Understanding Logistics Management - Essay Example

Logistics Management Student’s Name Number Course Code Course Date Logistics Management Introduction Logistics refers to the process through which a product or service moves from the preliminary customer who orders for it to the final consumption point of the service or product. In the current business setting, logistics acts as a competitive tactic for the firms, which can assist them in meeting their customers’ expectations. Logistics helps supply chain’s members to join together in a proficient manner. It does not comprise of a single component, however it involves a wide range of disciplines and activities such as planning, coordinating, purchasing, customer service, warehousing and distribution. When carrying out any kind of business activity especially in manufacturing, it is important for a company to put in place adequate and efficient logistics’ infrastructure and plans. This will facilitate fast, timely and cost-effective transportation of products or services from their origin to the customer (Farahani, et al. 2011, p.4). This essay will analyze the logistical challenges involved in the transportation of huge construction sub-assemblies from the site of manufacture in HanJin Shipyard, Philippines to Curtis Island, Australia. It will also give an explanation on how these challenges should be handled. Manufacturing Site Transportation modes and costs Transporting big construction sub-assemblies from the manufacturing site in Philippines to Curtis Island might be quite challenging and also very costly. Different transportation modes will have to be used in transporting the sub-assemblies to their final destination. In the first place, sea transport will be used to move the commodities from HanJin Shipyard to the port at Panay. Then, road transport through the use of wide-load trucks may be used to transport the materials within Philippines to Negros. Sea transport will have to be used again from Negros to a port at Curtis Island. Several challenges are likely to be faced during the conveyance of the materials from the manufacturing site to the final location. To start with, when it comes to the sea transport, getting a vessel that will have the capacity to carry such heavy and large sub-assemblies within Philippines may be difficult. Moreover, just in case a vessel is found, the transport costs of the goods will be very high. In addition, most transit companies permit only a certain weight level during transportation and most of the roads in Philippines are in poor condition. Out of a total distance of 213,151km in road coverage, only 54,481km is paved (PBFR 2012, p.40). Therefore, getting a truck for carrying such a heavy load will be difficult and with the condition of the roads worsens the situation. The challenges of transportation costs and modes can be solved through the use of a single transportation contractor to ferry the materials from one point to the other since it is likely to lower the costs and be more convenient as compared to using different transportation companies. Protection and storage of sub-assemblies During the manufacture and after completion of the sub-assemblies, they will need to be protected from such things like theft and bad weather. The sub-assemblies occupy quite a large space and thus ensuring that there is enough security for them is very challenging. Security measures like the use of security control systems and security walls require lots of spending. This challenge can be handled through the use of electric fences around the site to avoid external intrusion. Additionally, CCTV surveillance cameras can be used to monitor the movements of personnel within the site. Bad weather can take the form of direct sunlight, rain, cyclones and hurricanes. In order to protect the sub-assemblies from such weather conditions, they should be kept under appropriate shelters. After completion, the assemblies will need to be stored as they await transportation to Australia. The use of private warehouse is more advisable in this case in order to avoid inconveniences that may be caused by the use of for-hire warehouses such as poor communications and lack of adequate space during high seasons (Kohn, et al. 2009, p.72). Logistics or Supply Chain Management System According to Chan, et al. (2010, p.6295), Just-in-time (JIT) is a concept that aims at achieving the lowest level of inventory. Conventionally, it has been generally considered to be a stock reduction method that can be applied to lower the amount of inventory in a manufacturing process. JIT has three basic principles which are waste elimination, constant quality improvement as well as encouragement of employee involvement in the planning and execution of operations. JIT is the most suitable supply chain or logistics management system given the storage challenges of the construction sub-assemblies at HanJin Shipyard. Storage of such commodities requires large space both during and after manufacture due to their size. Therefore, adopting a system where the completed sub-assemblies are transported while the others are being manufactured can help in reducing storage costs and saving storage space. Final Destination Storage on delivery Providing adequate storage for the construction sub-assemblies after being delivered at the Liquid Gas plants in Curtis Island is likely to be more challenging as compared to their storage in the point of manufacture at HanJin Shipyard. This is because; the plants has other materials that are used for the production of the liquid gas like storage cylinders and thus getting enough space and facility to accommodate all the materials will be tough. Such a situation will require either a large piece of land where large warehouses can be constructed or hiring of large warehouses from other firms. Using hired warehouses may lead to production delays due to untimely delivery of raw materials from the warehouses to the production site. Moreover, additional transportation costs will be incurred in transporting the materials from the hired warehouse to the plants. Accordingly, adequate planning in relation to storage space is needed prior to the transportation of the sub-assemblies in order to avoid storage issues (Hou, et al. 2010, p.372). This may take the form of acquiring more land at the Liquid Gas plants to build large warehouse to accommodate all the sub-assemblies. Delivery accommodation The sub-assemblies will be transported using both sea and road transport. Sea transport will be used in delivering the materials from HanJin Shipyard to probably Port Curtis, which is the main sea port around Curtis Island. Just like the case of Philippines, locating a vessel with enough capacity to accommodate the size of the sub-assemblies will be difficult. As a result, chances of delays in transportation of the materials are very high. This is because; unlike road transport where trucks are on the move every day, sea vessels do not travel on a daily basis. Delays can be avoided by booking vessel early in advance to facilitate timely transportation. Road transport in form of large trucks will be used to transport the construction sub-assemblies from the port to the Liquid Gas plants. The main challenge during road transport is bad weather in form of rains especially when using unpaved roads. Though rain is a natural occurrence which cannot be avoided, relying on weather forecast news can be helpful to avoid transportation on rainy days (Lukinskiy & Shulzhenko 2011, p.43). Shipping time Given the weight and size of the construction sub-assemblies as well as the distance between HanJin Shipyard and Curtis Island, transporting more than 50 sub-assemblies within a period of six months will be tricky. This is because; when it comes to road transport, one truck can only manage to carry one sub-assembly at a time and ships can only carry a limited number of the assemblies. Much of the shipping time will be spend on sea transport since the speed of water vessels is a bit slow. For a timely delivery of the commodity at their destination, good time considerations and effective transport plans are required. In order to meet the six-month transportation period target, the company will be forced to sign transportation contracts with a large shipping and transit company that own numerous vessels and trucks. By doing so, several sub-assemblies will be able to be transported at a time. The other option will be to deal with several shipping and transportation companies. However, the first option is more advisable than the second one since the latter may be more costly (Tomasiello 2011, p.19). Delays and additional costs are some of the risks that are likely to be incurred during the transportation of the construction sub-assemblies. Other factors to be considered Size of consignment The sub-assemblies have a diameter of 10 metres and a weight of 30 tonnes each. The size of the consignment needs to be put into consideration in all aspects of logistics such as transportation mode, storage, warehousing and government customs and regulation on entry points. McGinnis & Kohn (2010, p.221) maintain that, in transport, the size of the consignment ought to be considered in order to help in choosing the correct mode of transport that will be able to deliver the consignment safely and on time. When designing storage facilities and warehouses, taking into account the size of the sub-assemblies is crucial to ensure adequate storage space and condition are available for the consignment. In addition, the size of the consignment should match with government set rules and regulations regarding weight limits at entry points. Seasonal considerations Sabir & Van Ommeren (2011, p.701) assert that, poor weather such as heavy rains, high tidal waves, strong winds and thunderstorms may interfere with the transportation process of the assemblies. Heavy rains may make unpaved roads impassable while tidal waves may interrupt movement of water vessels like ships. It is thus important for the companies involved in the conveyance of the sub-assemblies from HanJin Shipyard to Curtis Island to liaise with meteorological department publications regarding likely weather condition in order to avoid such interruptions. In addition, most government offices and companies do not operate during public holidays. Therefore, transporting the materials during holidays should be avoided or the holidays should be considered in transportation timing. Difficulty of arranging shipment Drawing from Australian Government (2012), the Australian Government has enacted several regulations in relation to shipment which makes it difficult for importers to arrange shipment. Some of the regulations relate to contaminants and pests, seas hygiene, offshore treatment and weight limits. In order for any shipment company to be able to transport goods into any Australian port, it has to comply with the set standards and regulations. Given the size of the construction sub-assemblies along with the Australian government regulations, arranging for shipment becomes difficult especially due to space limitations. Transporting the materials to the shipment zone is also difficult since weight limits also apply on trucks hence only few if any transit companies will be ready to carry the sub-assemblies. Australian Customs, Quarantine and Inspection clearance According to Australian Government (2011), importing some products in Australia is subject to given quarantine conditions. Some items have been considered to pose significant danger to human, plant, animal and the environment and are not permitted in Australia. Others are only permitted upon the receipt of a permit from DAFF. Assuming that the construction sub-assemblies consist of timber products, they are subject to quarantine condition since import of timber products is restricted in Australia. An import permit is needed before the entry of the sub-assemblies into Curtis Island. In addition, the sub-assemblies are subject to the normal customs regulations, inspection and clearance. It is thus important for the time to be spent in entry points to be considered in the logistics details of the sub-assemblies. The companies involved should also ensure that they comply with set regulations to avoid delays during clearance at entry points. Conclusion Logistics relates to the movement of goods and service from point of origin to their consumption point and comprises of activities such as planning, coordinating, purchasing, customer service, warehousing and distribution. The transportation modes that will be used to convey the construction sub-assemblies from HanJin Shipyard to Curtis Island are sea and road transport. The logistical challenges at the place of origin include difficulties in getting vessel and truck, high costs, bad weather and storage limitations. Just-in-time (JIT) is the most suitable logistics management system for the manufacture and transportation of the construction sub-assemblies. Considerations to be made regarding the final destination include size of consignment, seasons, storage facilities, government regulations on shipment, shipping time, as well as Australian Customs, Quarantine and Inspection clearance. References Australian Government 2011, Application to Import Quarantine Material, [Online] Available at: http://www.daff.gov.au/aqis/import/application [Accessed 11 December 2012]. Australian Government 2012, Importing to Australia, [Online] Available at: http://www.daff.gov.au/aqis/import [Accessed 11 December 2012]. Chan, HK, Yin, S & Chan, FTS 2010, Implementing just-in-time philosophy to reverse logistics systems: a review, International Journal of Production Research, 48(21), pp. 6293-6313. Farahani, RZ, Rezapour, S & Kardar, L 2011, Logistics operations and management : concepts and models, London, Elsevier. 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