LOGISTICS

II. DESCRIBING CHANGES IN THE LOGISTICS INDUSTRY

1. THE LOGISTICS PROCESS

Good afternoon! I’m Pall Parry and I’m a supply chain manager. I’m here today to talk about the logistics industry. Let me begin with an analogy.  I’ve read someone’s words that logistics can be compared to a game of golf.  In other words, both are about course management. Golf is about navigating eighteen holes in most efficient manner, in this sense logistics is no different.

Basically, logistics is the science of planning, organizing and managing of flow of information and recourse regarding the transportation of goods from the point of manufacturing to the point of consumption.    

In order to keep this supply chain running smoothly companies need to think about transportation, storage, handling and inventory levels.  Inbound and outbound logistics are equally important parts of the supply chain process.

Let me explain this using a can fruit factory as an example. The inbound process deals with the receipt and storage of the fresh fruit as well as the cans the fruit will be put into.

Once the food has been processed and caned at the factory, the cans are transported from the factory to the final destination by freight forwarding companies. This is the outbound process.  So, just as in golf in order for the logistics company  to be successful it must find the most efficient way to make sure its goods travel without mishap from the point of origin to the final destination. And all times keeping the client notified and satisfied. 

Outbound logistics - the transportation of goods to their point of consumption

Inbound logistics - the receipt and storage of the raw materials before they are processed and packed up for shipping 


Basically, logistics is the science of planning, organizing and managing a flow of information and resources regarding thetransportation of goods from the point of manufacturing to the point of consumption . In order to keep these supply chains running smoothly, companies need to think about transportation, storage , handling and inventory levels.


2. INTRODUCING CHARTS AND GRAPHS

segment
line graph
vertical axis 
dotted line
horizontal axis
pie chart
solid line
bar graph 

- If I could draw your attention to the vertical axis 
- As you can see, the chart's horizontal axis indicates
- This bar chart you see in front of you outlines
- Have a look at this pie chart to see
- If you'll turn your attention to the bar chart, you can see
- You'll have noticed that the pie chart illustrates 


3. DESCRIBING CHANGE

Now, I’d like to talk about my company Try Logistics. If you’ll turn your attention to the bar chart, you can see we’re one of the biggest logistics companies in the business. And as this line graph indicates we employ 50 000 nationally, which is an increase of 25% compare to only three years ago. The number of businesses we deal with worldwide has also risen exponentially. And now stands at 16500 businesses. Try Logistics also contributes  900  million dollars annually  to the  national economy. Unfortunately the industry is experiencing the shortage of skilled workers right now. So one of our company’s main aim is to present an attractive package of benefits.

Have a look at this pie chart to see the different kinds of employers we’re trying to attract: transport and logistics managers, warehouse and store managers, senior instructors, ships officers, ships engineers,   and freight forward agents among others.

We’re predicting a 10% year-on-year increase over the next five years in our skilled workforce.

Finally, as you can see the chart horizontal axis indicates growth rates in the logistics workforce this month. It’s near 10%, but we need these number to grow much more. Industry trends indicate that port-based operations will grow from 20 to 25%. We need to find the skilled workforce to deal with this rise.

As the scale and scope of our business continues to shoot up dramatically it is up to us as a company to adopt and involve.

In fact, we’re expecting that in five years' time, the Try Logistics’ workforce will have grown by as mush as 50%.       

III. NEGOTIATING A DELIVERY DEAL

1. STICKING POINTS

contract
distance 
discount
billing
delivery
discount
turnaround time

D: all in all, we're happy with your proposal, but there are a few points I'd like to go over. 
S: Fire away.

D: We're well aware Seabright Shipping can provide excellent service, but we have some concerns about the billing process. 
S: Well, as I explained before, our billing is based on either weight or dimensional size, and it also takes into account the nature of the product and distance it's being shipped.

D: We'd prefer a fixed rate based on dimensional size.
S: I'm afraid we can't agree to that. The distance varies according to your order, so we'd have to charge a higher fee for the longer distances. 

D: What if we agreed to extend the length of our contract for another six months?
S: If you're prepared to do that, then we can accept the fixed rate.
D: Alright, agreed. Now, our second bone of contention is that you're asking for half the total amount up front. We would rather pay 25% up front and the rest after delivery. 

S: I think we could live with that. 
D: Great.
S: Do you have any other concerns?

D: Just the one. Your proposal wasn't very clear on the issue of delivery time. 
S: We will guarantee delivery within three days of the order receipt. 
D: But that's not really fast enough. We need a 24-hour turnaround time. 

S: We can do that, but we'll have to add 10% to the rate.
D: And you would guarantee on-time delivery?
S: Yes, plus a discount for any carrier failure. 

D: Well, that seems reasonable. But, due to the increase in cost, I'll have to run it by my associates.
S: I fully understand.  

2. MAKING SUGGESTIONS AND GIVING OPINIONS

So, to recap
As far as I'm concerned (offering an opinion)
I'm just throwing out an idea here
If I could butt in here (interrupting)
In other words 
That may be true, but 

1. So, to recap , we agreed upon every issue barring turnaround time and total cost. I pushed for a 24-hour turnaround, but Simon insisted this would mean a 10% increase in cost. 

2. In other words , faster turnaround time means more expense. That's nothing out of the ordinary.

3. If I could butt in here ...Our customers expect 24-hour product delivery. 

4. I'm just throwing out an idea here, but we could downgrade service levels... 

5. Well, that may be true , but we don't have the time to analyze thousands of small shipments a day - our resources are stretched already. 

6. As far as I'm concerned , we shouldn't change our approach until we've looked more deeply into the issues involved.


- So, to recap, we agreed upon every issue barring turnaround time and total cost. I pushed for a 24-hour turnaround, but Simon insisted this would mean a 10% increase in cost.
- In other words , faster turnaround time means more expense. That's nothing out of the ordinary.
- True, but it does bet the question. We consistently faster turnaround time make the company money or custed money. This question goes to the heart of how we do business. I mean, we're spending  twenty thousands dollars on small parcel shipping right now and that weights too much.
- I totally agree. We can't keep sending every package by express delivery and which ever carriers ...
- If I could butt in here ...Our customers expect 24-hour product delivery.
- I'm just throwing out an idea here, but we could downgrade service levels.

- And would it be worthy increasing transit time? 

- I don't to get ...   increasing transit time, just last week we sent   shipment via ground. It was delivered the next day and was a half of cost three-day service  

- Ok, that's one option. What about using more than one carrier and switching when is a cost difference?

- I don't necessarily agree with that. I think using one vendor gives us the best rate for a level of volume. 

- I'm afraid I disagree. That system works if we're shipping package sustainable  but we ship small orders all over the world on a daily basis.

- Yes, you're right about that and different shipping companies do tend to offer better rates on certain routes. 

-  Well, that may be true , but we don't have the time to analyze thousands of small shipments a day - our resources are stretched already.  

- As far as I'm concerned , we shouldn't change our approach until we've looked more deeply into the issues involved.
- You mean, we should continue with the same delivery policy that we have right now?
- Yes, and if you ask me, the most important thing is flexibility. We have to be prepared to go with what ever company offers the most competitive deal whether it's by air, sea or land.

3. CONCLUDING A NEGOTIATION

- First, I'd like to recap the points we've already agreed upon. Just so there's no future misunderstanding. So far Seabrigthshipping has agreed a fix-rate billing based on dimensional size, on the proviso that the contract is extended another six months.
- That is my understanding of the situation.
- And you have no problem with us paying 25% up front and the remainder after delivery?
- No problem at all.

- So, that just leaves turnaround time. After discussing this with my associates it was decided that we will be willing to pay the extra 10%, as long as you can guarantee a 24-hour turnaround time for the length of the new contract.
- You have my word on that.
- Than we have a deal. Let's shake on it.
- Pleasure doing business with you.
- And you. I'll have my secretary draw up the contract.

- Simon, hello again.
- Hi, Dana.
- How has your stay been so far?
- Great. And if we can conclude our deal successfully today I can safely say that it will have worked out  as the perfect business trip
- Well, on that note I have some good news
- I'm all eras.

DANA: Simon, hello again. 
SIMON: Hi, Dana. 
DANA: How has your stay been so far? 
SIMON: Great. And if we can conclude our deal successfully today, I can safely say that it will have worked out as the perfect business trip. 
DANA: Well, on that note, I have some good news. 
SIMON: I'm all ears.
DANA: First, I'd like to recap the points we've already agreed upon, just so there's no future misunderstanding. So far, Seabright Shipping has agreed a fixed-rate billing based on dimensional size, on the proviso that the contract is extended another six months. 
SIMON: That is my understanding of the situation.
DANA: And you have no problem with us paying 25% up front and the remainder after delivery? 
SIMON: No problem at all. 
DANA: So, that just leaves turnaround time. After discussing it with my associates, it was decided that we would be willing to pay the extra 10%, as long as you could guarantee a 24-hour turnaround time for the length of the new contract. 
SIMON: You have my word on that.
DANA: Then we have a deal . Let's shake on it. 
SIMON: Pleasure doing business with you. 
DANA: And you. I'll have my secretary draw up the contract.


IV. MAKING A COUNTER PROPOSAL

1. LOGISTICS ACRONYMS

deliver - to send
source - to look for
manufacture - to make
return - to send back
plan - to discuss and decide

STATE OF THE LOGISTICS INDUSTRY

If you haven’t yet thought about the State of the Logistics Industry article from the SCM (Supply Chain Management) Group, now is the time.

It’s no secret there have been some ups and downs in the industry recently, especially in the areas of cost, inventory and carrier prices. This trend is in part due to the industry consolidating, but also to new technology or, more precisely, the lack of it.

SCM is committed to improving the way a company finds the raw components that enable it to make a product and then delivers it to customers. There are five basic components of SCM: Plan, Source, Manufacture, Deliver and Return. This last area can be an especially problematic part of the supply chain. So what can be done? Bar codes only? Not anymore. Companies are now using RFID (Radio Frequency Identification), tags that can identify what the product is, where it has been and when it expires – essentially whatever information a company wishes to program. Right now the major drawback is the high cost of building the infrastructure to manage RFID data and the consequent lack of ROI (return on investment).

Many SCM applications are reliant upon the kind of information stored inside Enterprise Resource Planning (ERP) software and, in some cases, Customer Relationship Management (CRM) packages, making the cost very high. It can be a nightmare getting information flowing on a fast, reliable basis from all the areas of a company, especially if that company doesn’t collaborate with other companies to help lower costs.

Another important factor is ERM (Enterprise Resource Management). Recently, due to a decline in demand, distribution centers produced SKUs (stock-keeping units). However, this system created some serious problems and many companies soon replaced it with a JIT (just in time) system. Unfortunately, as a supplier adopts JIT and other ‘lean production’ concepts, it also tends to reduce its indirect labor and technical staff.

Using a CPFR (Collaborative Planning, Forecasting and Replenishment) system helps a company develop clear business guidelines and roadmaps for various collaborative scenarios, including upstream suppliers and retailers. Sharing expenses between companies can be an effective way to reduce costs.

As companies search for new ways to reduce costs, collaboration is more and more becoming a key component in optimizing supply chain. The CPFR system is one effective way of doing this. 

SCM - the organization and management of shipping and other logistical supply methods.
CRM - a software that helps a company manage its clients.
JIT - a system of signals that alerts those involved to when to begin the next part of the process, thus reducing costs and increasing ROI. 

RETURN ON INVESTMENT 
the amount of profit a company makes, compared with the capital it invested

SUPPLY CHAIN MANAGEMENT 
the organization and management of shipping and other logistical supply methods
 
COLLABORATIVE PLANNING, FORECASTING AND REPLENISHMENT 
a system that enables logistics companies to reduce overheads by collaborating with other companies

RADIO FREQUENCY IDENTIFICATION 
a way of tagging shipments and goods to track their progress

JUST IN TIME 
a system of signals that alerts those involved to when to begin the next part of the process, thus reducing costs and increasing ROI

CUSTOMER RELATIONSHIP MANAGEMENT 
a software that helps a company manage its clients


2. SUPPLY CHAIN SOFTWARE

Online Supply Chain Management

That’s why the leading SCM and ERP software vendors are ramping up (наращивают) their products to perform in real time, across different environments, and with better analysis tools. They are promising systems that integrate more easily with other applications and map more closely to the business processes and priorities on which companies actually operate.

Supply chain product managers say that real-time visibility offers greater responsiveness (чувствительность), which lets them operate with lower inventory levels. It also helps them improve their forecasting capabilities, which is important because inaccurate forecasts could translate into lost sales.

The industry’s leading supply chain and ERP vendors are very much aware of this need for real-time capabilities. This year, they are adding support for web services so their applications can more easily share information with other vendors’ apps, as well as with legacy systems. Some vendors have even rebuilt their software so it’s purely web based. Such efforts have set the stage for companies to automate business processes across departments and beyond their own walls.

One example of real-time operation is Alcatel’s enterprise networking division. A few years ago the division out sourced its production and logistics services. Now it assembles (собирают) products only when inventory drops to specified levels, rather than according to forecasted sales. The changes have cut in half the dollar value of the inventory that the company holds: and the planning cycle, which previously relied on manually constructed spreadsheets, by about 75%.

But trimming inventory and planning cycles put hefty (тяжелый) demands on Alcatel’s supply chain. In order for the outsourcing to be successful, the company required visibility across the supply chain of assemblies and critical components. So they upgraded their applications to better share planning and production schedules with their business partners. The software lets Alcatel treat outsourced manufacturers as though they were internal organizations. They can now, in real time, work with suppliers to compare order forecasts with supply commitments, determine demand-supply (спрос-предложение) mismatches, and analyze suppliers’ performance.

automated business processes
manually constructed spreadsheets
order forecasts 
outsourced manufacturers
supply commitments 
real-time visibility 


3. SKIMMING AND SCANNING BUSINESS PROPOSAL

TriLogistics Inc.
SCM

Project:

Information Technology using RFID

Prepared for: Better Logistics Ltd.

Prepared by: Lauren Stewart, TriLogistics Inc.
                     

Description:

An automated program equipped with RFID Technology

Proposal Number: 33430921

Objective:

To create an automated program to facilitate the use of tags in tracking the situation, route, destination and contents of a product, including where the product is, where it has been and its expiration date. The logistics sector is perfectly positioned as one of the primary beneficiaries of the adoption of RFID into the supply chain.

We will be keeping in mind all possible present and future scenarios and carefully analyzing and implementing forecasts on the behalf of the client.

• Cost-effective
• Complete database
• A range of tracking applications
• Cutting edge but easy-to-implement technology

Opportunity:

Our company will build a secure database located at an information storage facility. The information can be read by any computer with access to the internet and with no special software required. RFID tagging represents a great opportunity to expand a company’s portfolio of services rendered. These opportunities include:

• Performing inspections
• Viewing and printing inspection certificates
• Recording inventories 
• Tracking assets 
• Lowering inventory stock levels
• Reducing manual checks
• Reducing logistics costs
• Providing RFID compliance services to clients  
• Expanding service and revenue bases to suppliers

Objectives 

cutting edge
easy to implement
complete database
a range of applications

cost-effective

Opportunities

recording inventories

viewing inspection certificates

expanding service and revenue 

providing RFID to clients

performing inspections

reducing costs 

Project 
Information Technology using RFID 
Prepared for: Better Logistics Ltd. 
Prepared by: Lauren Stewart, TriLogistics Inc. 

Description 
An automated program equipped with RFID Technology. 
Proposal Number: 33430921 

Objective 
To create an automated program to facilitate the use of tags in tracking the situation, route, destination and contents of a product, including where the product is, where it has been and its expiration date. The logistics sector is perfectly positioned as one of the primary beneficiaries of the adoption of RFID into the supply chain. 
We will be keeping in mind all possible present and future scenarios and carefully analyzing and implementing forecasts on the behalf of the client. 

Opportunity 
Our company will build a secure database located at an information storage facility. The information can be read by any computer with access to the Internet and with no special software required. RFID tagging represents a great opportunity to expand a company’s portfolio of services rendered...