Review paper with the requirments

The Council of Supply Chain Management Professionals (CSCMP), the preeminent worldwide professional association of supply chain management professionals, defines logistics as “…that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements.” 

In the business environment, the main function of logistics is to ensure that products and services required are in the right place, in the right quantity at the right time. Logistics plays a significant role in the success of any company’s operations and has a direct impact on its bottom line. Functions of Logistics management activities varies from organization to organization, typically they include inbound, in-process and outbound transportation management, fleet management, warehouse management, order management, logistics network design, inventory management, supply/demand planning, packaging and management of third party logistics services providers. In some organization, the logistics function also includes customer service, sourcing and procurement, production planning and scheduling, packaging and assembly and reverse logistics.

Main Objectives of Logistic

· Reduce Cost

· Reduce Inventory

· Improve Service Levels

· Improve Responsiveness

· Continuous improvement

In this report we are looking at the logistics management of the oil and gas industry which demands the highest standards in logistics management. The complexity and scale of the projects, in some of the world’s most harsh environments, remote areas and deep water, this requires proven expertise, total reliability and deep domain knowledge of all areas within the sector.

Logistics management in oil and gas industry is not the easiest of tasks, most of the projects are located in areas with inadequate infrastructure and the financial impact of downtime may easily run into millions of dollars. There are no One size fits all solutions, at times you might have to use all modes of transport(sea, road, air) for a single shipment to ensure that products are delivered on time. Products (wide variety of materials including oversized items) needs to be delivered quickly, safely and efficiently as possible.

Another challenging facing the logistics are customs regulations which constantly evolve and complex bureaucracy set by different countries around the world for variety of products, which directly impacts the lead time for moving equipment from one country to another in this part of the world.

ROLES AND RESPONSIBILITIES OF LOGISTICS DEPT

The Logistic Dept is responsible to ensure the effective planning, evaluation and co-ordination of logistics and transportation of goods from one Site/ Warehouse to another or for transportation project materials and equipment’s/ assets vendors to end user, from the time of release for delivery till safe arrival at the final requested destination. The Logistic Officer ensures that the goods are delivered in the most economical mean whilst achieving Project objectives with regards to schedule, safety and quality by coordinating the efforts of procurement, Vendors, engineering, finance, construction, etc. He/She is responsible to issue shipping instructions to Vendors and advise site of status accordingly. However Its the Project/Requesting Department who are responsible to identify the final destination of goods as well as to specify (through Vendors where applicable) any required packing, storage, handling and shipping requirements.

INTERNAL PROCESS

The shipping and transport process includes the following activities:

· Identification of transport and shipping requirements, as well as development of transport

and logistics plan necessarily for the Project.

· Identification of suitable transportation routes and methods, advising other groups and departments of any limitations.

· Appointment of packers, carriers and forwarding agents.

· Preparation of transport documents in accordance with national and international legal requirements.

· Arrangement of transportation and clearance through customs, Freight insurance and claims.

· Monitoring progress and taking remedial action as required.

· Issuing of shipping status reports.

For the activities to carry out there are basically two main cases:

· Shipment/ transport under the Vendor’s responsibility;

· Shipment/ transport under the Company’s responsibility.

In the case of shipment/ transport under the Vendor’s responsibility, the Transport/ Logistics Officer must obtain the shipment data from the vendor to enter the Shipment/Transport Plan in the system and check its progress

For Shipment under Company’s responsibility below steps are followed.

TRANSPORT AND LOGISTICS PLAN

As soon as weights, sizes, countries of origin, destinations and delivery dates are identified by the Project, the Logistic Officer evaluates possible transportation routes, import customs and duty requirements, capabilities/limitations of port facilities, available labour, local transportation (highway regulations and clearances, rail facilities, inland waters, etc.). The result of this evaluation shall be used to identify the mode of transport, estimated shipping times and any special requirements or limitations. The Logistic Officer ensures that the compatibility of the transport with the overall Procurement Plan and Required On Site (ROS) dates.

Transport Plan from the vendor/warehouse to the destination is dividing by bills (If necessary), in order to plan the transport of material or a service request to a customs agency.

The bills can be:

· Main:

· from the loading port / airport to the unloading port / airport;

· Only for land transport, from the loading point (vendor / warehouse) to the coordination centre /site.

· Intermediate:

· from the vendor to the warehouse (for transit);

· from the vendor to the unloading port (for transit);

· from the unloading port to the warehouse (for transit);

· from the vendor to the loading port / airport;

· from the warehouse to the loading port / airport;

· from the unloading port / airport to the coordination centre / site;

· from the coordination centre to the site.

For the main bills one or more Transport Plans with the same means of transport

and final destination are created. The creation of several Transport Plans arises from the need to manage documents related to different projects / cost centres.

The documents regarding the Transport Plan will be produced or requested from the shipper/ transporters by the Transport/ Logistics Officer in order to manage the plan, and then send the documents to the destination point.

CARRIERS AND FORWARDING AGENTS

Carriers and forwarding agents are assigned for the Project by means of their geographical capability and/or competitive tendering. The requisition for the carriers and forwarding subcontract details all the Project shipping and service requirements.

PACKING, MARKING AND DOCUMENTATION

Whenever deemed necessary, instructions for the packing, marking and required documentation may be an integral part of each PO. This includes requirements for packing lists, certification and all documentation concerned with export and import.

TRANSPORT

Before shipment, the Logistic Officer notifies the goods receiver about the shipment with a shipping notice (with necessary shipping documents e.g. invoice, packing list, airway bill, bill of lading, etc.), informing of the forthcoming arrival of shipment. The Logistic Officer then issues a Shipping Authorization to the Vendor/carriers/forwarding agents.

Following information are provided for a shipment:

· Instruction to ship notice.

· PO number.

· Items released (e.g. description, gross weight, net weight, volume, number of parcels to

ship, etc.).

· Departure site and agreed arrival site.

· Name/address of forwarder.

· Dimensional data.

· Delivery terms per PO.

· Mode of shipment.

· Special handling requirements.

The Vendor/carriers/forwarding agents provide the following information and data to the Logistic Officer:

· Status report detailing all shipping information;

· Certificate of receipt for dispatched shipments;

· Bill of lading for FOB shipments;

· Commercial and insurance backup for shipments.

IMPORT/EXPORT STATUS REPORT

An Import/Export Status Report is initiated and maintained by the Logistic Officer. The report details the following information:

· PO.

· Name of Vendor.

· Mode of transport.

· Departure site.

· Destination site.

· Name of forwarder.

· Airway bill/bill of lading number.

· Flight/Vessel number.

· Remarks/freight PO.

CHECK OF CONFIRMATION FOR THE RECEIPT OF GOODS

The Logistic and Custom Officer from the destination point of the goods, checks that the documents transmitted are complete and confirms the receipt of the goods. To this end, he/she fills in and signs the Material Receipt attached to the Shipment notice and submits a copy to the cognisant Transport / Logistics Officer.

In addition to these, the logistics function provides support for vessel operations and movement of vessels and also commercial department in support of bid activities as requested by the bid team

BEST PRACTICES IN LOGISTICS INDUSTRY

Supply Chain network design

A supply chain network can be strategically designed in such a way as to reduce the cost of the supply chain; it has been suggested by experts that 80% of supply chain costs are determined by location of facilities and the flow of product between the facilities. Supply chain network design is sometimes referred to as 'Network Modelling', due to the fact a mathematical model can be created to optimize the supply chain network. Companies have been led to modify their basic supply chain, investing in the tools and resources to develop an improved SCN design that takes into account taxation regulations, new entrants into their industry and availability of resources, has resulted in more complex network designs.

Designing a SCN involves creating a network that incorporates all the facilities, means of production, products, and transportation assets owned by the organization or those not owned by the organization but which immediately support the supply chain operations and product flow. The design should also include details of the number and location of facilities: plants, warehouses, and supplier base. Therefore, it can be said that a SCN design is the combination of nodes with capability and capacity, connected by lanes to help products move between facilities

There is no definitive way to design a SCN as the network footprint, the capability and capacity, and product flow—all intertwine and are interdependent. Following on from this, there is also no single optimal SCN design, in designing the network there is an apparent trade-off between responsiveness, risk tolerance and efficiency.

Transportation management system (TMS)

A TMS usually "sits" between an ERP or legacy order processing and warehouse/ distribution module. A typical scenario would include both inbound (procurement) and outbound (shipping) orders to be evaluated by the TMS Planning Module offering the user various suggested routing solutions. These solutions are evaluated by the user for reasonableness and are passed along to the transportation provider analysis module to select the best mode and least cost provider. Once the best provider is selected, the solution typically generates electronic load tendering and track/trace to execute the optimized shipment with the selected carrier, and later to support freight audit and payment (settlement process). Links back to ERP systems (after orders turned into optimal shipments), and sometimes secondarily to WMS programs also linked to ERP are also common.

The business value of a fully deployed TMS should achieve the following goals:

· Reduce costs through better route planning, load optimization, carrier mix and mode selection.

· Improve accountability with visibility into the transportation chain.

· Provide greater flexibility to make changes in delivery plans.

· Complete key supply chain execution requirements.

 Advanced shipping notification (ASN) 

With ASN, suppliers notify receivers in advance, letting them know they are shipping a specific purchase order, and giving an expected arrival time. Knowing what is coming into the warehouse enables managers to preplan receiving for the day. It's important that both carriers and receivers be flexible. Without scheduling inbound receipts, however, you'll randomly receive product as it arrives, and may have some carriers sitting in your yard for hours. Knowing in advance what product will be received and when, combined with system-directed put away, makes it easier to treat incoming shipments appropriately.

Automation with Internet-based technology

The benefits of automatic data collection—via bar code and radio frequency identification—are well-established, including increased productivity and accuracy and lower labor costs. But plenty of companies still haven't implemented automatic data collection.

Without exception, best practice winners’ logistics strategies revolve around decreasing manual processes and increasing automation. “Automation translates into speed,” says one best practice winner. “Manual processes translate into delays and errors.” According to another winner, “Having technology that lets you manage by exception is instrumental to boosting efficiency.” Internet-based technology is enabling a new level of transaction automation and partner synchronization previously not practical or possible. On-demand global trade management platforms and data gateways are driving more electronic collaboration for significantly reduced IT costs. Best practice winners report very little internal resistance to using on-demand technology, also known as “software as a service” or “hosted, web-based” systems. International logistics has historically been on the bottom of the corporate IT priority list, so CIOs are generally supportive of trying on-demand models in this area rather than having to reprioritize their projects and reallocate staff for traditional software installations. Supplementing existing enterprise systems with advanced optimization is another favored strategy of best practice winners. They realize that optimizing end-to-end inventory or optimizing lane-by-lane awards to carriers or forwarders is too complex to figure out on spreadsheets. Multi-echelon inventory optimization and ocean bid optimization are two areas driving quick, multi-million dollar savings for companies.

Cross Docking/ Aggregating/ Consolidating

Cross-docking is a practice in logistics  of unloading materials from an incoming semi-trailer truck or railroad  loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between. This may be done to change the type of conveyance, to sort material intended for different destinations, or to combine material from different origins into transport vehicles (or containers) with the same destination or similar destinations. Cross docking can be used for fast- or slow-moving product, and includes cross docking of back-ordered product, or product prepared by your supplier for your customer; reverse line picking; and other functions.

Building complete truckloads is a transportation best practice that nurtures efficiencies and economies in the best of times and the worst of times. Converting less-than-truckload (LTL) shipments to full truckloads (TL) helps companies optimize and reduce transportation costs, rationalize asset utilization, and provide better service to end customers. Fluctuating demand, variable capacity, and speed-to-market requirements often challenge shippers to find economies of scale by consolidating freight. Pooling like shipments together en force can help mediate these same volatilities.

Fundamentally, consolidation drives simplicity and consistency. Companies often leverage this balance to underpin business process improvements that have far-reaching impact elsewhere in the supply chain. By merging shipments and delivering more frequent truckload volumes, shippers can increase turns and reduce inventory. This flexibility drives just-in-time, continuous flow strategies—from production to sale—allowing businesses to pull product at each pooling point and more efficiently match supply to demand.

Ongoing cycle count program

 A good, ongoing cycle count program enables you to eliminate taking a physical inventory count. While many firms do cycle counting, they have not yet eliminated the physical inventory. Doing so cuts time and costs substantially.

Partnership

Unlike domestic logistics, it’s impossible to go it alone in the international arena. Best practice winners are figuring out new ways to synchronize activities and increase visibility and control of processes with customs brokers, freight forwarders, ocean carriers, logistics service providers, and others. These companies are leveraging the skills (and technology) of partners to achieve cost and lead time benefits.

ROBOTICS IN LOSTICS

Robots have the potential to create a limitless workforce that does not have additional expenses on a company. For example, retirement benefits, paid-time-off, overtime pay, adherence to daily work schedules, and other aspects of typical workers is completely eliminated when robotics are employed in supply chain processes.

Robotics also impact the efficiency and analysis of supply chain processes. Robotics can sort through incoming and outgoing packages faster, place them on the appropriate shelves, or shipping containers, and ensure the packages do not have any defects, which would cause unnecessary returns or delays in the order fulfillment process. Robots may also detect issues arising around them. they are capable of inhuman feats, such as lifting heavy objects or reaching tiny areas.

Internet of Things

With the advent of IoT, Internet connections now extend to physical objects that are not computers in the classic sense. A connect pallet for example, can tell its owner the whereabouts and condition of their shipment, Vastly improved pre-shipment planning incorporating real-time data, Use of real-time traffic data in route planning and transportation decision making, A connected truck can intelligently predict its own maintenance needs,  The ability to lower fuel costs,  Increasingly flexible warehousing operations These are just some of many intriguing possibilities for IoT in logistics

SUSTAINABILITY

Supply chain sustainability is a business issue affecting an organization’s supply chain or logistics network in terms of environmental, risk, and waste costs. There is a growing need for integrating environmentally sound choices into supply-chain management Sustainability in the supply chain is increasingly seen among high-level executives as essential to delivering long-term profitability and has replaced monetary cost, value, and speed as the dominant topic of discussion among purchasing and supply professionals. A sustainable supply chain seizes value creation opportunities and offers significant competitive advantages for early adopters and process innovators.

BENCHMARKING BEST PRACTICES

practice	Rating	Comments
Supply Chain Network Design	****	Company corporate frequently monitors the logistics spend and redesign the logistics activities and deploy new logistics center to take care of the activities locally /internationally
Transportation Management System (TMS)	***	For every shipment Company works out the routing and other options manually with the help of FF and other tools, hence less efficiency is noted.
Advanced Shipping Notification (ASN)	*****	As mentioned clearly in the work instructions, company uses Shipping Authorization and notification which is state of art technology and serves the purpose.
Cross Docking/ Aggregating/ Consolidating	****	Whenever possible depending upon the criticality of the materials company uses own warehouse/ 3rd Party warehouse to consolidate shipment to certain projects in remote locations.
Ongoing cycle count program	**	Huge number of SKU and the variety of them being handled, makes it impractical to employee ongoing cycle count.
Partnership	*****	Company has high level of partnership with all its subsidiary companies, local and international FF, clearing agents and lines to understand and meet the requirements of projects.
Sustainability	*****	Sustainability for the company means conducting its business while remaining mindful of their responsibility towards all the stakeholders. Employing and training people, promoting socio-economic development and being close to the local communities are keys to becoming truly sustainable.
Robotics in Logistics	*	So far the use is considered negligible but this is considered as an opportunity for future
Automation with Internet-based technology	*	With the number of SKU and multiple facilities used company is still convinced they're better off without technology
Internet of Things	*	Use of IoT can be detected in the offshore equipment’s and vessels, the employment in logistics is considered as an opportunity for future

References

James L. Heskett ( 1977, November) Author. Harward Business Review.

Retrieved from

https://hbr.org/1977/11/logistics-essential-to-strategy -

Leslie Hansen Harps(2005, May) Best Practice in Today’s Distribution Center

Retrieved from

http://www.inboundlogistics.com/cms/article/best-practices-in-todays-distribution-center/

Joseph O'Reilly (2009, January) rediscovering the classics, volume III, truckload consolidation

Retrieved from

http://www.inboundlogistics.com/cms/article/rediscovering-the-classics-volume-iii-truckload-consolidation/

http://searchmanufacturingerp.techtarget.com/definition/Transportation-Management-System-TMS

https://en.wikipedia.org/wiki/Transportation_management_system

https://en.wikipedia.org/wiki/Cross-docking