LOGISTICS - SUPPLY CHAIN MANAGEMENT

First I want to explain definition of logistics and also history of logistic. According to this case about Mongolian logistics overview, and also what  I will explained with my learned knowledge and I will guess overview of logistic system,  especially I will take example one of Mongolian biggest  retail chain company’s  logistics process.  Before get definition of Logistics?  we need to mentioned what is the supply chain management? “Supply Chain Management is the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. So What is the Logistics? Which is part of the supply chain process that plans, the process of planning implementing and controlling the efficient, cost effective flow and storage of raw materials, in- process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements. The mission of logistics is to get the right goods or services to the right place, at  right time, and in the desired condition and quantity in relation to customers order.

 Take a example of about the history logistics: The ancient time first period international logisticians were traders on the Silk Road,  a well-traveled trade path, in use for over 3,000 years, act of spreading out from Europe to Asia and passing through the Middle East. During this time The Mongol Empire was a military superpower  that had outstanding logistical strategies. Each soldier would have three or four horses and they brought all of staff such as  weapons, foods, equipments, home etc  wherever far a way they can to reach. Secret of changing hotline news is they used horses for the transmission of news each other, land is too wide and every few kilometer have to charge horses, also postman , who called “ulaich”, meaning postman or spy ,  always change the horses every few kilometers , it is  was one kind of ancient type of logistics. Now day is Modern logistics began to refer to not just the movement of goods but also to sales, the procurement of supplies, and the management of supplier and customer relationships. Also we will be future managers after university so we need to know well about order processing, inventory, transportation, warehousing, material handling and packaging also information flow, price, sales all process is part of logistics.

Logistics services to be implemented between each objects such as first  input  raw materials to production  logistic  services implementing between , production to distribution also logistics services implementing between , such as distribution to consumers,  consumers to disposal . logistics infrastructure and resources  Influence  to  logistics services.  Disposal, consumers , DC, production’s all connecting each other via logistics information system. Logistics and information flow is the stream of data in different directions with variable contents between various departments within a company is defined as information flow.

Now let’s move to  Mongolian logistics overview. Expansion of industry and commerce our country is constrained by a lack of trade port and transport routes. Ulaanbaatar capital of Mongolia and living one thousand people ,  in rural Mongolian population two thousand  density is less than one person per square  kilometer it mean transportation distance is too far and cost is high.  About  City of  Ulaanbaatar, density is high and last ten years rapidly increasing  traffic jam and price of petrol. Routes of Trade in Mongolia about  3000 kilometers  of railway in the country, 4000  kilometers  of paved roadway and only eight airports outfitted to land jet powered aircrafts. Unfortunately haven’t  seaport , landlocked country.  Mongolia must rely on the Russian federation and the People’s Republic of China for access to seaport. The majority of Mongolian goods are boarded on the Trans-Mongolian railway connected to two neighbor country is still mostly unreachable by modern transport like world level of road and standards I guess. Last decade growing import and export traffic has exceeded Mongolia’s logistic capacity, both physical and managerial, causing severe delays and excessive transport costs that increase the cost of products and services and inhibit economic development.  Ulaanbaatar is the main trade and transportation hub of Mongolia, it is terminals handling 95% of the nation’s exports and imports.

Now i want to explain actual example of Mongolian retail chain company’s logistics process via own experience. The company name is  “ My stores ” currently operates 20 stores and , divided into 2 main formats: supermarket and hypermarket. The stores of the Group are located all over the capital city also In 2008 the company completed the DC of setting up 10.000 square meter.  Modern retail practices regards inventory management, order processing and fulfillment, transportation, warehousing as interdependent functions in the supply chain.     Before I mentioned modern logistics process the process of planning implementing and controlling the efficient cost effective flow and storage of raw materials, in- process inventory, finished goods to right goods or services to the right place, and in the desired condition and quantity in relation to customers order and demand. According to about retail chain company’s logistics service especially  about supermarkets logistics process. Let me get simple example let’s think I am customer and I want buy new television so  i bought television 1000$ from electronics chain store. I didn’t recognize about what is kind of process going .. behind this price. Let me explain whole of process ( related to logistics own thinking ) from order process  until to sale and bring to  on the shop counter.  First category managers  have to research top demands  products price to charge customers demands from home country or abroad and after finished research process result  than choose the products kind and price, sent information to  customs managers , who is role refer continuous research of manufactory also suppliers , where is most cheaper another issue and choose the manufactory.  After customs managers deal and research  to partner , which prefers  process contract to supplier about  price , quantity , contract, time of production etc so after above process finished , who need to give an advance payment to partners. All of the process depends from CEO’s decision. After carriage-paid customs managers move to transportation process. Customs managers  prefer decide to  transportation way, transport routes or railway etc also decide piece of trucks ( also choose trucks length 13 meter length  or 11 meter, or quantity of container ) these all depends goods kind and goods size. When customs managers finished above process after who need pay duty then starting shipment  such as from Russia and China to Mongolia especially to Distributions center. My guess is railway cheaper than trucks in Mongolia, railway can transmission large quantity. When transportation finished came to the Mongolia. After DC receive the goods. Receive process refers  many process. So starting account process of prices with  category manager and accountants  for account prices (  calculate cost, calculate value, add-value, purchase price etc ). When finished above whole process, move to next step to distribute goods from DC to stores. Usually cars going to stores at night , because in night no traffic jam, also it’s facilitate stores  work.

Organizing  whole process via  Information system contains detailed information about SKUs, contract with suppliers, purchasing price, etc. Also ERP system provides information needed for various analysis such as sales analysis of product categories over time, information technology advantage is  sharing of information, charge  to a reduction in costs, lower prices to the customer, also control the inventory and price etc  information system is very important force control for logistics system.