● Principles of Business

Logistics and Supply Chain

Objectives:
● Identify the problems likely to be encountered in distribution
● Outline measures to mitigate problems in distribution
● Outline the impact of information technology on logistics and supply chain operations

Identify the problems likely to be encountered in distribution

Distribution refers to all of the processes involved in getting materials, partly finished goods and
finished goods to the end consumer, and then arranging for payment to travel in the opposite
direction. In the Caribbean many challenges exist due to the nature of the islands. A key
problem of distribution is whether suitable airport, harbour and docking facilities are available
for the efficient distribution of goods.

There are several problems that may occur in distribution. These include:

Delayed shipment: this occurs when a planned shipment of goods does not arrive on time.
● Spoilage of goods: when perishable goods spoil: this could be from improper storage
facilities or damage during shipment.

● Industrial unrest: industrial action by workers at various transportation hubs, like ports
and airports, railway stations (e.g., strikes. go-slows).

● Misdirection of goods: goods sent to the wrong location: this can be due to improper
labelling
poor communication.

● Inadequate warehousing facilities: warehousing facilities without the required conditions

for proper storage o fa particular type of good (e.g., cooling system, special shelving,
improper lighting).

● Lack of proper security measures: insufficient security measures to prevent theft and
pilferage.

● Ineffective communication: gaps in communication.

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Measures to mitigation transport problems

Delayed Shipment:

● reconsider the shipping company being used, and look for reputable providers.

● receive compensation for delay from responsible party through litigation or insurance.

● consider different shipping company or different method.

● reconsider the method of transportation.

● reconsider the chain of distribution; ask questions and evaluate the number of
middlemen.

Spoilage of goods:

● liaise with supplier to ensure proper packaging, e.g. waterproof or airtight packaging

● investigate and receive compensation from shipping company

● ensure goods are insured before shipment

● consider the use of refrigerated containers

● ensure proper labelling from suppliers (assess handling of boxes).

Industrial unrest:

● seek an alternative shipping method, e.g., air versus sea

● stockpile by ordering additional goods to handle any shortages that may occur

● lobby government representatives.

Misdirection occurring overseas:

● use reputable shipping companies and ensure all legal documents are completed properly,
e.g., bill of lading and airway bill.

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 ● ensure goods are properly labelled and all documents are in place.

Inadequate warehousing facilities:

The business may need to carry out a thorough investigation of ports (especially where there is a
choice), to ensure there is sufficient space and quick processing or Shipments (to prevent rent
charges that may accumulate while the goods are waiting to be cleared)

Lack of proper security measures

● hire security to travel with transportation.

● ensure proper checkpoints are set up tor vehicles entering and leaving the compound.

● Install security cameras.

● hire a private security firm.

Ineffective communication:
● make use of technology through GPS systems and dash cameras in vehicles

● provide company cell phones to drivers

● Use reputable shipping companies that can track goods being shipped

Specific measures to mitigate problems in distribution

There are a number of measures that can be taken to improve distribution. The main ones are
outlined below.

Government intervention
Caribbean governments know that effective supply chains help to create wealth and job
opportunities in the domestic economy. This is reflected in government plans, such as the
building new deep-water port, building new cargo airport, developing technology parks and
resolve issues in the industry.

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Communication networks
This including use of the Internet Modern logistics systems are highly dependent on IT links,
including online programmes for managing paperwork, coordinating transport links, managing
payment systems, purchasing insurance and so on. IT communications are the single most
important factor leading to improvements in global logistics today.

Insurance
Wise distributors takeout adequate insurance for their stock while it is being stored and moved
along the supply chain. The biggest threats to warehouses and stock come from fire, flooding,
theft and product recall. For example, in September 2016, clothing retailer Gap had a fire at its
New York distribution centre, causing damage to most of the stock. Without insurance, the
company would have lost a huge amount of money.
Insurance is a key way of supporting the supply chain so that compensation is paid for valid
losses ,such as stock being held up when ships cannot sail in bad weather, or trucks breaking
down on the road.

Selecting the most appropriate channel of distribution based on the product

Sound distribution involves constantly evaluating the modes of transport being used, the routes
being taken and the channels of distribution. For example, a business may decide to remove the
middleman from the supply chain and sell directly to customers through online sales.

Using handling services with a good reputation

There are a range of freight handling services whose express purpose is to support good supply
chain links. These include global logistics providers, freight forwarding agents, domestic
transport firms and a range of established import and export agents. By using handling services
with good reputations, companies know that they are in safe hands. A global logistics provider
will provide services like Ship Me, mail pack and GPS to companies needing to ship goods.

Careful labelling and documentation

Clear labelling is required to ensure that products are sent to the correct location. Goods need to
be accompanied by accurate documents to show who the owner of the goods is, who the shipper
will be, etc. Today, much of this documentation is produced online, and it needs to be error free

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in order to pass the requirements of officials in various countries, including customs. Appropriate
documents need to be sent with the goods and will need to be supplied prior to the arrival of the
goods, such as bills of lading, certificates of origin, etc.

Avoiding large stocks

Stock can be handled more efficiently when stockyards and stockpiles are neater. A key aspect of
this is reducing stock levels to the minimum quantities required to deliver materials, components
and finished goods just in time for their use. This also avoids extra costs for the business in
having too much stock to store.
Increasing security
The proper security of warehouse and storage facilities helps to prevent and reduce pilfering and
damage to business property. Security cameras can record all personnel and vehicles moving in
and out of a facility, and can also record the timing of such events. Visible security cameras help
to deter thieves and vandals, and security footage can potentially be used to help prosecute
criminals.

Outline the impact of information technology on logistics and supply chain operations
Modern logistics and supply chain management are very complex, and distribution channels can
be very fragmented. There are therefore real benefits associated with the use of information
technology (IT) in supply chain operations.
IT involves the design, creation, use and management of computer-based systems, including
software applications, telecommunications, computer equipment and smart devices, to capture
and distribute information in digital and other forms.

IT is useful for the following elements of supply chain operations:

● handling large volumes of data
● sorting out data into meaningful patterns
● simplifying complex supply chain and logistics problems
● providing solutions for effective distribution
● reducing the cost of logistics
● coming up with the best logistics solutions
● supporting logistics hubs.

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There are many different forms of technology that contribute to effective supply chain
operations, as outlined below.

Global Positioning System (GPS)

The Global Positioning System {GPS) allows people to pinpoint their exact position using
satellites that orbit the Earth. It is owned by the United States Department of Defense, but is used
commercially for logistics and supply chain management.
On the ground, drivers can use individual GPS receivers to see their position on a map. While
moving, the GPS computer in a vehicle shows the position of the vehicle, and how the position is
changing on a map. The driver is able to plan journeys by inputting a starting point and an end
point. The GPS will then map out the best journey and route to take. The GPS receiver will
continually give feedback on the distance travelled and the distance to the destination, as well as
information about traffic hold ups so that the driver is able to avoid these.
Geographic information system (GIS)
A geographic information system is a computer-based system designed to capture, store,
manipulate, analyse, manage and present all types of geographical data, often in the form of a
map. A business will use GIS to map geographical data to improve the business's logistics
information.
Having GIS is particularly important in the world of e-tailing, where an e-tailer may need to get
orders delivered from the warehouse to thousands of separate locations. A sophisticated logistics
GIS will contain the details of customers, where they live, the best routes to reach them and how
to contact them. A successful GIS will reduce the lead time from when customers make an order
to when they receive their goods.

Portnet
Portnet is a system that uses advanced IT to support shipping and port authorities via the
Internet. In 2018, it handled 200 million transactions during the year, providing information
about ports, shipping and logistics processes required to move goods by sea. The system:
● enables importers and exporters to buy space on cargo ships.
● enables shipping lines to advertise and sell cargo space.
● provides information about the movement of goods.
● provides information about the location and availability of containers, so they can behired
or used for transporting goods around the globe.
● provides a single portal bringing together shipping lines, freight haulers, freight
forwarders and government officials.

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Telemarketing and e-commerce
Telemarketing refers to selling goods over the telephone. The telemarketer will use a computer
to record details about customers, such as where they live, their purchasing history, etc. The
telemarketer will then seek to make an offer and to "win" the customer.
E-commerce refers to buying and selling goods electronically using the Internet. Potential
customers browse websites with the view of making a purchase. The websites are designed to
help the customer to move quickly to goods that interest them, to enter these into a shopping cart
and then to make a payment. E-commerce makes it possible for shoppers to shop at a time which
is convenient to them.

Global logistics providers such as FedEx, DHL and Amazon Logistics

A global logistics provider is a large, multinational company set up for the purpose of managing
distribution networks across the globe.
For example, FedEx provides an express delivery service, carrying packages and deliveries
around the globe with a guaranteed "rapid" delivery time. Accessing the FedEx site, a customer
is able to book a delivery slot, find out how much this will cost, what the delivery time will be,
and whether there are any additional requirements (such as for the international shipment of
goods}.
DHL provides a similar global logistics system for companies. As well as providing delivery of
freight, the company works closely with firms in specific industries (such as the automotive,
engineering and pharmaceutical industries} to provide complex solutions to the problems of
organizing global supply chains
Amazon is a major e-tailer that has built up an effective delivery system, and has now decided to
move into the international transportation of goods for other companies.

Logistics hub
A logistics hub is a location that acts as a centre for a range of activities relating to transport,
logistics and goods distribution, both for national and international purposes. There are various
operators (such as shipping lines, road haulers, shippers, etc.) and various facilities for storing
goods in bulk. A logistics hub will be multimodal, bringing several forms of transport together.