Wednesday, 27 March 2013

The Challenges of Logistics Performance

The Challenges of Logistics Performance:
What affects Logistics Performance? (Cost, Time, Geography and Over Regulation)

Rokiah binti Abu Hassan


The first thing to consider in logistics, as always, is cost. Any businessman worth his salt knows that he will be in the losing end if the tries to reach for a global market yet incur high overhead expenses. It will not be a wise move to ship items to another location if the actual costs of the activities are not going to be retrieved by the expected profit.

The logistics industry is a dynamic and very fluid market where prices can change every week. Pricing in logistics is a combination of understanding the traditions of the routing used, the research put into the negotiations, and the timing of the negotiations. In order to obtain the best logistics costs, take into account the good faith of a long term agreement, the scale of your operations and move, and the priority of the move (transit time versus price).

How to Reduce Logistics Cost on Transportation? First, determine what you need to ship and determine the mode you'll use. Second, Plan for your projected needs for at least one year. Logistics providers base rates and rate agreements on either an immediate shipment basis (within 30 days), or based on a one-year agreement. If there is a large volume of shipments, it's possible to prepare a bid that could warrant special terms and conditions. Third, Solicit quotes from any vendor which can accommodate shipments. For small shipments less than a container, contact freight consolidators/brokers. Forth, Analyze quotes and read the terms/conditions of the quotes. Check the validity of the quote (Is it for a particular sailing, a month, a year?) and what surcharges it's subject to. Check if there are any value-added services available such as extended demurrage (time at the pier/airport), detention (time to keep the container), credit terms or volume incentive discount. Also ask if rates are subject to general rate increases, new surcharges, war risk or terminal handling charges. Fifth, Compare and counter offer the rate levels you were provided and lastly, Confirm that rates are filed in either a contract or in a governing tariff and regularly check the terms of the filing.


Another thing to consider is the time that it will take for the goods and services to be delivered to their destination.

In many instances, perishable goods do not reach the destination in the same fresh condition. This poses a risk to any businessman since the products will not be sold anymore. Sometimes, the products do reach the destination, albeit late. The downside here is that they would have just a few shelf days remaining. In a very short span of time, the products will perish and will no longer be fit for consumption. Ironically, this scenario means that it would take more days to transport the goods than the days they would be displayed on market shelves. As such, business owners simply refuse to ship items since they lose money instead of earning it.

Time is critical. With quickening obsolence and technology advancement, new products must be brought to market quickly. Customers do not want to carry any more inventory than they must. So their suppliers must be able to respond quickly to delivery orders to them. This demand for time reduction exists through out each link of the supply chain.

Company management may focus on different aspects and elements of cycle time. It's very possible they do not understand the total process. They may look at how long it takes to enter an order, or the warehouse time to pick and ship and order, the cycle time from order receipt to ship an order, manufacturing cycle time, time to prepare purchase orders or other measures of time. These are each elements of the total cycle time; they are not the entire process. Without an understanding of the entire cycle and its elements, companies can optimize one element and yet sub optimizes the overall system.

With logistics, the cycle time is significant and can be complex. In logistics, cycle time runs from the vendor shipping to you right through to your delivering the customer's order to him. This view of cycle time means there are both internal and external factors. These must be recognized and dealt with an order to manage and reduce the time. And the scope and complexity becomes significant if the vendor is located overseas and/or the customer order is for export. Very often company management does not understand the process and what all is involved to get materials into the manufacturing facility, or finished goods into a warehouse and to deliver orders--all within the time constraints to meet the customer's requirements.

Supply chain management, continuous replenishment, vendor-managed inventory, just-in-time and similar programs are customer driven. You must perform as the customer demands. Failure to meet the customer's expectations can result in penalties, charge backs and even the loss of his business.


 In relation to this, geography also plays a crucial role in logistics management. If a target global market is too remote, there is almost no practical way of reaching out to that geography. What needs to be identified is the source of the product and then a study is made regarding the feasibility of transport to that specifically remote location. With today's airplanes, this does not really post much of a challenge. However, you still have to consider the associated costs with effective transport of goods.

In most of the cases, geography plays a vital role in logistics management. The face of the matter is that you will have to often deliver the mandatory goods and services to the right person at the remote areas. That’s why you will have to really take care of geography along with good means of transportation


Last but not least, you will have to take note of a country’s over-regulation during your logistics management.
In short, although there are many challenges of logistics management but you can certainly reduce these concerns by your sheer planning, organization, and execution. There are many countries that have customer practices that are detrimental to their own economic development. Goods are stocked for so long in the customs bureau and they just get released after months of waiting. This kind of bad practice seriously impairs the goal of logistics.


Tuesday, 26 March 2013

Logistic Security Management System (LSMS) - ISO28001:2007

ISO 28001 – Standard to reduce risks to the supply chain, meet regulatory requirements and streamlined supply chain operations

ISO 28000:2007 specifies the requirements for a security management system, including those aspects critical to security assurance of the supply chain. Security management is linked to many other aspects of business management. Aspects include all activities controlled or influenced by organizations that impact on supply chain security. These other aspects should be considered directly, where and when they have an impact on security management, including transporting these goods along the supply chain (1).
The transportation of goods in the global economy, driven largely by outsourcing of services, has never been more complex. Sources of raw materials, components, component assembly, and finished products are global in nature and therefore require a global supply chain. As this global dependence has intensified, the value of goods shipped has also increased. The threat of terrorism, smuggling (drugs, weapons, human trafficking), preservation of brand integrity, product safety and other threats have mandated the increase in regulation and cooperation between nations. Requirements of the Customs-Trade Partnership Against Terrorism (C-TPAT), the Container Security Initiative (CSI), the Transported Asset Protection Association (TAPA) and others are some examples of regulation designed to address threats to the supply chain. These are complemented by the drive for increased surveillance and inspection.

There are five key elements that are critical to the development of a Logistic Security Management System (LLSMS):
- LSMS Management Policy 
- LSMS Planning
- Implementation & Operation
- Checking & Corrective Action
- Management Review & Continual Improvement

A conformant physical security management system (LSMS) requires the organization to have an  overall security management policy, authorized by executive management. The LSMS must also have a process for assessing the security environment in which it operates and for determining if adequate security measures are in place. This examination of the operational environment includes regulatory requirements as well as the physical, natural and human hazards and specific industry requirements. ISO 28000 articulates a strategy for assessment of risk and determining countermeasures as a core component of providing physical security for the organization.

ISO 28000 identifies requirements for implementing and operating a LSMS, including organizational (security) structure, authorized personnel responsible for security management, assessing and maintaining competence of personnel and training for personnel responsible for security.

Corrective and preventative actions, based on monitoring and evaluation of the LSMS, must be implemented to address any security-related failures and address in a timely fashion any non-conformities that are discovered.

Oversight by the organization’s executive management at regular intervals is required to assure that security management policy, objectives, targets and other elements of the LSMS are functioning as intended and consistent with continual improvement. Records generated as part of the operation of the LSMS, results of audits and risk assessments, legal and regulatory requirements are submitted for review along with input from interested parties and recommendations for improvement. Output from management review must include guidance for the organization to improve the LSMS through changes to policy, controls and other elements of the LSMS. ISO 28004:2007 provides corresponding implementation guidance for implementation of ISO 28000.

ISO 28000:2007 is applicable to all sizes of organizations, from small to multinational, in manufacturing, service, storage or transportation at any stage of the production or supply chain that wishes to:
a) establish, implement, maintain and improve a security management system;
b) assure conformance with stated security management policy;
c) demonstrate such conformance to others;
d) seek certification/registration of its security management system by an Accredited third party Certification Body; or
e) make a self-determination and self-declaration of conformance with ISO 28000:2007.
There are legislative and regulatory codes that address some of the requirements in ISO 28000:2007.
It is not the intention of ISO 28000:2007 to require duplicative demonstration of conformance.
Organizations that choose third party certification can further demonstrate that they are contributing significantly to supply chain security.


A study by University of Virginia, 3 researchers analyzing the cost/benefit of implementing Customs-Trade Partnership Against Terror (C-TPAT) requirements identified tangible benefits to organizations that implemented a supply chain security program (3). Among the benefits:
  • -          Significant decrease in U.S. Customs inspections (up to 42.8%)
  • -          Increase in new customers for transport and logistics companies (35.2%)
  • -          Increase in sales (24.1%)
  • -          Access to the U.S. Customs FAST (Free and Secure Trade) program
  • -          Decreased wait time at the border (Green Lane)
  • -          Decreased supply chain disruptions
  • -          Increased supply chain visibility and improved lead-time predictability

An ISO 28000-conformant security management system will meet the security requirements of C-TPAT, World Customs Organization (WCO) SAFE Framework, Safety of Life at Sea (SOLAS) and other international regulations while providing greater visibility and optimizing the organization’s security spend.


The International Standards Organization released the ISO 28000 series in 2007 to provide  requirements and guidance to organizations seeking enhancement to supply chain security and to certification bodies providing audit and certification of supply chain security management systems.
The series consists of:
ISO 28000:2007 – Specification for security management systems for the supply chain
ISO 28001:2007 – Best practices for implementing supply chain security, assessments and plans –
Requirements and guidance
ISO 28003:2007 – Requirements for bodies providing audit and certification of supply chain security
management systems
ISO 28004:2007 – Guidelines for the implementation of ISO 28000
Proper implementation and operation of a security management system will provide improved security and deliver
tangible benefits. ISO 28001 - Specific guidance for implementation of a security management system for the supply chain is provided in ISO 28001:2007 – Best practices for implementing supply chain security, assessments and plans – Requirements and guidelines. ISO 28001 is intended to assist organizations in establish reasonable levels of security and make better risk-based decisions for protection of the supply chain. Organizations that are in compliance with the WCO SAFE
Framework of standards2 are also in compliance with ISO 28001. In the absence of SAFE Framework compliance, ISO 28001 is an auditable standard containing requirements of a supply chain security process (General Requirements 4 – 5) and guidance for implementing a supply chain security process (Annex A).

A core component of ISO 28000 is planning the organization’s security program, including a formal risk assessment and selection of controls and countermeasures. Annex B of ISO 28001 contains an eight-step methodology for security risk assessment and development of countermeasures. This specific methodology is not required for certification to 28001 but is provided as an informative reference for organizations seeking to implement a risk assessment process or refine an existing methodology.

Risk management is the process of identifying threats, vulnerabilities, impact to the organization in the event that a threat exploits a vulnerability, likelihood of such an occurrence and identification of countermeasures sufficient to reduce risk to levels acceptable to executive management. In ISO 28001 Annex B, the risk management methodology is captured as followed:
1. Identify all activities within the scope of the security management system (LSMS)
2. Identify the security controls and countermeasures in place
3. Identify security threat scenarios
4. Determine the potential impact if the threat scenario actually occurred
5. Determine the likelihood of such an event occurring, given the current controls and countermeasures in place
6. Assess whether the current controls and countermeasures are adequate

(2)     ISO 28000:2007 – Specification for security management systems for the supply chain
(3)     The C-TPAT Cost/Benefit Survey was prepared by the University of Virginia Center for Survey Research and the Weldon Cooper Center for Public Service for the U.S. Customs and Border Protection Service in August 2007.


Quality in Logistic - March special edition

I been fonded by Shopping online!!! Hmmm maybe not me, but my lovely wife....

It is becoming safe, easy, fast, and save

Why I say it S-E-F-S?

Safety can be mean, we eliminate the need to travel, it mean that we eliminate the risk of accident, been robbed and other hazard while shopping.

Easy – I can freely browse the items that we want to shop; especially for electronics items, we need to study the specification. In compare to conventional shopping, we need to browse each shop!

Fast – My experience of purchased airlines ticket, it is really fast. No need to travel to travel agents, wait for them to prints, went to bank to withdraw the money… and many more. Also when I order my IPads, it only takes 3 days!

Save – Of course they are many offered and easy to compare the price online. We can have better deal especially for Hotel reservation. I managed to save almost 30% for most of normal cost.

Sure they are some pitfall of shopping online. But improvement of logistic that includes information and material logistics is significant or exponential.

 The Challenge is how to make

-          LOGISTIC to be more EFFECTIVE AND more EFFICIENT
-          How fast can we adapted it

In these March 2013, I will discuss on important of Logistic in ancient to modern civilization and how it improve the quality of life.


Sunday, 24 March 2013

Logistic – Transformed Quality of Civilization

Logistic – Transformed Quality of Civilization

by: Edly Ramly

How Ancient Civilisation becomes stronger?
How Islamic religious spread quickly around the word?
How British Empire expanded?
How giant economy stimulate?
It all lies into LOGISTICS AND TRANSPORTATION development and improvements!

In ancient Greek,  Roman and Byzantine empires, military officers with the  title  Logistikas  were responsible for financial and supply distribution matter (1). The historical leaders Caliphate Uthman, Hannibal Barca, Alexander the Great, and the Duke of Wellington are considered to have been logistical geniuses. They are a master of growth and globalization.

Before any civilisation occurs, the people normally survive by daily hunting and when the resources scarce, they move to other area. This sometimes called as nomads. Then the leader start to realised that it is tough to survive that way. They start to keep stocks of their foods. That is the start of logistics. Sometimes it not sufficient and they know people from other tribe have some extra. So they start to trade or conquered. That where the logistic begins. The storage and transportation improve their quality of life.

Ancient civilisation such as Macedonia, Babylon and Egypt build the logistics infracture in order for them to build the city and castles. They first used human powered transport is the transport of people and/or goods. Then Animal-powered transport is the use of working animals for the movement of people and goods. Humans may ride some of the animals directly, use them as pack animals for carrying goods, or harness them, alone or in teams, to pull sleds or wheeled vehicles. Indeed with this mode of logistic develop the civilisation but it is in slow states.

However, there few other mode of transportation they can opt depending on their geographical location. Of course the common mode is land and water.

The first earth tracks were created by humans carrying goods and often followed game trails. Tracks would be naturally created at points of high traffic density. As animals were domesticated, horses, and donkeys became an element in track-creation. With the growth of trade, tracks were often flattened or widened to accommodate animal traffic. Later, the travois, a frame used to drag loads, was developed. Animal-drawn wheeled vehicles probably developed in Sumer in the Mesopotamia (or modern Iran today) in the 4th or 5th millennium BC and spread to Europe and India in the 4th millennium BC and China in about 1200 BC. The Romans had a significant need for good roads to extend and maintain their empire and developed Roman roads. The Persian and Roman empires built stone-paved roads to allow armies to travel quickly. Deep roadbeds of crushed stone underneath ensured that the roads kept dry. The medieval especially during Caliphate Umar later built tar-paved roads. All this remark to their skill in improving logistic.

For water modes, the stone ages primitive boats developed to permit navigation of rivers and for fishing in rivers and off the coast. It has been argued that boats suitable for a significant sea crossing was necessary for people to reach Australia an estimated 40,000-45,000 years ago. With the development of civilization, bigger vessels were developed both for trade and war. In the Mediterranean, galleys were developed about 3000 BC. Galleys were eventually rendered obsolete by ocean-going sailing ships, such as the Arabic caravel in the 13th century which first initiate by Caliph Uthman in order to encourage trade and war against Roman., the Chinese treasure ship in the early 15th century, and the Mediterranean man-of-war in the late 15th century. In the Industrial Revolution, the first steamboats and later diesel-powered ships were developed. Meanwhile specialised craft were developed for river and canal transport. Canals were developed in Mesopotamia c. 4000 BC. The Indus Valley Civilization in Pakistan and North India (from c. 2600 BC) had the first canal irrigation system in the world. The longest canal of ancient times was the Grand Canal of China. It is 1,794 kilometres (1,115 mi) long and was built to carry the Emperor Yang Guang between Beijing and Hangzhou. The project began in 605, although the oldest sections of the canal may have existed since c. 486 BC. Canals were developed in the Middle Ages in Europe in Venice and the Netherlands. Pierre- Paul Riquet began to organise the   construction of the 240 km long Canal in France in 1665 and it was opened in 1681. In the Industrial Revolution, inland canals were built in England and later the United States before the development of railways.

Exponential Growth of Civilisation

Most of the modern developed countries especially in Europe have the comprehensive link and network of canal. By having the organized link of canal, more and more village was developed and goods can be transport to the nearest port or vice versa. This network of canal is start to be build as early 16th and support the industrial revolution is 18th centuries.
However the rail transport were found to be more effective in improving quality of civilisation.The history of rail transportation dates back nearly 500 years, and includes systems with man or horse power and rails of wood (or occasionally stone). This was usually for moving  coal  from  the mine down to a river, from where it could continue by boat, with a flanged wheel running on a rail. The use of cast iron plates as rails began in the 1760s, and was followed by systems (plateways) where the flange was part of the rail.Modern rail transport systems first appeared in England in the 1820s. These systems, which made use of the steam locomotive, were the first practical form of mechanized land transport, and they remained the primary form of mechanized land transport for the next 100 years.Again, the developed modern civilisation mastered the art of railways and they have vast network of rail.

The real exponential growth of quality of civilisation was the introduction of aviation losgistic and transportation. During the 17th and 18th century, when scientists began analysing the Earth's atmosphere, gases such as hydrogen were discovered which in turn led to the invention of hydrogen balloons.Various theories in mechanics by physicists during the same period of time—notably fluid dynamics and Newton's laws of motion—led to the foundation of modern aerodynamics.

Logistics infrastructure change the geography and quality of civilisation

White electric train with red cheatline emerging from tunnel in the countryside
InterCityExpress, a German high-speed passenger train
Infrastructure is the fixed installations that allow a vehicle to operate. It consists of both a way, terminal and facilities for parking and maintenance. For rail, pipeline, road and cable transport, the entire way the vehicle travels must be built up. Air and water craft are able to avoid this, since the airway and seawaydo not need to be built up. However, they require fixed infrastructure at terminals.
Terminals such as airports, ports and stations, are locations where passengers and freight can be transferred from one vehicle or mode to another. For passenger transport, terminals are integrating different modes to allow riders to interchange to take advantage of each mode's advantages. For instance, airport rail links connect airports to the city centers and suburbs. The terminals for automobiles are parking lots, while buses and coaches can operates from simple stops.[13] For freight, terminals act as transshipment points, though some cargo is transported directly from the point of production to the point of use.


Any civilisation always start with their logistic wills and development. Humans' first means of transport were walking and swimming. The domestication of animals introduces a new way to lay the burden of transport on more powerful creatures, allowing heavier loads to be hauled, or humans to ride the animals for higher speed and duration. Inventions such as the wheel and sled helped make animal transport more efficient through the introduction of vehicles. Also water transport, including rowed and sailed vessels, dates back to time immemorial, and was the only efficient way to transport large quantities or over large distances prior to the Industrial Revolution.
Until the Industrial Revolution, transport remained slow and costly, and production and consumption were located as close to each other as feasible. But we saw most of either ancient, mid age of 18th centuries civilisation upgrade their logistic capability and those who upgrade faster become survivors.
The Industrial Revolution in the 19th century saw a number of inventions fundamentally change transport. With telegraphy, communication became instant and independent of transport.
The history of logistic is largely one of technological innovation that improve the quality of civilisation. Advances in technology have allowed people to travel farther, explore more territory, and expand their influence over larger and larger areas. Even in ancient times, new tools such as foot coverings, skis, and snowshoes lengthened the distances that could be traveled. As new inventions and discoveries were applied to transportation problems, travel time decreased while the ability to move more and larger loads increased. Innovation continues today, and transportation researchers are working to find new ways to reduce costs and increase transportation efficiency.