The supply chain management. It explains logistics background

The purpose of this paper
is to review a sample of the literature relating to the Logistics and Supply Chain
Management, also, by reviewing the main article written by D.M.Z. Islam, J. F.
Meier, P. T. Aditjandra, T. H. Zunder and G. Pace. This article is an
introduction to the principles and methods used in logistics and supply chain
management. It explains logistics background and gives a general understanding
of the topic as well as provides some methods of logistics global integration.
Also, authors talk about the freight transport logistics plan and practice, and
policies. Followed by, classical transportation problems. Furthermore, this
article talks about principles of sustainable transportation and the White
Paper (WP) of the European Commission.

In addition to the above,
the literature is studied from the supply chain integration perspective, where
the commercial activities are largely responsible for the success of the
business and influence of the customer towards that success. 

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This document also considers
and introduces ‘Green’ transport for freight and impact on supply chain
management as a next step in studied topic.

In
general, the research shows observation and is more interpretive in nature. As from the limitation of the main article, the research gaps
 

 

1. Principles of logistics

According to previously
mention article, logistics word was in use for many years before it was
assigned to present business meaning. It was originally used in military, where
the divisions were responsible for the supply of necessary arms, ammunition,
and foods as and when they were needed, but this was not always as simple as it
sounds. In ‘Logistics and Supply
Management’ (2016), writer is talking about the wars that have been won and
lost due to strength and capabilities and as an example, author mentioned the
defeat of the British in the American War of Independence in 18th
century. Where the lack of logistics abilities was accredited for the failure.
In this case, the whole army was relaying almost completely on the supplies,
like equipment and food, coming from Britain.  

Additionally, Speranza (2016),
talks about the evolution of word logistics. Back in the 1960s and 1970s
logistics and transportation were different fields. Where transport meant traffic
and public transport, and logistics, was a field of physical distribution and
inventory management. Since 1990s, where logistics strongly focuses on
operations and shippers with the development into supply chain management and then,
in the next 20 years the author mentioned the significant barrier between
passenger transportation and freight started to fade.

Although, the historical
understanding of how critical the role of logistics is, only in the recent past,
the business organisations have come to recognise the significant consequence
that logistics management plays part in the achievement of competitive
advantage.  

Nowadays, the understanding
of logistics covers transport, warehousing and storage of materials, inventory
and packaging as well as information processing and marketing channels to
maximise current and future profits through cost-effective fulfilment of orders
(Christopher, 2016). With the transport being a major section. But not only
this, as it was written in the main article, “Logistics and supply management” (2012), where authors, also,
mentioned agreement regarding terms and conditions while buying and selling
product, transportation of those goods and insurance, that either falls onto
buyer or seller responsibilities. 

 

1.1.
Supply chain management versus logistics

 

The supply chain
management builds upon logistics planning orientation and framework. The
framework that creates a single plan for the flow of products and information
within an organisation. Whereas, supply chain management, is a linkage and
co-ordination between those processes, for example suppliers and customers and
the company itself (Christopher, 2016). This same writer argues, that the
supply chain management should be called “‘demand
chain management’ to reflect the fact the chain should be driven by the market,
not by the suppliers” alongside, the word ‘network’, replacing word ‘chain’.
This is due to multiple suppliers and customers. For instance, where the
supplier sells to another supplier, which then sells to either another supplier
or the end customer. In this case, the second supplier becomes the customer to
a first supplier as well as this supplier may still be a seller to another
supplier, so the multiple customers and customers’ customers to be included in
the total system. As of suggestion in ‘Logistics and Supply Management’ (2016,
p.3) book, previous supply chain meaning could be modified to new definition of
“A network of connected and interdependent
organisations mutually and co-operatively working together to control, manage
and improve the flow of the materials from suppliers to end users”.

 

2. Transportation and logistics
problems

 

Considering article
written by Islam et. al. (2012), the logistics and transport problems were
described as optimisation, where the action has to be taken to make the best or
the most effective use of available transport and capacity of a vehicle,
maximising truck loads or warehouses operation. The warehouses operation was
explained in the example of the demand of the customer (previous paragraph) and
more to the point, the demand that may be greater than inventory available. For
that reason, some strategic planning would be the aim to fulfil orders even
though, it may means shifting some goods from one warehouse to another or
dispatching an order from further located warehouse. In this case the cost
structure is the main decisive factor. Authors, also, mentioned, minimising the
environmental impact.

On the other hand, those
are not the only worries in logistics and transportation. According to, Morales
(2015), who speaks about the volcanic descends on Europe affecting aeroplanes
or tsunami in Thailand disrupting port activities in California as well as
fires in Los Angeles forest leading to motorways closure. Even, IT issues
having an impact on United Airlines system forcing the New Your Stock Exchange
shut down. In today’s world, these are executives of logistics and
transportation leading to crisis that no longer are as simple as loading boxes
and carrying them from point A to point B. These issues involve and effect the
international trade and development of technology.
Furthermore, challenges like minute-by-minute tracking available globally,
developing cost efficiencies while guaranteeing timely delivery. Even, thinking
ahead of any issues that may or may not occur and having an alternative
plan. 

All of those represents
the logistics and transportation problems that may impact the whole supply
chain operation and for that reason, business management must have a greater
understanding of logistics as performance component as this is a key to success
(Gleissner, Femerling, 2013).

 

3. Minimising the environmental
impact, delivering sustainability through supply chain management

 

The idea of
sustainability and sustainable development is not the latest concept, but with
the increasing knowledge and requirements coming from a general consumer, companies
are still to catch up. Sustainability is not only about the environment and
workers’ rights, but it is a long-term viability that is a part of business
model, where all stakeholders seeking a future in their business (Waters and
Rinsler, 2015).

According to Islam et.
al. (2012), sustainability means more than set of tools or indicators. This
topic means action and mission in progress that affects many cultures. It has
an impact on political process, economy, society, environment also,
institutions and transport.

Additionally, Panagakos
(2016), is mentioning Brundtland Commission definition of sustainability,
describing it as a development process meeting the needs of the present without
compromising the ability of future generation. Author, is also, talking about
the 2001 Sustainable Development Strategy (SDS) where the economic growth,
social coherence and environmental protection are related and draw picture of
long-term aims. Those objectives are prioritised into six main policy parts
like climate change and clean energy, public health, social exclusion,
demography and migration. Followed by, management of natural resources,
sustainable transport and finally global poverty and development challenges.
When it comes to sustainable transport, SDS goals focus on shifting road
transportation to rail or water in terms of cargo and promoting public
passenger transport, walking and cycling as well as separating transportation
growth from GDP growth. Which ideally will reduce congestion and other negative
side-effects, for example, carbon emissions.

Another finding is by
Waters and Rinsler (2014), declaring that 24-hours transport is damaging the
environment on reduced levels as fuel consumption is more efficient due to
minor congestion in opposition to, Just-In-Time (JIT) operations. JIT uses
smaller-size lorries that consume more fuel per tonne of goods moved then
larger-size vehicles. In addition, Mangan and Lalwani (2016), also talk about
JIT strategy as inefficient transport utilisation. The JIT method became a
trend in reducing stock levels by managing production more carefully, but this
increases the transport services within supply chain.

On the plus side, in
opposition to previously mentioned JIT, the combined transport options, which
may be, container using road and rail links are improving environmental impact,
where fuel consumption is in decrease. 

Furthermore, to minimise
environmental impact logistics companies need to reduce empty running and
increase pooling and sharing capacity, improve vehicle plan routing. Increase vehicle
payload capacity, for example double deck or higher trailers as well as
enhancing vehicles operating efficiency (Waters and Rinsler, 2014). But not
only this, also, exchange of information through interoperable Information and
Communication Technology (ICT) systems and monitoring performance of operation,
administration and infrastructure also, by introducing ‘green corridors’.   

 

4. Green Corridors and Green
Logistics as a solution to mitigate an impact on environmental supported by Transport
White Paper vision

 

Back in 2007 the European
Union introduced the concept of ‘Green Corridors’. The idea that is aiming to
develop integrated, efficient and environmentally friendly transportation of
freight between major hubs and by relatively long distance. The aim of this
idea was to ensure that selected corridors are the ones with the highest
‘greening potential’ (Panagakos, Psaraftis, 2012).

Islam et. al. (2012)
argues that ‘green corridors’ it was not a brand-new idea, it is based on TEN-T
programme. The scheme that went through development stages in terms of the
number of EU members (TEN-T 15 in 1990s, TEN-25 in year 2000 and TEN-T 27 from year
2007). TEN-T states for the Trans European Transport Network and it is a
European Commission policy aimed towards the implementation and development of
a European road networks, railway lines, inland waterways, maritime shipping
routes, ports, airports and rail-road terminals.  Authors says, that green corridors are assigned
to rail transport, especially in the UK.  Where the rail transportation is understood as
the most green mode of transportation.

Also, it is worth mentioning,
that Transport White Paper (WP) from 1992 introduced combination of two or more
transport modes already. The newest version of WP (2011), talks about 40 strong
initiatives to be built in the next 40 years. This inter alia incudes, competitive
transport system and traffic management, which will increase mobility;
limitation on oil usage, what will reduce greenhouse gases emission; investment
programmes into modernisation of existing transport modes and new infrastructure,
which leads to positive effect on economic growth and more to the point it will
create more jobs and hence wealth as well as will give a better access to
people’s mobility. Also, this document calls for minimising congestion on the
road and in the sky. Even thought, according to White Paper publication (http://eur-lex.europa.eu),
since the previous document was issued in 2001 a lot was achieved already, like
further market opening in aviation, road and partly in rail transport and the
single European Sky was launched, also, transport safety and security increased
across all modes.

On the other hand, Green
Logistics is defined as green transport, green storage, green packaging
followed by, green circulation processing, green recovery, etc. This type of
logistics goal is to reduce resource consumption and negative environmental effect.
Which can be done by, obtaining and restructuring new distribution channels
with the reverse logistics increasing efficiency.