WEEK 4:

Objectives:

● Identify advantages and disadvantages of supply chain operations.

● Explain the impact of logistics and supply chain operations on the competitiveness of business.

ADVANTAGES OF SUPPLY CHAIN

1. Improved Quality of Life: people depend on the supply chain to deliver the basic necessities they
need to survive, e.g. food, water, shelter and to improve their quality of life. The supply chain can even aid
health care, e.g. medical emergency transporting victims to hospital for emergency treatment, as is
transporting medical supplies to hospitals.

2. Supports Economic growth (Wealth creation):societies with a highly developed infrastructure (roads,
railways, ports, airports) enable citizens to access goods and services when they need them, and
economically because the supply chain promotes competition. Competition encourages high quality and
competitive pricing. As a result, consumers can buy more with their income, being assured of getting
value for money. Thereby the standard of living in society is raised.

3. Employment Opportunities: the supply chain encompasses almost unlimited opportunities for
employment. There are also opportunities for self-employment and entrepreneurship.

● Tele-sales and Telemarketing: allows people to work from home, either for a business or through
self-employment. Tele-sales refers to selling products/services of others direct to customers by
telephone. Tele-sales workers are paid a basic wage with an added payment based on the
number of sales achieved. A telephone, pleasant telephone manner, a sound knowledge of
employer’s product/service and discretion aids the worker at being successful at his job.
Telemarketing also involves telephone use, but can be more interesting and satisfying. It creates
the interest of potential customers and opportunities for the marketing company, but is used to
provide information to customers and potential customers and collect customer feedback and
make appointments.
● E-tailing: (electronic retailing) is the selling of retail goods on the internet. It requires strong
branding and service display, giving the shopper a personal feel of shopping without being
present in a store. E-tailing benefits both consumers and marketers. Consumers, who are pressed
for time save time and energy because they can browse online, compare with other traders, select
and pay online and receive a speedy delivery. Marketers do not necessarily benefit to the same
degree as consumers, but they do gain. A successful electronic campaign not only increases
revenue but also raises brand awareness and paves the way for boarder distribution. E-tailing also
creates employment opportunities, e.g. more computer workers are needed to set up, maintain
and oversee the computer and information systems that e-tailing demands. There is also a need
for increased packaging and dispatch workers. E-tailing has led to an increase in the need for
many smaller courier services, including opportunities for self-employment and entrepreneurship.
This has occurred due to the increase in online shopping, package tracking and ‘next day’ or
committed dated delivery. E-tailing is an element of the wider electronic-commerce
(e-commerce). In addition to e-tailing, e-commerce encompasses many other online facilities
 such as electronic funds transfer and online transaction processing. Both e-commerce and
e-tailing have grown enormously. Like technology, e-commerce has grown to rival traditional store
shopping and resulted in:

- An increase in the number of online market places

- A move to the use of mobile devices for online shopping
- Widespread use of online payments
- Growth in online digital advertising and marketing

DISADVANTAGES OF SUPPLY CHAIN

1. Globalization: has presented many challenges to the supply chain, especially related to the
complexity of products and the process of such wide trading.
- If business management does not cope with the increased complexity of globalization, the business
loses its competitiveness in the market.
- Globalization implies having customers, and perhaps materials and factories, in other countries.
This means that the business is vulnerable to events in those other countries, e.g. natural disasters,
political instability and industrial actions such as port closes.
- As a result of globalization it naturally follows that businesses face global competition because the
number of competitors has expanded considerably.
- The collection of information, such as that related to market conditions, has become increasingly
complex because data collection is more widely spread.
- There will be legal issues that have to be addressed when involving countries that have different
laws and regulations with which the marketer must comply, e.g. where a company has a factory in
another country, employment laws may be different from those in the home country.

2. Counterfeiting: has been ongoing for thousands of years and it is not restricted to currency. Product
counterfeiting has also been around for a very long time. Product counterfeiting means imitating
something illegally and it is increasing in scope, scale and threat. The global trade in counterfeit products
has increased considerably and this is of course a concern for genuine producers and the supply chain,
but it is also becoming dangerous. Counterfeiting has expanded from clothing and fashion accessories
into items such as medicines and pesticides that can have serious health and safety implications.

3. Product Complexity & Rapid Product Obsolescence: product complexity means greater chances of
issues in the supply chain because one or more parts will not be available when they should be. IT
systems can help to create logistic systems to deal with product complexity. As technology and
processes change, products are becoming rapidly obsolete. New products require different
manufacturing techniques, and results in elements of the supply chain no longer being required and new
supply chains may have to be developed. Products have shorter life-spans compared to the past also.

4. Regulatory Complexity: The number of regulations involved in the shipping of goods makes the
process very complex and technical to perform and complete. The more complex the route the freight has
to take, the more official paperwork and checking needs to be.

5. Management Blunders:
 ● Over – handling of freight, so that it needs to be loaded and unloaded too often and in quantities
that are too small.
● Not having enough information about customer requirements, e.g. where to deliver goods.
● Holding too much inventory in stock, where it can get damaged or become obsolescent.
● Using unsuitable IT systems, or unsuitably trained staff.

6. Changing Market Conditions: market conditions are always changing, and businesses have to
respond and
manage these changes – and they are happening faster than ever before. Managing these changes is of
course easier for large, global-scale businesses but more difficult for smaller concerns. But they affect
the supply chain also, and all businesses, irrespective of their size, have to embrace the changes in their
operations. And, as we observed earlier, blunders by management can have severe consequences. One of
the distinct ways that market conditions have changed is that consumers, even children and young adults,
are more significant forces in the market. And they are better education overall and more concerned to
tap into the expansion in the choice of goods available to consumers.

7. Natural Disasters: cause supply chain disruptions, particular with hurricanes in parts of the
Caribbean. Even though weather forecasting projections can calculate the likelihood and impact of
hurricanes, nature is generally unpredictable which mean changes can occur.

8. Political Instability: Countries with a peaceful political institution will have a favorable supply chain
activity than countries with instable political institutions. Political stability assumes business conditions
will be positive, that is, fewer strikes, more stable prices and less corruption.

IMPACT OF LOGISTICS
Logistics can Improve Competitiveness
Logistics aims to meet the increasing demands of customers at the lowest possible costs. Effectively
managing the flow of materials, products and information from the supplier to the end consumer is all
part of the logistics system. Logistics can give a business an edge over its competitors in two ways:
- The advantage of providing value by ensuring materials and products are transmitted faster or to
schedule, and providing efficient assembly of component parts into end products effectively. Doing this is
recognizing customer value.
- Providing a cost advantage through partnering effectively with suppliers and business customers to
make activities and processes more efficient, thus resulting in the ability to put products on the market on
time, in the best
conditions and at a competitive price.

Logistics can give a

Competitive Advantage
The success of a business depends considerably on its ability to match or surpass the services or
products of its competitors. Comparative advantage refers to conditions or circumstances that put a
business in a more favorable or superior, position, in comparison with its competitors. It can gain this
advantage through differentiation and cost advantage.
Product differentiation is important: a business’ product is more important than ever, and can give a
business a
competitive advantage in a market dominated by large companies. A product/service can be jointly
referred to as a commodity and a sale will tend to go to the cheapest supplier unless the commodity can
be distinguished in some way from its competitors. It is, therefore, important to be able to identify and
add additional ‘values’ in order to differentiate from the competitors. Branding goods aims to achieve this,
but a good brand depends on a good product that is different or better in same ways from other in the
market, and making consumers aware of this. In this respect, making a product more attractive, e.g.
through packaging and presentation, is important, but gaining a good reputation is even more important.

Logistics can achieve Comparative Cost Advantage

Comparative cost advantage refers to being able to produce a commodity at a lesser cost than other
businesses. Logistics can contribute to achieving this aim, particularly through outsource.
Outsourcing (contracting out) refers to accessing goods/services by contract from an outside supplier. It
is used by
businesses to reduce costs or improve efficiency by relocating tasks, operations, jobs or processes to an
external contracted party for a significant period of time. The functions might be carried out by the other
party either onsite or offsite of the business. E.g. a manufacturer may outsource some elements of its
production (such as the production of component parts) to a third party in another country, this is usually
done to benefit from reduced
labour or material costs.
Parties to outsourcing
- First-party logistics (1PL): these are logistics provider firms that own their own logistics activities
and
sometimes outsource some of their activities.
- Second-party logistics (2PL): these firms provide their own assets such as trucks and driver,
warehouse operations and so on to 1PLs.
- Third party logistics (3PL): these firms perform logistics on behalf of another company (1PL),
providing the management skills along with the physical assets, labour and technology to provide
logistics to part or all of the supply chain, thereby relieving companies of performing these services
themselves, e.g. transportation, warehousing management consulting, freight forwarding, pool
distribution (delivery to numerous destinations) and more.
- Fourth party (4PL): these are supply chain integrators. The 4PL assembles and manages resources,
capabilities and technology of an organization’s supply chain and its many providers, that is it
co-ordinates the activities of 3PLs; designing, building and running supply chain solutions for clients.

Other examples of outsourcing include payroll and accounting, operation of call centres, consultancy,
using temporary employees from agencies, IT technicians and much more.

Benefits of Outsourcing:
1. It can free up cash flow, personnel and time resources for the country
2. It can result in cost savings due to lower labour costs
3. It enables the company to focus on its ‘core’ business competencies
4. It tends to be directed to organizations who are specialists in the required services
WEEK 5 & 6:
Objectives:

● Identify the problems likely to be encountered in distribution.

● Outline measures to mitigate problems in distribution.
● Outline the impact of Information Technology on logistics and supply chain operations.

PROBLEMS ENCOUNTERED IN DISTRIBUTION

Seaports and Airports are vital for the health and wellbeing of a country’s international trade, and
participation in the global market. Some countries have many ports and airports, while others may only
have one, and that one may have been positioned a long time ago and cannot be changed. The supporting
infrastructure of effective transport links of road and rail to the ports and airports is vital in order to make
their contribution to the economy effective. While an exporter is familiar with the infrastructure in his own
country, what exist in another country may be very different. Even with an appropriate infrastructure in the
home country there are factors that creates problems for effective distribution, at home and exporting
and importing as well.
1. Delayed shipment: adverse weather conditions and efficiency affects shipment greatly. Sometimes
delay is caused by a delayed consignment during the transit from one form of transport to another.
2. Spoilage: in today’s market there has been an increased demand for fresh foodstuff which requires
appropriate storage and handling facilities.
3. Misdirection of goods: goods are mistakenly sent to the wrong destination (or the wrong goods are
sent). E.g. negligent packing or inaccurate labelling or paperwork can cause a consignment to end up at
the wrong destination.
4. Inadequate warehousing facilities: e.g. for perishable or fragile goods. Cooled storage areas are
necessary for some products and loss of electricity can cause big difficulties. Also storage space is
always limited.
5. Lack of adequate security measures: this can lead to stealing or insertion of illegal substances into
shipments, or even terrorist activities.
6. Industrial unrest: e.g. strikes by airport or port workers will cause delays in delivery, and inland labour
disputes can also interfere with smooth and prompt delivery
7. Ineffective communication: delays or misinterpretation of infrastructure related to a consignment can
result in wrong goods being sent, or sent to wrong place. E.g. an order for goods show an invoice address
and a delivery address that differ.

REDUCING DISTRIBUTION PROBLEMS

1. Government Intervention: governments advise businesses how to become more efficient including:
investment in new equipment and technology, raising staff skills through education and training and
innovation through research and development. They also publish recommendations of good practice to
be observed by those involved in distribution, e.g. drawing attention to existing regulations related to
marketing products. Government implements legislation related to distribution and employs inspectors to
ensure these are being observed, and businesses with whom complaints of malpractice can be registered
for investigation.
2. Creating a Communication Network: communication technology provides access to rapid exchange
of accurate communication via a range of internet communication networks. Delayed deliveries are
reduced by managing distribution routes, real-time vehicle position awareness and tracking goods.
3. Taking Out Insurance: many difficulties can be covered by insurance, but there are two important
considerations to bear in mind:
- Insurance compensates the insured (sender of goods/consignor). This is still a cost to the
seller/sender of the goods and still causes them inconvenience, such as extra paperwork.
- For the consignee the inconvenience caused by failure to deliver can be immeasurable, as the
insurance does not help them. Their production is disrupted; their own customers are let down.
Therefore, insurance gives monetary compensation, but does little to enhance reputation.
4. Selecting the Most Appropriate Channel of Distribution: is important on the grounds of cost and time,
and the decisions made determines the speed of delivery and how they are handled. The channel chosen
must be easily accessible to the end consumer and the nature of the product has considerable influence
on the channel chosen.
- Perishable goods require fast, direct distribution. Size and weight has an influence, as heavy, bulky
products (e.g. grains) are best transported by short and direct distribution. High unit value goods (e.g.
jewellery) require secure distribution channel.
- Using intermediaries such as agents, wholesalers and retailers may be used, while at other times
the best channel will be direct. Using an intermediary does not always slow up the process – they can
speed up the process and distribute quickly. They often bring special skills to assist.
- If the end customers are consumers, then the distribution channel will be to retailers, if the
customer is another business, the distribution channel will be different, and often direct.
5. Choosing a Handling Service: means selecting one with a good reputation, which isn’t as simple
tasks. Those seeking a reliable handling service can ask the following questions to identify the right
handling service provider:
- What is their existing client base? Do they have a proven track record? You should find out if they
have clients known to them that have used them for some years, if so, they must be doing something
right!
- Do they provide a bespoke service? Are they familiar with your products/services? Do they have
similar specialism? Do they offer a generic service? If it matters, you may need to look elsewhere.
- Where are their sites located? Are their sites located conveniently to you and your market, or is their
access to your market well serviced (e.g. for international trade).
- Do they offer intermodal facilities? In some circumstances this may be essential to reducing
transport risks.
- Are you prepared to pay the price for the best, or are you willing to compromise?
6. Carefully Labelling and Documentation: in order to reduce customer dissatisfaction, special care,
back-up checking and efficient technology must be utilized. However, even today’s technology can result
in distribution difficulties, e.g. a simple ‘cut-and-paste’ solution save times, but can result in damaging
mix-ups if care is not taken.
7. Avoid handling Large Stocks: a business needs stock (inventory) to meet demands, but too much
stock means
capital is tied up and stock becomes dated. There are five solutions:
- Reduce lead time: identify ways that supplier(s) can deliver supplies at shorter notice – if
necessary, using alternative suppliers.
- Improve forecasting: take steps to identify both supply and demand functions ahead. Use
technology to make forecasting accurate.
 - Prioritise stock: eliminate obsolete stock – identify high-selling items and delete those not selling
high. Even if they are still selling, if inventory is the priority, delete them.
- Review suppliers regularly: sometimes an inability to reduce lead time is due to supplier
inefficiency. Investigate alternative suppliers.
- Understand how much to order: many businesses order supplies on the Basis of quantity discounts
– the more ordered, the cheaper the price. This can be a false economy if the priority is to reduce
inventory.
8. Employing a Security Company and Using Security Cameras: Security cameras are video surveillance
technology that records the activity of people to detect, deter and prevent crime. Installed strategically it
can be said to:
- Prevent theft - Protect facility (areas and buildings)
- Prevent loss - Deter vandalism
- Assure employee safety
Security companies are businesses that provide armed and unarmed security services to guard and patrol
premises. The surveillance they provide is immediate. Their guards are not fixed, as security cameras are.
They roam the site and can take immediate action as incidents happen.

INFORMATION TECHNOLOGY AND LOGISTICS AND SUPPLY

1. Global Positioning Systems (GPS): those businesses engaged in transportation have three particular
concerns; security of their vehicles, avoiding fuel wastage and maximum efficient use of their fleets. GPS
tracking addresses these concerns.
- Fuel consumption: a GPS system installed in vehicles enables the owners to get real-time
knowledge of the whereabouts of the vehicle, and to monitor vehicle idle time, driver behaviour, fuel usage
and so on.
- Security and safety: the location tracker system enables the vehicle to be tracked if stolen, thus
facilitating retrieval of stolen vehicles and their freight.
- Time predictor monitoring: one of the biggest advantages is the ability to plan the shortest and best
possible routes for vehicles to follow. This reduces fuel wastage and helps to reduce idle time.
2. Geographical Information Systems (GIS): this is an information system designed to capture, store,
manipulate, analyse, manage and present geographical data such as street maps and location tags via
social media. Typical applications include highway maintenance, traffic modelling, accident analysis and
route planning and environment assessment of road schemes, such as traffic counting. This helps
government to develop transportation policy and planning that results in a better road infrastructure.
3. Portnet: aims to help ports and the shipping community to increase productivity and save costs
through the
greater use of information technology and the internet. It empowers the shipping community to manage
the complexity of cargo operations and the entire shipping process by:
- Handling all electronic and container data
- Simplifying the processing of transactions and shipping business processes. This results in such
benefits as:
- Streamlining documentation and shipping business processes
- Reducing repetitive data creation
- Simplification and integration between government and port authorities
- Real-time tracking and notification
- Real-time, on demand, information provision, e.g. e-mail and SMS
- Simple-to-use system controls
4. Telemarketing and E-commerce: telemarketing has now been extended into machines that
automatically call
people with a recording that sounds as if it really is a real person calling. The sophistication even includes
negotiating a home visit.
E-commerce is the application of information and communication technologies (ICT) to conduct
business. These include the older technologies such as landline telephones, but ICTs offer most scope,
particularly for small businesses, through e-mail, mobile phones, mobile apps and other internet-based
technologies. In addition, e-commerce helps to support profitable business relationships and to more
effectively manage and run businesses.
5. Global Logistics Providers: with international trade expanding around the world, third-party logistics
have taken on an increasingly important role for multinational manufacturers and retailers. Multinational
manufacturers, e.g. need reliable sources of supply and retailers also need rapid delivery channels for an
ever-expanding distribution network of consumers. This has resulted in the emergence of a relatively
small number of 3PLs that can provide expertise, reach and reliable logistics around the world. These
include the following logistics provider; FedEx, DHL, Amazon Logistics and Excel, among others.
6. Logistics Hubs: around the world countries have been developing logistics hubs. A logistic hub is a
centre or specific designated area identified to deal with activities relate to transportation, organisation
separation and co-ordinating goods for national and international trade. Operators lease or rent
warehouses, storage areas,
distribution areas and offices from airports and seaports and manage transportation through to the
departure terminal. London Heathrow Airport has three hubs supporting it but in regional areas distanced
from the airport thus spreading the employment and wealth creation over a wider area, but creating
effective linkages with the airport and seaports. And our European airports similarly use hubs. Jamaica
will soon have its own logistic hub, thereby creating a large number of jobs and improving regional
logistics. Logistics hubs play a key role in supporting efficient delivery and reducing emissions by
transporting assembled components to sites using fewer trucks.