INTERNATIONAL LOGISTICS

(LOB30503)

ASSIGNMENT 1

PREPARED BY:
MUHAMMAD SABIL RIDZUAN BIN NORZI 56212114092

MOHD FAIZAL BIN MOHD HANAPIAH 56212114098

MUHAMAD SYAZWAN BIN SUTERIS 56212114081

MUHAMMAD RAZIF FARKHAN BIN NASUHA 56212114082
MOHAMAD MOHSIN BIN ISMAIL 56212114132
MOHD HAFIZZUDIN ASHRAWI BIN MOHD FUDZI 56212114175
NURUL NADIHA BINTI JAAFAR 56212114187

PREPARED FOR:
RASIDAH BINTI SHAFIEE

0
 TABLE OF CONTENTS

1.0 Introduction
3
2.0 Describe The Word Logistics & Supply Chain
4
2.1 Definition Logistic
4
2.2 Definition Of Supply Chain
4
3.0 Identify & Explain Each Of The Logistics Activities
5
3.1 Customer Service
5
3.2 Demand Forecasting
5
3.3 Inventory Management
5
3.4 Logistics Communication
6
3.5 Material Handling
6
3.6 Order Processing
6
3.7 Packaging 7
3.8 Parts & Service Support
7
3.9 Plant & Warehouse Site Selection
7
3.10 Warehousing & Storage
7
3.11 Procurement
8

1
 3.12 Reverse Logistics
8
3.13 Traffic & Transportation
8
4.0 Discuss The Logistics Roles In Economy & Roles In
Organization Business
9
5.0 Identify The Process Flow Of Logistics & Supply Chain.
(Draw & Explain)
11
6.0 Explain In Details About Integrated Logistics Network
13
6.1 Definition Of Integrated Logistics Network
13
6.2 Logistic Network Modeling
14
6.3 Main Activity In Logistic
14
6.4 Logistic Network Appraisal
14
7.0 Differentiate Between Logistic Management & Supply
Chain Management
17
8.0 Identify The Supply Chain Network On International
Market Business
18
9.0 Discuss Six (6) International Market Strategies Of Global
Logistics 21
9.1 Exporting 21
9.2 Importing 21
9.3 Licensing 21
9.4 Joint Venture
22

2
 9.5 Ownership
22
9.6 Countertrade & Duty Drawback
22
10.0 Determine The Factors That Influence The Effectiveness And
Efficiency Of Logistics
23
11.0 Identify Issues In Global Logistics Environment
25
12.0 Conclusion
27
13.0 Reference 28

3
1.0 Introduction

This course studies the role of logistics in the supply chain in firm
focus and between organizations attributed in the supply chain is
provided. Topics covered include issues such as the introduction to the
basic terms of logistics, distribution and transportation alternatives, the
connection between logistics and marketing, estimated value and cost
control strategies logistics, sourcing and supply management, the supply
chain planning and logistics and the future challenges and opportunities.
The course will also review operations research models and
techniques developed for the various problems that arise in planning
production logistics system. Students will get a clear idea of their role as
logistics in business today. It would also become familiar with the
principles and the process of logistics as a strategic supply chain
management.
Logistics management is part of the supply chain management and
has elements of planning, implementing, and controlling the flow of
efficient, effective forward and reverse and storage of goods, services and
related information between the point of origin and the point of
consumption to meet customer needs. Supply chain management is the
managing the flow of goods and services, involving the movement and
also the storage for raw materials, work in the process of inventory in
warehouse, and finished goods from point of origin to point of
consumption.

4
2.0 Describe the word Logistics & Supply Chain

2.1 Definition Logistic

Logistics is practically the science of managing or controlling the
movement and storage of goods (or people) from point of origin to point of
consumption. The goods may be in the form of raw materials to the final
products and everything in between those two. As for the movement in
this context, refers to the transportation that is involved along the
shipment of the goods. The (Council of Logistics Management, 1998)
defines logistics as part of the supply chain process that plans,
implements and controls the efficient, effective flow and storage of goods,
services and related information from the point-of-origin to the point-of-
consumption in order to meet customers requirement.
Logistics typically refers to activities that occur within the
boundaries of a single organization and supply chains refer to networks of
companies that work together and coordinate their actions to deliver a
product to market. Also, traditional logistics focuses its attention on
activities such as procurement, distribution, maintenance, and inventory
management.

2.2 Definition of Supply Chain

Supply chain is normally refers to network but (Martin Christopher,
nd) in the book entitled Logistics and Supply Chain Management defines
supply chain in a closer look which is "Supply Chain is the network of
organizations that are involved, through upstream and downstream
linkages, in the different processes and activities that produce value in the
form of products and services in the hands of the ultimate consumer"
Supply Chain Management (SCM) acknowledges all of traditional
logistics and also includes activities such as marketing, new product
development, finance, and customer service" - from Essential of Supply
Chain Management by Michael Hugos.

5
 The general supply chain structure simply composed of supplier,
manufacturer, wholesaler and retailer. Supply chain management controls
a broader number of functions and concentrates on achieving customer
satisfaction and maximizing profit in a long-term way.

3.0 Identify & explain each of the logistics activities

3.1 Customer service

Customer service is the measure of how logistics is creating the time and
place utility for a product. The meaning of customer service varies with
the organization the product it is marketing and the transaction phase it is
undergoing the buyer looks for value for the money he is spending, while
the seller, in delivering superior customer service, looks for the trade-off
between cost and customer satisfaction.

3.2 Demand forecasting

Demand forecasting is drive customer demand by corporate supply chain
and business management. It may be used in production planning,
inventory management, and at times in assessing future capacity
requirements. In this forecasting, it involve techniques including both
informal methods, such as educated guesses, and quantitative methods,
such as the use of historical sales data and statistical techniques or
current data from test markets. In easy words, demand forecasting is
actually predicting future demand for the product.

3.3 Inventory management

Inventory management is actually a warehouse that is a planned space for
the storage and handling of goods and material that are focusing for
product and information flow between sources of supply and beneficiaries.
The role of inventory management is to ensure that stock is available to

6
 meet the needs of the beneficiaries as and when required. It represents a
large cost include, the cost of transporting the goods, cost of managing
the goods (labor, fumigation, repackaging, etc) and keeping the goods in
warehouses. The inventory manager's job is to make inventory available
at the lowest possible cost. In order to achieve this, the inventory
manager must ensure a balance between supply and demand by
establishing minimum holding stocks to cover lead-times.

3.4 Logistics communication

Communications are becoming increasingly automated, complex, and
rapid. Logistic interfaces communications widely occur between:

i. Organization and its suppliers and customer

ii. Organizations major functions which are, logistic, engineering,
accounting, marketing and production.
iii. Organization logistic activities such as coordinating warehousing
of material, work in process, and finished goods.

Communication is key to the efficient functioning of any system, whether

it be the distribution system of an organization and also in scope of wider
supply chain.

3.5 Material handling

Materials handling is the function of moving the right materials to the
right place in the right time, in the right amount, in sequence, and in the
right condition to minimize production cost. Materials handling covers
virtually all aspects of all movements of raw materials, work -in-process or
finished goods within a factory or warehouse. Basically, material
movement is considered as a non-value adding activity. So, manager
should be to eliminate material handling where is possible. This includes
minimizing inventory, travel distance, bottlenecks and loss due to spillage,
wast, wrong handling, damage etc.

7
3.6 Order processing
Order processing is the process or work-flow associated with the picking,
packing and delivery of the packed items to a shipping carrier. It is also a
system of doing business for ages, and have developed alongside
technology to provide powerful means of capturing, tracking and shipping
customers' orders. Part of this processing are includes checking inventory
status, customer credit, invoicing, and accounts receivable. So, it clearly
shows that the order processing is a key element of order fulfillment that
can directly have a big impact on a customers perception of service and
then their satisfaction.

3.7 Packaging
Packaging is indeed a very important process in advertising and
distribution. When making products, packaging also determines the
appearance and the looks of the product which of course affects people
and how they will view the products; if they like the packaging then it is
most likely that they will buy the products. With packaging, products will
be greatly in shape and that they can be arranged structurally as well as
combine and make things a lot easier when it comes to delivery. These
effects of packaging will bring along profits, higher capability of
productivity, competition, and the enhance of logistical activities.

3.8 Parts & service support

To supporting production through the movement of materials, work in
process and finished goods, logistics also is responsible for providing after-
sale service support. This may include delivery of repair part to dealers,
stocking adequate spares, picking up defective or malfunctioning product
from customers, and responding quickly to demands for repairs.

3.9 Plant & warehouse site selection

8
 A warehouse is a planned space for the storage and handling of goods and
material. The strategic placement of plants and warehouse can assist
firms in improving customer service level. Proper facility location can also
allow lower volume-related transportation rates in moving product from
plant to warehouse, plant to plant or warehouse to customer.

3.10 Warehousing & storage

Warehousing is the act of storing goods that will be sold or distributed
later. While a small, home-based business might be warehousing products
in a spare room, basement, or garage, larger businesses typically own or
rent space in a building that is specifically designed for storage.
Warehouses are used by manufacturers, importers, exporters,
wholesalers, transport businesses, customs, etc. Whether the purpose is
strictly storage or storage plus order fulfillment, warehouses use specific
elements that help manufacturers, distributors, and retailers monitor
inventory and store it safely.

3.11 Procurement
Procurement is an act of getting or purchasing good and service. It
includes preparation and processing of a demand as well as payment
approval and the end receipt. The systematic coordination of all aspects of
the procurement process including bids, price negotiations, assuring
proper quantities and specifications, shipping and delivery. The goal is to
obtain materials, services or products at the best possible cost which
meet the needs and time constraints of the organization.

2.12 Reverse logistics

Reverse logistics refers to all procedures associated to product returns,
repairs, maintenance, recycling and dismantling for products and
materials. Overall it incorporates running products in reverse through the
supply chain to gain maximum value. It is "the process of planning,
implementing, and controlling the efficient, cost effective flow of raw

9
 materials, in-process inventory, finished goods and related information
from the point of consumption to the point of origin for the purpose of
recapturing value or proper disposal. More precisely, reverse logistics is
the process of moving goods from their typical final destination for the
purpose of capturing value, or proper disposal. Remanufacturing and
refurbishing activities also may be included in the definition of reverse
logistics." The reverse logistics process includes the management and the
sale of surplus as well as returned equipment and machines from the
hardware leasing business.

3.13 Traffic & transportation

This activity is actually to provide for movement of material and goods
from point of origin to point of consumption, and perhaps to its ultimate
point of disposal. Transportation involve selection of mode (eg, air, rail,
water truck/ pipeline) the routing of shipment assuring of compliance with
regulation in the region of the country, where shipsment, assuring of
compliance with regulation in the region of the county whre shipment is
occurring, and selection of the carrier.

10
4.0 Discuss the Logistics Roles in Economy & Roles in
Organization business.

Logistics can creates Competitive Advantage for the organization

i. The role of logistics in an organization is to play an important role in
ensuring customer satisfaction can be achieved with the maximum
level.
ii. The logistic systems make the output of customer services more
effective and efficient for the organization.
iii. The role of logistics can make a product or service that is created is
competitive with other competitors in the market place.
iv. The organization can make their competitive advantages in quality,
quantity and price of the product for their customer is well
established.

Logistics can creates Time and Place utility for the organization's products
i. The role of logistics can create a time and place utility for the
product to be produced for any organization to its customers is more
accurate and efficient.
ii. Customers can purchase the products they want on the market a
more accurate and organizations can maximize the production with
more organized.
iii. In fact, customers can purchase and have the products they want at
the right place or platform.
iv. Time and place utility must be mutually linked and should be
occurring together to ensure the products can provide the maximum
benefit to the organization.

Logistics allows efficient movement of Goods and Services to the

Customer
i. The role of logistics to ensure the goods movements to the
customer are faster and save the transportation cost for the
organizations.

11
 ii. The products are sold in the market must be delivered to customers
more efficiently and effectively to ensure the management and
delivery costs can be minimized.
iii. Products delivered must be in the correct process and platforms to
ensure that customers can purchase products at lower prices to
prevent the intervention of an intermediary person.

Logistics can make the efficient Pricing Considerations

i. The role of logistics in terms of pricing consideration is an important
to ensure that products to be sold in the market are more
affordable.
ii. The strategy of goods production in organization can develop and
also be able to meet customer demand in the market place.
iii. Pricing on goods must take into account all aspects, including
manufacturing costs, shipping costs, promotion or discount and
among others.

Logistics as a Significant Component in National and International

Economy
i. The role of logistics in the economy may affect the rate of inflation
in a country, the percentage of productivity, labor costs and any
related aspects.
ii. The productivity of a product not based on the value of sales in the
market, but at a cheaper cost than any manufacturing operation.
iii. Logistics can also ensure that products can be delivered in the right
way channel and the product quickly arrived on the world market.

12
5.0 Identify the process flow of Logistics & Supply
Chain. (Draw & explain)

Transportation Transportation

Production finished good

Raw material supplier manufacturer warehouse

retailer consumer

Inbound logistics outbound logistics

Figure 4.1 Logistic Management Process

Figure 4.2 Flow of Supply Chain

13
Raw Material : Raw material is the component part need by logistic
management process. Also known as basic material
from which a product is made.

Supplier : Supplier provides the necessary raw of material,

service or component part for the logistic company.
Purchased material or services frequently represent 50%
of cost of goods sold.

Tier-one supplier : Directly supplies materials or service to the firm

that does business with the final customer

Tier-two supplier : Provide materials or service to tier one supplier

Tier-three suppliers : Provide material or service to tier two suppliers

Manufacturer : Where the production of good take place. Production

planning and inventory control function is the center
point of this chart

Inbound Logistics : The movement of goods and raw materials from

suppliers to your company.

Outbound Logistics : Refers to movement of finished goods from your

company to customers

Warehouse : A place for storage the finished good or part of the

good. General warehouse used for long term storage of
good. Role of warehouse such as transportation
consolidation, product mixing and blending-group
multiple item from various supplier and also improve
service-reduced response time

Retailer : Person or business that sells goods to the public in

relatively small quantities for use or consumption rather
than for resale.

14
6.0 Explain in details about Integrated Logistics network

6.1 Definition of Integrated Logistics Network

Integrated logistic network is defined as the process of

anticipating customer needs and wants; acquiring the capital, materials,
people, technologies and information necessary to meet those needs and
wants; optimizing the goods-or-service-producing a network to fulfill
customer requests; and utilizing the network to fulfill customer request in
a timely way. Integrated logistics network is a service-oriented process. It
incorporates actions that help move the product from the raw material
source to the final customer.
Logistics network design provides an optimal platform for efficient
and effective Supply Chain Management (SCM). Its made up of a set of
facilities linked by transportation services. The facilities are sites where
materials are processed such as manufactured, stored, sorted, sold. While
the transportation services is to move materials using vehicles and
equipment such as trucks, tractors, trailers, crews, pallets, containers,
cars and trains.
Logistics network design is used to determine the number, location,
equipment and size of new facilities, as well as the divestment,
displacement or downsizing of facilities depend on the type of facilities
that use. The aim for logistic network design is to minimization of the
annual total logistics cost subject to side constraints related to facility
capacity and required customer service level. Usually, the cost be
minimized is associated with facility operations and to transportation
between facilities, or between facilities and users. Its also an important
and strategic operations management problem in Supply Chain
Management, which usually involves multiple and conflicting objectives
such as cost, service level, and resource utilization. Design of a logistics
system based on major planning area:

15
 i. Customer service in logistics includes product availability, lead
time to obtain the product, condition of the product when
received and accuracy of filling an order.
ii. Location decisions relate to the placement of facilities such as
warehouses, terminals, stores and plants and the assignment of
demands to supply points.
iii. Inventory planning encompasses setting up inventory levels and
inventory replenishment schemes.
iv. Transportation management deals with transportation mode,
fleet size, route selection, and vehicle scheduling and freight
consolidation.

6.2 Logistic Network Modeling

Some of the complexities involved in designing a logistics system with use

of network modeling are as follows:
i. The integration of vehicle routing and scheduling
ii. The uncertainty in demand, which requires demand to be
forecasted
iii. The identification and development of the appropriate type of
cost functions
iv. The dynamic nature of the demand and cost functions over a
period of time
v. Dependency relationships between inventory and transportation
decisions

Integrated logistics network model are as follows:

i. The number of warehouses, their location, ownership (private or
public) and their size
ii. The allocation of customer demand to supply points (warehouses
or plants) allocation to single or multiple supply points
iii. The amount of inventory to be maintained at various locations
iv. The type of transportation services to use

16
 v. The level of customer service to be provided.

6.3 Main Activity in Logistic

The three main activity in logistic system are the order processing,
inventory management and transportation strategies.

i. Order Processing
Customers request the products by filling out an order form.
The orders are transmitted and checked.
The items are retrieved from the stock, packed and delivered
along with their shipping documentation.
Customers have to be kept informed about the status of their
orders.
Order processing used to be very time-consuming, but it has
benefited greatly from ICT.

ii. Inventory Management

To determine stock levels in order to minimize total operating
cost while satisfying customer service requirements.
A good inventory management policy should take into account
five issues:
The relative importance of customers
The economic significance of the different products
Transportation policies
Production process flexibility
Competitor's policies.

iii. Transportation Service

These services include local delivery and pick-up operations as
well as over-the-road and trucking services.

17
 Transportation decisions include the mode of transportation,
shipment size and allocation of product flow from source to sink
to various transportation modes.
Each transportation mode has restrictions in terms of capacity
and availability.
The transportation decisions made at the network level are
aggregate in nature and hence will not deal with tactical
decisions such as vehicle routing and scheduling.

6.4 Logistic Network Appraisal

18
19
7.0 Differentiate between Logistic Management & Supply
chain management.
Comparison Logistic Management
Scope Logistics management refers to
managing the flow of goods, information
and resources from the beginning point
of external origin to the point of
consumption and reverse. Logistics has a
vital effect on shipped goods, and
includes all activities involved in the
shipping process. Logistics manages the
flow within a company and between a
company and its suppliers and customers.
Meaning The process of integrating the movement The coordination and management of the
and maintenance of goods in and out the
organization.
Objective The objective is to achieve customer
satisfaction.
Evolution The concept of Logistics has been
evolved earlier.
Organization It involves a single organization.
s involve
One in Logistics Management is a fraction of
another Supply Chain Management.
20
Supply Chain Management
Supply chain management is control over
integrated network processes, providing
the end customer with a product or
service and meeting all his/her
requirements. It includes numerous
aspects of logistics management and
demand planning which coordinates
processes within and among companies.
supply chain activities are known as
Supply Chain Management.
The objective is the competitive
advantage.
Supply Chain Management is a modern
concept.
It involves multiple organizations.
Supply chain management is the new
version of Logistic Management.
8.0 Identify the supply chain network on international
market business

Figure 7.1 Supply Chain Network

Figure 7.2 Supply Chain Network

21
Supply chain network is intended to enable a clearer picture and a better
understanding of the flow or movement of materials and information by
connecting the organization with end customer. Material flow is the
movement of goods from raw materials in order to complete a product
that will be delivered to the customer. Information flow means any
information relating to requests from customers regarding the products
needed at any given time. There is the flow in supply chain network on
international business.

i. Supplier
Supplier is an entity that will supply the goods and services required
by the organization as one of the contributors to the development
process on the way to the final customer. Usually the supplier will
supply raw materials and should be sent to the manufacturer. A
supplier can produce and deliver raw materials, components
partially assembled, custom parts, or any run out supplies. Supplier
can also provide employment, consulting or management services.

ii. Manufacturing
The process to convert raw materials, components, or components
into finished products that meet customer expectations or
specifications. Manufacturing usually use human labor or machine
tools to produce a large-scale production. The finished goods that
may be sold to another manufacturer for the production of other,
more complex products, such as airplanes, household appliances or
cars, or sold to wholesalers, who then sell to retailers, who then sell
them to consumers and end users. The raw material supplied by the
supplier should be sent to the manufacturer. For Supplier from
overseas, the use of shipping transportation is needed to bring
large-scale material and can save transport of the expenses. For raw
materials that are in the country, perhaps the use of rail
transportation is needed for areas that have railroad facilities.

22
iii. Distribution
A distribution channel is a process where the product was ready to
be delivered to end users. The distributions channel also as for
wholesalers, retailers and distributors by any transportation modes
that provided. Products to be marketed overseas, shipping
transportation should be used to bring the product and it should be
managed efficiently to avoid the additional cost is not applicable.
Each product is brought in or taken out of the country will have a
procedure to involve the customs and freight forwarder. In fact, all
documents must be complete and meet all the conditions have
indicated for the smooth running of the product. Delivery of the
finished product can also use the air carrier is faster delivery to
customers. But the cost of the transportation by air carrier is very
expensive compared to shipping transportation.

iv. Retailer
Retail is a process that involves the sale of consumer goods or
services to customers through various distribution channels to gain
the profit. Retailers meet the demands are determined through the
supply chain. Retailers usually will provide a platform to showcase
their products and strategy to the buyer as a shop. Once the
strategic retail plan in place, retailers drafting retail mix that
includes product, price, place, promotion, people and performance.
In the digital era, digital technology is changing the way that
consumers pay for goods and services. Retail support services can
also include the provision of credit, delivery services and various
support services. Not only that, the product sales can also use
Internet technology much more easily and readily accessible at all
times by the user.

v. Consumer
Consumer is an individual who purchases products or services for
personal use and not for the manufacture or resale. A consumer is

23
the person who can decide whether or not to buy items in the store,
and someone who may be influenced by marketing and advertising.
Any time a person goes to the store and buy toys, clothes, drinks, or
anything else, they make decisions as consumers. Thus, consumers
play a key role in the economic system of a country. Without
consumer demand, manufacturers will lack one of the main
motivations to produce or to sell to consumers. Consumers also
forms part of the distribution chain.

24
9.0 Discuss six (6) International Market Strategies of global
logistics

9.1 Exporting
Exporting is process where the goods or the product were manufactured
by a country and being purchased by citizen of another country passing
by border of the country. It may ship thru air, water and land
transportation. The more exporting process occur on the country will
represent that country are expert in producing of goods or product and
management on it. Furthermore, the country that exports their product
will sell their product and receiving the money which called foreign
exchange into the country. At the same time, the process will make the
country become more expert is selling the product in foreign market.

9.2 Importing
Importing are one of the most frequency activity in shipping for seconder
country where their buy are product from the others country. Importing
may define as the country are buying or bring in the goods or service from
the foreign country to their own country. The importing process includes a
lot of document and procedure. Its starting from the manufacture or
producer into the consumer including the shipping process. This process
will make the importer will gain the new technology from the product or
service. But the economic will little lost where the country need to pay to
the foreign country. The importing processes are able to improve the
standard of living of people of the country. The most bad site of the
importing process is unemployment thru the discourage local
manufacturing.

9.3 Licensing
Is the situation where the company are allow to the others entity to use
the manufacture, processing, trademark, know-how, technical assistance,
merchandising knowledge that provided by the licenser in the other

25
 country. With this method, the domestic firms are easier to control the
distribution of the product. Its become simple when the licensed
companies are located on the country of consumer where theyre not
need the transportation from the local country. But the licensees usually
are only paid the royalty or the percentage of the sale. With is no profit
making in this contract. Sometime the licensee wills be the competitor to
the licensor.

9.4 Joint venture

Two or more entity are share the expenses and looking for profit in a
particular business project. The contract between shareholders usually
state in contract and have a limited time. One of the main factor joint
venture is create to share their risk through the capital and resource
sharing. Sometime, this contract will allow to the small companies work
together with biggest companies. The main companies will gain new
capacity an expertise from the companies that joint venture with it. But
the objective of the joint venture usually are not 100% clear this means
each companies usually have their own objective behind the objective
stated in the contract.

9.5 Ownership
Its refer to the individual or entity that own a business aimed for profit
from the successful of the operations of the company. The ownership of
the companies will refer to the most owned of share of the companies.
This situation are required more knowledge in the international market
compared to others forms or market entry strategies where related to the
risk of marketing and product distribution. With these strategies, the
organizations may compete effectively on price. Theres a few type of
business will be; sole proprietor, general partnership, limited partnership,
regular corporation or non-corporation, limited liability company. Those
types of business are effect on the several factors including the nature of
the workforce of your organization, the goal of the organization and etc.

26
9.6 Countertrade & Duty Drawback.
Countertrade is an reciprocal trade or mutual trade where the both entity
are agreed to exchange the goods or service not for cash but for other
goods or services. Theres five form of countertrade; barter, buyback,
compensation, counter purchased, switch. For duty drawback, its a
refund that is able to obtain when the import fee are paid but the goods is
then subsequently exported. For that, a business does not have to pay the
import duty.

27
10.0 Determine the factors that influence the effectiveness &
efficiency of logistics

Efficiency is ability in avoiding wasting resource such as energy, money,

time, material and effort in the completion of work or in producing a
desired result. Effectiveness is the capability of producing a desired result.
There are several factors in influencing the effectiveness and efficiency of
logistics such as:

i. Energy consumption
Energy consumption will lead to cost of energy such as fuel,
electricity and etc. Energy consumption will give impacts to the
operating cost. In order to improve efficiency and effectiveness is by
lowering the energy consumption. High-efficiency units are also
considered as solution. Nowadays many companies install high-
efficiency appliances and fixtures in a facility to conserve and
reduce energy usage. But there is also some investment required,
but the payback is often reduced rates and/or a lower monthly
bill.

ii. Optimize transportation

Cost of transportation increasing based on the economy. Fuel cost is
hardly to avoid in every industries nowadays. Optimal size and
weight of product and packaging need to be implement to maximize
full use of space while delivering the goods. Full use of space will
enable to delivering high capacity of goods thus reducing the fuel
cost. Proper load and delivery route pattern planning should be
systemizing to avoid additional cost of fuel because of route
mistake.

iii. Price
To make the logistics efficient and effective, quality and service
must be in tiptop condition and at a great level. But to compete and

28
 make it more effective, the price must be lowered compared to the
competitors. This strategy will enable to dominate the industry. To
overcome the shortest on profit, the volume of pace and inventory
turnover must be increased. Attraction of customers must be done
in order to survive.

iv. Reverse logistic

Many of the costs associated with reverse logistics are hidden that
make the cost are expensive. The hidden cost maybe on several
aspects such as:

a. Labour costs associated with customer relations

b. Customer service labor costs (identifying warranty eligibility,
return and credit rules apply in each individual case)
c. Transaction costs
d. Transport and shipping costs
e. Warehouse and storage costs

To overcome these costs firstly reduce the number of failure or

return by producing high quality product without mistake. Mistake
means additional costs. Lowered the cost include in reverse logistics
such as warehouse and storage cost, labour cost to fix the
uncompleted or damage product.

v. Third party logistics (3PL/TPL)

Third party logistics is a company's use of third party businesses to
outsource elements of the company's distribution and fulfillment
services. Third party logistics are expert and specialize in integrated
operation, transporting and warehousing. There a lot of benefit to
use 3PL and also method to make the logistics effective and
efficient. 3PL enable low capital commitment which is highly
recommended because there is no need for client to own

29
 warehouse, transportation service and facilities. 3PL is also flexible
in delivering and distributes goods based on geography.

vi. Maximize warehouse storage

Warehousing procedures enable the flow of goods to be update
systematically. This will enable to maximize the warehouse storage
because companies can store, move and ships product or goods
efficiently. Thats means the empty space is filled systematically by
coding the goods by first in first out or first in last out category.

30
11.0 Identify issues in global logistics environment.

i. Ocean Shipping
Global logistic have use ocean shipping as famous mode of
transportation of goods and freights. Ocean shipping is effective due
to lower cost compared to other mode of transportation. The issue is
a structural shift from air freight to sea freight. Its happen due to
the strategy of reducing cost and maximizes the capacity of freight
in delivering to the customer. The cost of air freight is expensive
rather than sea freight which is the main reason of the structural
shift. This issue gives impact to the air freight due to lose of
customers.

ii. Green Movement

There is new issue in global logistic environment about green
movement. This is a new trend in reducing pollution substance in
every modes of transportation due to exposure of green technology.
The new regulation from International Maritime Organization (IMO)
highlight about sulfur content in ships fuel that cause pollution. The
regulation mentions that sulfur must be below 0.1% compared to
current 1%. The problem is low sulfur fuels cost more because it is
expensive compared to normal fuels. The issue forces the company
to implement low sulfur fuels which increase the cost of
transportation and reduce the competitiveness of sea transport.

iii. Infrastructure
Technology has expanded year by year that cause many great
things such as large vessel. Lack of infrastructure to accept and
service large vessel is also one of the famous issue nowadays. This
cause low number of terminal can accept large vessel and force
them to only go to the hub port.

31
iv. Fuel Price
Fuel price plays important role in competitiveness and lead to main
cost of operation. The global rate of fuel price nowadays is increase
compared to last year. The increasing of fuel price gives impacts to
the mode of transportation. Company or owner will choose lowest
mode of transportation to delivering their freight. A structural shift
from air freight may happen due to the expensive cost of air freight
compared to sea freight.

32
12.0 Conclusion

i. Logistics management should be approached from the perspective

of cost and service to optimize the performance of the entire
system.
ii. Logistics management should be efficiently and effectively to
contribute significantly to the financial performance of the
organization.
iii. Logistics can increase the growth in international trade and
distribution of goods.
iv. Logistics is able to improve the competitiveness of each country and
at the same time improving the national economy.
v. Logistics play a key role in improving the quality of transportation of
goods and services for the country.
vi. Logistics also can be further developed an organization and can
generate high profits.
vii. Logistics is a substantial component of a nations Gross Domestic
Product.
viii.

33
13.0 Reference

Books:
Blanchard, B. S. (2004). Logistics engineering and management. Prentice
Hall.
Christopher, M. (2016). Logistics & supply chain management. Pearson
UK.
Arndt, H. (2004). Supply Chain Management. Gabler Verlag Springer
Fachmedien Wiesbaden GmbH, Wiesbaden.
Handfield, R. B., & Nichols, E. L. (1999). Introduction to supply chain
management (Vol. 183). Upper Saddle River, NJ: prentice Hall.
Mentzer, J. T., DeWitt, W., Keebler, J. S., Min, S., Nix, N. W., Smith, C. D., &
Zacharia, Z. G. (2001). Defining supply chain management. Journal
of Business logistics, 22(2), 1-25.
Lambert, D. M., & Cooper, M. C. (2000). Issues in supply chain
management. Industrial marketing management, 29(1), 65-83.

Internet:

http://www.supplychainopz.com/2012/04/what-is-logistics-and-supply-
chain-management.html

http://info.plslogistics.com/blog/the-differences-between-logistics-
management-and-supply-chain-management

34