Business Logistics Management – a value chain perspective

To maximise a region’s net gain in wealth, created through local economies of scale and comparative efficiency, requires effectively integrated and co-ordinated transport and storage systems, known as business logistics systems.

However there are questions to be answered:

How does one ensure that goods demanded by the client are at the designated place, at the desired time, in the required condition and quantity and at an acceptable price? •   Why has co-ordination of the supply chain become so crucial in logistics management?

How does consistent order fulfilment enable competitive advantage?

How do recent advances in logistics technology and the freer exchange of information impact on business?

These are the tenets of the new edition of Business Logistics Management –  A Value Chain Perspective.

A macroeconomic perspective

No region on earth is singly capable of providing all the products to satisfy everybody’s material needs. There is invariably a spatial and temporal separation between where the natural resources for production occur and where most people live. Similarly, there is a time gap between when production is feasible and when people need or desire to consume certain products. Adequate quantities of desired goods can either be collected wherever and whenever they are available, or alternatively, they can be stored and delivered to people where and when they demand them. Sustained economic growth and development are dependent on productive regional specialisation, the continued improvement of production efficiencies and the profitable exchange, or trade, of goods, services and information. South Africa has an additional challenge in that it is geographically far removed from most of its markets.


This makes the country even more reliant on efficient and effective business logistics in order to ensure the realisation of its natural areas of competitive advantage. Without excellent supply chains and logistics systems, South Africa’s products do not have a chance in foreign market places. While the weak rand may temporarily make SA products more affordable this is not sustainable as the state of the rand simultaneously makes many of the inputs to those products much more expensive, particularly over the longer-term.

Product supply chains thus need to be planned, organised and controlled with a reasoned, scientific logistics approach, and must also be supported by efficient, effective physical logistics systems.

This means that:

Business logistics and its activities and related concepts need to be grasped

The competitive advantage created by logistics should be understood.

  • So too are several critical processes in the success of the value chains of businesses:
  • Logistics and supply chain strategy planning
  • Tactical logistics management and supply chain integration
  • Financial aspects of logistics and supply chain management
  • Forecasting supply requirements
  • Supply chain network integration
  • Production and operations management
  • Procurement management
  • Inventory management
  • The design of storage and handling facilities
  • Packaging and containerisation
  • Equipment used in facilities
  • The operation of a warehouse
  • The transport system
  • Transport modal cost structures, competition and pricing principles
  • Transport management
  • Managing international supply chains
  • Product returns and reverse logistics management
  • Controlling logistics performance

Transport and transport management

As a key activity in these processes, and usually the largest cost component within the business logistics process, freight transport requires particular attention. Competitive advantage can be supported by the most optimal deployment of the physical components and constituent members of the transport systems of a country, involving the various modes of transport, terminals and the freight itself, as well as the service providers, transport users and authorities.

This optimisation means that the emphasis in business logistics should not be simply on the cheapest or fastest transport or on reducing inventories, but rather on achieving an integrated and co-ordinated systems approach to the logistics process. The acceptance of the total-cost logistics concept has led firstly to logistics cost trade-offs between the various transport services provided and, secondly, to the operations at facilities that can assume greater importance.

Furthermore, the high costs involved in transporting goods from one place to another within supply chains places exceptional challenges on the management of the transport function. The optimal trade-off between transport efficiency and transport effectiveness – as well as managing transport optimally alongside other functional activities within the broader context and objectives of the entire product supply chain – requires that the transport activity should be managed holistically. This means that management of the transport function should be led by the strategic business objectives that transport serves. The strategic objectives within transport management in turn give guidance to tactical decision making. The latter eventually dictates how transport operations will be performed.

Conclusion

The efficiency and economy with which inputs are organised to achieve set goals have a direct effect on the competitiveness of a business. The application of a reasoned, systematic logistics approach within product supply chains and the management of business logistics systems so that customers are provided consistently with the desired quality and required quantity of products, where and when they are needed, at an acceptable cost, are thus the topics of this thoroughly researched, and South African applicable, book.

Written by: Wessel Pienaar, John Vogt, Kobus Cronje, Peter Kilbourn, Ulrike Kussing, Johan Louw, Joubert van Eeden Publisher: Oxford University Press, Southern Africa ISBN: 978 0 19 9057139 Pages: 502

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