Whether freight is being moved from one location to anotherdomestically or internationally, the hottest buzzword of today is Logistics. From point A to point B or at any given point through point Z, there are many important links in the supply chain that encompass the global industry of the logistics of moving goods: including but limited to the shipper, freight forwarder, carrier, importer, Customs broker, warehouse, and end users. Moreover, distribution, logistics, freight forwarding, warehousing, and supply chain management are all interchangeable terms that are related to the movement of products from place to place or in other words: freight forwarding and storage of goods or otherwise plain old fashion warehousing and distribution.
Logistics, which is an emerging business area in the United States and in many countries world-wide, is one (1) of the most important global business activities in terms of modern society. Moreover, it has been estimated that the total logistics cost incurred by businesses engaged in commerce in the United States is approximately $862 billion, which comparatively speaking corresponds to approximately 11% of the total Gross Domestic Product (GDP) of the United States.
In todays industrial magazines, books and other media, authors tend to use the terms distribution, warehouse, logistics, and material handling to describe this industry. According to LogisticsWorld, which is an industry leader and premier directory and website that offers services and contact information from various companies and organizations in the transportation, logistics, and supply chain industry, there are some nineteen (19) distinct definitions of logistics.
Moreover, the question posed in this article is then what is logistics? They sum it up in a nutshell as “Logistics means having the right thing, at the right place, at the right time.”
Now, lets look at the definition of each term aforementioned above, which each has a very similar meaning but differs slightly in their definition:
Distribution: is defined as the function of moving various products form a vendors facility or a manufacturing workstation (where the product was manufactured) to a companys facility for storing the product, picking the product to fulfill a customers order requirements, and delivering the product to a customers facility or workstation in a manufacturing facility.
Warehouse: is defined as the function of storing a variety of product types [stock-keeping units (SKUs)] that have a small or large quantity of storage units between the time that the product is manufactured by a facility (vendor) and the time that the product is required by a customer or workstation within a manufacturing facility.
Logistics: has the same meaning as distribution; however, it encompasses all activities that are required to have controlled product and information flow between two locations. The first flow pattern is between a vendors location and a warehouse. The second flow pattern is between a warehouse and a customers location. This controlled product and information flow maximizes the return on investment and the number of satisfied customers. Until the mid- and late 1980s, the term logistics was widely used outside of the United Sates; in the mid-1980s, the term became popular in the U.S. warehouse and distribution industry and media.
Storage: is defined in Websters Dictionary as the activity of placing or depositing a good in a store or warehouse for safekeeping until the good is required at another location or workstation or by a customer.
Material Handing: is defined by the Material Handling Institute as “the basic operation that involves the movement of bulk, packaged and individual goods in a semi-solid state by means of a human or machine and within the limits of the facility.”
Other associated names that have gained prominence in the industry throughout the years and have been applied to distribution and logistics include:
-Procurement and supply;
-Supply chain management;
-Demand chain management;
-And much more!
Now, lets get back to logistics. The term logistics was first used in the United States in the military circa 1861 during the Civil War. Moreover, the term is considered to have originated in the military because of its innate need to supply themselves with arms, ammunition and rations as they moved from their various bases to their forward positions. Furthermore, in the ancient Greek, Roman and Byzantine empires, military officers with the title Logistikas were responsible for financial and supply distribution matters.
According to the Webster Dictionary, logistics is defined as 1: the aspect of military science dealing with the procurement, maintenance, and transportation of military matériel, facilities, and personnel; 2: the handling of the details of an operation.
The Oxford English Dictionary defines logistics as “the branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.” Another dictionary definition is “the time-related positioning of resources.” As such, logistics is commonly seen as a branch of engineering that creates “people systems” rather than “machine systems”.
The etymology of the word logistics derives from the French word logistique and the Greek word logistikē, which both mean the art of calculating, logistics; however, in Greek the word can be broken down further from the two words: logos (λόγος), meaning “speech, reason, ratio, rationality, language, phrase”, and more specifically from logistiki (λογιστική), meaning accounting and financial organization.
Logistics as a business concept evolved in the United States around the 1950s from the compounding complexity of supplying businesses with raw materials as well as the shipment of finished products in an increasingly globalized supply chain. Moreover, this chain of events ultimately lead to the advent of industry leaders and experts in the field of logistics, which are now called supply-chain logisticians.
Moreover, a logistician is a professional logistics expert and/or practitioner, who is often certified by professional associations; for example, one such certification available in the industry today is the Global Logistics Specialist (GLS). Furthermore, some universities and academic institutions educate and train students as logisticians, offering them real understanding and insight into the logistics field as well as postgraduate programs. The main areas of expertise and functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation and the organizing and planning of these activities.
Alternatively, logisticians combine a professional knowledge and practical experience of each of these functions to coordinate resources in a particular organization. Moreover, there are two fundamentally different forms of logistics: 1) one that optimizes a steady flow of raw materials and/or finished goods through a network of transportation links and storage nodes; and 2) one that coordinates a sequence of resources to carry out some project.
In business, logistics may have either internal focus, which is called inbound logistics, or external focus, which is called outbound logistics. Basically, these two diverging focuses ultimately couple together into the concept of logistics, which comprises the flow and storage of raw materials and/or finished products from point of origin to point of consumption. Today, logistics is a major buzz word and one of the most popular terms in the movement of goods in regard to warehousing, distribution, freight forwarding, and much more!
Logistics (or logistics management) is defined by the Council for Logistics Management as:
-The process of planning, implementing, and controlling the efficient cost-effective flow and storage of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.
Logistics has evolved into a new, comprehensive, complex management strategy and business model for companies engaged in commerce. Besides the traditional logistics functions aforementioned, there are new and exciting trends in logistics, which include: Just-In-Time (JIT) distribution, E-Commerce, global markets and sourcing, new information technologies and communications, a renewed focus on customer satisfaction (24-hour customer service), new transportation service options (overnight), increasing environmental awareness (recycling), etc.
The important term Logistics system refers to a set of facilities, which are linked by transportation services. Moreover, facilities are sites where materials are processed; for instance, manufactured, stored, sorted, sold or consumed. Nevertheless, the decisions that business executives and/or logisticians make regarding facility locations are critical to the efficient and effective operation of a particular supply chain. Furthermore, they include manufacturing and assembly centers, warehouses, distribution centers (DCs), transshipment points, transportation terminals, retail outlets, mail sorting centers, garbage incinerators, dump sites, etc. Alternatively, transportation services move materials between facilities using vehicles and equipment such as trucks, tractors, trailers, crews, pallets, containers, cars and trains.
Therefore, the term integrated logistics can be defined as the physical network that commences with the supplier and ends with the customer. It includes all aspects of transportation, importation, exportation, Customs brokerage and other warehousing/distribution of products such as electronics, apparel, alcohol, tobacco, sugar, automobiles, steel, non-ferrous metals (copper, primary aluminum, aluminum alloy, NASAAC, lead and zinc), machinery and other general cargo from collection at mines/plants to warehouse and to ultimate users including transportation, storage, loading, unloading, export packaging, Customs clearance, shipment, stevedoring, sea transportation, intermodal and/or land bridge.
In general, products are sourced, transported, warehoused, delivered, manufactured and sold as finished goods globally. The global supply chain of products can span several countries and general cargo is typically shipped to various destinations around the world utilizing the principal modes of transportation (MOT) listed below:
-Pipeline (not elaborated on in this article)
Ocean freight is often complex and expensive depending on the destination and commodity. Ocean transportation is strategically linked to the numerous delivery points and ports of entry located throughout a natural physical network of seaports world-wide: the largest and/or busiest container seaports are Hong Kong, Singapore, Busan, Long Beach/Los Angeles, Rotterdam, etc. Moreover, seaport terminals usually have a manifold of cargo handling capabilities including but not limited to container, bulk, break-bulk, and multi-purpose berths as well. Typically, a shipper will either work with an ocean carrier directly or choose to work with an Ocean Transportation Intermediary such as a Non-Vessel Operating Common Carrier (NVOCC) or an Ocean Freight Forwarder.
An ocean freight forwarder is an individual or company that dispatches shipments from the United States via common carriers and books or otherwise arranges space for those shipments on behalf of shippers. Ocean freight forwarders also prepare and process the documentation and perform related activities pertaining to those shipments.
An NVOCC is a common carrier that holds itself out to the public to provide ocean transportation, issues its own house bills of lading or equivalent documents, but does not operate the vessels by which ocean transportation is provided, and is a shipper in relation to the involved ocean common carrier.
Ocean Transportation Intermediaries generally offer a full array of global ocean freight and transportation services. They typically handle almost any size shipment, from less-than-container loads (LCL) to full container loads (FCL), special equipment, and oversized cargo.
The entire forwarding process encompasses ocean freight from any seaport origin and destination to the carrier, cargo booking, pickup and delivery arrangements, and the management of the shipping documentation as well. The key to success is to lower freight costs and maximize routing and transit times.
Ocean freight forwarders are required to obtain a license with the Federal Maritime Commission (FMC) to provide services in the United States. U.S.-based NVOCCs are also required to be licensed with the FMC. NVOCCs that are not based in the U.S. are not required to be licensed, but may choose to obtain one if desired, as licensing results in lower financial responsibility levels.
Shippers are manufacturers and suppliers who contract freight forwarders to handle their shipments. Shipments that are transferred within the United States are domestic shipments, and those that are transferred overseas are international shipments
There are three principal types of ocean freight: containerized, bulk and break-bulk.
Containerized loads are shipments, which are loaded in standardized re-sealable transportation boxes or “ocean containers” with standardized equipment. The two (2) most common sizes are 40-foot or 20-foot ocean container, measured and tracked by seaports and authorities for statistical purposes as Twenty-foot Equivalent Units (TEUs); but there are also 45-foot and 53-foot ocean containers as well.
Product that is shipped in ocean containers is typically loaded on 20-foot containers due to the weight maximization or on 40-foot containers due to cube maximization. Merchandise is typically floor loaded (handstacked) on to a container or consolidated on to a pallet in order to facilitate handling at terminals and/or warehouses.
Moreover, product that is small in quantity and does not fit in a standard container solely can be consolidated and considered a Less than Container Load (LTL) or Container Freight Storage (CFS) shipment, because the goods will ultimately be shipped to a CFS in the U.S. for deconsolidation and Entry into the U.S. Customs territory.
A shipment which is not packaged or unitized but is loaded directly into the vessels hold[s] in bulk quantity is considered a bulk shipment. Examples of commodities that can be shipped in bulk are ores, coal, scrap, iron, grain, rice, vegetable oil, tallow, fuel oil (petroleum), salt, and similar products.
A shipment which may or may not be packaged but is loaded directly into the vessels hold[s] in bulk quantity but differs from a bulk shipment because it is broken down in smaller units or unitized is considered a break-bulk shipment.
A Stevedore is a person, docker, dock laborer and longshoremen employed to load, stow or discharge the cargo of a ship in a port. The word Stevedore originates in English back to year 1862 and derives its meaning from the Spanish word estibador, which stems from estibar meaning to stow and from Latin stipare meaning to pack.
The following is a breakdown in outline form of the typical stevedoring scope of activity and associated fee items related to the loading and unloading of cargo:
-Hold to Tackle
2.Stevedoring Fees (Tackle Rates)
-Tack to Rest
-Terminal Fees (Clerk & Overhead)
4.Warehousing / Manufacturing / End-User
Discharge typically includes the unloading of cargo from the hold of the vessel to point of rest on dock segregated by Bill of Lading (B/L), head marks, and clerking to delivery. The following chart enumerates one example of a typical logistics flow of goods from ship all the way to truck:
The following is a real life example of a typical break-bulk shipment of non-ferrous metals as unloaded by a stevedore for U.S. consumption based on a certain scope of activity.
Typical metal scenario in the U.S.:
Scope of Activity:
-Discharge of Copper Cathodes 5,000 Bundles, 17,000 ton Shipment
The vessel is a modern box holed bulker with minimum 20-ton capacity cranes. The squares of each hatch should be either empty or pre-slung using certified slings. If the cargo is stowed 2 high, then 32 bundles should be preslung. If 4 high, 64 bundles should be pre-slung accordingly.
Typically, the squares are empty by the same amount of space that normally would have been taken up by the 32 or 64-bundle configuration. If slings are used, they are returned to the ship. Sufficient dunnage is to be used between each bundle in stow in order to facilitate forklift handling in the hatch. Stowage and placement of dunnage are done in a fore and aft position in relation to the ship. The bundles themselves are strapped with a minimum of 4, 1-1/2″ steel straps, 2 horizontal and 2 vertical from the top view.
In United States, the stevedoring rates are based on the commodity in question and the specific circumstances involved in the loading/unloading of the cargo, stowage, vessel, material handling equipment, and manpower available.
-Stevedoring discharge rates vary from approx. $5.00 per metric ton in Gulf Ports such as New Orleans to anywhere from $11.85 to $35.00 per metric ton in West Coast Ports such as Los Angeles and Long Beach. The discharge rates are based on production assumptions for discharge per gang per hour. *NOTE: East Coast ports typically have steady/consistent gangs while West Coast Ports do not.
-There are other numerous charges that need to be calculated and added to the total stevedoring costs such as second shift differentialstypically $2.75 – $2.80 per metric ton, Pacific Maritime Association (PMA) chargestypically $0.78 per metric ton, load to truck chargestypically $1.25 per metric ton, terminal chargestypically ranging from free (included) to $3.50/$6.00 per metric ton, wharfagetypically ranging from $5.15 to $5.25 per metric ton, and trucking to warehousetypically $5.50 per metric ton. Therefore, the total cost for stevedoring on the West Coast for instance can range from $30.53 to $36.68 per metric ton while on the East Coast the cost is surprisingly lower at $5.00 to $12.00 per metric ton.
-A charge assessed against cargo or merchandise, vessel’s stores, fuel and supplies for passage on, over, under or through any wharf, pier, or bank controlled by the seaport, or between vessels or overside vessels (to or from barge, lighter or water) when berthed at a wharf, pier or bank controlled by the seaport .
-*NOTE: Wharfage rates do not include sorting, weighing, marking, sampling, inspecting, coopering, recording marked weights or numbers, or loading or unloading to or from railroad cars or motor vehicles, stevedoring, demurrage, handling, customs charges, revenue stamps or fees of any nature imposed by the State or Federal Government against the shipment or vessels transporting the shipment.
Typical Wharfage Rates:
-$5.00 per metric ton in Ensenada, Baja California, Mexico
-$5.00 per metric ton in San Diego, California, USA
-$5.25 per metric ton in Long Beach, California, USA
-$5.15 per metric ton in Los Angeles, California, USA
-$4.00 per metric ton in Seattle, Washington, USA
-Stevedoring Services of America New Orleans, Long Beach, San Diego, etc.
-Cooper T. Smith New Orleans, Long Beach, etc.
-Rio Doce Pasha Los Angeles.
-California United Terminals (CUT) Long Beach.
-P & O Ports Louisiana, Inc. Stevedore and terminal operator at the Port of New Orleans, handling both container and break-bulk cargo. Henry Clay and Nashville A-C Wharves.
-Ceres Gulf, Inc. Stevedore and terminal operator at the Port of New Orleans, handling both container and break-bulk cargo. Operates Milan Street Wharf.
-Coastal Cargo Company Stevedore and terminal operator at the Port of New Orleans, handling break-bulk and bulk commodities. Operates Louisiana Avenue Wharf, Harmony Street Wharf, Seventh Street Wharf and Napoleon C Wharf.
-Empire Stevedoring Company, Ltd. Stevedore and terminal operator at the Port of New Orleans, handling break-bulk cargoes. Operates First Street Wharf.
-CSA Stevedoring Stevedore and terminal operator at the Port of New Orleansone of the Cooper Group of Companies. Located at Milan St. & Napoleon C Wharves.
Land transportation also called road transport (British English) or road transportation (American English) is transportation on load via roads consisting of passengers or goods. The United States has the largest network of roadways of any country with 3,995,644 miles (6,430,366 kilometers). China (Mainland) [Peoples Republic of China] is second with 2,226,817 miles (3,583,715 kilometers) of roadway. India [Republic of India] has the third largest road system in the world with 2,102,312 miles (3,383,344 kilometers).
Some countries also have freeways or expressways, which substantially expand road transport and cartage from one place in a city, county, state, and country to another. In the United States, there are some 56,000 miles worth of freeways. In China (Mainland), there are some 37,469 miles (60,300 km) of expressways called the National Trunk Highway System (NTHS). Moreover, by the year 2020, China (Mainland) will have constructed approximately 52,817 miles (85,000 km) of expressways.
In the United States, let us now consider a typical transportation scenario involving the transportation of non-ferrous metals in the Midwest from St. Louis, Missouri to Detroit, Michigan. The mileage from St. Louis to Detroit ranges from approximately 530 to 550 miles. The transportation rates vary depending on the season, loads, availability and backhauls from approx. $675 per truckload or $1.23 per miles (based on 550 miles) to $825 per truckload or $1.50 per miles (based on 550 miles) + a fuel surcharge that can range from 2% (when gasoline is inexpensive) to 15%/20% (when gasoline is expense like today).
Typical carriers and transportation brokers in the United States are:
-PNJ Transportation and Brokerage
-Apex Truck Brokerage
-Trinity Transportation, Inc.
-YRC (Yellow and Roadway)
-& many more!
Rail transportation is the conveyance of passengers and goods by means of wheeled vehicles running along railways [railroads]. Railway transport is part of the logistics supply-demand chain, which facilitates international trade and economic growth. Rail transport is capable of high capacity and is energy efficient, but lacks flexibility and is capital intensive.
The most common and most well known transportation carriers that operate rail in the United States are:
-Canadian National (CN)/Illinois Central Railroad (ICR)
-Burlington Northern Santa Fe (BNSF)
-Union Pacific (UP)
Let us now consider a typical rail transportation scenario in the United States. The typical lading weight per boxcar for rail transport is 68 metric tons (150,000 pounds). As one can imagine, rail is based on commodity, tonnage, and mileage from city to city (e.g., Detroit, MI to Baltimore, MD). Moreover, standard pricing ranges from $32.51 – $61.92 per net ton via rail. Equipped Boxcars range from $21.24 to $26.49 per metric ton. Moreover, rail cars must be sent to a facility that is equipped and served by rail and one that has a rail spur; for example, spur # WWF6. Otherwise, a company can choose to send its container to an Inter Container Transfer Facility (ICTF) called “Intermodal” and thus shipped via rail.
Air transportation is one of the most dynamic industries in the world. Moreover, the International Air Transport Association (IATA) is its global trade organization representative. Air cargo is shipped via a fixed-wing aircraft, commonly called airplane. The global air cargo industry represents almost $100 billion revenue ton-miles of transportation, an estimated $52 billion in direct revenue and substantially more revenues in related trucking and logistics services.
Air cargo logistics offers clients the benefit for secure handling, speed and geographic and temporal flexibility but, with per kilogram costs that average six times those of ocean container freight, it is relatively expensive. Also, air cargo typically involves high value goods and the need to be time-definite.
Air carriers such as Air China, United Airlines, American Airlines, Delta Airlines, Air France, British Airways, Lufthansa, etc. handle the majority of air cargo from their respective countries and to destinations around the world. In regard to express consignment carriers, UPS, Fed-Ex, and DHL handle small parcel shipments from Door- To-Door shipment in addition to even handling their own Customs clearances and other barriers to trade.
A Third (3rd) Party Logistics (3PL) firm is defined as an external supplier that performs all or part of a companys logistics functions, which encompasses suppliers of services such as transportation, warehousing, distribution, financial services, etc. A 3PL executes activities that have traditionally been performed within a companys own organization itself. Accordingly, a 3PL also includes any form of outsourcing of logistics activities previously performed in-house. For instance, a company with its own warehouse facilities may decide to employ an outside transportation company; moreover, this would be an example of a 3PL.
A 3PL provider serves the trade community as a Public Warehouse, Bonded Warehousing facility such as a Bonded Warehouse, Container Freight Station, and Foreign-Trade Zone and/or a Contract Warehouse (the hottest trend in warehousing). Companies that are located in distribution hubs or delivery point around the world and specialize in the handling and storage of domestic and international cargo will maximize company profits while providing state-of-the-art, efficient, and cost-effective logistics services to manufactures and end users alike.
Many of the 3PLs are small, niche players; however, the industry leaders are large firms such as Ryder, Fed-Ex, UPS Worldwide Logistics, Excel, Schneider Logistics, UTI Worldwide, and Caterpillar Logistics Services, etc.
Furthermore, the traditional concept of a 3PL has evolved into a new concept of a Fourth (4th) Party Logistics (4PL) provider, which was first defined by Andersen Consulting (Now Accenture) as an integrator that assembles the resources, capabilities and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions.
Whereas a 3PL service provider targets a function and typically leases or owns assets such as warehouses and trucks, etc., a 4PL targets management of the entire process and is typically asset free. Moreover, some have described a 4PL as a general contractor who manages other 3PLs, truckers, freight forwarders, Customs brokers, and others in the supply-demand chain, essentially taking the responsibility of the complete logistics process for the customer.
Whether cargo is moving across the country or around the world by air, truck, rail or ship, the day-to-day order fulfillment and on-time delivery can be managed by a 3PL/4PL that specializes in integrated logistics. 3PLs traditionally offer comprehensive shipping and handling solution for their customers products.
3PLs typically are one-stop service providers, which offer their clients a complete logistics package to fulfill their distribution needs. 3PLs oversee the process of planning, implementing and controlling the flow and storage of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.
The following figure illustrates a typical supply chain in logistics from supplier/manufacturing/assembly plant to the Central Distribution Center (CDC) to the Regional Distribution Center (RDC) then ultimately to the end user[s].
3PLs can help improve the business processes of their clients by providing third party logistics services for inventory management, containerization, cross docking, transloading, fulfillment services, pick and pack, importing and exporting services, and pool distribution and freight consolidation.
The following is a decisive list of features and benefits of the various and common distribution services offered by a 3PL:
q3PL stores raw materials and distributes them directly to the manufacturing plants on the same day they are needed. Products are available just in time for required production operations in response to a customer demand-driven supply chain.
q3PL serves as a distribution hub for finished goods.
q3PL distributes customer goods that arrive ready to be delivered. 3PL serves as the point of transfer from one type of transportation to another typically from full container loads to full trailer loads.
qSimilar to Transloading, 3PL transfers customer goods that arrive ready for delivery from full truckloads (FTL) to less than trailer loads (LTL).
-Customer Logistics Center
q3PL manages the complete logistics function for its customers including taking customer orders, making local deliveries, repackaging, labeling, and holding all stocks prior to delivery to customer.
q3PL serves as a way station in the customer delivery process. Products arrive to the distribution facility in consolidated shipments for many customers and 3PL adds value by changing the product to meet individual customer orders.
-Retail Pool Distribution
qWhen you have multiple shipments bound for a specific region, Pool Distribution is a simple, cost effective alternative to LTL. 3PL manages the local distribution of products to retail stores within a 300 mile radius of our distribution centers.
-Break-Bulk Cargo Transfers
q3PL handles the transfer to rail and van of non-ferrous metals, iron, steel, heavy industrial equipment and other break bulk cargos.
-Build-to-order or Final Assembly Points
qManufacturers postpone the assembly and final configuration of their products until customer orders require such operations. 3PL oversees the assembly of such operations and handles the distribution of finished goods to the end user.
q3PL receives and distributes products within 24-hours to the local market with complete order accuracy and on-time delivery performance.
q3PL oversees the in-bond drayage of ocean containers from the harbor to its warehouses.
q3PL handles returned product, which has given rise to this field, for which allocating space and controlling labor costs is becoming more and more of an issue.
The following diagram illustrates a variety of different distribution strategies available in logistics: (a) direct shipment; (b) warehousing; (c) crossdocking.
INTERNATIONAL TRADE / GLOBALIZATION
Many companies that operate in the United States are also contemporaneously engaged in international trade. Additionally, due to the increasing number of companies that foreign source raw materials and finished products overseas in order to take advantage of lower manufacturing costs or inexpensive labor and/or raw materials available in certain countries, globalization is an important and emerging trend in logistics. Alternatively, another concept that stems from globalization is the term known as glocalization [global-local], which encompasses a global perspective in terms of business and trade but emphasizes a local and/or specialized approach to a particular market.
Paramount to international trade is the ability to get raw materials and finished products to/from markets world-wide. As a result of globalization, transportation needs have increased as well. Global distribution is not only contingent on transportation services in regard to the various MOTs such as land, rail, ocean, air, and pipeline but more importantly requires the services of 3PLs and 4PLs to manage the logistics and move the freight from one location to another both domestically but also internationally as well!
Automation changes everything! Automation is the use of automatic equipment or software programs to reduce mental and/or manual operations. The logistics industry as a whole has taken long and decisive strides towards achieving automation throughout the years. Paper has long since dominated warehousing, distribution, and logistics industries.
Simply put, logistics automation signifies the increased availability of various levels of automation given rise to an important decision problem: determining its optimal level, which requires analyzing the tradeoffs between, among other things, throughput, labor costs, equipment costs, and flexibility. Further complicating this sort of study, is the fact that many of the pertinent factors are not readily quantifiable.
However, as technology improves and the world goes “green” from an environmentally friendly perspective in addition to the passage of the paperwork reduction act, the private and public sectors should endeavor to migrate commercial invoices, packing lists, purchase orders, bill of materials, bills of lading, delivery orders, etc. electronically as well as entering into a virtual “paperless” environment.
Furthermore, Information Technology (IT) will become more prevalent in warehousing, justified in part by embedded operations research methods that will ultimately reduce operational costs in terms of Warehouse Management Systems (WMS) and associated Remote Frequency (RF) / Bar Code Scanning equipment.
Alternatively, there exist certain warehouse simulation packages with some standard components that would be most useful as a rapid modeling toolan over the counter type product, which could provide valuable insights in comparing alternative design and operating scenarios in a common logistics environment.
E-Commerce, which stands for electronic commerce (EC) is the buying and selling of goods and services on the Internet, especially the World Wide Web (www). A newer synonym, e-business, is now available and is often used interchangeably. E-Commerce is also conducted through the more limited electronic forms of communication called e-mail, facsimile or fax, and the emerging use of telephone calls over the Internet.
Electronic Data Interchange (EDI) is the exchange between computers of trade documentation and business data using an understood data format, which actually predates today’s Internet. EDI involves data exchange among parties that know each other well and make arrangements for one-to-one (or point-to-point) connection, usually dial-up. EDI can take two formsfinancial and documentary. EDI traditionally utilizes at least two message format standards: ANSI, which is popular in the United States and EDIFACT, which is popular elsewhere. EDI is expected to be replaced by one or more standard XML formats, such as ebXML. However, EDI is a still used as a buzz word that actually encompasses the basic concept of electronic data interchange and today includes all formats both new and old including the above aforementioned as well.
Technology has improved, and new ideas are constantly being introduced, investigated, developed and implemented as well as the emergence of new computer hardware, software, networking infrastructure, and communication technology, which have effected and will continue to affect the logistics industry as it grows accordingly. The current Internet and web technology is aimed at connecting the world electronically through a global network of interconnected computer systems where information flows instantaneously, unobstructed and safe.
Let us now recapitulate some of the highlights of this article regarding logistics, which is considered to be one of the hottest buzz words and fastest growing industries of commerce in the United States and abroad! Logistics is the management of the flow of goods, information, storage and other resources in a complete logistics cycle concerning the movement of goods whether raw materials or finished products between the point of origin and the point of consumption in order to meet the requirements of customers. Logistics involves the integration of information, transportation, freight forwarding, inventory, warehousing, distribution, material handling, packaging, fulfillment, and occasionally security as well.
Logistics is a channel of the supply-demand chain, which adds value utility (“Value Added Services”) of time, place, efficiency, cost-effectiveness, flexibility, and propinquity to U.S. ports of entry, distribution hubs, and/or consumption points in regard to the day-to-day business activities of firms in the U.S. and abroad. Moreover, the evolution of logistics has entailed an increasingly comprehensive global vision of logistics and an ever changing logistics decision-making model for companies engaged in commerce both locally and internationally.
Logistics has it origin internationally back to the ancient Greek, Roman and Byzantine empires of Europe pre era of Before Christ (“B.C.”) or commonly known as the Christian Era (“C.E.”). In the United States, the roots of logistics stem from the military branches of governmental service that originated circa 1861 during the Civil War. Posteriorly, logistics evolved from a militaristic perspective through the post American wars, including but not limited to the Spanish-American War, the Boxer Rebellion, World War I, World War II, the Korean War, the Vietnam War, the Cold War, Desert Storm and the Afghanistan/Iraq War.
Alternatively, the field of business logistics has evolved substantially over the past several decades. Moreover, in the 1960s, business logistics made a turn a part from the military traditional perspective to a more commercial aspect of business and focused on two (2) groups of functions: namely: materials management and distribution.
Furthermore, logistics is the biggest buzz word and most popular term for the movement of goods in the 21st century. Moreover, it has led to the growth of a number of associated names and different definitions of logistics that have been analyzed and defined in this article aforementioned above. Essentially, a widely accepted view and/or formula of logistics is contained in the following expression (relationship):
Logistics = Supply + Materials Management + Distribution
Additionally, there are five (5) major modes of transportation (MOT) by which goods are shipped in logistics: ocean, land, air, rail, and pipeline. Moreover, the shipper and/or the agent whether a freight forwarder or NVOCC handles the shipmentcontainerized, bulk or break-bulk from origin to destination. Furthermore, the stevedore handles the loading/unloading of vessels at various terminals in ports around the United States. Goodsraw materials and/or finished products are then shipped via any number of MOTs to a warehouse, distribution center and/or end user to complete the logistics cycle.
Many companies handle their own logistics while other companies outsource a portion or the complete logistics to a 3PL and/or 4PL for flexibly, cost-effectiveness and/or on-time/just-in-time distribution of their materials and/or finished products. Finally, as we endeavor to handle and manage the logistics of multifarious products around the world, automation is a vital and compulsory step in streamlining logistics, reducing mental and/or manual operations while improving the environment “going green” and adhering to the paperwork reduction act to ultimately improve the overall logistics of the movement of freight. Logistics is the panacea for the movement of goods and information, etc. whether for military use as apparent in its origin and history or for commercial use, which is consistent with the current trend and buzz word.
Summed up, logistics is the apotheosis of the supply-demand chain in terms of the movement of productsraw materials and finished goods both domestically and globally! Global logistics networks, which are formed by each link in the chain whether a shipper, freight forwarder, warehouse and/or end user, serves as a sort of circulatory system for the corresponding global value-added services in which various aspects of logistics are performed and realized by companies, 3PLs and/or 4PLs in order to move freight efficiently, effectively and on-time according to the customers requirements. Moreover, during these difficult economic times and post the recent Great Recession, logistics is also emerging as a key economic activity, an international trade stimulus and an important source of employment for American jobs across the country! Go Logistics!
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