Logistics and Transportation Issues

Logistics and transportation issues are becoming a more significant and complex factor in supply chains.  The major gain in decades has been the concept of containization.  Containers are so much cheaper to move in whole, thereby a lot cheaper.  This concept allowed us to implement Intermodal practices.  Containers can come un-opened from China to our retailer’s DC, no unload and load of any kind.    With the advancement of e-commerce and the sensitivity to inventory holding cost, the trend in logistics in the past twenty years has been to ship in smaller quantity, more frequently, and further distance to travel(off-shoring). This has increased the transportation cost drastically.  Also, with fuel costs keep going up and carbon footprint becoming such an issue, this trend is not good for business.  And in particular, many organizations recognized that they did not have the internal core competency to handle logistics any more, now that it became a more significant part of the operations overall costs.  That has led to the emergence of Third-Party Logistics providers, 3PLs.  They are so popular nowadays that the demand of such services has surpassed their ability to provide in recent years.  There is this new movement towards 4PLs in this area.  Besides moving materials, warehousing them, sometimes more involved services are offered, like in-transit merge, minor assembly at customer’s DCs. In the world of logistics, it is about decisions in where you want to locate warehouses/Distribution Centers/manufacturing plants, what level of inventories and where to put them, and what mode(s) of transportation to use.  there are many materials in Week 8 that address these.  Pick the ones you want to review, then post your comment(s) here.     And in general, logistics is about how to take care of customers(could be individuals or businesses) asap.  speed is important today.  so in order to do that, you have to ship out close to the customers, therefore you have to locate your facilities as close as possible, even if it costs more.  That is why we have so many Distribution Centers in Inland Empire where they are within hours of tens of millions of consumers.  It is difficult for most companies to handle logistics efficiently.  Therefore they like to outsource them to a 3PL(Third Party Logistics provider).  the growth of 3PLs is tremendous.  It is not just the UPS or Fedex of the world, it also include 3PLs that run warehouses, take care of overseas shipping, clear customs, moving trailers from point A to B, etc.  we spend about 9% of our GDP in the logistics world, totaling about $2 trillion.  Remember there are a lot of movement along the supply chains that are B2B.   You can review some info on this also if you like. The latest in Logistics that is becoming a major opportunity for savings is Reverse Logistics.   Generally 8% of retails are returned.  And business-to-busoness involves returns too. The handling of such is a mess and there are chances to save money there.  And sometimes you reverse product flows for other reasons, such as re-use.  Please review those articles.   And the best way is to avoid it in the first place, instead of having to deal with reverse logistics. How about those parking garages in Asia and Europe.  It is coming to USA as in New York, Chicago.  It is a matter of cost of land space/footprint.  Due to the shift towards online retailing, the last mile issue is becoming critical for companies.  The virus accelerated the awareness of it as a major strategy issue.  What are some of your thoughts on this?  there are articles in Content and you can search yourself too.

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