Logistics Park offers a strategic location with good road, rail, and air connectivity. Logistics Parks have wide roads which are sufficient for the free flow of two way traffic during the day and night.
• They promote economic development by attracting businesses and generating employment
• The area is available for multiple customers and commerce for future expansion.
• Ample truck and office parking space.
• The highly secured area with required security arrangements.
• Mingled park management for general maintenance, landscaping, security & waste control.
• State-of-the-art warehousing & cold storage facilities.
• They promote growth expectations in freight
• For amenities like banking, insurance, office space, accommodation, catering, and other services facilities.
• Connectivity with ports & Inland Container Depot (ICD).

In commerce, global supply-chain management (GSCM) is defined as the distribution of goods and services throughout a trans-national companies’ global network to maximize profit and minimize waste. Essentially, global supply chain-management is the same as supply-chain management, but it focuses on companies and organizations that are trans-national.

Global supply-chain management has six main areas of concentration: logistics management, competitor orientation, customer orientation, supply-chain coordination, supply management, and operations management. These six areas of concentration can be divided into four main areas: marketing, logistics, supply management, and operations management. Successful management of a global supply chain also requires complying with various international regulations set by a variety of non-governmental organizations (e.g. The United Nations).

Global supply-chain management can be impacted by several factors who impose policies that regulate certain aspects of supply chains. Governmental and non-governmental organizations play a key role in the field as they create and enforce laws or regulations which companies must abide by. These regulatory policies often regulate social issues that pertain to the implementation and operation of a global supply chain (e.g. labour, environmental, etc.). These regulatory policies force companies to obey the regulations set in place which often impact a company’s profit.

Operating and managing a global supply chain comes with several risks. These risks can be divided into two main categories: supply-side risk and demand side risk.[4] Supply-side risk is a category that includes risks accompanied by the availability of raw materials which effects the ability of the company to satisfy customer demands. Demand-side risk is a category that includes risks that pertain to the availability of the finished product. Depending on the supply chain, a manager may choose to minimize or take on these risks.

Successful global supply-chain management occurs after implementing the appropriate framework of concentration, complying with international regulations set by governments and non-governmental organizations, and recognizing and appropriately handling the risks involved while maximizing profit and minimizing waste.

Management theories

The 21st-century logistics framework

The 21st-century logistics framework is a global supply-chain management theory that was developed at Michigan State University and was introduced to the business world in 1999. The framework identifies six business competencies that are necessary to operate a global supply chain.

There are multiple underlying capabilities for each competency which influence management decisions. The six competencies are: customer integration, internal integration, material/service supplier integration, technology and planning integration, measurement integration, and relationship integration.

The capabilities that are attached the competency of customer integration are: segmental focus, relevancy, responsiveness, and flexibility. Segmental focus refers to the ability to develop customer aimed programs that are specifically designed to achieve maximum customer success. Relevancy refers to the ability to maintain and modify customer focuses to reflect the constant changing expectations. Responsiveness refers to the ability to accommodate unique and unforeseen customer requests/requirements. Flexibility refers to the ability to appropriately adapt to any unexpected circumstance.

Cross-functional unification, standardization, simplification, and compliance are the underlying capabilities that are associated with the internal integration competency. Cross-functional unification refers to the ability to put potential co-operative activities into manageable operational processes. Standardization refers to the ability to implement policies/procedures that address any concurrent operations. Simplification refers to the ability to identify, adopt, implement, and improve the best possible business practices. Compliance refers to the ability to follow any established policies.

The capabilities that are related to material/service supplier integration are: strategic alignment, operational fusion, financial linkage, and supplier management. The ability to develop a corporate culture or common vision that create a shared responsibility is defined as strategic alignment. The ability to fuse systems together to reduce redundancy is defined as operational fusion. Financial linkage refers to ability to join financial ventures with suppliers to achieve common goals. Supplier management refers to the ability to extend management to include the hierarchical structure of suppliers.

Information management, internal communication, connectivity, and collaborative forecasting and planning are the capabilities that encompassed by technology and planning integration. The ability to use seamless transactions across the entire chain to allocate resources throughout the chain is called information management. Internal communication refers to the ability to communicate within the business in appropriate manner. The ability to communicate and exchange information between the business and the external supply chain partner is called connectivity. Collaborative forecasting and planning refers to the ability to collaborate with customers to identify and develop shared visions.

The capabilities that underlie measurement integration are: functional assessment, comprehensive metrics, and financial impact. Functional assessment refers to the ability to develop and implement an appropriate performance measurement tool. Comprehensive metrics refers to the ability to implement cross-business performance standards. Financial impact refers to the direct link between overall supply chain performance and the results of the financial measurement.

The capabilities that underlie relationship integration are: role specificity, guidelines, information sharing, and gain/risk sharing. Role specificity refers to the ability to clearly define leadership and establish a set of shared and individual responsibilities. Guidelines refers to the ability to create and implement policies/rules that govern everyday interactions. Information sharing refers to the willingness to share important information (often including financial, technical, or strategic information) throughout the supply chain. Gain/risk sharing refers to the appropriately divide and allocate rewards/penalties.

The 21st-century logistics framework allows managers to identify and implement the most important underlying capabilities that are encompassed in the six business competencies. The framework gives managers the freedom to decide what they believe to be the most important capabilities that need to be implemented to run a successful global supply chain.

Human collaboration theory

The human collaboration theory suggests that there is strong evidence to prove that investment in supply-chain management have the largest impacts when they focus on enabling supply chain collaboration. This management theory focuses on the managers ability to invest in and promote human collaboration between employees throughout the global supply chain.

Human collaboration is defined as the use of skills through harmonization of individuals, teams and organizations to achieve greater things not achievable by an individual person. The human collaboration theory/framework lays out four key components. The first component deals with the forces that drive change, the second focuses on people-technology-process assets that create network collaboration, the third deals with resisting forces which encourage people to resist collaboration, and the fourth component looks at the desired collaboration performance. The theory states that to implement and operate a successful global supply chain, a manager must understand and use these components.

The theory states that to implement and operate the best collaboration system, a manager must; build trust between the different players of the chain (supplier and manufacturer), establish a culture which supports decision making and work, implement a proper reward system, and use synergistic activities.

According to the theories creators, a manager must follow four steps to transform their network into a more collaborative network. The first step is to recognize that to be competitive the company will require innovations which can be proposed by people outside the corporate boundary and therefore to access these people they need to be more collaborative with external partners. They then must alter their views of achieving collaboration by acknowledging the different types of collaboration (transactional, co-operative, coordinated, synchronized). Next, a manager must develop a collaborative plan that achieve the goals he/she sets out to achieve. Finally a manager must develop the right controls to ensure the goals/mission can be met. If a manager follows the recommendations made by this theory, then they will have implemented a proper global supply chain that focuses on human collaboration which in turn will yield better results.

The rapid increase in world trade in the past decade has restructured the global maritime industry and has brought about new developments, deregulation, liberalization and increased competition.

There have been dramatic changes in the mode of world trade and cargo transportation, characterized by the prevalence of business-to-business and integrated supply chains. These changes have been embodied in the increasing demand for value-added logistics services and the integration of various transportation modes.

As a consequence, high-quality logistics services and the effective and efficient integration of transport and logistics systems offered by a maritime operator (i.e. a shipping company or port/terminal operator) has become an important issue.

Maritime logistics has been traditionally regarded as the primary means of transporting parts and finished goods on a global scale and has recently attracted considerable attention from academics and practitioners alike.

However, the term ‘maritime logistics,’ is not easy to define and its precise definition, scope and role within global supply chains are yet to be established.

On the one hand, maritime transport (i.e. shipping and ports) is clearly concerned with the transportation of goods and/or passengers between two or more seaports by sea; on the other hand, logistics is the function responsible for the flow of materials from suppliers into an organization, through operations within the organization and then out to customers.

A supply chain is composed of a series of activities and organizations that materials (i.e. raw materials and information) move through on their journey from initial suppliers to final customers.

Supply chain management involves the integration of all key business operations across the supply chain.

In general, logistics and supply chain management relate to the coordinated management of the various functions in charge of the flow of materials from suppliers to an organization through a number of operations across and within the organization, and then reaching out to its consumers.

Based on this clean-cut understanding, in 2006 Photis Panayides, one of the authors of Maritime Logistics, further elaborated on the issue of convergence of maritime transport and logistics.

These two terms are largely attributed to the physical integration of modes of transport facilitated by containerization and the evolving demands of end-users that require the application of logistics concepts and the achievement of logistics goals.  At the centre of maritime logistics is, therefore, the concept of integration, be it physical (intermodal or multimodal), economic/strategic (vertical integration, governance structure) or organizational (relational, people and process integration across organizations) as an ongoing attempt to create greater value for shareholders.

At the cutting edge in its assessment of the industry, Maritime Logistics covers the whole scope of maritime logistics and examines latest logistical developments within the port and shipping industry.

Benefits.

Economical

Hands down, the ocean shipping industry offers the most competitive freight costs to shippers, especially over long distances. By comparison, some estimates show that ocean freight shipping costs are generally four to six times less expensive than air. With statistics like this one, it is easy to argue that ocean transportation is the cheapest international shipping option.  

Efficiency

No matter the size of your shipments, sea freight companies can usually accommodate your needs. Smaller shipments can be grouped together with other cargo to fill a container, allowing for cost-sharing of the transportation services. Larger cargo can fill one or more containers, offering shippers unmatched bulk options. In fact, vessels are the ideal way to move high volumes of cargo as they are designed to carry large amounts of goods or raw materials.

Oversized, heavy and bulky cargo capability

A major advantage of sea freight shipping is shipping companies’ ability to handle oversized, heavy or bulky cargo often referred to as breakbulk or Not in Trailer (NIT) loads. Such cargo could include large vehicles, equipment, construction materials and more. Oftentimes too heavy or large for air freight or even over-the-road transportation, very large cargo is not a problem on many shipping vessels.

Safety

Ships are designed to carry hazardous materials and dangerous cargo safely. The industry is well-versed in the handling of such goods and has regulations in place to ensure the safety of the vessel, crew, cargo and environment. Cargo loss caused by incidents during transportation is continually dropping as maritime safety increases, and has dropped significantly in the past decade. Containers are designed to be sealed and locked during transportation for extra security.

Environmental friendliness

When compared to sea shipping, air and many other forms of transportation have much higher carbon footprints a definite disadvantage for the environment. Ships, on the other hand, provide the most carbon-efficient mode of transportation and produce fewer grams of exhaust gas emissions for each ton of cargo transported than any other shipment method. These already-low emissions continue to trend downward as technology advances, new ships come online and as liquefied natural gas (LNG)-powered options are utilized.

The rise of on-demand delivery has forced modern-day businesses to rethink their traditional logistic operation models. Outsourcing the entire function to a trustworthy 3PL partner has become a viable option since it reduces the complexity of achieving deliveries until the last mile.

Logistic outsourcing is a brilliant way to free up resources and also achieve cost efficiency. The benefits have lured even enterprise behemoths like HP, Procter & Gamble, Apple and others into entrusting their logistic operations to 3PL experts.

The benefits of logistics outsourcing come in several forms savings in operating costs, savings in human capital, streamlined operations, no lock-in of working capital and well-connected global delivery endpoints to name a few. Let’s take a closer look at some of the additional advantages:

1. Reduces burden of back-office management

On the surface, the logistic function appears to be simple: sending physical packages from point A to point B. However, before each consignment is sent out on transit, there is paperwork, auditing and verification to be conducted and documented.

3PL outsourcing service providers will have the necessary backend personnel and systems in place to take care of these procedures. From assigning a dispatch note and carrying out physical verification, to ensuring that all shipping papers are in order, logistics outsourcing can take care of the routine activities, sparing time for the business to focus on other priorities.

2. Economies of scale

3PL players usually have a globally distributed network of carriers and fleets which allow them to reach any destination with ease. Since the function is outsourced, it is easy to scale up or scale down the logistic reach of the business without having to set up owned infrastructure and personnel.

3. Real-time visibility of inventory

Professional logistic outsourcing service providers use ERP systems or cloud-based Warehouse Management Systems to help track inventory on a real-time basis. This data can also be received from the service provider on a regular basis for supply chain management planning.

4. Expert documentation handling

Logistics, especially cross-border logistics, requires adherence to sophisticated paperwork. For a business that has logistics only as a small function or department, this can be a tedious job to do on a routine basis. Logistics outsourcing service providers have the domain expertise and knowledge to take care of all kinds of paperwork involved like inter-connected carrier contracts, insurance certificates, bill of lading, certificate of origin, etc.

Disadvantages of Logistic Outsourcing

While logistic outsourcing delivers high on economic benefits, it also riddled with pitfalls that businesses must safeguard against.

1. Outsourcing without proper appraisal process

A good logistics partner is hard to find. The appraisal process itself will include gathering quotes and doing quality reports to check if the provider meets benchmark standards and so on. Rushing through the tender process without adhering to a well-thought process will lead to hassles in the future.

2. Choosing a low-pricing vendor for cost-benefit

An after effect of rushing through the logistic outsourcing vendor process is that you end up signing the deal with someone who offers the lowest rates. As Sun Tzu, the legendary military leader once said, “The line between disorder and order lies in logistics.”

Outsourcing the function to a low-priced vendor who cuts corners might actually create chaos rather than an orderly logistics function. There is a reason why top-notch 3PL players charge a premium rate. It costs a lot to have personnel and processes in place to ensure perfect paperwork, timely coordination of carriers, warehouse management and much more.

3. Not specifying roles and responsibilities in writing

Logistics is a subset of supply chain management which by itself is a combination of several micro-steps. This increases the complexity in logistics planning and implementation.

Unless the roles, responsibilities and tasks of each party take the form of an explicitly written a Service Level Agreement (SLA), there could be serious complications when the process kicks into action.

4. Not viewing logistics outsourcing as a strategy

Logistics plays a key role in the overall strategy of an organization. Moreover, the business environment and customer demands are not what they used to be a few years ago. E-commerce, mobility, on-demand services and other advancements, have reformed the commerce landscape.

If you are outsourcing logistics merely as a function to be done with, and not as a strategic element, then the business is not going to gain much despite the economy of scale.

5. Disconnect between clients & outsourcing agents

Does your logistic outsourcing agent really know what you are trying to do? Is it last mile delivery that your focus is on or faster delivery than the competition? A lack of consensus between the parties can lead to a waste of resources and also lead to cost overruns and delayed deliveries.