Supply Chain and Logistics Analysis - Case Study Example

Supply Chain And Logistics A supply chain is a network or a system of resources, people, activities, organizations and information used to move a service or product from a supplier to the consumer. A typical supply chain starts with the biological, ecological, and political control of natural resources. It is followed by the extraction of raw material by humans; under this several production, links are included (e.g., component manufacture, assembly, and merging). Similarly, critical to the chain are the layers of several storage facilities whose size continually decreases as the geographical locations increasingly became remote, before finally reaching the customer. Logistics is the management of how resources are obtained, moved, and stored from the point of production or origin to the point of consumption or destination. It involves the integration of transportation, warehousing, production, inventory, material handling, as well as security. The resources managed in logistics include tangible goods such as equipments, labor, raw substances, or foods, as well as non-tangible goods such as time, information, energy, and particles. The activities of the supply chain change the raw materials, natural resources into a finished product, which is provided to the consumer. Some supply chains are sophisticated in that used product can be introduced into the supply chain at any point Most of the exchanges that occur in the supply chain are among companies that look forward to maximizing their revenue within their area of interest. However, they may have insufficient or no knowledge or may not be interested in the remaining players in the supply chain. In most recent development, a network of self-organizing businesses that is loosely coupled and works together to provide a product or service is termed extended enterprise. Accordingly, through a smooth and properly managed logistics as well as an efficient and effective supply chain, a company can reduce costs. It may as well, improve time management, increase their efficiency and greater provide high-quality services to their customers. Table of Contents ABSTRACT 1 1.0 Part One 4 1.1 Aviation Industry 4 1.1.2 Transportation Supply Chain 5 Supply Chain And Logistics 1.0 Part One 1.1 Aviation Industry Few Inventions have transformed the way live and experience nature as much as the aeroplane design. However, few inventions have changed how human being interact, travel and experience life like that of the plane. The aviation industry can be termed as a work of art or aspects of aeronautics, being the production, development, design, operation, and use of aircrafts. It has various sectors namely; aircraft manufacturing sector, which includes the production of commercial aircrafts, general aviation planes, and military aircrafts. Airport operations area; which includes, navigation and air traffic control systems and runways. Support industries sector; which includes, ground transportation, fuel supply, maintenance, hospitality industry, and the car rentals. Finally the service providers sector; this includes providers such as travel agents and freight forwarders (Dyckhoff et al. 2004). 1.1.1 Manufacturing Supply Chain Manufacturing is one of if not the most vital sector of the aviation industry. The area supports the aviation sector in the manufacturing of aircrafts and aircraft parts for maintenance purposes. 1.1.1.1 Aircraft manufacturing sector The aircraft-manufacturing sector includes the production of general aviation planes, commercial aircrafts, and military aircrafts. Civil aviation planes include all non-military flying planes, commercial and general aviation aircraft’s, scheduled air transport and cargo aircraft. There are five principal civil aviation aircraft manufacturers. The principal plane manufacturers are Boeing, based in the United States, Airbus that is in Europe. Another one is Embraer that in Brazil, bombardier that is in Canada and United Aircraft Corporation located in Russia. Boeing and Airbus focus on the manufacturing of broad and narrow-bodied jets, which are, used long distance and international airliner while Embraer and Bombardier concentrate on the production of the regional airliner. The manufacturing sector is the most important part of the aviation industry because without the planes and spare parts, which hey manufacture the airline, industry would not exist (Rushton et al. 2007). 1.1.1.2 Spare parts manufacturing sector Most of the modern aircraft manufacturers concentrate on producing the initial designs and the final assembly of aircrafts, meaning that a number of companies who specialized in the manufacturing of spare parts have to be in their support. The production of spare parts is a critical part of the aviation industry. It is because it gives the aircraft manufacturers a chance to concentrate and master the design aspect of manufacturing. Similarly, it also provides an opportunity to manufacturing companies to focus on the production of particular spare parts, which make the produce high quality spare parts (Myerson 2012). 1.1.2 Transportation Supply Chain The transportation supply chain of the aviation industry can be termed as the global transportation network of airliners, travel agents and freight forwarders that facilitate the movement of passengers and goods from the source of production to the market place (Myerson 2012). 1.1.2.1 Cargo and Freight Transportation Sector Air cargoes are any goods or properties that are transportable in a plane or aircraft; it comprises air express, airmail, and airmail. This load can be transported in three different ways namely; by passenger airplanes, which utilizes the spare space not occupied by the passengers to store their luggage, and cargo. The aircrafts transport freight and a combo aircraft for carrying both passengers and freight. The leading companies that carry air cargo include FedEx, DHL, UPS, and TNT (Rushton et al. 2007). 1.1.2.2 Passenger Transportation Airline transportation is the transportation or movement of travelers from one point to another. It enables or makes the movement of people much easier, faster, and safer compared to other modes of transport. It also facilities tourism, international investments, world trade and eventually contributes positively to a countries economic growth and development (Radhakrishnan 2001). 1.1.3 Storage, Warehousing, and Distribution supply chain Warehousing and distribution chain is a vital and integral part of the aviation industry, especially when it comes to airfreight and cargo. These two terms can be broken down to warehouse and distribution centers. A warehouse is a building usually used for the storage of goods while a distribution center is a commercial building or a warehouse for stocking goods that are in transit or which are to be redistributed to consumers. The distribution center is the important part of the supply chain, and it is where the orders are processed and fulfilled. In the aviation industries, warehouses and distribution centers can be used to store passenger goods, and products that are in transit. Similarly, they may also save cargo and freight in transit, as well as aircrafts, spare parts and planes that are in transit (Rushton et al. 2007). 1.1.3.1 Cargo and freight Warehousing and Distribution sector Cargo and freight warehousing is a vital component of international companies and logistics network. Therefore, it is essential in the controlling and managing of the flow and movement of goods such as raw material, finished product, energy resources, and other relevant materials from the source to the destination. Cargo transport facilitates international trade. These warehouses and distribution centers ensure that goods and products on transportation are in safe storage and the right conditions (Radhakrishnan 2001). 1.1.3.2 Fuel and Petroleum Storage and Distribution sector Fuels and petroleum products are highly flammable and thus need careful transportation. These fuels and oil products are very sensitive areas in the industry because they constitute up to forty percent of the operating cost. Accordingly, they play a significant role in profit making of the industry. Proper planning for distribution and storage of these oil products are good at reducing the overall operation cost of the industry. These products can transport through rail, pipeline, and trucks to the airport and storage can be done both inside and outside the aerodrome. Should Transportation and distribution of these products through pipeline is the post-cost efficient and safest way, while the storage should be done at the airfield (Rushton et al. 2007). 1.2 Oil and Gas Industry The industry of oil and gas is among the largest and most profitable worldwide and it contains the following components: exploring, extracting, refining, transpiration, and marketing. The industry can be subdivided to three principal elements: upstream, midstream and downstream. The upstream is the production and exploration sector, and midstream is the entails storage, transportation, and marketing of oil and gas products both in crude and refined form. The growing area includes the refining and processing natural gas and crude oil into finished goods and marketing this product to the retailer’s final consumers. 1.2.1 Exploration and Extraction supply Chain Exploration and extraction supply chain includes all the process and services that happen in the searching of potential underwater and underground natural gas and crude oil fields. They also include drilling of sample wells and eventually drilling operation wells that will be used to recover commercially viable raw gas and crude oil. 1.2.1.1 Exploration and Extraction of Oil and Gas sector. The extraction and expedition of oil and gas are the processes usable amounts of oil and gas extracted and removed from underground or under water. It starts with geological and seismic surveys are undertaken to search for geological structures that contain petroleum and gas reservoirs. Once there are viable reservoirs, and exploratory wells are drilled to check whether the amount of oil and gas in the tanks can be commercially mined. This sector is the capital intensive because of the lack of guarantee of finding commercial viable oil and gas once doing exploration and digging exploratory. Therefore, it is done by major co-operations such as BG group, Chevron, Total, and Shell. It is a crucial sector because a country may have vast reserves of oil and gas and may not know but can only find out through exploration (Rushton et al. 2007). 1.2.1.2 Manufacturing of exploration and extraction equipment sector. This industry is crucial because it supports the research and extractions sector by providing manufactured equipments useful in the exploration and extraction of oil and gas. These equipments include; drilling rigs, protective gear, transportation vehicles, Trams, etc. This sector is important because the equipments that they manufacture are the one that used during the exploration and extraction of the oil and gas. Due to the precise nature of this equipment the manufacturing, companies have to work very carefully with the mining companies to ensure the manufacture of advanced and high-quality equipment (Radhakrishnan 2001). 1.2.2 Transportation, storage, and marketing Supply Chain. This supply chain involves the transportation through rail, pipeline, rail, barge, oil truck or tanker, storage and bulk marketing crude oil\natural gas or refined gas and petroleum products. Transmission and storage facilities can be used to move crude oil and natural from the production areas to the refineries or from the factories to the retailer and consumers (Chew et al. 2011). 1.2.2.1 Transportation, Distribution, and storage of Oil and Gas. Railroad, pipeline, Barge, oil tankers, and trucks can carry oil and gas both in raw and refined form can be transported. Transportation over long distances, through water and in large volumes is done using oil tankers and barges while, through land, shorter distances can be done using pipelines and trucks. For one to reduce the cost of operation, the transportation logistics and management must be taken into account. Cost efficient and safe transportation for land should be done using pipes. This sector is crucial because it enables the safe transport, distribution and storage of oil and gas and their products (Mangan et al. 2008). 1.2.2.2 Transportation of Oil and Gas Equipment, staff and personnel. Oil and gas equipment are bulky and huge and need special transportation that will enable mining companies to transport them fast and safe. 1.2.3 Processing and Refining supply Chain. It refers to the refining crude oil and the processing of raw natural gas into products such as petrol, gasoline, natural gas, liquefied petroleum gas, and diesel oil. It also includes fuel oils, jet fuels, lubricants, waxes, asphalt, heating oil as well as numerous petrochemicals (Chew et al. 2011). 1.2.3.1 Natural Gas Processing Sector Natural gas processing is intricate and complex process of changing raw natural gas by removing non-methane hydrocarbons, fluids, and other impurities to produce high-quality dry natural gas. This processing start at the well where the type of gas mined depends on the depth, type, and location of the underground deposit and the geological conditions of the area. The natural gas when mined consists of ethane, methane, propane, butane, and other small weight hydrocarbon compounds. It is a crucial sector because the processed gas produces a wide variety of products that are used both for domestic and industrial use. Some of the uses are, heating of homes, electricity production (Waters & Chartered Institute of Logistics and Transport in the UK. 2007). 1.3 Automobile Industry The automotive industry consists of a broad range of companies and organizations, and that engage in the design, manufacture and development, selling and marketing of motor vehicles. It is among the most lucrative industries, and it constitutes a big part of the worlds workforce right from the manufacturing, distribution, and sales. Similarly, the industry employs workers in storage, repairs and spare parts shipping, manufacturing, and distribution (Chew et al. 2011). 1.3.1 Manufacturing Supply Chain. Manufacturing of motor vehicles and spare parts is a very lucrative and influential industries, this is because the majority of human movement happens through cars. 1.3.1.1 Manufacturing of Automobiles. Manufacturing of motor vehicle takes place in ten major companies located in North America, Europe, and some Asian countries. Some of the vehicles manufacturing nations include USA, China, Germany, United Kingdom, India, France, and Japan. Some of the manufacturing companies include Toyota, Land rover, Nissan, KIA motors, etc. It is a critical sector in the sense that it creates a lot of employment, and it improves economic development of the country (Chew et al. 2011). 1.3.1.2 Manufacturing of Spare parts It is a vital sector the automotive industry because it supports the manufacturing sector by providing spare part. Most manufacturing companies concentrate on the design and assembly of automobiles leaving the production of spare parts to other companies. These companies are important because they create employment opportunities and provide and spare parts to consumers (Waters 2010). 1.3.2 Transportation Supply Chain It involves the transportation of goods and passengers by the use of automotive 1.3.2.1 Transportation of Automobile and Spare Parts It includes the transportation of automobiles and spare parts. Trains, small beds, ship are used for this purpose. 1.3.2.2 Transportation of Goods and Passengers It offers a market for the automobile industry. 1.3.3 Warehousing, Storage, and Distribution Supply Chain The automobiles, spares, require proper storage provided for by this sub – sector to protect them from the adverse effects of weather. 1.3.3.1 Storage and Distribution of Automobile To ensure that the automobiles are secure when distributing them from the manufacturing plant to the consumers they require proper storage facilities otherwise, they will be exposed to theft and vandalism. 1.3.3.2 Warehousing and distribution of Spare Parts The automobiles and their spare parts require distribution equipments such as lifts hoists, cranes, etc. to allow loading and distribution and this aids sales. 2.0 Power Dynamics It refers to the recent developments that has taken place in a particular industry and which can influence and change the distribution of power in the industry example oil and gas, manufacturing industry. 2.1 Aviation Industry Power Dynamics In the aviation industry, two major companies hold the key in the manufacturing of commercial planes namely Boeing and Airbus, which originate from the USA and Europe. However, in the recent past China is rising as a crucial player in the aviation industry by purchasing a majority of the planes being built and is about to launch its manufacturing industry of aircrafts (Zanjirani et al. 2009). 2.2 Oil and Gas Industry Power Dynamics It refers to the developments that the global industry of gas and oil has undergone in the recently and how it may influence the sector going forward. These events include; development of unconventional oil and gas, the rising riskier and production investments, rising operating costs and a fall in the gas and oil prices. 2.3 Automobile Power Dynamics For a long time, Japan and USA have been the major players in the automotive industry with the manufacturing of the vehicle and USA being the largest consumer. Nevertheless, in the recent past china, is emerging as a production powerhouse, and it has even surpassed USA to become the largest consumer of automobiles (Radhakrishnan 2001). 3.0 Conclusion We can see that supply chain and logistics play an integral part in everyday life not just in the different companies but also to the public in general. Hence, for proper management of enterprises, reduction in operating cost, high-quality services supply chain management and logistics have to be considered. References Chew, E. P., Lee, L. H., & Tang, L. C. (2011). Advances in maritime logistics and supply chain systems. Singapore: World Scientific. Dyckhoff, H., Fandel, G., Lackes, R., & Reese, J. (2004). Supply chain management and reverse logistics. Berlin [u.a.: Springer. Mangan, J., Lalwani, C., & Butcher, T. (2008). Global logistics and supply chain management. Chichester, England: John Wiley & Sons. Myerson, P. (2012). Lean supply chain and logistics management. New York: McGraw Hill Professional. Radhakrishnan, P. (2001). Proceedings of the 1st international conference on logistics and supply chain management. Allied Publishers. Rushton, A., Walker, S., & Chartered Institute of Logistics and Transport in the UK. (2007). International logistics and supply chain outsourcing: From local to global. London: Kogan Page. Waters, C. D. J. (2010). Global Logistics: New Directions in Supply Chain Management. London: Kogan Page. Waters, C. D. J., & Chartered Institute of Logistics and Transport in the UK. (2007). Global logistics: New directions in supply chain management. London: Kogan Page Ltd. Zanjirani, F. R., Asgari, N., & Davarzani, H. (2009). Supply chain and logistics in national, international and governmental environment: Concepts and models. Heidelberg: Physical. Read More