Logistics, being a sub division of the supply chain, is essentially the organisation and coordination of the stream of goods and services from a distributor to the consumer. Logistics consists of various procedures before reaching the consumer, including; transportation, availability of stock, material handling, storage of goods in warehouse, quality control and packaging. All these events are vital to successful logistics. Logistics are wholly based around meeting customer requirements by providing quality goods and services, both time and financially efficiently.
Transportation in a logistics system is the conveying of goods and services from one site to another. There are various means of transport including road, rail, air, water. Trucks, vans, aeroplanes and trains use transport infrastructure to operate on. Transportation plays a key role in logistics as raw materials or finished goods and services are transported inbound and outbound. Transport costs and contracts are negotiated amongst companies and suppliers to organise transportation for merchandises. Contracts are taken out with raw material suppliers to transport this material to the company and also with another source to transport the finished goods out of the company's warehouse to retailers. Before any material is transported, mode of transport, routes and schedules are made and planned so transporters know what exactly what and when things should be taken. Also it guarantees that delivery will be done from the company to the consumers, in turn making them satisfied and building customer relations for future needs.
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Stock is an asset that is invested by a company which will normally be sold later on to consumers directly or to retailers. Normally stock is purchased in bulk and stored in a factory respectively. The exact number of items/stock needs to be known by a company on their shelves and storage facilities so more orders can be placed or to manage losses. Factory managers need to identify the number of units of commodities available for customer orders.
All companies depend on their stock count to provide for retailers and consumers.
Normally companies count their inventory/stock levels quite often to avoid shortages of supplies, especially trendy ones. They also check their stocks to insure that the number of goods purchased are equivalent to the definite quantity of items counted physically. Stock is best purchase in a 'JIT' (just in time) basis so that goods can be transported to retailers as soon as possible without delay or so that they don't get expired just sitting in the warehouse or get damaged by other means.
A warehouse is fundamentally a building for storing purchased stock/inventory. These can be owned privately or taken out on rent for the public. Warehouses are used by importers, exporters, manufacturers or wholesalers. Warehouses usually have loading ports to load and unload merchandises from transport vehicles. These warehouses are normally widely open and can be separated into sections, segregating different products. Goods are organised efficiently so they can be handled with ease when it is time for transportation. Merchandises are usually stacked on crates and very high heights so that space is used effectively.
Material handling is defined as the control and movement of products in a warehouse for rearrangement or distribution for outbound transportation. Mechanical handling devices such as forklifts and cranes are used to physically handle and arrange goods in the warehouse very effectively. Material handling equipment in general increases output, control costs, and maximizes productivity. This is mainly because a lot of time is saved due to machines handling merchandises, ultimately resulting in making time for other procedures and simultaneously cutting costs.
Packaging involves the closure and protection of finished goods for storage or distribution to retailers for sale. The purpose of packaging can vary from simply protecting the good from debris when transporting to destinations or for promotion purposes by the seller, by means of printing logos and designs on the item. Packaging can also give instructions to people who transport the goods and services such as where and when it has to go. It can also give instructions to vendors on how and what to sell and consumers on how to utilise the product.
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Due to the rise of economic, social and environmental concerns today, a more sustainable approach to logistics needs to be investigated. Green logistics is a system of logistics which is designed to be environmentally friendly, socially welcoming and finally economically serviceable. Green logistics started expanding since the 1980's amongst companies who were interested in ways of satisfying consumers. Because logistics revolves around the shifting of merchandises from being raw materials to finished goods, green logistics plays a very important role. Green logistics definitely focuses on satisfying consumer needs by providing them with reasonable goods at the most reasonable market value.
Numerous methods can be useful in order to cut company's overall costs by going green and still remain competitive in the trading market. By mending and altering the various parts of logistics including transportation, availability of stock, material handling, storage of goods in warehouse, quality control and packaging having green logistics is possible. When manufacturing goods to be environmentally friendly, it can also turn out to have economic effects. For instance, if a retailer who sells high quality laptops was to make his products greener, they could reduce the use of materials used to produce smaller compact laptops, therefore dropping transport rates.
On the other hand, doing this and making the product environmentally friendly can possibly further add to costs making it impractical. Social matters are a big issue as well because social impacts of goods and services will also have an influence on consumers. If for example, a company sells fuel efficient/electrically operated cars, but refuses to pay the workers minimum wage and not treat them well, consumers will take action on this company. Consumers can discontinue contact and purchases from the company, even though the goods and services are environmentally beneficial. Company's need to take into account the well being of their customers, by providing them with right merchandises. This being green products that are beneficial of use making them socially satisfied.
Transportation is used very commonly for distribution of goods and mostly done having a negative consequence on the environment. This is mainly due to high amounts of unnecessary carbon dioxide emissions from very large transport vehicles. Some environmental constraints that are to be considered for the sustainability of transportation are air and noise pollution. These types of environmental effects essentially, are very influential on how a company will operate. When vehicles release harmful gases into the atmosphere, people argue that air pollution causes damage to the ozone layer and leads to an increase in the number of children with asthma. Using renewable resources, such as CNG or electricity to power transport vehicles definitely helps the environment in many ways. Firstly there will be considerably less pollution and greenhouse gas emissions released as not many fossil fuels are utilised, resulting in a cleaner atmosphere.
Another benefit of using electricity for transport vehicles is because there is considerably less spent in fuel costs. Because diesel and gasoline are at a substantial peak these days, stretching the fuel as far as possible makes excellent economic logic. Awareness of the use of renewable energy is increasing due to the fact that fossil fuels are being used very fast and because people are worried about the way burning fossil fuels damages the environment. (e.g. the greenhouse effect and acid rain). Noise pollution can be created by the transportation of goods and can disrupt people's lives that have to put up with the noise. Road transport accounts for seventy percent of the total noise emissions by transportation. Noise pollution from large vehicles is socially unsustainable and can have and influence on peoples health and mood. To resolve noise pollution, vehicles delivering goods should take other routes where people won't be disturbed and also use vehicles that don't make a lot of unnecessary noise. Renewable energy prevents pollution and helps prevent climate change. New technologies aren't always completely environmentally-friendly, so they have to be planned carefully.
In the year 2000, Lee Scott took over Wal-Mart from founder Sam Walton and had an innovative business strategy of creating logistic systems to be friendlier to the economy. Having green logistics essentially means to implement procedures that are based around environmental, social and economic issues. Because Wal-Mart is an international company Lee Scott was to take into consideration the alterations and reputation of the company. This idea was evaluated to being a magnificent idea as care for the environment was taken and at the same time Wal-Mart won't suffer in the loss of profits. Lee Scott supplied an example of environmental sustainability, by improving fuel mileage effectiveness by just one mile per 4 litres on their delivery vehicles; $52 million per year could be saved. This simple calculation motivated Lee Scott to further imply sustainable changes to products and services Wal-Mart has to offer.
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In 2005, Lee Scott delivered a presentation to over 1.5 million employees and all of the suppliers announcing Wal-Mart's new approach to sustainable development to make a positive change in the company. He also wanted Wal-Mart to have a positive influence on the environment, so on the whole it will be the most economical and pioneering company in the world. During this speech, Lee Scott highlighted the three most important and highly ambitious aspirations. The information is given from Heying and Sanzero (2009)
1. Be supplied 100 percent by renewable energy in the very near future
2. Create zero waste
3. Sell products that sustain Wal-Mart's resources and the environment
These goals set by the CEO were very promising and would change the company positively forever. These were the three utter most important goals; however there were other goals in mind as well including:
1. Reduce greenhouse gases by 20 percent in 7 years
2. Reduce energy use at stores by 30 percent in 7 years
3. Cut solid waste from U.S. stores and Sam's Clubs by 25 percent in three years.
4. Buying diesel-electric and refrigerated trucks with a power unit that kept cargo cold without the engine running, saving nearly $75 million in fuel costs and eliminating an estimated 400,000 tons of CO2 pollution in one year alone
5. Promising by 2011 to only carry seafood certified wild by the Marine Stewardship
Council, a group dedicated to preventing the depletion of ocean life from overfishing.
All these goals are important for the future well being and growth of Wal-Mart, should these go according to plan and are implemented well. Wal-Mart will be a huge sustainable company that cares for people's social needs, the environment and positive economic growth by implementing these decisions. Consumers will definitely be satisfied when trading and purchasing with this company.
There are arguments against the reliability and implementation of the goals mentioned above. Many critics argue that this new approach is unrealistic and the high inevitable initial costs are not worth the investment. If the number of suppliers is limited then high costs will be a guarantee. In order for Wal-Mart to be successful, they will have to be innovative and at the same time remaining a positive environmental and economic impact.
Green logistics is a very healthy choice companies can make and can have a long term beneficial response from the economy. Humans very much rely on the world's minimum natural resources and fossil fuels to live and need to be responsible for the preservation of these things. If the transportation system in a logistics organisation develops with high regards to healthy sustainability, a company can gain competitive gain by distinction from a non-green corporation. Improving efficiency is another major benefit for transport vehicles which in turn does less damage to the environment, cutting long term costs and therefore saving profit. Having green logistics sets an optimistic illustration for the company, which enhances morale and reputation. Making other companies aware of the benefits to go green is essential as they will look up to you and will follow in the same manner.