Concept of education

1-WHAT IS LOGISTICS is the time related positioning of resources or, the strategic management of the total supply-chain.

The supply-chain is a sequence of events intended to satisfy a customer. It can include procurement, manufacture, distribution and waste disposal, together with associated transport, storage and information technology. Logistics is the function that is responsible for movement of goods and products. It is responsible for the transport and storage of materials on their journey between suppliers and customers.
In reality, this view is rather misleading, and every product is really a complex package that contains both goods and services.

Operations are usually divided into a number of related parts. Moving materials:

-Into the organization from suppliers:
inbound or inward logistics.

-Out to customers:
outbound or outward logistics.

-Within the organization:

Materials management

Logistics is 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.

2. BENEFITS OF SC: A supply chain consists of the series of activities and organizations that materials move through on their journey from initial suppliers to final customers. Every product has its own supply chain (could be long and complicated) The simplest view of a supply chain has a single product moving through a series of organizations, each of which somehow adds value to the product.

Taking one organization’s point of view, activities in front of it moving materials inwards are called upstream;
Those after the organization moving materials outwards – are called downstream.

The upstream activities are divided into tiers of suppliers.

-A supplier that sends materials directly to the operations is a first tier supplier;
-one that send materials to a first tier supplier is a second tier supplier;
-one that sends materials to a second tier supplier is a third tier supplier,

and so on back to the original sources.


Producers locate operations in the best locations, regardless of the locations of their customers.

By concentrating operations in large facilities, producers can get economies of scale.

Producers do not keep large stocks of finished goods, as these are held further down the supply chain nearer to customers.

Wholesalers place large orders, and producers pass on lower unit costs in price discounts.

Wholesalers keep stocks from many suppliers, giving retailers a choice of goods.

– Wholesalers are near to retailers and have short lead times

-Transport is simpler, with fewer, larger deliveries reducing costs.


In 1985, however, the integration process was given fresh impetus with the publication by the EU Commission of the White Book.
The White Book specified a number of measures, all of which were directed at changing the way in which companies are ran. They aimed to abolish the following: checks at internal measures proposed in the White Book were expected to influence the distribution of manufacturing within the EU. Borders; administrative hindrances to the movement of products, services, people and capital between European countries ; and, fiscal differences in the areas of VAT, profit taxation and customs.

-Companies would shift their manufacturing operations to sites where manufacturing factors were least expensive, or this was at least regarded as a theoretical possibility. -After all, the industries that had traditionally enjoyed national protection would no longer be protected and companies would be able to achieve economies of scale at the European level. -Another possibility was that companies would modify their product prices to improve their competitive position.

According to Cecchini (1988), the abolition of the various hindrances and the boost that this would give to competition would have four key consequences:
a significant reduction in costs for companies by making better use of manufacturing capacity and better organisation of distribution. The preconditions required to reduce labour costs were reaching agreement with the unions, and modifying the laws to create scope for more flexible labour. 2.
greater efficiency within companies, coupled with a review of their manufacturing sites and more intense competition.3. 
new patterns of competition between companies. Comparative benefits that apply nationally are no guarantee of a unique selling proposition in an international context.4. 
innovation of both products and processes stimulated by a large international market.


Manufacturing logistics is affected by a number of factors. The most important of these are:

(1)Manufacturing location

With the disappearance of internal frontiers within Europe, manufacturing companies should in theory be-able to set up their bases at the centre of gravity of their activities.

Every manufacturing company will be able to determine which location is best for it in terms of transport costs.

However, it is, of course, important to realise that freedom to choose the best location for their manufacturing activities mainly applies to companies that are starting up (existing companies would need substantial divestments and reinvestments)

This means that existing companies face certain logistical disadvantages, including the following: Higher transport costs and Higher inventory costs

The best manufacturing location.This means that in the search for the best manufacturing location, factors other than the lowest transport costs also play a role. The relative importance of these costs to the overall manufacturing cost will determine the extent to which they are taken into account in choosing the manufacturing location.

(2) Relative importance of manufacturing factors to the overall manufacturing cost:

Labour costs

Numerous studies have shown that labour costs are higher in various European countries than in the United States and Japan.  Besides the cost of labour, the quality and productivity of labour are, of course, also important factors. For manufacturing companies that are reviewing or setting up manufacturing plants and whose manufacturing processes involve a high degree of labour- intensive activities, reducing the cost of labour by moving to a different manufacturing location is worth considering. (However, they have to put attention in transportation costs)

Raw materials, components and energy costs:

highly dependent on the sector of industry concerned. In the petrochemical industry, for example, it is very important to gear the manufacturing location to the availability of raw materials and energy sources. In industries where purchasing is done outside national boundaries and European or global sourcing is employed, it will also be important to gear manufacturing locations to the available infrastructure facilities, such as import and transhipment sites. Other factors determining manufacturing plant location besides the role played by labour and raw material costs, other factors are also important determinants of manufacturing plant location. (Corporation tax, Desired distance from the market, The cost of land, Knowledge centres.

(3)Type of product produced

The term ‘manufacturing rationalisation’ means organising a company’s manufacturing processes so efficiently that economies of scale can be obtained.

-Current European market trends are forcing manufacturing companies to organise their manufacturing activities more efficiently. -Until recently, the area of fast-moving consumer goods manufacturing was dominated by national manufacturing companies producing goods for national markets. -There is now a trend towards large-scale factories producing goods for a number of European markets. This trend clearly has major consequences for the physical distribution of products as well as the more complex aspects of goods flow management and organisation.

One direct consequence of a manufacturing rationalisation of this kind is a greater need for logistical integration and co-ordination. Decisions that were formerly made locally, must now be co-ordinated to take the various markets into account.

The EU is striving to achieve total harmonization of product requirements.


The growing homogenization of the European market has given companies greater scope to integrate and rationalize their logistical subsystems. International or European physical distributions systems can be subdivided into: inventory management; warehouses and distribution centres; and, traffic management.

European warehouses, distribution centres

Issues relating to warehousing are directly related to the choice of inventory management system.

-Inventory centralization often also means warehouse centralization.-These warehouses are tending to decrease in number but increase in size. -This implies an increase in warehouse complexity

Four types of ‘warehouses’ or distribution centres:

1National distribution centres: goods are delivered from internationally dispersed factories to a single distribution centre for each area within a radius of 400 km. 2National transit centres: here the goods are stored centrally at the factories. This means smaller inventories and lower inventory costs, though transport costs will rise since more frequent stocking is required.3Direct delivery: ordered goods are delivered directly from a central factory warehouse to the customers, who are generally wholesalers or retailers in the countries concerned. However, transport costs may rise.4International distribution centres: customers from a number of different countries are served from one or more centralized international distribution centres. These centres can fulfill both inventory and transit functions. Inventory costs may fall, but transport costs will rise.__European Distribution Centre:
Is also used if products from branches in the US, Japan or Europe are collected and stored at one, or at most two, locations in Europe, and distributed from there to various customers.


Measurement of performance against each of the elements may also provide useful management information:-
Product availability may be measured by counting the number of back orders or the percentage of orders which are shipped complete.-
Order size constraints (volume or value) are orders accepted below a certain quantity or value.-
Delivery time may be measured from the moment the order is received until the relevant goods are delivered to the customer.-
Delivery gauges performance against an agreed schedule, bearing in mind: quality quantity and time factors.-
Consistency of delivery time over time is measured against an ongoing schedule. This is a vital measure as far as the customer’s safety stock levels are concerned.

8. FORMS OF TRANSPORT DOMINATIONG THE EU SCENE We attend to four main forms of transport: 1Road transport

Two types of structures can be found in European countries:
the star-shaped structure (as in the United Kingdom, for example) and the network-shaped structure (as, for example, in Germany).  This is more advantageous. Road density is not uniformly distributed and road transport is expected to increase in the coming years. 2Rail transport:
is one of the densest in the world. -Roughly one-third of the lines run along the London-Milan axis. -Railway networks have always been state enterprises in Europe, and as a result their infrastructure is targeted at national interests. -An important trend that has emerged in recent years is the development of multimodal transport (combining rail and road transport).3Inland water transport
Rhine = most important river. Rhine-Main-Danube canal 4.

Air transport-

Air transport has traditionally been dictated by passenger transport. –Freight transport has always had an international focus, and consequently, airport facilities are the most standardised of all.


The most important aspects involved in the organisation of intermodal transport are as follows: consolidation; standardization; information and communication technology; and, intermediaries.A.
Consolidation is the bundling of freight flows on a communal route.-Consolidation also entails deconsolidation at a later stage in the chain. -The choice of the point of consolidation and deconsolidation is vital.
Each transhipment of freight, with or without means of transport, costs time and money.
-For this reason, the number of transhipment points will always be limited.
-On the other hand, there must also be sufficient transhipment points to ensure that the distance to be travelled to and from these points is not so long that the remaining distance by rail or inland shipping is too short to be profitable.Consolidation may, incidentally, also take place within a single mode of transport, for example, at distribution centres (road transport), at shunting stations (rail transport) and via scheduled container services with feeder lines (sea transport).

b.Standardisation or the actual shape of the cargo, is an important factor in facilitating the rapid handling of shipments. -The use of standardised containers, swapbodies and pallets has increased the scope of intermodal transport. -As such, standardisation is desirable, and arrangements must obviously be made to achieve it. C.

Information and communication technology:

To facilitate the supply of and demand for transport as well as to ensure effective and efficient transhipment, exchange of information in necessary. -Communication plays a pivotal role. -Thanks to information exchange, the transhipment of goods from one mode of transport to another can be optimized. -Ultimately, the transhipment point will become just a brief transition from one step to the next.-Information can also play a vital role in preventing delays caused by customs clearance formalities.D-


Various types of specialists or ‘intermediaries’ are active in the field of transport: the forwarding agent, the shipbroker and the stevedore.:
The forwarding agent is sometimes referred to as the architect of the transport process. -The forwarding agent has access to precise information relating to the specific services provided by the various transport operators (shipping companies, airlines, etc.). -They consequently know exactly who can transport which goods as efficiently, safely and cost-effectively as possible. -The forwarding agent also knows exactly what documentation is required to accompany the goods and is able to make specific agreements for customers with individual carriers. -The various types of specialised forwarding agents include customs, groupage, seaport and airport forwarders.

The shipbroker is a middleman in the true sense of the word, acting on behalf of the shipping company (and its captain) on the one hand and on behalf of the shipper, transhipper or recipient of the goods on the other. Activities:-acquiring, taking delivery and arranging the loading and unloading of cargo, as well as the delivery of cargo.-issuing or receiving bills of lading.-collection of sea freight and other costs.-ensuring that the loading and unloading of the ship by the stevedore takes place properly.

The task of the stevedore is to load and unload ships. At airports, the stevedore function is entrusted to an airport-handling agency.


As a rule, a company can choose between five modes of transport to transport its goods: rail, road, water, air and pipeline.



How long on average does it take to cover the distance between manufacturer and customer, factory and distribution centre or distribution centre and customer? Air is in principle the fastest mode of transport. 


Can every location be reached? The road network is the densest of all networks. The truck is therefore the best option in terms of accessibility, which partly explains the dominance of road transport.


Will transport start and/or end at the agreed time? In other words: how great is the risk of transport being delayed by unforeseen circumstances? Pipelines are the least sensitive to adverse weather conditions. 


To what extent is a mode of transport suitable for carrying a wide diversity of goods of different sizes? Ships can accommodate goods of almost any shape or size and therefore score highest in this respect. 


A pipeline can be used 24 hours a day, 7 days a week and therefore offers the highest frequency. 

Risk of damage or loss

The pipeline is the safest option, though obviously not suitable for all products. 

Costs per ton/kilometre

The cost of the various modes of transport depends on the crucial factors of distance, weight and speed. If load and speed are constant, average transport costs will decrease as the distance increases. This is due to the ‘terminal costs’, that is, the costs of loading and unloading, shunting, administration, and so on. The greater the distance, the lower these costs are per ton/kilometre. Rail freight, for instance, is characterised by high ‘terminal-costs’ and is therefore only a competitive option for long-distance transport.


Cost leadership:

The cost leadership strategy involves all efforts being directed to reducing the total (or absorption) costs of a company. -This can be done by exercising strong cost control in each functional area: sourcing, production, marketing and especially logistics.
-By reducing the overall cost to a minimum, the company can achieve a relatively high contribution margin within a particular branch of industry. -Profits are invested in facilities such as automation, process engineering, telecommunication, information technology and logistics. -All these activities should make it possible to sustain business activities at the very lowest cost level. -With a cost leadership strategy, logistical decisions will have a considerable effect on a number of marketing decisions. -If the chosen strategy involves production and logistics being given relative importance over marketing, this may result in a reduction of product lines and individual article numbers (SKU’s), a compromise between freshness and quality.

Differentiationstrategy involves enhancing the product or service offered by a company by adopting a unique sales approach. -Differentiation can take many forms. These include an emphasis on design (Bang and Olufsen), label (Camel), prestige (Jaguar), technology
QVC) or logistics network (UPS). -With a differentiation strategy, the company is not concerned with reducing the overall cost to the minimum. –
If value is added through marketing and logistics, the price will become less important. To a certain extent, the higher costs may be offset by higher prices.

A company’s total product or service will represent a creative combination of three types of characteristics:- 

Fixed characteristics

During the production process, the product will undergo various transformations of form. Colour, taste, design and weight are some fixed product attributes.


Expressive characteristics

Customer wishes are investigated by means of marketing research. Each area of marketing is informed about how the product’s image and potential life-style contributions can best be marketed. –

Variable characteristics

The logistical function determines whether the product is at the right place at the right time. The customer service level is a performance indicator of the success of the outcome.-
The variable characteristics are responsible for supplying a product with a lot of additional value. The discussion on added value has resulted in companies defining their core competencies in terms of the logistical performance. -The desire to reduce logistical costs to a minimum has been replaced by the desire to provide optimal customer service.
-However, some companies are inclined to add more value to their products than the margin can bear. These products and companies are predestinated to vanish from the market.


Although Porter (1985)
argues that an organisation must select between an emphasis on cost drivers or drivers of differentiation, Mentzer (1993)
takes the position that organisations must pursue both to achieve long-term success. –
Combining the best cost leadership strategy characteristics with a differentiation strategy will produce an integration or strengthening strategy. -This strategy has the advantage of providing a high level of perceived quality as well as a low total cost level. Such a strategy can only bear results if all the company functions work together in an integrated way. -While the cost leadership strategy is marketing driven, the integration strategy leaves no space for functional domination:
marketing and logistics are no longer separated functions, but have to work in optimal harmony. -Marketers must not give sure lead times to their customers before checking whether production and logistical factors are such that these targets can be met. -Account managers and product managers have to understand how logistics functions and vice versa. The customer, rather than how each branch within the company functions, is the crucial thing.


The Trans European Transport Network (TEN-T)

was established in the aftermath of the Maastricht-agreement in the early 1990s. TEN-T focused on the EU’s internal market and the so-called four freedoms: 1) goods; 2) persons; 3) services; and, 4) capital. Developing the physical infrastructure both between and within the member-states was seen as an important factor in increasing growth and appreciation within the European Union. 
Therefore TEN-T is definitively regarded as part of the Lisbon-
strategy to improve competitiveness and employment. The new policy follows a two-year consultation process and establishes a core transport network to be established by 2030 to act as the backbone for transportation within the Single Market. The TEN-T network consists of two layers:
a core network to be completed by 2030 . It will ensure full coverage of the EU and accessibility of all regions.

and a comprehensive network feeding into this, to be completed by 2050. It will prioritize the most important links and nodes of the TEN-T, to be fully functional until 2030.


Past experience has shown that it is very difficult to implement cross border and other transport projects in different member states in a coordinated way.

It is very easy, in fact, to create divergent systems and connections and create more bottleneck.-

A major innovation on the new TEN-T guidelines for is the introduction of 10 implementing corridors on the core network.
They are there to help implement the development of the core network. -Each corridor must include three modes, three Member States and 2 cross-border sections.-“Corridor platforms” will be created to bring all relevant stakeholders and Member States together. The corridor platform is a governance structure that will devise and implement “corridor development plans” so that work along the corridor, in different Member States and at different stages of progress can be joined effectively. -European coordinators will chair the corridor platforms for the 10 key corridors on the core network.

the core network.


An integrated competitive logistics concept represents a combination of a business logistics strategy with competitive strategy theories.  -It bridges the gap between a competitive strategy and logistical concept.  -Integrated competitive logistics is defined as the specification and implementation of an integrated logistics concept from the point of view of competitive strategy.1. In it, the elements of a logistics concept are influenced on the input- side by a company’s competitive strategy and dependent logistics missions.  2. On the output-side, the performance indicators translate the results of the logistics concept into operational terms.  3. As such, it is impossible to implement a logistics concept, if the competitive strategy is not clearly defined.

Four areas of decisions

Consequently, logistical performance indicators can be used to assess the quality of a company’s logistical concept.


16.  10 TIPS FOR SELECTING A EUROPEAN DISTRIBUTION HUB: 1. Analyze your company’s needs

The first step in the process is understanding your requirements. Be sure you can answer these questions:  How much product is flowing and where is it flowing to? Where is the majority of your international customer base? What are your shipping needs? What products are you shipping—medical, pharmaceutical, food, hazardous materials, or fragile items?

2. Become familiar with the European Union’s demographics and currencies

The original 15 EU countries have more advanced economies than the 10 that joined at the start of last year. Currently, three other nations are in discussions to join the EU. Most EU members use the euro, but not all. The United Kingdom and Sweden, for example, use their own currencies


Check out national employment laws

Employment laws differ from country to country, which makes it challenging to reduce your labor pool.


Make sure you understand the country’s planning laws

Building regulations change from country to country.


Learn the EU transport initiatives

The EU is working to get freight off roads and onto rail and water systems.


Examine transport connectivity and infrastructure

Infrastructure is not consistent across Europe


Know your potential exit strategies

You must understand the property’s sale and leaseback value, and whether or not you will be able to exit the property if your circumstances change.

8. Ask about available grant incentives

In certain economically disadvantaged regions, the government may encourage economic activity through grants, which boost financial investment in the country and its economy. 

9. Understand the European drive time directives

10. Check out property pricing and local taxes

Rents and investment yields differ across Europe to reflect market maturity. These dynamics change all the time. Countries have different ways of taxing property, which can impact your operations costs.

18. EU LOGISTICAL SERVICESThe market for logistical services in Europe is a dynamic one. There are two reasons for this:  
Deregulation is changing the character of the transport industry.- The market’s requirements are changing rapidly.

Transport deregulation-

The transport industry is one of the most regulated sectors in Europe. -A key development within the EU is the ongoing abolition of restrictions on cabotage. As a result of this process, extra transport capacity will become available to the market. -There is also a trend towards ‘differentiated road pricing’, which will make some forms of transport more advantageous than others at the regional level, and thus resolve some of the congestion problems. -The abolition of frontier checks is a step forward that has significantly increased the average speed of intra-European transport. -Regulations relating to the environment (pollution, noise, reverse logistics) will also affect the availability, efficiency and cost of transport capacity. -Competition is expected to increase as a result of deregulation and harmonisation, and transport charges will fall in consequence. -On the other hand, the increase in restrictive environmental and safety measures will increase the cost of transport. Moreover, transport companies operating internationally will have to make expensive modifications to their information systems.

Third-party logistics-

Deregulation and the stiffening of competition that accompanies it is also forcing third-party logistics providers to be more professional: they are putting greater effort into their own strategies and marketing activities so that they can respond more effectively to market conditions and demands.-Last but not least, intermodal transport opportunities will increase and the transport industry must respond to them.

Market requirements-

Companies are showing a gradual tendency to increased concentration on their core competencies. -One of the effects of this tendency is outsourcing of warehousing and transportation activities to specialised third-party logistics providers. -Goods shippers regard these activities as extraneous to their core competencies. -In the current economic climate, products and markets are no longer the main factors determining company strategy; it is business processes that yield a clear added value for the customer. -As a result, the supply chain from raw materials to the customer by way of manufacturing and distribution is becoming a series of business processes that have to function together as effectively as possible. -By effective management of the supply chain, customers get with added value (short delivery times, high reliability).

Third-party logistics

Since shippers are recognising the growing importance of logistical performance within the supply chain, they will try to hive off some activities at their end of the supply chain if their performance can be thereby improved.

-As a result, demand for value-adding activities from third-party logistics providers is developing among manufacturers. The importance of partnership is also increasing. -This means that third-party logistics providers are becoming increasingly closely involved in such things as shippers’ sales activities.-As a result of changes prompted by European unification processes and market trends, shippers are currently reviewing their European logistical strategies. –
The number of DCs in Europe is showing a clear tendency to decline. This means the emergence of fewer but larger DCs, each of which will have to serve a larger share of Europe. -Third- party logistics providers of sufficient size and professionalism, and with the right networks to handle these business opportunities, will be needed for this purpose.-Third-party logistics providers will also need to be ready and able to work in a greater number of different countries than in the past.
They will need to have knowledge of the languages and cultures of several countries. All of these factors mean that there is likely to be a shift towards fewer but larger and more professional third-party logistics providers in Europe.

19. CONGESTION IN EUROPE European transport is expected to grow vigorously. Since there is a shortage of rail transport capacity, by far the largest part of this increase will have to be handled by freight trucks, and this will only increase in the long term.-The increase in road transport is leading to road congestion. One solution to the congestion is improving the European infrastructure. -Others are increasing combined modes of transport such as road, rail and inland water transport and increasing transportation networks.

Transport and distribution companies in a Europe with a single common market can expect to benefit from the following macroeconomic opportunities:- 

Increasing exports

Assuming income levels remain stable, falling consumer prices will lead to an increase in purchasing power.- 
This increase in purchasing power will lead to an increase in industrial manufacturing and hence increased demand for transport capacity for both finished products and raw materials and components.- 

Intra-European transport is increasing

Due to changing manufacturing locations, easier export opportunities and the introduction of free cabotage, transport between and within the various European countries is likely to grow strongly.

However, European transport and distribution companies can also expect to face the following macroeconomic threats:

increased competition as a result of the entry of low-wage countries where drivers work for lower wages than their northern European colleagues-
opposition to harmonisation by Member States whereby higher priority is given to national interests than to European interests.


Environmental regulations (pollution, noise, reverse logistics) will have a significant impact on the availability, efficiency and cost of transport capacity.
If some countries vote to lower the maximum speed limit, this will also result in a reduction in the average speed. European environmental awareness has increased significantly in recent decades. This has had an obvious effect on politics and on the measures proposed by governments. 

The goal of these measures is to reduce water and air pollution, to reduce noise and to improve the landscape.-‘Life-cycle analysis’ – analysis of the impact on the environment of product manufacturing, distribution, consumption and final disposal – is now being carried out, and this is having an indirect effect on transportation. It is increasingly common for manufacturers to be compelled to retrieve the packaging material in which they deliver their products and to assume responsibility for recycling or destroying it.-Transportation is also directly affected by environmental measures.  -Austria and Switzerland ban cargo transport from their road networks, taxes on diesel are going up and taxes are expected to be introduced on kerosene for air transport.  Outsourcing of storage, packaging and transport is a direct consequence of the trend in business whereby manufacturing and trading companies are concentrating to a growing extent on their core activities. 

For multinational transport companies in particular, this trend offers considerable scope for expanding their activities.

Examples of companies like these are Danzas, TPG and Frans Maas. Other ways in which transport companies are responding to changes are the following: –

Voluntary collaboration

For example between transport companies that have remained independent. –


For example offering highly specialized transport services. –

Supplier or subcontractor

Goods transportation on behalf of one of the aforementioned types of companies.


International or European physical distributions systems can be subdivided into: inventory management; warehouses and distribution centres; and, traffic management.


Many issues relating to inventory management at national level are also relevant at international level. Although the complexity is larger, many national methods can also be used on an international scale. Some examples of this are: determination of optimum order quantitieS anddetermination of the turnover levels of various products within the international supply chain.

•          inventory management directed at creating international levels of customer service.

•          distribution requirements planning (DRP) at the European level.

European unification

  • One aspect of European unification that has influenced inventory management is the harmonization of product standards.

  • Unification has had the effect of facilitating use of inventory centralization by companies as a logistical strategy.
  • Another effect of European unification on inventory management is that companies can now maintain lower inventory levels because they are no longer hindered by delays resulting from border formalities.

Allocation of responsibilities for inventory management

  • If inventory is only centralized physically and the old method of inventory management is retained, companies will merely end up with the old inventory levels plus safety stock.
  • If inventory management responsibilities are also centralized, the problem of allocating shortages and surpluses will arise.
  • This is a tricky issue, bearing in mind that it is almost impossible to produce a good short-term sales forecast in practice.

Inventory management centralization is most effective in situations where there are reliable European sales forecasts and national fluctuations in demand cancel out one another.

  • This is the case in sectors such as service parts, computer and copier supplies, office stationary and pharmaceutical products.
  • It is less effective in other situations: for example, national promotional activities for fast- moving consumer goods or consumer electronics, large projects for key office machines or office furniture accounts.

Because of this, many companies opt for a hybrid form in practice.

  • National sales organizations pass their sales forecasts on to a central inventory management department. This department aggregates the forecasts, determines a European inventory level and places orders with the suppliers or the manufacturing organizations concerned.
  • Each of the national sales organizations receives a ‘commitment’ from the European supply chain organization:
    This is a pledge to make a particular quantity available within a given period.

This will work as long as the national sales organization continues to purchase the products in accordance with this commitment.

However, if purchases are below the agreed level, the national sales organization is ‘penalized’ (for example, it may be obliged to purchase products for accounting purposes, or it may be charged interest on the inventory), unless it has been able to ‘sell’ its commitment to another national sales organization.



European traffic management is affected by a number of factors.

The transport sector is one of the most regulated in Europe, with:

  • driving speeds,
  • dimensions,
  • maximum weights,
  • taxes,
  • driving time limits and so on,

all subject to specific regulations which have a direct impact on:

  • the availability,
  • quality,
  • efficiency and
  • cost of means of transport.

Other factors include environmental considerations and legislation, and the impact of existing and new traffic infrastructures.

While there is a current trend towards transport liberalisation in European countries, countries are also trying to protect their national transport sectors.

Transport deregulation

An important development within the EU is the ongoing elimination of restrictions on cabotage.

Cabotage – the transportation of goods on the return journey

  • This will make extra transport capacity available to the market.
  • There is also a trend towards ‘differentiated road pricing’, which means that transport activities are taxed according to the region in which they occur. In this way, the various means of transport can be given relative preference with an eye to resolving some of the congestion problems.


We saw diffusion as a process involving the combination of new ideas with insights from other industries and countries. This is useful to eplore the role of international trade in the process of development. Starting from autarky (closed borders), a country opening itself to traded results in a higher temporary growth rate and a permanently higher lvl of the stock of knowledge, as producers are exposed to more productive ideas. We separate the gains from trade into static and dynamic components. The static component consists of the gains from increased specialization and comparative advantage, wehereas the dynamic component comprises the gains that are made through the flow of ideas.


Is an accounting framework with three parts: social, environmental and financial. Some organizations have adopted the TBL framework to evaluate their performance in a broader perspective to create greater business value. The concept of TBL demands that a company’s responsibility lies with stakehoders rather than shareholders. The TBL consists of social equity, economic, and environmental factors. The phrase “people, planet, and profit” is used to describe the TBL and the goal of sustainability. The people (social equity) pertains to fair and beneficial business practices toward labour and the community and region in which a corporation conducts its business. Planet (environmental) refers to sustainable environmental practices. A TBL company endeavors to benefit the natural order as much as possible or at the least do no harm and minimize environmental impact. Profit deals with the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital tied up. It therefore differs from traditional accounting definitions of profit.


this activity might be the work of the commercial department in an organization. The commercial department is the one who ensures that the payment terms and the delivery terms have been met and then processes the order from within the company.

2) Materials handling:

is the movement of goods within the warehouse. It onvolves handling the material in such a way that the warehouse is able to process orders efficiently.

3) Warehousing:

If we take the example of LG, these are are consumer durable companies which are present in multiple contries. Their manufacturing might be at one point, but the distribution is all across the world. Warehouse should be nearby to the dealer or the distributors’ place and it should facilitate the easy delivery of goods.

4) Inventory control:

If a firm has 100 units of a product in stock, but the demand is only 10, then the company has uselessly invested in 90 units. This is money which can be used as a working capital and its money on which banks are applying interest.

5) Transportation:

it involves the physical delivery of goods from the company to the distributor or dealer and from the dealer to the end customer.


WIDE NETWORK OF RESOURCES: this enables providers to execute each step along the supply chain efficiently.
2. SAVE TIME AND MONEY: more businesses find that they can save both time and money by outsourcing their logistics to third-party logistics providers. Generally, these companies provide warehousing, transportation, proprietary technology and integrated operation services.
4. SCALABILITY AND FLEXIBILITY: Three key benefits to outsourcing logistics has to do with the flexibility to scale space, transportation and labor, especially if you are experience a sudden spike in demand.


Logistics plays a vital role in economies throughout Europe. With continuing changes in market conditions, it is important to be aware of current trends in order to remain competitive. Logistics makes up 14% of total GDP in the EU countries. Road is the biggest carrier of goods in terms of tonnage, with over 46million tonnes carried daily. Over 79million euros in tobacco and beverages are eported daily in the EU. There is an increase in consumer spending in Europe; Eastern European countries such as Poland outspend many of their European counterparts, etc. We have to highlight that contract logistics now accounts for over 1/3 of the European logistics market value.


A large standard size metal bo into which cargo is packed for shipment aboard specially configured transport modes. It is designed to be moved with common handling equipment enabling high-speed intermodal transfers in economically large units between ships, railcars, truck chassis and barges using a minimum of labor. The container, therefore, serves as the load unit rather than the cargo contained therein.


Logistics functions are same domestically and globally but differ in four D’s (distance, documents, diversity in culture and demand of customer). In the global logistics distances are longer, documentation is more extensive, customer demand varies to satisfy cultural differences within both, countries and regions. Developing strategies to respond to the 4D’s environment is the global challenge for logistics management.