Week 2 - Tutorial 1 (refer to Lecture 1)-done

What is distribution management?

1. Define the term of Distribution Management.

2. Discuss the key challenges facing logistics today.

3. Using an example, explain the meaning of Total Logistics Concept (TLC).

4. Discuss the scope of distribution and logistics.

Objectives for distribution

5. How do improvements in logistics productivity affect the economy as a whole, as well as the
position of individual consumers?

Distribution, logistics and the global supply chain

6. How is logistics related to the marketing effort? Be sure to discuss customer service/customer
satisfaction/integration of efforts. (answers will vary because it is based on individual opinion)
-------------------------------------------------------------------------------------------------------------------------------
Case Study
Kontena Nasional Now Halal-certified
Renowned national container haulier and logistics services provider, Kontena Nasional’s Petaling Jaya
branch has been certified as a halal logistics service provider in warehousing and transport, by Jabatan
Kemajuan Islam Malaysia (Jakim).With the growing international demand for halal products, Kontena
Nasional hopes to position itself as the preferred ancillary service provider in the country, thus filling the
gap in the entire halal production and distribution chain.
(Tutor note: ancillary=auxiliary or subsidiary or secondary)

With this certification by Jakim, Kontena Nasional has an added advantage of offering a complete 3PL
halal service package to its customers.

Services in the package would include halal storage and warehousing, both containerised and
conventional halal transportation, halal distribution, halal shipping, halal freighting for sea and air cargo,
sama service for containers, customs facilities and other halal value-added services.

https://www.theborneopost.com/2010/04/21/kontena-nasional-now-halal-certified/
Accessed on 9 September 2019
Discuss.
a) Are there any advantages?
b) Are there any disadvantages or problems?
c) What are your recommendations?
Week 3 - Tutorial 2 (refer to Lecture 2)
Distribution Management:
Customer service and added value concepts and measures
1. Explain customer service within the context of distribution in logistics. Quote an example to
support your answer.

Cost and service trade off

2. Explain cost and service trade off in distribution.
3.
Total costs concept
3. Explain total costs concept in logistics.

The cost and service trade-offs within any logistics structure will, vary from one company to another
depending on the role the company plays within the supply chain as a whole. In the main, however, the
following major costs and their associated trade-off s may need to be considered and assessed:

Case Study
Goods cross round-the-clock
The wait to achieve smoother flow of goods between Thailand and Malaysia has ended after the border
opened 24/7 since midnight yesterday.

Both the Bukit Kayu Hitam Immigration, Customs, Quarantine and Security (ICQS) Complex and Sadao
Customs, Immigration and Quaran-tine (CIQ) Complex are now operating round the clock on a three-
month trial basis.

Deputy Foreign Affairs Minister Datuk Marzuki Yahya said the 24-hour operation marked a historic
event between both countries, adding that the trial period would end on Sept 17.

“For many years, the gate would close at exactly midnight.”

The crossing was previously open from 6am to midnight daily. For years, industrialists called for the
heavy vehicles lanes to be open 24/7 to ease the flow of goods between the countries. However, the public
lane for people to cross remains open for only 18 hours from 6am to midnight.

Marzuki said both Malaysia and Thailand have set up teams to evaluate the effectiveness of the 24-hour
operation.

“Having shared a common border, it is vital to improve connectivity between both countries. The move
will attract foreign direct investments, enhance industrialisation efforts as well as accelerate the process of
economic growth of both countries,” he said.

Marzuki said trade between the two countries continued to increase steadily, as Thailand is Malaysia’s
fifth largest trading partner globally and second largest trading partner among Association of Southeast
Asian Nations (Asean) member states.
***(Lecturer note: Association of Southeast Asian Nations (Asean) consists of 10 countries – Brunei,
Cambodia, Indonesia, Malaysia, Myanmar, Philippine, Singapore, Thailand, Vietnam, and Laos)

“Our total trade with Thailand last year recorded an increase of 13.7% at USD$26.12bil (RM109.15bil)
compared with USD$22.96bil (RM95.94bil) in 2017. Border trade accounts for more than 60% of the
total trade,” he said.
During the ceremony, the border gate was closed at midnight before it was reopened at 12.05am,
witnessed by Marzuki and Adviser to Foreign Minister of Thailand Chaisiri Anamarn.

Chaisiri said the move would further facilitate cross-border trade and logistics, lessen traffic congestion at
the checkpoint and facilitate round-the-clock coordination bet-ween the border control agencies of both
countries.

“Although the three-month trial period applies only to lorries and trailers, we believe that allowing them
to cross the border after normal operating hours will help reduce daytime traffic congestion. It will also be
more convenient for our peoples to cross the border for tourism, business and trade.”

Chaisiri said Thailand was building a new Sadao CIQ complex scheduled to open early next year.

“I hope the complex will be able to directly link to the Bukit Kayu Hitam ICQS Complex to promote even
greater connectivity between our countries,” he said.

Also present were Kedah Mentri Besar Datuk Seri Mukhriz Mahathir, Governor of Songkhla Province
Weranaan Pengjun, Customs Director-General Datuk Paddy Abdul Halim, Thailand ambassador to
Malaysia Narong Sasitorn and Malaysian ambassador to Thailand Datuk Jojie Samuel M. C. Samuel.

https://www.thestar.com.my/news/nation/2019/06/19/goods-cross-roundtheclock/
Accessed on 23-6-2019

Discuss.
a) Are there any advantages?
b) Are there any disadvantages or problems?
c) What are your recommendations?
Week 4 - Tutorial 3 (refer to Lecture 3)
Channels of Distribution:
Nature, scope and functions of retailing
Discuss the nature, scope, and functions of retailing.

One of the most far-reaching implications has been that of inventory reduction within the retail supply
chain, which has evolved from a combination of different policies.

Consumer behaviour and distribution channels

1. How does consumer behaviour affect the distribution channel in the current market trend?

2. Behaviouristic segments may also be very important for supply chain design. For example,
Gattorna (2006) used personality types to investigate buying behaviours, particularly of
commercial customers, and identified four common categories:
1. Collaborative;
2. Efficient;
3. Demanding; and
4. Innovative.

3. Explain distribution channel

Functions of wholesalers
1. Explain the functions of retailer or wholesaler. Quote an example to support your answer.

-------------------------------------------------------------------------------------------------------------------------------
Case Study
Convenience Comes A-dashing

MAKING good on its “convenience” concept, myNews is offering delivery services via myNews Dash to
its customers.

myNews Holdings Bhd chief executive officer Dang Tai Luk said, “myNews Dash will be made available
throughout the Klang Valley, starting with our outlet at Taman Tun Dr Ismail for delivery within a 5km
radius from the store.”

The delivery service started last month.

Among the products made available for delivery on the site are myNews Kineya ready-to-eat meals,
Mynews Ryoyupan Japanese-inspired bakes, Canadian Beemaid Honey as well as selected drinks,
pharmaceuticals, groceries and snacks.

Dang made the announcement during the launch of the company’s food production centre for two
subsidiaries, myNews Kineya Sdn Bhd and myNews Ryoyupan Sdn Bhd at myNews headquarters in
Kota Damansara.

The food production centre offers a variety of Japanese-inspired confectionery and ready-to-eat meals.

The homegrown retail convenience store has collaborated with Japanese partners, Gourmet Kineya Co
Ltd and Ryoyu Baking Co Ltd to establish myNews Kineya and Mynews Ryoyupan respectively.
Gourmet Kineya president Atsushi Mukumoto said he has taken a personal interest in the collaboration
and delivery of their joint venture products.

“After much trial and error, we have come up with improved quality products which suit the preference
and ‘purchase ability’ of the Malaysian market.

“Now that the new factory is completed with enhanced development of cold chain logistics, it is possible
to deliver to up to 300 outlets all around Malaysia, ” said Mukumoto.

The food production centre, which consists of two factories, was built at a cost of RM100mil with total
space of 130,000sq ft.

Ryoyu Baking president Takehiko Abe said, “Through many tastings, discussions, experimentation and
combination of Malaysian and Japanese bread, we have created a higher quality product.”

Dang added, “Even though we have created products with help and support from our Japanese experts
before, these products cater to all Malaysians.”

All myNews Malaysia-Japanese innovation products are halal-certified.

myNews is projecting to open 85 new stores this year and 100 new stores next year.

https://www.thestar.com.my/metro/metro-news/2019/10/10/convenience-comes-a-dashing
Accessed on 11 October 2019

Discuss.
a) Are there any advantages?
b) Are there any disadvantages or problems?
c) What are your recommendations?
Week 5 – Tutorial 4 (refer to Lecture 4)
Channels of Distribution:
Wholesaling – supplies, relationships and strategies
1. What is channel of distribution?

Physical distribution systems

2. Critically explain the alternative physical channels of distribution for consumer product being
transferred from the manufacturer’s point to a retailer.

Emerging systems of distribution

3. Explain the factors affecting the choice of a distribution network.

Case Study
Daiso To Set Up Regional Distribution Centre in Malaysia
Friday, 01 Feb 2019
https://www.thestar.com.my/business/business-news/2019/02/01/daiso-to-set-up-regional-distribution-
centre-in-malaysia
Viewed on 16-1-2020

PETALING JAYA: PKT every24 Logistics Sdn Bhd (PKT) has signed a service agreement with Daiso
Industries Co. Ltd. to operate the latter’s regional distribution centre (RDC) in Port Klang, in the second
quarter of this year.

In a joint statement Friday, it said Daiso decided to locate their RDC for their popular household products
in Malaysia, serving few countries initially in 2019 and increasing to more than 15 countries once the new
warehouse is completed.

This RDC is the centerpiece in Daiso’s business expansion strategy to streamline their logistics operations
for the Southeast Asia and Middle East regions, allowing them to better serve these two fast-growing
markets.

“We are confident PKT will be a valuable logistics partner for Daiso to better serve our outlets and
customers across the Middle East and Southeast Asia” Daiso president Seiji Yano said.

In order to serve Daiso in this RDC, PKT will be constructing a purpose-built warehouse at an estimated
investment cost of RM250mil while creating 500 new jobs. PKT shall be providing Daiso haulage,
freight forwarding and warehousing services for their transshipment and local cargo, reaching
approximately several hundred containers per month.

“We are truly honored by Daiso’s confidence in Malaysia’s logistics capability but most importantly
Daiso’s confidence in PKT to deliver quality logistics service to their outlets” PKT Logistics group
chairman Datuk Wira Jalilah Baba said.

PKT every24 Logistics is a Joint Venture company between PKT Logistics Group Sdn Bhd and Daisei
every24 Co. Ltd.

Discuss the following.

● Wholesaling – supplies, relationships and strategies
● Physical distribution systems
● Emerging systems of distribution
Week 6 – Tutorial 5 (refer to Lecture 5)

Distribution Planning

Factors affecting the choice of a distribution network

1. “Customer is the key factor in the logistics flows”. Discuss. Your answer must base on the
transport mode selection factors. Provide appropriate examples.

Using third party contractors and logistics service providers

2. Describe the third party logistics (3PLs) providers in distribution management.

-------------------------------------------------------------------------------------------------------------------------------
Case Study
Young Logistics Company Shows Impressive Growth
JUST two years after logistics company SnT Global Sdn Bhd was set up in 2000, chief executive officer
David Wong introduced the company’s first garment-on-rack (GOH) system.

According to Wong, SnT was among the first logistics companies to implement the system used in
supply-chain services in Malaysia.

The system occupies the company’s warehouse in Subang where it incorporates space-saving and labour
reduction ideas designed specifically to address the requirements of retailers that are SnT’s customers.

These include the likes of regional retail companies such as Robinsons, Anakku, Marks & Spencer and
Cotton On.

The GOH system involves the storage, transportation and distribution of apparel in warehouses.

Wong said the system took the complexity of storing and distributing goods out of the hands of the retail
chains, who instead relied on SnT to manage these services.

The company’s Subang location plays host to a three-tier warehouse with racks of apparel on each level.

“This helps us to optimise space and make stock checks possible at all levels,” Wong said.

The garment rack system allows for easier warehousing and distribution of apparel from the supplier to
the warehouse and later to retail outlets around the Klang Valley and around the region.

Wong said the company was set to introduce newer innovations in the warehouse soon.

“We are currently piloting a new system which will make stock count easier. It is currently used by US
retailing giant Walmart and makes it easier for us to identify the products placed on racks without having
to go through them one by one,” Wong said.

Each product in the warehouse will have a unique identity and will be tracked via a radio frequency
identification (RFID) system, which will make stock counts much faster.

“With the new system, all we will need is to scan the products from a distance to obtain information such
as the colour, size and amount of each product in a box or a rack,” he said.
The system will be introduced next year.

As a logistics-services provider, SnT Global does more than just provide a location to house goods. It also
provides supply chain solutions.

The company focuses on all elements of supply chain management by being a single point of contact for
warehousing, transportation and distribution, freight and forwarding.

Beyond this, the company reviews and analyses its clients’ supply chains and helps them to save costs
where possible.

“We’re not just about providing services, but also about driving efficiency and making sure the whole
supply chain is cost-effective runs smoothly,” he said.

The company provides these services and solutions for fast-moving consumer goods, electronic
equipment, and certain types of food.

Each item that has been tagged will be sorted according to the retail store it will be sent to.

Currently, SnT Global Sdn Bhd is focusing its efforts on making Malaysia the ideal location to set up a
logistics hub by working together with its partner, WH Distripark, a newly developed logistics
distribution hub located in the Iskandar Development Corridor in Johor to enable manufacturers,
distributors and online retailers to penetrate the Asean market via a single point for fulfilment services.

“Malaysia is a promising market and has some of the largest ports in the region and this hub will enable
us to position Malaysia as the e-fulfilment hub for e-commerce and create a conducive environment for
Singapore to re-locate their logistics activities to Malaysia,” he said.

The new hub falls under the Digital Malaysia project, the last block of the Economic Transformation
Plan, and is intended to highlight how the nation can leverage technology.

The logistics hub will have three warehouses and facilities for pharmaceutical research, production and
distribution.

The main focus of the logistics hub is biopharma, fast moving consumer goods, e-commerce goods like
apparel and books.

The hub will provide value-added services such as packaging and end-to-end tracking, including last-mile
delivery.

Its logistic systems will support retailers by providing fulfilment solutions after an order is made.

Wong said there was much to gain from relocation of Singapore logistics activities to Malaysia.

“The relocation is expected to result in 30% to 40% savings in operating cost, while maintaining the same
service levels. This hub will enable retailers to deliver further and cheaper which is good for the end-
users, the customers,” he said.

The hub, strategically located between Singapore and Kuala Lumpur, will benefit from the lower costs for
things such as utilities, haulage and manpower in Malaysia.
The hub aims to significantly lower both regional and international freight charges as well as logistics
costs, provide efficient services and solution and effective e-fulfilment operations and coordination.

Apart from attracting Singapore companies, the hub will also enable overseas online merchants to
penetrate into the Asean market.

WH Distripark, SnT Global’s partner for the logistics hub, develops logistics distribution hubs that meet
specific customers’ requirements.

It provides flexible multi-tenant, built-to-suit, and sale-and leaseback solutions, dedicated to improving
supply chain efficiency for the most dynamic biopharma manufacturers, e-commerce, e-tailers and third-
party logistics companies in the world.

Among the advantages of the new logistic hub in Johor is its close proximity to Singapore and its high-
value pharmaceutical and medical centres.

SnT Global has already engaged consultants and research companies to help seek customers to outsource,
purchase or lease a warehouse in the new logistics hub. As the hub in Johor is in its design phase, a
temporary hub in Tampoi has been set up to serve customers. The logistics hub in the Iskandar region in
Johor is expected to be completed in 2016.

Source of information:
http://www.thestar.com.my/news/community/2014/11/17/rack-em-and-stack-em-young-logistics-
company-shows-impressive-growth/
Discuss.
a) Are there any advantages?
b) Are there any disadvantages or problems?
c) What are your recommendations?
Week 7 – Tutorial 6 (refer to Lecture 6)
Distribution Planning

Use of information and communication technology in distribution

1. Describe the use of information and communication technology in distribution.

Impact of internet on distribution

2. Explain the impact of internet on distribution.

Customs controls

3. Identify the types of information to be declared in a custom form. (Lecture 6)

Case Study
US Startup Tries Remote-control Trucks
FOR four days in February, Ben Shukman showed up to his office at Phantom Auto in Mountain View,
California, sat down in front of a bank of computer screens with a steering wheel in a darkened room, and
began driving. As the 25-year-old turned the wheel in Silicon Valley, an empty truck 2,500 miles away in
Atlanta picked up semi trailers and towed them around a warehouse lot.

From seven states away, Shukman backed trailers into loading docks and parking spaces.

“We were able to do some manoeuvrers that were so difficult that there were truck drivers there that said
that they could not do that,” he said.

Phantom Auto was founded in 2017 to help bridge the gap between the vision and the reality of
autonomous vehicles. It offers remote-driving technology that provides human intervention for
construction zones, bad weather, roadside emergencies or anything else that might fluster the artificial
intelligence piloting a driverless car.

Now the startup is announcing an expansion into logistics, providing remote operation capability for
forklifts, delivery robots, and “yard truck” tractors that move trailers around warehouses and shipping
centres.

Phantom Auto last Thursday said it has raised US$13.5mil in a round of financing lead by Bessemer
Venture Partners. The company has raised roughly US$19mil to date.

Phantom Auto’s new line of business shows just how deep the current moment of disillusionment has
become for the self-driving car industry. After years of development and more than US$10bil in
investment, autonomous vehicles still aren’t ready for widespread public use.

Phantom Auto’s original strategy was to fill gaps in robotaxi capabilities. But autonomous ride-hailing
fleets have made little progress beyond testing and rarely operate without human safety drivers –
sometimes working in pairs – sitting in the front seat.Alphabet Inc’s Waymo is offering limited ride-
hailing service to a small number of customers in suburban Phoenix, usually with a safety driver on board
to take over if the robot fails as well as remote monitors who can intervene. Virtually no other
autonomous startup is ferrying passengers through traffic, and that means little demand for Phantom
Auto’s remote-driving technology.
Phantom Auto says it has agreements to sell its technology to large automakers, so that faraway backup
drivers can troubleshoot autonomous fleets once they hit the road.

“We’ve talked to literally every major player in the space, and given the nature of what we do, we have to
have pretty detailed discussions about their limitations, their capabilities, and their actual rollout dates,”
said co-founder Elliot Katz.

“Everyone who says they’re deploying, whatever they say they’re deploying in the near term, it’s
completely false.”

The startup decided to enter logistics as a way to survive in the meantime. Even the stopgap provider in
the self-driving industry needed a stopgap strategy.

Yard trucks, forklifts and delivery vehicles offer a faster path to market because each operates at
relatively low speeds, carry no passengers, and can be used without engaging with traffic on public roads.
Katz said his company is also looking at possibilities in construction and mining. There is a strong
appetite for automated and remote technology in these industries because professional operators can be
hard to find and often don’t live close to the job sites where they are needed.

Phantom’s yard truck customers, according to Katz, include retailers with dozens of distribution centres
across the country. Using remote operation, the startup can potentially service all of them from a central
location, with drivers bouncing instantly from Alabama to Ohio to Oregon as needed. If Phantom Auto or
its rivals can make this vision real, it will dramatically expand and reshape the labour pool for industrial-
vehicle operators.

An early-stage venture fund within Google led a US$6mil investment last year in Scotty Labs, a remote-
driving equipment startup. Volvo Construction Equipment recently announced tests of remote-controlled
wheel loaders over a 5G cellular network in Sweden.

Deficit of talent

“There’s a deficit of talent available in our industry,” said Scott Young, Volvo CE’s vice-president for
customer support in the Americas. “This is how we bring the work to the talent pool.”

The legions of young people who play online video games, Young points out, are already learning to
work on teams remotely, suggesting that the heavy equipment operator of the future could be more gamer
than teamster.

Shukman, for one, doesn’t fit the profile of the typical yard truck driver. A self-taught roboticist and
programmer, he was an avid gamer during his college years at the University of California at Santa
Barbara. He once wrote a strategy guide for the game League of Legends that has been viewed over four
million times online.

Since joining Phantom two years ago, Shukman has helped test and develop its remote driving consoles.
Most of the other remote drivers at Phantom started out as safety drivers at autonomous car developers.
Phantom puts all of them through a training protocol that takes about two weeks and requires passing a
series of tasks, such as remotely navigating a slalom course.

Shukman hadn’t been inside of an actual yard truck until three months ago when Terberg Group BV, the
Dutch manufacturer working with Phantom to put remote-driving systems into its trucks, delivered one to
California for retrofitting. He spent a day doing drills and manoeuvrers in the real truck before moving
back inside to practice on the remote console. It took him about two weeks before he felt comfortable.

“The big thing about that shift between driving locally and driving remotely, although it’s different, it
doesn’t necessarily mean it’s more difficult,” said Shukman.

A highlight reel released by Phantom shows Shukman backing into impossibly narrow spaces, and he
describes the visibility on the monitors as superior to looking through a truck’s wind shield.

Most of Phantom Auto’s warehouse clients plan to teach current truck operators to do the job remotely. A
few drivers have already been through the training. “They were a little nervous at first,” said Shukman,
“and then within the two-week period they were nailing manoeuvrers that very few people can do.”

It’s too soon to tell, said Katz, whether gamers or truckers make for better remote operators.

“The biggest thing that we stress,” said Katz, “is even though you’re sitting in a remote location and
you’re behind the screen, this is real life.”

https://www.thestar.com.my/business/business-news/2019/04/22/us-startup-tries-remotecontrol-trucks/
Accessed on 18-6-2019

Discuss.
a) Are there any advantages?
b) Are there any disadvantages or problems?
c) What are your recommendations?
Week 8 – Tutorial 7 (refer to Lecture 7)

Moving Goods

Modes of transport

1. Explain the various modes of transport available in transferring goods from manufacturer to the
destination or end-user.

Characteristics of each mode

2. Explain the characteristics of each mode.

Rules and conditions governing each mode

3. What are the key areas of health and safety that we need to focus in the logistics system?

4. Discuss the legal requirements in the issues of transporting goods in Malaysia.

5. What are the major health and safety requirements specified by the National Institute of
Occupational Safety and Health in Malaysia?

Inter-modal transport

6. Define inter-modal transport.

-------------------------------------------------------------------------------------------------------------------------------
Case Study
Walmart’s Mexico unit springs into same-day delivery, taking on Amazon
MEXICO CITY: Walmart Inc's Mexico unit has begun offering delivery within three hours for certain
home and tech products ordered online, it said on Monday, taking another step to try to best e-commerce
rival Amazon.com Inc at speedy shipping.

The new service from Walmart de Mexico applies to about 12,000 products within certain dimensions
delivered within Mexico, including laptops, cellphones, televisions and clothing irons, the company said
in a statement. The retailer this year opened two distribution centres dedicated to e-commerce in Mexico,
Walmart's largest overseas market by store count, in its push to boost logistics and compete with Amazon.

Amazon, which launched in Mexico in 2015, offers same-day delivery within Mexico City for some
items. Fast shipping is a crucial part of the race to dominate e-commerce. In one of Walmart's latest
efforts to draw shoppers online, it began offering free next-day delivery in the United States in May,
shortly after Amazon announced a similar offer.

https://www.thestar.com.my/tech/tech-news/2019/09/03/walmarts-mexico-unit-springs-into-same-day-
delivery-taking-on-amazon#cxrecs_s
Accessed on 4 September 2019

Discuss.
a) Are there any advantages?
b) Are there any disadvantages or problems?
c) What are your recommendations?
Week 9 - Tutorial 8 (refer to Lecture 8)

Moving Goods

Road transport route and load planning

1. Briefly explain the importance of route & loading planning.

Unitisation and containerisation of loads

2. Discuss the importance of unitisation and containerisation in distribution planning.

3. List the disadvantages of containerisation.

Transport of hazardous goods

4. What are the key issues in transporting hazardous goods?

Insurance
- (please refer to slide 23-30 of Lecture 8)
- Refer to Lecture 13

Case Study 1
Area Logistics Set to Ride on Strong Demand
DEMAND for industrial properties, in particular mega distribution, inner-city distribution and purpose-
built centres, is holding strong despite a dim outlook for Malaysia’s economy.

Knight Frank Malaysia is expecting more high-tech manufacturers, especially from China, to make
Malaysia their manufacturing hub, taking advantage of the country’s adequate supply of raw materials
and relatively low operating costs.

Seeing demand spilling in from countries around the world, real estate private equity and advisory firm
Area Management Sdn Bhd is setting up Area Logistics @ Ampang to tap business opportunities from
multinational companies and local industry players.

Area Logistics @ Ampang is located on a 7.15ha site and expected to be fully ready by year-end.

Upon completion, it will be Malaysia’s first three-storey ramp-up inner-city mega distribution hub. With
1.5 million sq ft of warehouse space, it will be the largest of its kind in Malaysia.

The warehouse is coming up on the former site of a chip manufacturing company near Texas Instruments
Malaysia Sdn Bhd, in the mature electronics manufacturing site at the Ulu Klang Free Trade Zone.

The Certificate of Completion and Compliance for the warehouse is expected to be issued in October,
said Datuk Stewart LaBrooy, chairman of Area Management.

LaBrooy said the warehouse is purpose-built to serve the inner-city logistics and e-commerce supply
chain networks.

It offers services such as self-storage, last mile delivery, warehousing, e-commerce, parcel sorting and
cold-chain logistics.
With the completion of the warehouse, two-hour same-day delivery would become a reality, he said.

“The last mile is often the least efficient link in the supply chain. There is often delay of loading and
dispatch from the warehouse, and in deliveries due to congestion in urban areas.

“There is also transportation downtime due to mall delivery restrictions and unsuitable mode of
transports. Other issues include expansion of the e-commerce industry resulting in high volume of single-
item deliveries and multiple attempts to deliver goods. We found a terrific site to build the warehouse and
it will alleviate all these concerns.”

LaBrooy said location of the warehouse and the mode of delivery are key points to meeting demand and
supply.

Area Logistics @ Ampang is well connected to highways and major roads, making delivery convenient.

Most of the major shopping malls are also within 13km radius of the site.

“We are excited about this venture. We have received enquiries from a number of industry players who
want to take up space at the warehouse for their business expansion. We are confident the warehouse will
be fully leased next year,” he said.

Area Logistics @ Ampang is accessible through the Middle Ring Road 2, Duta-Ulu Kelang Expressway
and Ampang-Kuala Lumpur Elevated Highway, as well as major roads like Jalan Ampang and Jalan Tun
Razak.

Coming up is the new Sungai Besi-Ulu Kelang Elevated Expressway (SUKE) alignment, which is
expected to complete in early 2020.

LaBrooy said SUKE alignment would allow for smoother traffic and reduce the amount of commuting
time.

Traffic congestion on Jalan Ampang could be reduced by 36 per cent, MRR2 24 per cent and Jalan
Cheras 12 per cent, he said.

TARGETING MULTIPLE PLAYERS

Area Logistics @ Ampang, with Grade A specifications, is targeting e-commerce players, logistics firms,
third-party logistics companies and retailers which supply to major shopping malls within 13km radius of
the site.

These include Suria KLCC, shopping malls on Jalan Bukit Bintang, Tun Razak Exchange, Sunway
Velocity, MyTown, Berjaya Times Square, PNB 118, Bukit Bintang City Centre and Sunway Putra Mall.

“They are supplying to major shopping malls and would require a big space to store their items before
delivery. These companies are expanding in tandem with e-commerce growth,” said LaBrooy.

He said Area Management is also in negotiations with multinational companies who are keen to take up
to 50,000 sq ft of space at the warehouse.
LaBrooy said Kuala Lumpur has the largest retail market in Malaysia and with the rise of e-commerce,
many retailers are trying to adopt e-commerce strategies.

“They need to create a 24/7 business model to complement their stores’ performance and drive sales.
They also need strategic stock points near their retail outlets. They can use an efficient e-commerce
provider to deliver online orders to their customers.”

LaBrooy said the four-storey warehouse including basement has been carved out into 15 zones to cater to
individual players.

There are four zones on each floor except for the basement, which has three zones.

The warehouse has large floor plates of about 320,000 sq ft per level and three floor plates with fully-
sealed docking bays catering fo 20ft by 40ft container trucks.

There is also high security features with full CCTV surveillance.

In addition, there is a separate car park, of which access will be through turnstiles and biometric/radio
frequency identification device passes.

“Safety and security is the top priority at the warehouse. There will be full control of all entering and
exiting vehicles, as well as the movement of people,” added LaBrooy.

https://www.nst.com.my/property/2019/07/503418/area-logistics-set-ride-strong-demand
Accessed on 9 September 2019

Discuss.
a) Are there any advantages?
b) Are there any disadvantages or problems?
c) What are your recommendations?
-------------------------------------------------------------------------------------------------------------------------------
Case Study 2

https://www.wsj.com/articles/commentary-e-commerce-surge-will-reshape-parcel-carriers-strategies-
11603879200
Accessed on 1 November 2020
By Alan Amling
Oct. 28, 2020 6:00 am ET

Commentary: E-Commerce Surge Will Reshape Parcel Carriers’ Strategies

The acceleration of business-to-consumer shipments during the Covid-19 pandemic has been a boon to
the big, national small-package companies.

The spike in demand that came from a surge in online shopping flooded the United Parcel Service Inc.
and FedEx Corp. delivery networks with shipments and allowed both companies to raise their shipping
rates. Their stock prices soared after initially dipping as widespread lockdowns began in the early days of
the pandemic.
Yet changes in distribution strategies as a response threaten to loosen the carriers’ grip on the highly
lucrative U.S. package-delivery market, and raise important questions about the business plans at the
parcel carriers going forward that could have dramatic implications on how retailers get goods to their
customers.

The rapid expansion of business-to-consumer parcel distribution is already driving significant changes to
distribution strategies that are aimed at cutting logistics costs and making delivery more responsive to
consumer demands. Retailers and a growing field of logistics providers are adding more warehouses close
to population centers and spreading more inventory around the country, a shift away from the use of a
small number of regional warehouses.

The companies are trading potentially higher inventory and warehousing costs for lower shipping charges
to get goods to consumers within a couple of days. When products are stored locally for delivery, the
options for delivery expand and competition for those shipments grows. According to New York-based
market research group IBISWorld Business, there are 228,000 couriers and local delivery-service
businesses in the U.S.

Deliveries to consumers’ homes accounted for roughly 70% of U.S. domestic volume for UPS and FedEx
in the period after coronavirus-driven lockdowns began, a sharp increase from pre-pandemic levels,
according to statements by company executives during earnings conference calls earlier this year.

The package carriers charge based on weight, making these lighter deliveries to individual consumers less
profitable than the heavier business-to-business shipments that have driven parcel growth over the last
half-century. The companies get a boost from the economies of scale: Delivering 10 packages to a single
business location is only marginally more costly than delivering a single package to a residence.

During the first quarter, UPS drivers made 15% more stops on their routes and delivered packages that
were 33% lighter.

The rapid growth of same-day and next-day deliveries amid competition between the big retailers also
poses a challenge to the package carriers. To ensure that delivery standard and tamp down higher delivery
costs, Amazon.com Inc., Walmart Inc. and others are taking greater control of their own distribution
operations.

Last year, Amazon.com began shifting the delivery commitment for Prime members from two days to one
day, supported by the buildout of over 400 local delivery stations fulfilling last-mile shipments. Walmart
has made “fast and free” a linchpin of its Walmart+ offering.

They’re hardly alone.

In the first half of 2020, Costco Wholesale Corp. spent $1 billion for Innovel Solutions, a middle- and
last-mile carrier. Home Depot Inc. opened a dozen last-mile facilities, with plans for 100 more. Target
Corp. is leveraging the use of Shipt, the same-day delivery company it acquired in 2017, and now fulfills
about 80% of its e-commerce orders through its 1,900 U.S. stores. Many other retailers are looking at how
to turn their stores into fulfillment centers for curbside pickup and delivery.
Local fulfillment changes the game, undercutting the advantages of size and scale the big carriers enjoy in
their national networks, raising important strategic questions for the package giants.

The national carriers could choose to invest in changes to their own delivery networks compatible with
the multiple trip requirements of on-demand delivery. That would expand their service offerings, but
would be no easy undertaking.

Currently, UPS and FedEx have highly efficient route-based systems optimized for two- to five-day
delivery of ground shipments. A crowdsourced delivery component would enable the incumbents to
compete for local business-to-consumer shipments and could lead to bundling opportunities for their
express and trucking businesses.

Still, they could simply choose to effectively stand pat, taking what business they can while leaving the
tough economics of last-mile delivery to regional carriers and the retailers who want to invest in the
business. UPS and FedEx could then build out services for higher-margin, industrial segments like
manufacturing, health care and cross-border shipping that rely on their highly integrated networks.

That would leave a U.S. private package market dominated for two decades by two carriers looking far
more fragmented, but perhaps more responsive than ever to the needs of individual consumers.

Alan Amling is a teacher and researcher at the University of Tennessee’s Global Supply Chain Institute in
the Haslam College of Business. He is a former UPS executive.

Discuss.
a) Are there any advantages?
b) Are there any disadvantages or problems?
c) What are your recommendations?
Week 10- Tutorial 9 (refer to Lecture 9)

Physical Distribution Controls

Security in physical distribution

1. Discuss the importance of security in the physical distribution system.

2. Explain the security measures available in physical distribution.

Requirements for packing in distribution

3. Explain the importance of packaging.

4. How do packaging requirements contribute to logistics and marketing flows?

Case Study 1
Logistics Weathering Through the MCO
Saturday, 04 Apr 2020
https://www.thestar.com.my/business/business-news/2020/04/04/logistics-weathering-through-the-mco
Viewed on 16-1-2021

It may seem that logistics companies are enjoying a brisk spike in business during the movement control
order (MCO) period, particularly those involved in last mile delivery - but that does not seem to be the
case.

GD Express Carrier Bhd (GDEX) managing director and group CEO Teong Teck Lean notes that there
had been high growth in shipments of surgical face masks and vitamin supplements throughout the MCO
period, but there was a slowdown in shipments for other goods during the first week.

“Only in the last couple of days did we begin to see a pick up in e-commerce activity of non-essential
goods.

“GDEX has also been adapting to changes in the logistics landscape by catering to delivery pick-up from
homes, ” he tells StarBizWeek.

Teong says the customer-to-customer (C2C) segment has changed drastically, and is the highest growth
segment for GDEX, as more individuals begin selling goods on social media.

Social media platforms are highly accessible for individuals to start a business, given its almost-free set
up cost, as compared to the larger e-commerce platforms.

Currently, the C2C segment only contributes about 3% to 4% of GDEX’s total revenue, while the
business-to-business (B2B) segment makes up 60%.

“The B2B segment is the worst hit segment during the MCO.

“The Covid-19 pandemic is a wake-up call to businesses who were slow to adopt digital initiatives.

“I believe that the way businesses will be run after the Covid-19 outbreak is over will be the new normal,
with a greater adoption of digitalisation, ” says Teong.
Teong also hopes that during this challenging business environment, last mile delivery players will realise
the importance of setting a floor price for merchandise delivery, instead of selling at a loss.

“Unlike document delivery, which can be reproduced, the delivery of goods or merchandise need to be
compensated, should there be any delivery issues, loss or damages.

“At present, with no floor price for merchandise delivery, it is insufficient to cover the cost of insurance
and there is no minimum compensation value.

“There should be healthy competition, yet a sustainable business environment, ” he explains.

Going forward, GDEX intends to focus on growing the C2C segment by innovating on its range of
service offerings and is in the midst of adding frozen food delivery as part of its services. GDEX is also
working with insurance companies to provide more coverage options for its deliveries.

‘All about survival’

“The year 2020 is all about survival.

“I will be happy if we (GDEX) can achieve a small growth in topline this year, but I am more focused on
ensuring that we survive the year, through managing costs and ensuring that our cash flow remains
healthy, ” adds Teong.

While Century Logistics Holdings Bhd is not involved in the last mile delivery segment of logistics, the
group has experienced a slowdown in procurement logistics and contract logistics, since the beginning of
the global Covid-19 outbreak in January.

This has impacted the global raw material supply chain, of which the bulk of it are sourced from China.

Century Logistics managing director Steven Teow Choo Hing says the group’s strategy to tide over this
down time is to focus on its ship-to-ship and property (warehousing) segments, while controlling costs
and curbing expansion. “We have new tenders in the works, and we have been able to fill up our
warehouses.

“There may also be an adjustment of our budget in the first half of the year.

“The group is taking a conservative and careful stand, thus, any expansion plans will be deferred to the
second half of 2020, ” he says.

In Tiong Nam Logistics Holdings Bhd’s case, the group has also experienced a decline in both regional
and domestic business activity following the MCO implementation. Despite that, Tiong Nam has been
able to partly mitigate the decline in business activity through a higher utilisation of warehousing
facilities and maintaining logistics support for essential products, such as food and beverage (F&B),
healthcare as well as oil and gas sectors. Apart from the gradual increase in activity in F&B, consumer
goods and medical equipment supplies, Tiong Nam executive director Victor Ong anticipates more
activity in the related supporting industries to come on stream.

“We are in a strong position to meet the higher demand in these sectors, as our earlier investments into
new warehouses and expansions at various sites across the country provides us with adequate space and
capabilities to serve our clients’ requirements.
“We thus remain committed in playing our vital role in replenishing essential goods in this critical period,
” he says.

At this juncture, Ong notes that it is preliminary to determine which sectors were the hardest hit during
the MCO period.

The MCO period has incentivised consumers to utilise e-commerce platforms to get their daily essentials,
while various industries have shown increased reliance on e-commerce and last mile delivery services to
get their goods to consumers during the MCO.

As such, Ong expects accelerated demand for e-fulfilment and warehousing services going forward.

“We thus have the opportunity to expand our brand presence and target growth in these segments by
leveraging on our integrated solutions, as well as robust fleet and infrastructure.

“Meanwhile, we also anticipate growing interest in decentralised warehousing and management services
by industries as they review their business continuity plans and strengthen their supply chain.

“Therefore, logistics players as well as related technology providers with the experience and scale would
be well placed to support this industry trend, ” he says.

Logistics and warehousing services made up 90% of Tiong Nam’s group revenue for the nine months
ended December 31,2019.Hotel, property development, and investment segments made up the remaining
10% of revenue during the nine-month period.

After the MCO, Ong expects an increase in business activity, driven by consumers restocking essentials
and resuming work, in addition to the fulfilment of backlogged orders by various industries. “We remain
ready to support these activities, backed by our extensive fleet and infrastructure across the country.

“Additionally, we would remain focused on executing our long term strategies to further enhance our
logistics fleet and warehousing capabilities, which would ensure that we continue delivering high
standards of service to our MNC and SME customers.

“These efforts include future investments into enhancing sustainability and studying Industry 4.0
technologies, such as green technologies, fleet management and route optimisation, as well as
warehousing automation and efficiency, ” says Ong.

Discuss.
a) Are there any advantages?
b) Are there any disadvantages or problems?
c) What are your recommendations?
-------------------------------------------------------------------------------------------------------------------------------
 Case Study 2

https://www.wsj.com/articles/commentary-e-commerce-surge-will-reshape-parcel-carriers-strategies-
11603879200
Accessed on 1 November 2020
By Alan Amling
Oct. 28, 2020 6:00 am ET

Commentary: E-Commerce Surge Will Reshape Parcel Carriers’ Strategies

The acceleration of business-to-consumer shipments during the Covid-19 pandemic has been a boon to
the big, national small-package companies.

The spike in demand that came from a surge in online shopping flooded the United Parcel Service Inc.
and FedEx Corp. delivery networks with shipments and allowed both companies to raise their shipping
rates. Their stock prices soared after initially dipping as widespread lockdowns began in the early days of
the pandemic.

Yet changes in distribution strategies as a response threaten to loosen the carriers’ grip on the highly
lucrative U.S. package-delivery market, and raise important questions about the business plans at the
parcel carriers going forward that could have dramatic implications on how retailers get goods to their
customers.

The rapid expansion of business-to-consumer parcel distribution is already driving significant changes to
distribution strategies that are aimed at cutting logistics costs and making delivery more responsive to
consumer demands. Retailers and a growing field of logistics providers are adding more warehouses close
to population centers and spreading more inventory around the country, a shift away from the use of a
small number of regional warehouses.

The companies are trading potentially higher inventory and warehousing costs for lower shipping charges
to get goods to consumers within a couple of days. When products are stored locally for delivery, the
options for delivery expand and competition for those shipments grows. According to New York-based
market research group IBISWorld Business, there are 228,000 couriers and local delivery-service
businesses in the U.S.

Deliveries to consumers’ homes accounted for roughly 70% of U.S. domestic volume for UPS and FedEx
in the period after coronavirus-driven lockdowns began, a sharp increase from pre-pandemic levels,
according to statements by company executives during earnings conference calls earlier this year.

The package carriers charge based on weight, making these lighter deliveries to individual consumers less
profitable than the heavier business-to-business shipments that have driven parcel growth over the last
half-century. The companies get a boost from the economies of scale: Delivering 10 packages to a single
business location is only marginally more costly than delivering a single package to a residence.

During the first quarter, UPS drivers made 15% more stops on their routes and delivered packages that
were 33% lighter.
The rapid growth of same-day and next-day deliveries amid competition between the big retailers also
poses a challenge to the package carriers. To ensure that delivery standard and tamp down higher delivery
costs, Amazon.com Inc., Walmart Inc. and others are taking greater control of their own distribution
operations.

Last year, Amazon.com began shifting the delivery commitment for Prime members from two days to one
day, supported by the buildout of over 400 local delivery stations fulfilling last-mile shipments. Walmart
has made “fast and free” a linchpin of its Walmart+ offering.

They’re hardly alone.

In the first half of 2020, Costco Wholesale Corp. spent $1 billion for Innovel Solutions, a middle- and
last-mile carrier. Home Depot Inc. opened a dozen last-mile facilities, with plans for 100 more. Target
Corp. is leveraging the use of Shipt, the same-day delivery company it acquired in 2017, and now fulfills
about 80% of its e-commerce orders through its 1,900 U.S. stores. Many other retailers are looking at how
to turn their stores into fulfillment centers for curbside pickup and delivery.

Local fulfillment changes the game, undercutting the advantages of size and scale the big carriers enjoy in
their national networks, raising important strategic questions for the package giants.

The national carriers could choose to invest in changes to their own delivery networks compatible with
the multiple trip requirements of on-demand delivery. That would expand their service offerings, but
would be no easy undertaking.

Currently, UPS and FedEx have highly efficient route-based systems optimized for two- to five-day
delivery of ground shipments. A crowdsourced delivery component would enable the incumbents to
compete for local business-to-consumer shipments and could lead to bundling opportunities for their
express and trucking businesses.

Still, they could simply choose to effectively stand pat, taking what business they can while leaving the
tough economics of last-mile delivery to regional carriers and the retailers who want to invest in the
business. UPS and FedEx could then build out services for higher-margin, industrial segments like
manufacturing, health care and cross-border shipping that rely on their highly integrated networks.

That would leave a U.S. private package market dominated for two decades by two carriers looking far
more fragmented, but perhaps more responsive than ever to the needs of individual consumers.

Alan Amling is a teacher and researcher at the University of Tennessee’s Global Supply Chain Institute in
the Haslam College of Business. He is a former UPS executive.

Question: Do you have any recommendation to overcome the surge?

-------------------------------------------------------------------------------------------------------------------------------
Week 11 – Tutorial 10 (refer to Lecture 10 & Lecture 11, slide 3-4)

Physical Distribution Controls

Costs: fixed and variable

1. Explain the difference between variable and fixed cost?

Productivity standards: utilisation and performance ratios

2. Explain the importance of having performance ratios in logistics.

3. Explain some of the productivity ratios used in logistics.

-------------------------------------------------------------------------------------------------------------------------------
Case Study
China’s JD.com Adds More Bricks-and-mortar Stores to Supply Chain to Speed Up Deliveries
Online shopping giant JD.com is targeting delivery times of as little as 30 minutes across China by using
various offline retail outlets, including Walmart, to directly get products to customers.

Beijing-based JD.com’s latest initiative forms part of efforts to improve the overall efficiency of its
supply chain, according to Carol Fung, president of the company’s fast-moving consumer goods business.

“This programme cuts out unnecessary steps, improving efficiency for retailers, maximising resources,
reducing costs and improving the customer experience,” Fung said in a statement on Tuesday.

Instead of having every product pass through traditional warehouses, distribution centres and delivery
stations before reaching the customer, the new programme has offline channels directly make deliveries
of orders processed on JD.com’s online platform.

The programme uses an artificial intelligence algorithm to determine the proximity of offline retail outlets
as well as JD.com’s warehouses and distribution centres to a customer. If an offline store with the goods
on order is closer, the AI system will ask that shop to make a direct delivery.

These offline channels include supermarkets, convenience stores, some major brands’ own bricks-and-
mortar shops and crowdsourced delivery platform Dada-JD Daojia. The programme initially covers items
such as non-alcoholic beverages, beer, wine, rice and flour.

It currently includes 20,000 offline stores in 54 cities, including 175 Walmart hypermarkets, 198 Nongfu
Spring offline water stations in Beijing, and 166 9bianli liquor stores throughout China. Walmart has been
working with JD.com since 2016.

Average delivery time with the programme is two hours, but customers can receive orders as fast as 30
minutes, according to JD.com. The Nasdaq-traded company said brands taking part in the programme are
likely to see improved store traffic and turnover rates.

That programme would intensify JD.com’s rivalry with Alibaba Group Holding, which has pushed its
“new retail” strategy to integrate online and offline shopping in the world’s second largest economy.

New York-listed Alibaba, the parent company of the South China Morning Post, has already invested
billions in various logistics services providers as well as bricks-and-mortar retail enterprises – including
Sun Art Retail Group, Intime department stores and Hema supermarkets – so that it can get closer to
consumers and deliver goods as fast as possible.

At the more than 30 Hema supermarkets across China, for example, users can place grocery orders online,
or shop offline and have their groceries delivered directly to their homes afterwards. Customers can also
pick out fresh seafood at Hema and have chefs prepare them on the spot for a meal.

Alibaba has a logistics subsidiary, Cainiao Network, which runs a platform that does everything from
digitising and standardising waybills to route optimisation for couriers. JD.com, which has also invested
in logistics services providers, operates its own network of warehouses and automated fulfilment centres.

For Chinese beverage brand Nongfu Spring, an early partner in JD.com’s new supply chain innovation,
the programme enabled 90 per cent of orders it received on June 18 – the final day of JD.com’s 18th
anniversary shopping festival in China – to be delivered within two hours without adding staff at its
Nongfu stations.

Its daily orders have also increased about 20% overall, according to Li Zhou, chief secretary of the board
at Nongfu Spring.

“We see enormous potential to deliver more orders from offline channels in the future, and will roll out
the programme in more cities around China soon,” Li said.

Achieving faster delivery times would augur well for China’s e-commerce providers to expand their
business in the country’s smaller cities. The online shopping penetration rate in China’s first- and second-
tier cities is 36.4%, compared with 13.8% in the smaller cities, according to a Nielsen report in August. –
South China Morning Post

https://www.thestar.com.my/tech/tech-news/2019/09/25/chinas-jdcom-adds-more-bricks-and-mortar-
stores-to-supply-chain-to-speed-up-deliveries
Accessed on 26 September 2019

Discuss.
a) Are there any advantages?
b) Are there any disadvantages or problems?
c) What are your recommendations?
Week 12 – Tutorial 11 (refer to Lecture 11)

Legal Aspects of Moving Goods

Health and Safety at Work

1. Major issues in health and safety.

-------------------------------------------------------------------------------------------------------------------------------
Case Study
Smarter Trucking Saves Fuel over the Long Haul
By Josie Garthwaite, For National Geographic News
PUBLISHED SEPTEMBER 24, 2011

Just over 33 years ago, 33 truckers competed for three days in a fuel economy contest dubbed the "Double
Nickel Challenge." Named after radio slang for the 55 miles per hour (89 kilometer-per-hour) speed limit
then in force in the United States, the goal was simple: to test the claim, common among truckers at the
time, that big rigs got better mileage at higher speeds.

Long-haul truckers from all over the United States gathered in East Liberty, Ohio, to watch as drivers
navigated laps around a track—first at 55 mph, and then at any speed of their choosing. With a few
exceptions, they burned less fuel in the first, speed-limited, trial.

More than three decades later, the double-nickel U.S. speed limit—enacted in the wake of the 1973 Arab
oil embargo—has faded into history on most highways. But so has credibility for the claim that higher
truck speeds beget better fuel economy.

In fact, road-speed "governors," electronic engine controls that limit driver speed, are standard equipment
on modern 18-wheelers. In Europe all trucks have their road-speed governors set by the factory to a
specified value determined by law. In the United States, it's up to the vehicle owner to decide the setting,
but most large fleet operators electronically limit their drivers to 60 to 63 miles an hour (97 to 101
kilometers per hour), with some flexibility to accelerate when needed. Safety is one consideration, but the
other aim is to save on the cost of fuel.

Yet both the trucking industry and policy makers are convinced that more can be done to curb the
growing amount of fuel that is being burned by big rigs hauling goods from one place to another. The
U.S. government, in fact, this summer announced its very first fuel economy standards for heavy-duty
vehicles, seeking to require that big tractor-trailers get 20 percent better mileage by 2018. Europe also is
working on a framework for limiting trucking fuel consumption and carbon emissions. And Japan, where
trucks are estimated to be responsible for 25 percent of automotive greenhouse gas emissions, set
standards to improve trucking fuel performance in 2006.

Changes in truck aerodynamics, reduction of mass, and improved rolling resistance all are strategies that
could yield significant improvements in fuel economy, according to a U.S. National Academy of Sciences
(NAS) report issued last year. But on par with all of those, the NAS put "intelligent vehicle" systems-
many available today-which can reduce the fuel burned by trucks by encouraging changes in driver
behavior that have long been known to save fuel.

The Fuel-Saving Power of Data

Curbing driver speed is perhaps the most widely recognized behavioral change that can save fuel, with the
low 60 to 65 mph (about 100 kilometer-per hour) range the "sweet spot" for many of the 18-wheelers on
today's highways, said Glen Kedzie, vice president of environmental affairs for the American Trucking
Associations, a trade group headquartered in Arlington, Virginia.

On average, a truck traveling at 65 mph instead of 75 mph will experience up to 27 percent improvement
in fuel consumption. "As a rule of thumb, for every one mile per hour increase in speed, there is a
corresponding 0.14 mpg penalty in fuel consumption," said Kedzie.

Operating at even lower speeds (around the old double-nickel limit, for example) would further reduce
aerodynamic drag and decrease fuel consumption, he said, but safety risks increase if trucks travel much
slower than cars. And the problem voiced by truckers during the days of the Double Nickel Challenge-
that of slower speeds translating to less income-remains today.

In the United States, Australia, Canada, and European countries, for example, "hours of service"
regulations force truckers to rest after a certain number of hours on the road. "Some trucks traveling at 55
may not be able to get their loads to their destinations on time," Kedzie explained.

Fortunately, the tool kit for eking out extra miles per gallon has expanded far beyond driving speed. In an
era of evermore intelligent and connected vehicles, trucking technology for better fuel economy now
includes wireless sensors, GPS chips, algorithms, and sophisticated real-time data analysis. "The rate of
change is getting faster and faster," Kedzie said.

Fleet operators can collect highly detailed information about a given driver and vehicle, for example.
"They almost have a real-time printout of a specific driver," Kedzie said. He ran off a list of data points
that a growing number of U.S. fleets are monitoring: "Where they stopped, how long they rested, how
often they braked and how often they hard-braked, the temperature of the engine."

It might sound like Big Brother has moved into the trucking industry. But analyzing this data and training
drivers accordingly can translate to real savings. As Michael Roeth, executive director of the North
American Council for Freight Efficiency, put it, "Between the worst driver and the best driver," the
difference in fuel economy can be up to 25 percent.

Others cite more modest gains from technology designed to encourage more fuel-efficient driving
behavior. For example, GreenRoad, based in Redwood City, California, says drivers using its real-time
feedback system consistently cut fuel and maintenance costs by 10 percent. The big oil and gas company
Shell says its FuelSave Challenge Partner system for commercial trucks also can improve fuel economy
by 10 percent. The Shell system collects information on 13 separate driver behaviors, such as harsh
braking and excessive engine revving, and on a weekly or monthly basis, reports emissions, fuel, and
efficiency data to fleet managers.

According to Roeth, tractor-trailers in the United States currently average just 6 mpg (2.55 kilometers per
liter). But some fleets can achieve up to 8.5 mpg (3.61 kilometers per liter), with the most efficient trucks
reaching 10.5 mpg (4.46 kilometers per liter). "If we could bring the average up to the best real-world
experience today," he said, "incredible cost would come out of freight." At current diesel fuel prices, he
said, each one percent improvement in fuel economy saves about $900 per truck annually.

A Trucking Transition

The tipping point doesn't seem far off. "The truck fleet is as old as it's ever been," said Roeth. That's
because, in hard economic times, fleet operators are "keeping trucks longer than they ever have." But new
purchases can be postponed for only so long, and an influx of new trucks will hit U.S. highways within
the next few years, according to Roeth.
It's an opportune time for the recently finalized fuel economy standards in the United States, where liquid
fuel consumption by medium- and heavy-duty vehicles represents 26 percent of all transportation fuels
burned. Trucking fuel consumption has increased more rapidly-in both absolute and percentage terms-
than consumption by passenger vehicles.

Analysts at the firm ACT Research predict that North American production of Class 8 trucks (the heaviest
trucks on the road, including big rigs) in 2012 and 2013 will be about 628,000, including an estimated
45,000 trucks to be exported to countries including Australia, South Africa, and Russia, ACT president
Kenny Vieth said in an interview.

"That is nearly the total of all trucks built in the four years of 2007 through 2010. Twice as many!" Roeth
wrote in an email. "It is crucial these trucks are bought with the most features for fuel economy."

It's not just a North American trend. ACT researchers are seeing "a really strong jump in the EU," Vieth
said. And he added, "Demand is off the Richter scale in China," with heavy-duty truck purchases
skyrocketing to more than 1.1 million in 2010, from just about 200,000 in 2001. "It's a deeply cyclical
industry, either feast or famine," he said.

A major reason such strong growth is expected in the next couple years compared to the last few, is "the
market was profoundly weak." Back in 2006, for example, North America produced more than 375,000
heavy trucks, about 40,000 more than ACT predicts for 2013.

Still, the fact is truck purchases have been down, and hundreds of thousands of new trucks will in all
likelihood begin moving the world's freight within the next two years. Roeth noted that it's the fuel
efficiency per ton of freight that must improve: "We like ton-miles per gallon," he explained. "Just
because pickup trucks can go 20 miles per gallon (8.5 kilometers per liter), we wouldn't want 60 pickups
hauling what one tractor-trailer can [haul]."

The drive to use technology for improved big rig fuel economy reflects several fundamental changes in
the business of moving freight by truck, from new emission standards to rising fuel prices. At the same
time, trucks are getting heavier. "But the overall weight limit hasn't changed," Roeth said. So trucks need
to be able to haul more weight using smaller engines and fuel tanks.

"In 20 years, we've had five versions of pollutant emission standards," said Roeth. Scrubbing systems and
other equipment required under those regulations tend to add weight. Trucking companies also want
"sleepers" to provide more creature comforts in order to help retain the best drivers-not a small
consideration as companies face a shortage of young drivers coming up to replace those now nearing
retirement age.

"Our customers are looking for every opportunity to save fuel," said Peter Adams, program manager for
Smart Transport at Shell Global. While acknowledging that Shell hopes its subscription-based FuelSave
system will increase loyalty among commercial truckers, Adams explained the move to sell fuel-saving
technology: "If we help our customers manage their fuel effectively, they remain profitable, in business,
and keep buying fuel."

In the Netherlands, for example, the Emons Group has piloted the Shell FuelSave Partner on 17 trucks in
its recycling division. The company's 450 trucks, which haul chemicals, glass, and other cargo, consume
15 million liters (nearly 4 million gallons) per year. Fuel alone accounts for about one quarter of Emons'
costs. By 2012, Emons aims to slash fuel use by 20 percent. The 17 trucks using the Shell system for six
months dropped fuel consumption by an average of 5.3 percent, with some individual drivers achieving
10 percent savings.

"The sky's the limit as to what information you can get out of technology," Kedzie said. It's becoming
possible, for example, for a truck to be programmed to shift at just the right time for maximum fuel
efficiency and minimum wear and tear. Braking can be automated, with the proper distance calculated
based on road conditions, weather, and load weight. Other systems, using retinal observation, are being
marketed to detect signs of driver fatigue. "Trucks are heading down the path of becoming more
intelligent," he added, "which will result in the industry becoming safer, more fuel efficient, and more
productive."

Discuss.
Question a: What are the advantages in the trucking business that you can find in the case study?
Question b: What are your recommendations?
Week 13 – Tutorial 12 (refer to Lecture 12) done for group 3 class code 607737

Legal Aspects of Moving Goods

National Institute of Occupational Safety and Hazards requirements

(Please refer to lecture slide number 15 of Lecture 11)

1. What are the current occupational safety and hazard that you know?

Legal requirements in transporting goods

2. What are the major INCOTERMS used in the international logistics? Explain each
INCOTERMS.
Week 14 – Tutorial 13 (refer to Lecture 13 & 14)
International Physical Distribution and Documentation

Role of freight forwarders, import brokers, agents, distributors and overseas representatives

1. Explain the role of each export facilitators available in your country.

2. Function of Fleet Management System. Discuss.

Cargo insurance

3. Explain why it is necessary to have cargo insurance in each shipment.

Import and export documentation

4. Discuss the basic import and export document that apply in your country.

Customs management

5. Explain the export documentation procedure in the shipping industry.

Impact of electronic commerce

6. What are the impacts of e-commerce in the context of physical distribution?

Case Study
Malaysia is IKEA’S Near RM1 Billion ASEAN Distribution and Supply Chain Hub

By NST Business - August 22, 2017 @ 11:12am

(***Lecturer’s note to student – Association of Southeast Asian Nations (ASEAN) consists of Brunei,
Cambodia, Indonesia, Malaysia, Myanmar (Burma), Philippines, Singapore, Vietnam, and Laos)

KUALA LUMPUR: IKEA, the world’s largest furniture retailer, has decided to establish its regional
distribution and supply chain centre for Asean in Malaysia.

IKEA, which was founded in Sweden and headquartered in the Netherlands, is investing RM908 million
for the new centre. It will adopt the structure and technology of IKEA’s biggest regional distribution
centre in Germany.

The centre will be among the top 10 largest regional distribution centres of IKEA Group globally,
Malaysian Investment Development Authority (MIDA), said in a statement today.

IKEA will manage an inventory of 9,500 stock keeping units worth RM6.6 billion annually.

Its new 100,000sqm specialised warehouse will utilise its integrated ICT systems to reduce dependency
on manual labour and significantly increase the efficiency and accuracy of its inventory management
processes.
MIDA said Malaysia has always been a significant market for IKEA. IKEA’s retail stores in Malaysia are
among IKEA’s most visited stores globally.

“With the establishment of the regional distribution and supply chain centre, Malaysia will strengthen its
role in supporting IKEA’s growth in the Asean region. The centre will serve 12 retail stores in Asean,
which will increase to 20 stores by 2026,” it added.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said the project, which resulted
from continuous engagements and facilitation by MIDA, represents a significant milestone for both IKEA
and Malaysia.

“IKEA’s decision of selecting our country as a base to support retailers in Malaysia, Singapore, Thailand,
Indonesia, Vietnam, the Philippines and India underscores the strategic fit of this country in supporting
IKEA’s overall growth strategy in the Asean region,” the minister said in the statement.

“The establishment also adds momentum towards making Malaysia a regional distribution hub and
preferred logistics gateway to Asia as outlined in the National Logistics and Trade Facilitation Masterplan
and National E-Commerce Strategic Roadmap.

“Deployment of technology in the logistics chain is key in strengthening the capabilities of logistics
service providers as we enhance trade facilitation. Thus, IKEA’s high-flow and automated warehouse is
certainly well-aligned to this agenda,” Mustapa added.

The government has been actively encouraging large local conglomerates and multi-national corporations
to set up their regional establishment here through various business models.

This includes the Principal Hub scheme that allows companies to centralise their global activities such as
procurement and distribution.

Such establishments bring along many multiplier effects to the country, ranging from creating high value
jobs, incurring high business spending, intensifying usage of local ancillary services, increasing the flow
of foreign exchange as well as strengthening the value chain in targeted industries.

As of todate, MIDA has approved 26 principal hubs applications, since its introduction in May 2015.
Over the next 10 years, these projects are poised to contribute RM16.8 billion in business spending,
utilise local ancillary services worth RM2.2 billion and generate more than 1,800 high value jobs for
Malaysians.

Among renowned companies that have been accorded with the principal hubs scheme include Honeywell,
Super Group, Avago Technologies, Lotte Chemical Titan, Daikin and Sharp.

Discuss.
Question a: What are the problems that you can find from the case study?
Question b: What were the solutions provided?
Question c: What are your recommendations?
Question d: Any evidence of real company applying the solution that you have suggested?

-------------------------------------------------------------------------------------------------------------------------------
 Miti: Auto Workshops, Spare Parts Stores Allowed to Operate During MCO
Monday, 13 Apr 2020 05:31 PM MYT
https://www.malaymail.com/news/malaysia/2020/04/13/miti-auto-workshops-spare-parts-stores-allowed-
to-operate-during-mco/1856288
Viewed on 14 January 2021

KUALA LUMPUR, April 13 — The Ministry of International Trade and Industry (Miti) has clarified that
vehicle workshops and car parts centres may now operate during movement control order (MCO) period.

In a frequently-asked-question (FAQ) sheet, the ministry said those providing after-sales services were
among those given exemption to open.

“After sales services refers to the operations of maintenance and service of vehicles within the country,’’
according to the FAQ that was released today.

After sales services also include tyre workshops for vehicle maintenance and services.

Logistics services supporting this sector such as the transportation of automotive parts and components
are also allowed to operate.

This is also extended to vehicle spare parts centre and stockists supporting after sales services or
workshops.

“Spare part centres can only conduct distribution of spare parts to service centres upon approval from
Miti. All other sales that are beyond the scope of after-sales services are strictly prohibited,’’ said the
FAQ.

This includes authorised dealer’s service centres, manufacturers’ service centres as well as independent
workshops, upon approval from Miti.

Car assembly plants are also allowed to operate throughout the MCO period upon approval by Miti as
well.