Emerging Trends and Issues in Transport Management

Emerging Trends in Logistics

In recent years, several strategic and technological changes have had a marked impact on logistics. Among these, three are worthy of mention: globalization, new information technologies and e-commerce.

Globalization: An increasing number of companies operate at the world level in order to take advantage of lower manufacturing costs or cheap raw materials available in some countries. This is sometimes achieved through acquisitions or strategic alliances with other firms. As a result of globalization, transportation needs have increased. More parts and semi-finished products have to be moved between production sites, and transportation to markets tends to be more complex and costly. increase in multimodal container transportation is a direct consequence of globalization. Also, as a result of globalization, more emphasis must be put on the efficient design and management of supply chains, sometimes at the world level.

Information technologies: Suppliers and manufacturers make use of EDI. This enables them to share data on stock levels, timing of deliveries, positioning of in transit goods in the supply chain, etc. At the operational level, geographic information systems (GISs), global positioning systems (GPSs) and on-board computers allow dispatchers to keep track of the current position of vehicles and to communicate with drivers. Such technologies are essential to firms engaged in express pick-up and delivery operations, and to long-haul trucking companies.

E-commerce: An increasing number of companies make commercial transactions through the internet. It is common to distinguish between business-to-business (B2B) and business-to-consumers (B2C) transactions. The growth of e-commerce parallels that of globalization and information technologies. As a result of e-commerce the volume of goods between producers and retailers should go down while more direct deliveries should be expected between manufacturers and end-users.E-commerce leads to a more complex organization of the entire logistics system (e-logistics), which should be able to manage small- and medium-size shipments to a large number of customers, sometimes scattered around the world. Furthermore, the return flow of defective (or rejected) goods becomes a major issue (reverse logistics).

In an e-logistics system different approaches for operating warehouses and distribution are generally adopted. The virtual warehouse and the Points Of Presence In The Territory (POPITT) are just a few examples. A virtual warehouse is a facility where suppliers and distributors keep their goods in stock in such a way that the e-commerce company can fulfil its orders. A POPITT is a company-owned facility where customers may go either for 126  purchasing and fetching the ordered goods, or for returning defective products. Unlike traditional shops, a POPITT only stores already sold goods waiting to be picked up by customers and defective products waiting to be returned to the manufacturers. This solution simplifies distribution management but reduces customer service level since it does not allow for home deliveries.

Logistics Decisions

When designing and operating a logistics system, one needs to address several fundamental issues. For example, should new facilities (manufacturing and assembly centres, CDCs, RDCs, etc.) be opened? What are their best configuration, size and location? Should any existing facility be divested, displaced or sized down? Where should materials and components be acquired and stored? Where should manufacturing and assembly take place? Where should finished goods be stored? Should warehouses be company-owned or leased? Where should spare parts be stocked? How should production be planned? How should warehouses operate? (Should goods be stored in racks or should they be stacked? Should goods be retrieved by a team of human order pickers or by automated devices?) When and how should each stocking point be resupplied? What mode of transportation should be used to transport products? Should vehicles be company-owned or leased? What is the best fleet size? How should shipment be scheduled? How should vehicles be routed? Should some transportation be carried out by common carriers?

Logistics decisions are traditionally classified as strategic, tactical and operational, according to the planning horizon.

Strategic decisions: Strategic decisions have long-lasting effects (usually over many years). They include logistics systems design and the acquisition of costly resources (facility location, capacity sizing, plant and warehouse layout, fleet sizing). Because data are often incomplete and imprecise, strategic decisions generally use forecasts based on aggregated data (obtained, for example, by grouping individual products into product families and aggregating individual customers into customer zones).

Tactical decisions: Tactical decisions are made on a medium-term basis (e.g. monthly or quarterly) and include production and distribution planning, as well as resource allocation 119 127

(Storage allocation, order picking strategies, transportation mode selection, consolidation strategy). Tactical decisions often use forecasts based on disaggregated data.

Operational decisions. Operational decisions are made on a daily basis or in real-time and have a narrow scope. They include warehouse order picking as well as shipment and vehicle dispatching. Operational decisions are customarily based on Modes of very detailed data.

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