C

3 Logistics and supply chain

13.1 Logistics and supply chain
ASyllabus reference Logistics
Section T You will remember that in Chapter 12 we examined the four "Ps' of the marketing mix.
objectives-10 One of those elements was place. We said that a product must be distributed in a place
that is conveniently accessible to potential purchasers (customers). Logistics is the
etaLyou ow Overall process by which goods reach the place where they are needed. In this respect,
E OTLInereian buSIne ogistics is more than just transportation, although transport is an important element.
Sei ayaing trom Logistics is the process of storage and transportation through a number of elements
d devices toanides of for products to reach the place where they are needed. This could be the end user, but it
dngto CIstoierai could also be some intermediate place where the final user purchases them, for example
roSs the Caribbean Wbat a retailer orwholesaler.
are someof thethingsyou
wGri needto consider
CE geiinggoodsitO Supply chain operations
Ihe supply chain is the way that a business gets its resources, for example the sources
GOROErsmyoucolunttry
vergis other
Carnsbean that supply a clothes manufacturer with the materials to make the clothes it produces
and sells. The distribution channels are how a business gets its finished product (or
service) to the market, for example the wholesalers or retailers, but it is important to
Ehemanufacturer ofthe realise that the distribution channels also have a supply chain.
ororcts youl, would One firm's supply chain may be another's distribution channel or vice versa, but it is
youform part ofthe supply the operations of the business involved that determines which is which.
chain orwould you be the
etire supply chain? The components of logistics
Forward and reverse flow
The movement of goods can be a two-way process in that goods are not only delivered
to customers, but customers may also return some products- reversing the process. For
example, faulty orunsuitablegoods may be returned to the original seller for a number
of reasons: unsuitable goods in original condition will be returned, and go back into the
distribution chain; some goods will be returned for repair, perhaps having originally been
satisfactory; some goods that were received damaged, or have become damaged in use,
will be returned to be trashed and reimbursement claimed. This is all part of effective
customer service.

Warehousing
A warehouse is a commercial building where goods are temporarily stored or re-
routed to other businesses. They also carry outinboundfunctions that prepare items for
storage, for example packing and labelling, and even some minor production work such
as assembling component parts. The outboundfunctions are the shipping of goods to
the final destination. You need to also bear in mind that warehousing not only embraces
selling to the end consumer, but also stores goods that are needed by producers, for
example raw materials and component parts. Here there is an inboundfunction because
the producer's warehouse is receiving goods and materials.
Warehousing is an important part of distribution particularly because it bridges the
time gap between when goods are available and when they are actually needed. For
example, seasonalgoodsare produced at one time and sold at another. Warehousing
in this sense provides temporary storage and enables production, marketing and sales

177
UNIT 2 PROMOTION AND LOGISTICS

To get on with their important roles. For example, holding production materials in store
means they are readily available when required, enabling production and supply to
continue without hold-ups.
Similarly, perishable goods can be held in suitable storerooms (cool or freezer) in
anticipation of sales, thus extending their life cycle and protecting price stability. In
turn, this enables stocks to be drawn on at the time they are needed, therby protecting
supply by ensuring stocks are continuously available. Warehousing also helps to
maintain price stability and prevent the violent fluctuations that can occur if such
a stock is not accumulated. Fluctuations in price can occur when demand for goods
exceeds the supply available.
Insurance
There are many risks involved in the chain of distribution. For example, loss of power
supply to a warehouse with specialist storage rooms (such as, cool or freezer storage)
will result in considerable financial loss. There are also risks of stealing or damage to
goods in transit (between destinations). Insurance plays an important part in the chain
of distribution in providing compensation should such an event occur.
Like all businesses, those engaged in distribution will insure:

their employees
motor vehicles
against fire, and other perils such as storms and floods
against theft and vandalism, especially where stock is of high value
goods in transit, and many other risks.

Information flow
We have seen the different channels that goods can flow through to reach their
destination, and we have noted the need to insure against risks that can occur. During
this process there is also a flow of information between the sender (the consignor) and
receiver of the goods (the consignee), but also between the sender and those engaged
during the course of the journey where the people with responsibility for the onwards
movement or storage of the goods or materials might change. With today's instant
electronic information transfer systems, the flow of information is immediate. The main
elements of communication involved in a transaction between a seller and a buyer can
be summarised as follows:

1adingdacumena ian i r e d ana camimuICtiau

Order Buyer to seller ****

******** *
****** .* ***** ****asesee******************"""*********"*********************
Acknowledgement of order Seller to buyer **********

... . **************************"*****************'*************************i****"*****.

*** Seller to buyer, informing that goods have been despatched

Advice note ***********"***

*****"
******""******************"********'***"****

Seller to buyer, advising that contents of assignment shipped

Deliyery note
*************
Seller to buyer, advising of the cost of particular consignment
Invoice
:... *******'*****************************'*:******"*t**********************************"****

account Seller to buyer, requesting.ipayment of collection of assignments

: Statement of
*********************" .oissosssnn.*****issws********
****************:

Remittance advice
.
Buyer to seller, regarding payment for collection of invoices
******""*************************************"*****i
***** *********
********

Delivery note Sent with the goods via the van driver when using the senderrs
Own transport vehicle, buyer signs to confirm delivery executed
***********************************************"*******

*******'******** ******.
Consignment note Similar to delivery note, sent via hired transporter * * * * "

***************************"********* ******************"*********'****************
.. *********

Later in this chapter you will learn more about documentation related to transportation.

17
 13 Logistics and supply chain

Activities in supply chain operations

Transformation of natural resources, for example a manufacturer taking produce from
Tarmers and
processing them in some way, such as canning them.
Movement and storaqe of natural resources, for example transporting and
materials such as mined ore for manufacturers to create into, say, metal, storing
raw
when they
need the raw materials
supplied to the production process.
Processing of raw materials into finished goods, for example a manufacturer purchases
raw materials to
process into finished goods. Where the production outcome is not
Completely finished but stored for further work later (for example, assembling) it is
referred to as work in progress.
Storage of work in progress and finished goods, for example component parts stored
until needed for
assembling into a final product, and finished products for onwards
movementalong the chain of supply.
Delivering the finished product from the point of origin to point of destination,
(transportation).
13.2 Chain of distribution
When a business has identified the place where they are going to sell their product or
service, they have to decide how they are going to get the product to their customer,
that is, what distribution channel they are going to use. The distribution chain means
all the channels of businesses that goods (or services) pass through until they reach the
final customer. It also includes the flow of money from the customer to the
and the two-way flow of communication between all of those involved in the
supplie,
of the chain.
operation
A typical supply chain consists of four interrelated
operations:
Producers - their job is to grow or mine raw materials (primary production) to

supply to manufacturers, who adapt the raw materials into end

scale production).
an product (large-
aWholesalers - their main task is to buy in bulk from the producer or manufacturer

and sell in smaller quantities to retailers (breaking bulk).

Retailers -they buy from producers or wholesalers and sell in convenient quantities
to the final buyers.
Consumers-the final purchasers of the product who are supplied in a variety of
ways, such as by a retailer or through online shopping.

Producer Wholesaler Retailer Consumer

A Figure 13.1 Chain of distribution

Traditionally, producers sell their output to manufacturers (and sometimes directly

to wholesalers or retailers) and manufacturers sell to wholesalers, but there are other
alternatives that may be used. Sometimes a producer or manufacturer will bypass the
wholesaler and sell directly to the retailer, especially when the retailer is large enough to
buy in very large quantities, and the consumer may even buy directly from the producer,
for example via e-commerce. Similarly, a producer of fitted kitchens or bathroom suites
may well sell directiy to the consumer, and even employ their own team of fitters/

installers. And sometimes the producer might use an agent to organise distribution. See
Figure 13.2 for the main distribution channels that are used.

179
 LOGISTICS
UNIT 2 PROMOTION AND
e * * *

Consumer

Channel 1 Producer Wholesaler Retailer

Consumer
Channel 2 Producer Retailer
Retailer Consumer
Wholesaler
Channel 3 Producer Agent
Channel 4Pro lucer Consumer

in distribution channels
A Figure 13.2 Variations

vetmeen 1e ter cuaomer and

mpoinidnerence
r e t a i e z 1 1 e pgLoducstus
otien.contosedhedisiagCa
GOnsymen ermas are
demand fhemostomersbo
Oerswl anybaya suppherspraductsitconsümeES oseLconsume
hey
gooc dgsellther 1oconsmers whoare the cd osers ot products
duected tomardnftendia ihelcasumerto.

13.3 Modes of transport

The importance of transport
Transport is an important element to all parts of
the chain of distribution in getting
enables:
products to their destinations. Transportation
workers to travel to and from work
r a w materials to reach manufacturers
finished products to be distributed.

Businesses have a choice of the modes of transportation they can use to get products
from factories or warehouses to their destinations. They will want to use the method
most appropriate for their products and will at times be under pressure to move the
goods before any deterioration or depreciation in value occurs. However, at the same
time they will want to minimise transportation costs.

The following are the main factors that influence the form of transport used
a the nature of the goods-fragile or perishable goods need special consideration
how urgently delivery is required
the value of each item and insurance costs
athe cost of the transportation
handling and warehouse costs
t h e distance the consignment must be transported
the size and weight of the load
the convenient postion of terminals, for example docks and airport
athe possibility of combining loads to reduce costs
t h e reputation of the carrier.

Multimodal and intermodaltransport

ut
Muitimodal transport rerers to the transportation of goods under a single contract, Du
involving at least two dirferent means of transport, for example using road to transpor
the goods to the seaport, marine transport to take the load to an overseas destination
and at that point forwarding it to the final destination by anóther form of transport.
 13 Logistics and supply chain

htermodal transport involves the transportation of freight in an intermodal

container or vehicle using multiple modes of transportation (road, rail, ship, truck)
without any actual handiling of the freight itself when changing modes of transport.

Methods of transportation
Air transport
Air transport is the most expensive form of transport and it is constantly expanding in
the volume of passengers and freight it handles. It is by tar the most important method
TOr the movement of people into and out of a cOuntry, especialy tourists and business

persons. But air transport also makes a major contribution to the carrying of goods.

I tis the fastest form of High operational costs

transport result in high freight
rates
I t operates to timetables,
mostly on direct routes The weight and size of
the carg0 are limited
The risk of damage or
pilferage is reduced I t is sometimes affected
by adverse weather
Shorter transit times reduce
insurance costs
conditions
It relies on other forms
Packaging costs are reduced
of transport to and from
It is particularly effective the airport
Over long distances
It is not suitable for
Containers are used to short distances
speed up cargo loading and
A Figure 13.3 Air transport unloading
***********************************************************************

Modern rail freight uses containers Rail transport

on special trains called freightliners Rail transport is a lot more widely used in overseas
countries than it is in
the Caribbean, but it is important that
you understand the role it plays in
distribution in other part parts of the world. This is because
some Caribbean
businesses that are engaged in the overseas market will
use rail transportation
in destination countries.
In many countries where rail
transport exists, it tends to be in
ownership (that is, owned by the state). This is because the cost publicof providing
the infrastructure for rail
transport is often beyond the scope of private
businesses. However, in some countries
private franchisas are given for some
aspects of the rail service for bothpassengers and freight (see Figure 15.4),
usually with separate services for each.
An important feature of rail
freight (and sea freight) is the use of
International Standards Organisation
loaded directly from trucks or (1S0) containers, which are
ships onto freight trains
freightliners). They are unloaded in a similar manner at(sometimes
Figure 13.4 Rail transport called
their rail destination.
Where countries have been able to embrace the
example via the use of containers, this has resulted improvement
in rail traffic, for
in:
ut
improved freight-handling economies
simplified and more effective timetabling
reduced losses from damage or theft
direct links between terminals such as ports.
181
T2 PROM0TION AND LOGISTICS

Advantages of trail transpot Disat vantages aic ransport

I t is more The routes are determined/
comfortable and easier for passenger
travel than road restricted by railway lines and
transport
It is faster than road stations
transport over long distances
It is less labour-intensive than Equipment costs are very high
road transport
It is I t is less economical than road for
especially suitable for container traffic short journeys
It causes less pollution than road transport I t is often not suitable for
Fuel use is more economical than road transport perishable products
I t is a
relatively cheap form of freight transport
t operates on a schedule and avoids road blockages
****************'******'**** ****** *************"°********"*********'"ttstnss*********** is utntnts*.************ ****"****'*************** ********

Road transport
Road transport is the most commonly used form of transport in most countries and
Is the most flexible (see Figure 13.5). Road transport includes carrying passengers and
reignt such as raw materials from producers to manufacturers, as well as between
the other elements of the distribution chain. The majority of road haulage tends
to be carried out by relatively large trucks, but smaller delivery vans also play
an
important part, for example e-commerce has seen a large increase in the use of courier
service vehicles.
Alarge proportion of the spending by governments of all countries is on provision of
and maintenance of the road networks.

Advantages
** www.w
of road transport
wm
Disadvantages of road transport
Door-to-door service provides I t is expensive to operate in large,
maximum flexibility congested cities
It is fast over short distances I t is subject to mechanical breakdowns
The risk of damage is reduced by less It is prone to accidents
need for transhipment
I t causes and is affected
It can reach places inaccessible to
by congestion
other forms of transport Loads are limited in size and weight
A good road network speeds up Some roads are
unsuitable for very
Road transport movement and reduces congestion large vehicles
is the mostt It is less tied to a rigid timetable than is slowerthan rail transport over
flexible method rail transport long distances
of transport I t is suitable for speedy delivery of I t is wasteful of resources when trucks
perishable goods return empty

Other forms of transport rely on road The tax on vehicles and fuel costs
transport to connect with terminals must be added to charges

Figure 13.5 Road transport can be flexible such as airporsStalions and docks I t causes considerable pollution
. ****************************"************************** *** * * *******************

Fleet ownership
Relatively small businesses may have little choice about the form of road transport
they use. They are not bIg enougn to own their own fleet of trucks and so they are
obliged to use the transpOrtracilities ot other companies. However, large concerns can
decide whether to operate their own tleets or use those of other providers. There is
no simple answer to this dlemma, and businesses will make a decision based on their
circumstances, taking into account the following:
 13 Logistics and supply chain

Reasons for fleet ownership

mVehicles purchased can be customised to the specialised requirement of the
and s0 on.
Ompany, for example high security, refrigeration
The company is able to meet the need of its customers directlyvwithout havingto
rely on other carriers.
DISpatch and delivery times can be completely controlled by the consignor
and consignee.
The likelihood of damage and theft is reduced.
Vehicles can carry the name and logo of the company sendingthe consignments,
together with contact information, thus raising the company's profile.
aWhere a number of deliveries can be scheduled on the same vehicle, the company
AHOugthereon can benefit from the economies of scale made.
I h e company can use its own fleet to carry deliveries of other companies, for
veicesareveny temphing example trucks need not be empty on return journeys, thus enjoying further
there are also costsand economies of scale.
disadvantages What do The amount of documentation is reduced when a company uses its own fleet
ya a kthesearet of vehicles.

Marine (sea) transport

Sea transport is important to any country that has a seaboard. It provides access to
ocean-going vessels, which can transport exports to other coutries to earn income.
as well as to bring in imported goods demanded by modern society that cannot be
economically produced in the home country. The main forms of sea transport are
outlined below and in Figure 13.6.

Oil tanker
Grain camer Fishing boat

'.1

Ferry
Cargoiship

ercraf
13.6
Commercial shipping
A Figure
183
 PROMOTION AND LOGISTICS
UNIT 2

for passenger travel, particularly

rassenger liners (cruise liners) are built especially income from tourism. They
By bringing tourists to a country they provide
in8 timetables.
follow fixed routes and set
Smetimes carry some cargo and tend to However, high freight costs limit their
herefore, delivery dates can be guaranteed.
use for cargo.
but their main purp0ose is to deliver cargo.
argo ships sometimes carry passengers to a
and regular timetable. Such a vessel tends
Tney tend to operate on fixed routes scheduled cargo has not arrived at the port in
to sail from a port even if some of the
time for loading.
timetable or schedule. They will carry all
tramp ships are cargo ships that have no chartered
of the world. The vessels are
Types of cargo they can manage to any part
through a charter party agreement.
Special freighters are purpose-built ships, including:
containers ofa set size,
designed vessels, these ships carry
deckspecially
ships:
Container
some below but a lot above the hull of vessels. Containers facilitate fast loading

and unloading
a bulk carriers: for grain and ore
atankers: for oil or other bulk liquids
ferries: roll-on/roll-off ships that can carry vehicles
in bulk; in some parts of the world
hovercrafts have particularly successful in this role.
proved
used for daily fishing, deep- inshore while
Fishing boats are purpose-built vessels harvest from a
sea ships will go out for many days
into international waters seeking
wider area.
Disadvantages
Disadv of seatransport
*
Advantages of sea transport
*** t can carry cargo only as far as the ports
T h e way' is free and gives access to most parts of the world
t is reliant on other forms of transport to deliverits
Alarge ship can be propelled with a relatively small amount of power cargo to and from ports
enables ships to carry very heavy
The natural buoyancy of the water I t is a relatively slow method of moving freight
economies of scale
Loads, which gives Ship maintenance costs are high
It aidsinternationaltrade I t is particularly affected by climatic conditions
It is relatively safe as accidents are rare
*******

I t causes relatively small amounts of pollution ..... . ******

.eaannaoa**** s********i********************************************************************
**********************************************************************

Pipeline
Transporting commodities
via PIpeline removes the need to use vehicles. Goods
include oil, gas and water, usually over long distances.
transported by this method
as well as overland.
Pipelines run under the oceans
Eneges of pipelines Disadyamages afgrg
moved
Products are conveyed Products that can be

to their destination with are limited to liquid products

limited labour input undetected
Leakages can go
for some time, causing
Environmentally unfriendly
vehicles are not used wastage and potential
environmental damage
There is no need to organise
a return cargo load In recent years pipelines
attacks by
have suffered from
The maintenance cost ot militant groups
and
vandals,
pipelines is low compared and the
theft of the pipelines
with other means of
transported products
transportation
*************pepnnha*sss * ..* i *******************
***************
.

A Figure 13.7 A pipeline

 13 Logistics and supply chain

Digital delivery
Digital delivery refers to the electronic delivery or distribution of data and media
Content such as audio, video and software games via a variety of devices such as the

web and mobile phone. It also applies to the practice of completing and submitting
forms online and making immediate payments to purchase items such as passports,

drivinglicence fees and hotel reservations.

renewals, car-parking

Activity
tarlier you were given the main factors that influence the mode of transport used. You have
now also become familiar with each of the modes of transport and the functions, costs and
advantages and disadvantages of each method. Now consider the suitability of each method
Tor specitic goods. Create a table with the modes of transport on the left, and to the right of
each form of transport list products that each is suitable to transport. Hint: you would not

send flowers to an overseas destination by ship.

13.4 Transport documentation

Earlier in this chapter we examined the main trading documents used. We included
there two documents related to transportation. These were the delivery note, sent with
the goods when a firm has its own transport fleet, and the consignment nots, which is
used when using a hired transporter.
When a consignment is being sernt to an overseas destination there are many
documents required in addition to the foregoing, including:

Certificate of origin-this certifies the country of origin of goods. It is required by

the importing countryy especially if there is a special agreement to allow imports
from some countries at a reducedtariffrate(import tax).
a Bill of exchange-this is used for the settlement of debts. It is created by the seller/
-exporter (the creditor) of the goods requiring that the buyer (the debtor) pays a sum
of money on demand, or on an agreed future date (usually after three months).
Documentary bill - this is a bill of exchange with all the related documents of title
attached, including the invoice and insurance policy. This can be used to give a bank
the right to take possession of the goods if the bill of exchange is not honoured when
it matures (when payment is due).
n Documentary credit-an exporter can request that a customer (the importer)
makes payment for goods by documentary credit. This allows the exporter to obtain
payment before the documents of title/ownership are released to the importer. The
importer arranges for their bank to guarantee that the payment will be made when
the documents of title are handed over.
Import licence - issued by the importing government, this document gives

permission to bring certain commodities into the country, for example where a
government restricts the amount of a particular product that can enter a countiy
(quota) or hazardous products.
Export licence -this sometimesis needed before certain goods can be exported, for
example works of art or of historical value.
a Bill o f lading - this is a title of ownership document. It is given to the consignor by

the shipping company (or its agent) as a receipt for the consignment loaded on the
ship for passage (see Figure 13.8)
A i r waybil! -this is issued by the carrier airline to the consignor as a contract of
carriage. The air waybill is not a document of title (see Figure 13.9)

185
 UNIT 2 PROMOTION AND LOGISTICS

Page 1 of 1
Date BLL OF SHORT FORM NOT NEGOTIABLE
LADING
-

Number:
SHIP FROM Bill of Lading
IName BAR CODE SPACE
Street Address]
City, ST ZIP Code]
SID No.:
Carrier Name:
SHIP TO Trailer number:
Name
Street Address] Serial number(s)
[City, ST ZIP Code]
CID No.:

THIRD PARTY FREIGHT CHARGES BILL TO SPAC:

Name Pro number

Street Address] BAR CODE SPACE
ICity, ST ZIP Code]

prepaid unless marked

charges are
Freight Charge Terms (Freight
Special Instructions: otherwise):
Prepaid D Collect 3rd Party
with attached underlying bills of lading.
Master bill of lading
CUSTOMER ORDER INFORMATION
# of Weight Pallet/Slip Additional Shipper Information
Customer Order No. (circle one)
packages
Y N
Y N

N
N
Grand Total
CARRIER INFORMATION
LTL Only
Handling9 Package
unit Description NMFC Class
Qty Type Qty ype Weight| HM Commodity
Commodities requiring special or additional care or attention in handling or
stowing must be so marked and packaged as to ensure safe transportation with No.
ordinary care. See Section 2(e) or NMFCitem 360

to state specifically in writing

are required
the COD Amount: $
Where the rate is dependent on value, shippers follows: The agreed or declared value of the
Customer check
agreed or declared value of the property as .per
Feeterms: Collect Prepaid a
be not exceeding-
property is specifically stated by the shipper to acceptable a

Note: Liability limitation for loss or damage in this shipment may be applicable. See 49 UsC 14706(()MA) and (B).
and
that have
Received, subject to individually determined rates
or contracts
been agreed upon in writing between the carrier and shipper, if applicabie, The carrier shail not make delivery of this shipment without payment of charges ai
other lawful fees.
and rules that have been estabisned
otherwise to the rates, classifications, on request, and
to an
Shipper Signature
by the carrier and are available to the shipper,
applicable state and federal regulations. Carrier Signature/Pickup Date
Trailer Freight Counted:
Shipper Signature/Date Loaded:
By shipper Carrier acknowledges receipt of packages
and
require
This is to certify that the above named
materials are O By shipper By driver/pallets said to placards. Carrier certifies emergency response intormduo
and labelled, contain was made available and/or carrier has the DOT emergery
properly classitied, packaged, marked, O By driver
and are in proper condition for transportation a By driver/pieces guidebook or equivalent
responseProperty
documentation
inu
DOT. venicle. described above is received in gooa o
according to the applicable regulations of the
except as noted.

A Figure 13.8 Bill of lading

 13 Logistics and supply chain

TFC20246899
Shipper's Name and Address Not Negotiable
ABC EXPORTER SND BND HOUSE AIR WAYBILL
KWANG 264, PADUNGAN ROAD,
issued By
COMPANY LTD
MY FREIGHT FORWARDING
myfreight
KUCHING

MATAYSIAa KUALA LUMPUR Malaysia

T:46465 F:12346 30, DEMO FREIGHT BUILDING
T+000000 F:+000000
TBE DIRECTOR

1, 2 and 3 of this Air waybill are originals and have the

same validity
Coples
herein are accepted apparent g0od order and condition (except as
in
It is agreed that the goods described
Consignees Name and Address
CONDITTONS OF CONTRACT ON THE REVERSE HEREOF ALL GOODS
noted) for carriage SUBJECT TO THE
AYZ IMPORTER GBH
INCLUDING ROAD OR ANY OTHER CARRIER UNLESS SPECIFIC
RIENER STRASSE 350, D-81829
MAY BE CARRIED BY ANY OTHER MEANS
HEREON BY THE SHIPPER, AND SHIPPER AGREES THAT THE
MUNIC CONTRARY INSTRUCTIONS ARE GIVEN
DEEMS APPROPRIATE.
IMMEDIATE STOPPING PLACES WHICH THE CARRIER
GERANY SHIPMENT MAY BE CARRIED VIA
CARRIER LUMITATION OF LIABILTY
T:123987 F:654123 THE SHIPPER'S ATTENTION IS DRAWN TO THE NOTICE CONCERNING
a higher value of carrage and playingga
PURCEASTNG OFFICER
Shipper may increase such limitation of liability by declaring
Supplemental charge if requried.

Isuing Camers Agent Name and City Account Information

NX FREIGET FORWARD ING COMPANY LID

NALAYSIA

Agent IATA Code Account No

Airport of Departure (Addr of First Carier) and Requested Routing

KUALA LUMPUR INTERNATIONAL

By First Carrier CUR CHGS WTNAL Other Declared Value for Carriage Declared value for Customs
Routing and Destination too by y

CodepPD COL
N V D NCV
FRA

Alrport of Destination REquess FIgnt/ lerms INSURANCE - If carrier offers insurance and such insurance is requested
Amount of Insurence
in accordance with the conditions hereof, indicate amount to be
PRANKFURT INTERNATIONAL NIL
insure in box marked Amount of Insurance

Handling information

Gross ate ass Chargable Kate Total

Nature and Quantity of Goods
Commodity (Incl Dimension or volume)
E weignt
RCP Weight tem NC Charge
AS AGREED AS AGREED Shipper's load, stow, and count
147
FOOD STUFF
3.78

AS AGREED
13 147

Prepaid Weight Charge Collect Other Charges

AS AGREED

Total otherChargesDueAgent

Total other Charges Due Carrier

Valuation CnarQes Shippercertifies that the particarsone ae hereof arecoretand that insofar as any part of the consignment contains dangerous
is properly described by narne and is in proper condition for carriage by air according to
applicable Dangerous oo
Regulation

MY FREIGHT FORWARDING COMPANY LTD

signature of shipper or his agent

Total Prepaid Total Collect

Currency conversion Rates Collect Charges in Destination Currency January 2020 KUALA LUMPUR INTERNATIONAL
EXECUted on ate (Place) Ignature of Issuing carrier or his agent
Total Collect Charges
Collect charqes at Destination
ORIGINAL 1
ForCarriers Use only at Destination

(FOR CARRIER)
A Figure 13.9 Air waybill
10/7
 UNIT 2 PROMOTION AND LOGISTICS

*13.5 Transport and marketing

The role of transport in marketing
The main roles of transport in marketing are
commodities
sourcing of
t o fast-track the
t o ensure security ofsupply
t o reduce costs.
there is a corresponding increase in
As countries and their economies grow,
develop and manufacturers by consurmers
demand for products and services from producers
this demand. This necessitates a need for
and marketing has to play its part in satistying
of agriculture and other
a more effective transport system
for the proper development
and meet increased demand. Transport aids
primary producers in order to mass produceto manufacturers at a time when they are
mass production by bringing raw
materials
then aiding the distribution of their output
needed (ensuring security supply), and
of
(finished goods) to the market place.
factor in the production of goods and
Time has increasingly become a crucial
services, as commodities are required to be
available quicker than ever before, alI
while not only ensuring that costs do not rise, but reducing them in an increasingly
demonstrates how these ideals
competitive market. Just-in-time (JIT) manufacturing
can be achieved.
to as lean aims to avoid the
production)
JIT manufacturing (sometimes referred
and facilitates a
waste associated with over-production (reducing production costs),
line directly to
Search online for some faster response to customer demands by delivering from the production
examples of industries the customer when they need them, and without the use of extended storage (thereby
a crucial role in
whichcommonly use JIT reducing storage costs). It should be clear to you that transport plays
demands.
making this work within the time restraints the process
Travel time is, of course, an important factor in transportation, especially considering
the requirement of finding speedier methods of delivering what customers want. We
saw earlier how, when a business owns its own fleet of vehicles, this reduces the time
factor of delivery, but there are other ways of reducing travel time. For example, caretut
entails a
route planning can reduce journey time and costs, so that even if the route
reduce travel time if congestion areas are avoided.
longer journey it canearlier
We also referred to the modes of transport used. It is sometimes the case that
and
more than one mode of transport will be used and the methods of transhipment,
the way this is managed, will be a crucial factor, and we have seen how containerisation
is one way that transhipment can be carried out effectively and speedily.

The role of transport in domestic, regional and

foreign trade
The main role of transportation is, of course, to enable goods to reach the customer
when they need them, and this can be within the domestic, regional and global makE
international trade).
the homne
The type of transportation used in the domestic market (that is, within
country) is mainly carried out by the various forms of road transport described earlier in
rail transpore
this chapter, for example truckS and vans, and in some Caribbean countries
isalso available. Interregional transport will additionally include sea and air transport.
International trade that encompasses importing and exporting engages all or tne
learnt
foregoing modes of transport: road, rail, air and sea. In this respect, we have
 13 Logistics and supply chain

n this chapter that the type of transport used will be influenced by factors such as
tne nature ofthe goods being transported, their value, the urgency of need and the
destination. We have also recognised that international trade invariably involves more
than one form of transport.

13.6 Supply chain advantages and challenges

The supply chain has dramatically changed in relatively recent years, and these
changes have brought many benefits to the lives of people and the economy of their
countries. But these changes have also raised many challenges for those involved in the
supply chain.

Supply chain advantages

OImproved quality of life
People depend on the supply chain to deliver the basic necessities they need to survive,
such as food and water, and even somewhere to live. But, in addition to needs, people
also want many things that are not necessary for survival but improve the quality
of their lives.The supply chain makes it possible for them to access things Such as
refrigerators, televisions, cars and so on. The supply chain can even claim to aid health
care. For example, during a medical emergency transporting victims to hospital for
emergency treatment is an aspect of the supply chain, as is transporting medical
supplies to hospitals.
e Supports economic growth
Societies with a highly developed infrastructure (roads, railways, ports and 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.

(Employment opportunities
The supply chain encompasses almost unlimited opportunities for employment. Just
to
think of the links in the supply chain and you will understand why it is impossible
investigate them all-but here is a sample of the possibilities: production, transport,
packaging. purchasing, warehousing, marketing, advertising, wholesaling, retailing
and
and much, much also opportunities for self-employment
more. There are

entrepreneurship. We will explore a few examples in more detail

Telesales and telemarketing
either for
Telesales and telemarke ng give people the opportunity to work from home,
or services
a company or through
self-employment. Telesales refers to selling products
customers by telephone. Sometimes telesales workers
are paid a
of others direct to
an added payment based the number of sales achieved..
on
basic wage but are given knowledge of
a pleasant telephone manner and a sound
All you need is a telephone, of the
or service. The work does tact because much
require
employer's product object
of cold calling (unsolicited approaches) and many people
your
soliciting is in the form
to such canvassing. and
involves telephone use, but can be more interesting
Telemarketing also of potential customers,
but often
This is a service that generates the interest
satisfving. The work creates
contact has been solicited by enquiries (or calls for help!).
where
189
UNIT 2 PROMOTION AND LOGISTIics

'leads), but is also used to

OPportunities for the marketing company (by creating
customers. It is also used to collect
PiOvIde information to customers and potential this again requires a pleasant
Customer feedback and make appointments. Obviously, knowledge of the company's
telephone manner, but requires an even more thorough
products and services. There are other ways of telemarketing by using machines to talk
to people, you will learn about this later in this chapter.

E-tailing retailing (e-tailing) is the selling of retail goods on the internet. E-tailing
Electronic
the a personal feel of
requires strong branding and service displays, giving shopper
shopping without being present in a store.
Consumers who are pressed
E-tailing benefits both consumers and marketers.
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
A successful
benefit to the same as consumers, but they do gain.
degree
necessarily
electronic campaign not only increases revenue but also raises brand awareness and

paves the way for broader distribution.

E-tailing also creates employment opportunities. For example, more computer
Workers are needed to set up, maintain and oversee the computer and information

systems that e-tailing demanids. There is also a need for increased packaging and
despatch workers.
E-tailing has led to an increase in the need for many smaller courier services,
This has occurred
including opportunities for self-employment and entrepreneurship.
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 onlinë facilities such as electronic
funds transfer and online transaction processing. Both e-commerce and e-tailing have
grown enormously.
Similar to the way that the internet has developed into the most popular mediumfor
marketing, advertising and purchasing of goods and services, e-commerce has grown
to

rival traditional store shopping. This has resulted in:

a n 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.
Supply chain challenges
Despite the many advantages the supply chain has gained, which were summarised
above, it is facing many challenges
Globalisation
it
Although globalisation
has
provided the supply chain with many new opportunities
has also presented many challenges, especially
related to the complexity products
off

and the process of such

wide trading.
and this is accompanied by
Globalisation has helped the supply chain to expand,
not cope with this complexity
increased complexity. If business management does
for example), the business
(this would be revealed through management blunders,
in the market.
loses its competitiveness
 13 Logistics and supply chain

materials and factories, in

lobalisation implies
other countries.
having customers, and perhaps
This means that the business is vulnerable to events in those other
Countries, for example natural disasters, political instability and industrial actions

such as port closures.

aAs a result of globalisation it naturally follows that businesses face global
has expanded considerably.
competition because the number of competitors
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. For
example, where acompany has a factory in another country, employment laws may
be different from those in the home country

Counterfeiting
Counterfeiting has been going on 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.
Changing market conditions
Market conditionsare 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 educated overall and more concerned to tap into the expansion in the choice of
goods available to consumers.

13.7 The impact of logistics

The old-fashioned assumption that good products will sell themselves is no longer the
case. Today's global market has ensured that there is a lot of competition out there to
provide good-quality products and services at a competitive price, and logistics has an
important role to play.

Logistics can improve competitiveness

Logistics aims to meet the increasing demands of customers at the lowest possible cost.
Effectively managing the flow of materials, products and information from the supplier
to the end consumer is all part of the logistics system. With this aim, logistics can give a
business an edge over its competitors in two ways:
1 The advantage of providing value is achieved by ensuring products are transmitted
faster or to schedule, and providing efficient assembly of component parts into end
Droducts effectively. Doing this is recognising customer value.
191
 UNIT 2 PROMOTION AND LOGISTICS
e

Tbiokabouti
Canyou Think of any
Providing a cost advantage through partnering effectively with suppliers and
business customers to make activities and processes more efficient, thus resulting in
the put products on the market on time, in the best condition and at a
A
ompantes that are knokn ability to
Tor havinga good delivery competitive price.
service Haw doesthis qive
them anadvantage over Logistics can give a competitive advantage
er campetitors The
success of a business depends considerably on its ability to match or surpass the
services or products of its competitors. Competitive advantage refers to conditions
or circumstances that put a business in a more favourable, or superior, position, in
comparison with its competitors, It can gain this advantage through differentiation and
cost advantage.

Product differentiation is important

We said earlier that the
assumption that good products will sell themselves is no longer
the case. However, this does not, of course, mean that the
product is no longer of main
importance. What it implies is that the product is more important than ever, and can
give a business a competitive advantage in a market dominated by large companies.
A product or 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 competition. Branding goods aims to achieve
this, but a good brand depends on a good product that is different or better in some
ways from others on the market, and making consumers aware of this. In this
respect,is
making a product more attractive, for example through packaging and presentation,
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
other businesses. Logistics can contribute to
cost than
achieving this aim, particularly
through outsourcing.
Outsourcing (sometimes referred to as contracting out) refers to accessing goods
or services by contract from an outside supplier. It is used by businesses to reduce costs
or improve efficiency by. relocating tasks, operations, jobs or processés to an external
contracted party fora significant period of time. The functions might be carried out by
the other party either onsite or offsite of the business.
For example, a manutacturer may outsource some elements of its
production
as the production of component pars) to a third party in another country. This is(such
usualy
done to benefit from reduced labour or material costs.
Parties to outsourcing

First-party logistics (1PL)-these are logistics provjder firms that own their own
logistic activities and sometimes outsource some of their activities.
Second-party logistics (2PL) - these firms provide their own assets such as trucks
and drivers, warehouse
operators and so on td1PLs
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 technolo8y to provide logistics to part or all of the supply chain,
thereby relieving companies of performing these services themselves, for example
transportation, warehousing management consulting, freight forwarding, pool
distribution (delivery to numerous destinations) and more.
 13 Logistics and supply chain

Fourth-party (4PL) - these are supply chain integrators. The 4PL assembles and
manages resources, capabilities and technology of an organisation's supply chain and
Its
and
many providers, that is it co-ordinates the activities of 3PLs: designing, building
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
I t can free up cash
flow, personnel and time resources for the company.
I t can result in cost
savings due to lower labour costs.
i t enables the
company to
focus on its 'core' business competencies.
It tends to be directed to organisations who are specialists in the required services.

Distribution problems
Problems encountered in distribution
Seaports and airports are vital for the health and wellbeing of a country's international
trade, and it is through these that a country participates in the global market. In
some countries there are many ports and
airports, but in others there may be only
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 needed in order to make their contribution to the
economy effective.
While an exporter may be familiar with what exists in their own country in relation to
infrastructure, what exists in another country may be very different.
Even with the
appropriate infrastructure in the home country there can occur
factors that present problems for effective distribution, and
many of these affect home
distribution as well as exporting and importing. For example, shipment can experience a
number of difficulties including:
Delayed shipment- both ships and aircraft are affected by weather, so this could
be the cause, but inefficiency can also be the reason. Sometimes delay is caused by a
consignment being delayed during the transit from one form of transport to another.
Spoilage - in today's market conditions, customers want delivery as soon as possible,

and certainly to schedule. Plus, with an increased demand for fresh foodstuffs there
is a need for appropriate store and handling facilities. But even other kinds of'fragile
products need particular care.
Misdirection of goods-this is when goods are mistakenly sent to the wrong
destination (or the wrong goods are sent). For example, negligent packing or
inaccurate labelling or paperwork can cause a consignment to end up at the
wrong destination.
Inadequate warehousingfacilities - for example, for perishable or fragile goods.
Cooled storage areas are necessary for some products and loss of electricity can
cause big difficulties. And storage space is always limited.
Lack of adequate security measures -this can lead to stealing or insertion of llegal
substances into shipments, or even terrorist activities.
Industrial unrest-for example, strikes by airport or port workers will cause
delavs in delivery, and inland labour disputes can also interfere with smooth and
prompt delivery.
ctive communication-delays or misinterpretation of instructions
related to
a consignment can result in
wrong g0ods being
sent, or sent to the wrong place. For

193
UNIT 2 PROMOTION AND LOGISTICS

example, an order for goods may show an invoice address and a delivery address that
differ. It is an easy, butinefficient, mistake to send goods to the invoice address.

Reducing distribution problems

Solutions, solutions! Measures to mitigate distribution problems include:
Government intervention
Most governments recognise the importance of distribution and will advise ways for
businesses to become more efficient including: investment in new equipment and
technology, raising staff skills through education and training and innovation through
research and development.
Governments also publish recommendations of good practice to be observed by
those involved in distribution. For example, it will draw attention to regulations that
exist related to marketing products, such as those related to health care and
consumables such as foodstuffs. The government also administers legislation related
to distribution and employs inspectors to ensure these are being observed, and officers
with whom complaints of malpractice can be registered for investigation.

Creating a communication network

The way businesses sell and others purchase has become faster but problems in
distribution have also been reduced to some extent, and it is communication
technology thathas reduced the difficulties. Communication technology provides
access to rapid exchange of accurate communication via a range of intemet
communication technologies. Delayed deliveries are reduced by the management of
distribution routes, real-time vehicle position awareness and tracking
consignments.
Taking out insurance
Many of the foregoing difficulties can be covered by insurance, but there are two
important considerations to bear in mind:
1 Insurance compensates the insured, that is, the 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.
2 But for the consignee the inconvenience caused by failure to deliver can be
immeasurable, and the insurance cover does not help them. Their production is
disrupted, their own customers are let down.
From this it can be seen that while insurance gives monetary compensation, it does not
do a lot to enhance reputations!
Selecting the most appropriate channel of distribution
Choosing the right distribution channel is important because there are both cost and
timeimplications, and the decision made determines the speed with which they are
delivered and how they are handled. Whatever channel is chosen it must be easily
accessible to the end customer and the nature of the product has considerable
influence on the channel chosen.

a Perishable goods require fast, direct distribution; size and weight has an influence,
as heavy, bulky products (for example, grain) is best transported by short and direct
distribution; high-unit value goods (for example, jewellery) require an especially
secure distribution channel
aUsing 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 goods quickly.
 13 Logistics and supply chain

And they often bring special skills to assist.

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.
Choosing a handling service
It obviously makes sense to use a handling service with a good reputation, but the
question is how to identify their reputation. One way we are all familiar with today is
to look online for reviews. However, online reviews must be viewed with caution as
they are not always as safe and foolproof as they appear. But those seeking a reliable
handling service can ask the following questions, which will help them identify the right
handling service provider:
What is theirexisting 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 or services?
Do they have similar specialisms? Or 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 (for example, 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?

Careful labelling and documentation

We said earlier that one of the
problems experienced in distribution is that of the wrong
quantity or type of goods mistakenly sent, or sent to the wrong destination. Where the
wrong goods are dispatched, this can clearly be identified as originating where they
are packed (usually a warehouse), and a wrong destination arrival could also be due to
a mistake made at the packing stage or an error during transit.Whatever the case, it
causes customer dissatisfaction. The answer of course is care and back-up checking,
but technology can also contribute adversely. Even today's téchnology can result in
distribution difficulties. For example, a simple cut-and-paste' solution saves time, but
can result in damaging mix-ups if care is not taken.
Avoid holding large stocks
(A business needs stock (inventory) to meet demands,but too much stock means capital
is tied uppnd stock becomes dated. There arefive solïtions:
,1 Reduce lead times: ldentify ways that supplier(s) can deliver supplies at shorter notice
-
if necessary, using alternative suppliers
2 Improveforecasting: Take steps to,identify both supply and demand functions ahead.
Use technology to make forecasting accurate.
3 Prioritise stock: Eliminate obsolete stock- identify high-selling items and delete those
n o t selling high. Even if they are still selling, if inventory is the priority, delete them.
4 Review suppliers regularly: Sometimes an inability to reduce lead times is due to
supplier inefficiency. Investigate alternative suppliers.
s 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 inyentory.

195
UNIT 2 PROMOTION AND LOGISTICS

cameras
security
Employing a security company and using
technology that
records the activity of people
surveillance
cameras are video the cameras not only
Security points,
crime. Installed at strategic
to detect, deter and prevent can make thieves reconsider
of the c a m e r a s
monitor scenarios but the m e r e presence
their actions. Their overall presence
can be said to
prevent theft
protect facilities (areas and buildings)
prevent loss
deter vandalism
assure employee safety.
businesses that provide armed and unarmed security services
Security companies are value if look back at the
to understand their
we
to guard and patrol premises. It helps is the outcome of
and ask the question, What
above description of security c a m e r a s action.
evidence for subsequent
video surveillance? The answer is that it gathers
is immediate. Their guards are not
The surveillance that security companies provides
immediate action as
cameras are. They roam
the site and can take
fixed,as security
it happens.

13.8 Information technology and logistics

and suply
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 rea
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 increased 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 ídle time.

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 medla.
Typical applications include highway maintenance, traffic modelling, accident analysis
and route planning, and environmental assessment of road schemes, such as traffic
counting. This helps government to develop transportation policy and planning that
results in a better road infrastructure.

Portnet
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:
 13 Logistics and supply chain

handling all electronic and container data

Simplitying the processing of transactions and shipping business processes.

This results in such benefits as:

streamlining documentation and shipping business processes

reducing repetitivedata creation
and port authorities
Simplification and integration between government
real-time tracking and notification
real-time, on demand, information provision (for example, email and SMS)
simple-to-use system controls.

Telemarketing and e-commerce

Earlier in this chapter we explained about telemarketing and we described how
interesting and challenging it can be as a form of employment. But there is a twist
within this sphere of marketing. It 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 has also been explored within this chapter and elsewhere in this book.
It is the application of information and communication technologies (1CTs) to
conduct business. These include the older technologies such as landline telephones, but
ICTs offer most scope, particularly for small businesses, through electronic 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.

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, for example, need reliable sources of supply, and retailers
also need rapid delivery channels for an ever-expanding distribution network of
hink abouf if consumers.
This has resulted in the emergence of a relatively small number of 3PLs that can
lica are the benefits
of workingwith a globa provide expertise, reach and reliable logistics around the world. These include the
ogistics provider? following logistic providers: FedEx, DHL, Amazon Logistics and Excel, among others.
Logistic hubs
Around the world countries have been developing logistic hubs. A logistic hub is a centre
or specific designated area identified to deal with activities related to transportation,
organisation separation and co-ordinating goods for national and international
trade. Operators lease or rent warehouses, storage areas, distribution areas and
offices away from airports and seaports and manage transportation through to the
departure terminal.
Searahtheintermet fo London Heathrow Airport has three hubs supporting it but in regional areas distanced
otadionoir jamai from the airport, thus spreading the employment and wealth creation over a wider
area, but creating eftective linkages with the airport and seaports. And other European
airports similarly use hubs. Jamaica will soon have its own logistic hub, thereby creating
a large number of jobs and improving regional logistics.
Logistic hubs play a key role in supporting efficient delivery and reducing emissions
by transporting assembled components to sites using fewer trucks.

197
UNIT 2 PROMOTION AND
LOGISTICS

Choallenge
Ihe table in 13.10 shows the volume of
inland passenger transport for the
Figure research every ten years.
imaginary country of Noland. Noland carries out transport
Answer the questions related to the data.
2011 2020
%
o
1537 84.54 1444 86.21
Road
Rail 176 9.68 79 4.72
44 2.42 57 3.40
Water: sea-going 0.61 7 0.42
Water: internal 11
2.75 88 3.23
Pipelines 50
1818L 100 .1675 100
Total
A Figure 13.10 goods transport of Noland
Domestic

carries the greatest volume of passenger transport?

a) Which type of inland transport is meant 'domestic' in by
6The data here refers to domestic passenger traffic.What
this respect?
traffic carried by road in 2011 and 202
c State the total percentage of passenger
between air, rail and road as a
Draw an appropriate graph to show a comparison
d domestic passenger traffic carried in
both 2011 and 2020
percentage of the volume of
be seen between 2011 and 2020 in relation to
Briefly state the general trend that can
shown.
each of the three categories of transport
2 Look at Figure 13.11 illustrating the
chain of distribution and answer these questions.

NIHIU

A Figure 13.11 Chain of distribution

'chain of distribution'.
a) Define the term illustration.
elements of the chain depicted in the
b) ldentify the chain dependent on the others in the
chain?
c)Why is every element of the in a distribution channel.
Summarise the role of warehousing
dependent on transportation?
eWhy is the chain of distribution veryis another's chain of supply: Explain this statement.
of distribution
)'One business' chain referencing real
area of production in your country, for example snacks, and,
Think of an
create a diagram showing the
chain of production.
companies,
What evidence is
there of linkage industries? methods
the companies showing growth over the last five years? By what
Are any of
did they grow?
 and supply chain
13 Logistics

Multiple choice questions

answers
The rouowing multiple choice questions should be completed in no more than five minutes. Four possible
are given and in each case you have to choose wer.
the most appropriate an
1 Which of the
following refers to the person to whom goods are belng sent? d) shipper
al carrier bl consignor c) consignee
2
which of the following documents conveys the right to takec)possession
al export licence air waybill
ofgoods d) bill of exchange
bl bill of lading
3 The main advantage of road transport is: dlit is not labour
al the large loads it can b) the flexibility it offers c) it doesn't cause
intensive
carry pollution
4 Air transport is unsuitable for the transport of
c) mail dl perishable goods
al high-value freight b) low-value freight
5 Logistics is the part of a supply chain that involves the forward and reverse flow or
dl all of the above
al services bl goods c) cash

Make a note of it
in your notebooks.
Copy and complete the following items
heard it before?
'logistics' to s o m e o n e who has
never
1 How would you explain the term
between supply chain and
2 Chad and Mary have a school assignment to distinguish
that they are the same
distribution channel. After reading the material, Mary says
whom do you agree?
thing. Chad says they are different things. With and 'reverse flow'.
forwards flow'
3 Explain the difference between the terms
4 Why is warehousing an important part of logistics?
functions.
5 Compare warehousing inbound and outbound
6 What role does insurance play in logistics?
7 Describe the information flow that takes place to aid flow of goods.
8 List the activities involved in supply chain operations.
9 Choose from the following words to fill in the blanks on the diagram below to show
materials reach the Words may be used more
just one way that raw can consumer.

than once.
Transport Retailer Manufacturer Wholesaler Consumer

Storage

Raw
materials

199
UNIT 2 PROMOTION AND
LOGISTICS

10
Define the term 'distribution chain.
distribution channel below.
nsert the missing words to complete the
Producer Consumer

Retailer

Consumer
Agent

Producer
in the supply chain.
12 Summarise the roles of the four main participants to their
by a Caribbean trader
customer.
13 The following are items being dispatched most likely used.
Use the diagram below to indicate
the form of transportation

i) Fresh flowers to the US

ii) Fresh food to a local restaurant
ii) Workers to their nearby workplace
customer
iv A container of machinery to a UK
inland long distance delivery.
v) A container shipped to China requiring

Customer
Air
Sea

Rail
Road

Caribbean trader

occur in the distribution

describe the variations that can
14 Use a simple diagram to
chain. sometimesmisconstrued?
the terms customer and consumer
are
15 Why role in logistics?
does transport play a pivotal
16 In what ways influence the form of transport
used.
factors that
17 Summarise the main 'intermodal transport'.
'multimodal transport' and
18 Define the terms and by each method
table that lists air, road, rail, and marine transport,
19 Create a
and disadvantages.
identify its advantages different from other forms of transportation?
In what way pipeline
is this
20 different from any other
form of transport. Explain
is
delivery very
21 'Digital to
statement. used in relation
function of at least six forms
of documentation
the and air waybill.
22 Describe licence, bill of lading,
transportation, including
import
in marketing?
is the role of transport
23 What advantages.
the supply chain
24 Summarise
 13 Logistics and supply chain

new opportunities, but it

chain with many
4uloDalisation has provided the supply
Comment on this statement
nas also presented many challenges.' the illustration below.
4b Insert the correct words to complete

PL

Contract Providers
PL

PL

Retailers or Manufacturers
PL
27 How can logistics help a business gain a competitive advantage?
28 Why is product differentiation important?
29 Define the term 'comparative cost advantage
30 What is outsourcing?
31 Explain the function of 1PLs, 2PLs, 3PLs, and 4PLs.
32 Summarise the benefits of outsourcing.
33 ldentify the problems likely to be encountered in distribution.
34 Outline the measures that help to mitigate the problems encOuntered in
distribution.
35 ldentify ways that information technology aids supply chain operations.

What do you know?

Copy and complete the following sentences by inserting the missing words from the
list below.
expensive outsourcing distribution container Pipeline warehouse
seller rivers slowest time-gap supply domestic competition
consumer expensive globalisation origin Customer buyer
1 The way a business gets its resources is called the. chain.
2 Warehousing bridges the- between when goods are available and
when they are needed.
3 Most transportation documentation is initiated by the.
-is a chain of intermediaries through which goods pass to reach
the consumer
5 Airtransport is the most form of transport.
6 A- transports products without the use of conventional transport.
7 A certificate of . states where a product was produced.
8 . implies having customers or suppliers in other countries.
9 Having a cost advantage refers to being able to supply something at a lower cost

than the
10 Obtaining services from outside suppliers is called.

201