1) Introduction
a) Definition of for-Profit and Non-profit Agencies
The use of the term not-for-profit generates significant misunderstanding about charitable organizations and the role their role in the society. The misunderstanding contributes to the scant attention given to the field of reverse logistics in the extant literature because associated supply chains are not primarily for profitability. According to Tatham and Pettit (2010), literature in the humanitarian logistics field associated with not-for-profit agencies shows limited application of the supply network and management theory and practice. Consequently, stakeholders in the field focused on the development of principles and practices with the potential for significant improvement in efficiency and effectiveness of the humanitarian logistics supply chain. The need for such strategies is evident in the study by Randall, Nowicki, and Hawkins (2011) showing the role of performance-based logistics strategies in providing the government and for profit agencies with systems cycles costs reduction mechanisms. The bottom line is that investment in logistics process improvements or system redesigns that reduce costs establishes structures that yield benefits. The evidence points to the significance of understanding different logistic theories and practices to both for-profit and not-for-profit agencies. The paper examines the influence of different warehouse systems and their relationship with inventory on important logistics strategies and overall supply network management.
Understanding the similarities in utilization of logistics services by for-profit and non-profit agencies requires apprehension of the differences between the two in relation to purpose, ownership, and public support. Charitable not-for profit agencies are characterized by a mission focusing on activities beneficial to the society whose goal is not profit, public ownership, and recycling of income into the agency’s mission and activities that re beneficial to the public. In contrast, for-profit agencies generate income for its stakeholders, who also share profits made from the sale of goods and services. For-profit agencies are privately held or publicly traded. However, the two types of agencies employ related strategies where logistics are concerned. Tatham and Pettit (2010) observed that humanitarian logistics deals with the planning, implementation, and control of the flow of goods, materials, and information from the point of origin to the point of consumption in an efficient, cost-effective manner that meets the requirements of the end beneficiary. A similar definition can be associated with for-profit agencies. Recognizing that both for-profit and not-for-profit agencies make profit, but it is the purpose of the profits that differ, is necessary to understand their logistics strategies. In addition, the two agencies may be subject to discriminative taxation, with non-profits being exempt from many federal, state, and local taxes by virtue of being charitable organizations. Such taxation policies can influence the differences in efficiency and cost-effectiveness of each agency’s supply chain significantly. However, in both cases, focus must be on long-term affordability and performance, and alignment of activities to end-user goals. According to Randall et al. (2011), process requires relational exchange, building trust, and communication with suppliers.
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b) Definition of a Natural Disaster
The effects of natural disasters on efficiency and effectiveness of logistics and overall supply chain management cannot be understated. Tatham and Pettit (2010) cited a statement by the United Nations General Secretary on the rising global demand for humanitarian responses triggered and sustained by the increase in severity of natural hazards, escalation in conflict, vulnerabilities from the global financial crisis, scarcity in food, water, and energy, growth in populations, and urbanization. In the face of natural disasters, these factors affect humanitarian response negatively. Natural disasters are responsible for great damage and loss of life. Hurricanes are classified as the most powerful natural disasters based on their size and potential for destruction, earthquakes are equally devastating, and floods and droughts are common natural hazards. In the US, hurricanes Katrina, Harvey, and Irma presented immense logistical challenges to the Department of Defense and other stakeholders involved in the provision of humanitarian aid and recovery efforts. In the wake of natural disasters, logistics programming is instituted to dispatch commodities to distribution centers as soon as possible to accelerate relief operations. According to Apte (2010), recent natural disasters across the world have exposed the shortcomings in humanitarian logistics planning. Readiness is becoming a priority of the homeland security in the US. The need for a new approach is informed by the fact that humanitarian logistics programming encounters challenges such as demand surges, uncertain supply, critical time windows in the face of infrastructural vulnerabilities, and large scope and size of operations (Apte, 2010). For-profit agencies can afford to wait out for the aftermath of natural disasters to pass, but not-for-profit agencies directly involved in emergency response have no such luxury because they must operate in real time in the midst of the disaster. Therefore, the former can learn crucial lessons from the latter about logistics programming under challenging circumstances.
2) Financial Logistics
a) Definition for
i) Customers
A suitable definition of financial logistics for customers is found in Shen, Zhao, Li (2010). The study describes financial logistics as an innovation of logistics service that has financial supporting functions in the form of cheques distribution, cash escorts, records storage, and supply chain finance. A financial logistics management system that is properly developed can aid financial institutions in the management of operations in a more effective and efficient manner, reducing risks and costs in the process.
ii) Logistics Measures
In logistics measures, financial logistics is strongly associated to inventory management where outsourcing of supply chains creates difficulties in inventory management, distribution of goods, and financial reporting due to errors. The various strategies employed to achieve lean supply chains result to difficulties in the tracking of logistics costs from hiring and managing personnel, multiple redundant systems, provision of warehousing in origin and destination countries, and maintaining accounting compliance.
b) Differences
The main feature of financial logistics targeted at customers is that it provides clients with a wide range of online services for liquidity management, risk management, trade finance, and treasury tools. The platforms are tailor made based on the user’s interests. Financial logistics platforms for customers have profiles customized for use by CFOs, treasurers, cash managers, and administrators. In contrast, financial logistics for logistics measures are systemic and integrated in the supply chain processes through involvement of external suppliers and customers. The processes target streamlining of logistics finance management by focusing on risk and performance.
c) Similarities
The similarities in financial logistics between customers and logistics measures are evident in the purpose of the platform, which is to streamline financial tracking to through elimination of errors associated with factors mentioned earlier. Customers and logistics measures benefit from the transactional perspective from the interaction of finance and logistics, allowing them to determine expenditure on transportation and warehousing, and opportunities for cutting costs through third party vendors or discounts.
3) Warehousing Management
Warehouse management systems can be employed by managers to increase productivity, improve order rate, shorten lead times, improve provision of information, and anticipate new developments. According to Ramaa, Subramanya, and Rangaswamy (2012), warehousing is a critical function that acts as a node linking material flows between suppliers and customers in the supply chain. The competitiveness of the modern logistics industry forces players in both for-profit and not-for-profit organizations to innovate and improve warehousing operations. Customization of value propositions has also increased customer service levels leading to alteration in the role of warehouses. Warehouse management systems (WMS) are software applications for supporting and optimizing warehousing or distribution. The core functions of WMS include planning, organizing, staffing, directing, and controlling utilization of resources by supporting staff in the movements of materials in and out of the warehouse. Warehouse management systems are adopted and implemented depending on the type of warehouse in question. For instance, an advanced WMS has the capability to plan resources and synchronize activities in the facility, while a complex WMS can optimize a group of warehouses ensuring information on inventory is shared.
Figure 1: Goals of WMS in supply chain management (Source: Jeroen van den Berg Consulting, 2001)
a) Types of Warehouses
The warehouse is a common method of storage and accumulation of goods. Warehousing, which refers to the responsibility storing and releasing goods when needed creates time utility. Functions and benefits of warehousing overlap and include time utility, regular production, price stabilization, storage of surplus goods, packaging and grading, risk minimization, and financing. Improvement of service levels is dependent on warehousing and inventory management. The dual perspective is important in addressing the complexity of warehousing in relation to handling in-bound goods and outbound shipments to customers. Over time, warehouses have grown in complexity and are diversified based on location and nature of goods handled.
| Nature/Type | Description |
| Dockyard Warehouses | Found in the premises of shipping docks or close to coastal cities with ports. They are controlled by the government or shipping dock authorities. They are used for storage and maintenance of goods, implying they store goods for a given period until picked by owners upon clearance of housing dues. |
| Trans-loading Warehouses | They are found near rail-car tracking or container ports, and serve as temporary storage for goods received through these modes. The goods are moved after a fixed number of days. |
| Cold Storages | These warehouses are used for storage of perishable goods, usually agricultural products. They are strategically located in city centers or airports and dockyards. They have state of the art refrigeration facilities and technology for tracking goods based on expiry date. There is high level of inventory in cold storage warehouses owing to the nature of goods. |
| Distribution Warehouses | These public warehouses receive large quantities of goods from different suppliers. Goods are tentatively placed in the warehouses without further changes in their material form or packaging and transferred to new buyers upon request. |
| Consolidated Warehouses | Are used for storing different types of goods, whose creates are opened for detailed inventory to be prepared. Goods are then converted into smaller shipments for delivery to buyers, hence the warehouses are popular among manufacturers taking online orders or dropping shipments. |
| Value-adding Warehouses | The physical appearance of goods is transformed in these warehouses by addition of new variants. Goods are rebranded based on the ultimate buyer or retailer, a process that increases quotable prices. |
| Long-term Storage Warehouses | They are contracted to store important documents for clients. |
| Private Warehouses | The privately-owned warehouses serve to store merchandise and inventory. They are used to shelter and protect company assets, for instance, by engineering companies. |
| Government Warehouses | Government owned facilities for storage and preservation of agricultural produce through the years. |
| Automated Warehouses | Employ the latest software and technology, cranes, and carriers to perform warehousing operations. They utilize minimum manpower. |
b) Locations
Location of warehouses is the most critical aspect in successful optimization of logistics systems (Demirel, Demirel, & Kahraman, 2010). The type of warehouses and inventory suggest that their location is influenced by various factors including costs, labor characteristics, infrastructure, markets, tax incentives and structures, efficiency of transportation modes, and proximity to customers. Location is both and external and internal concept in relation to warehouses. Warehouse location is undergoing transformation inspired by emphasis on inventory levels and transportation that allows negotiation of rates. Improved transit and delivery performance have diminished the need for opening more warehouses. Location of warehouses can also be viewed in relation to efficiency and effectiveness of its inventory management and other warehousing operations. The deployment of WMS solves most of these warehousing challenges. Location may also refer to the position of the warehouse in the agency’s logistics structure. Warehouses play a crucial role in the success of customer and service efforts and must be included into the organizational structure in a manner that optimizes service delivery rather than efficiency of managerial personnel.
c) Design Considerations
Design of warehouses is a crucial aspect of the logistics systems. Meneghetti and Monti (2015) observed that refrigerated automated warehouses need sustainable design that accounts for the specific features of the foods supply chain such as temperature control. Rack configurations, surfaces, and volumes of the cold cells re optimized to minimize yearly costs of using the facility. In addition, modeling of crane and satellite systems is necessary to provide deep lane solutions and save space (Meneghetti & Monti, 2015). Therefore, it can be argued that design considerations of a warehouse are determined by the type of product to be stored, spatial characteristics needed of such a warehouse, equipment to be deployed in warehousing operations, circulation of goods, accessibility, and the manpower needs for smooth running of warehouse operations.
4) Transportation
a) Issues
Integration of inventory and transportation is cost effective strategy for warehousing managers because it reduces the workload significantly (Sainathuni, Parikh, Zhang et al. , 2014). However, the current craze for greening the logistics industry implies critical areas of importance are neglected as emphasis is placed on reducing the carbon footprint of the organization. This is not the immediate concern of a warehouse manager, whose most important function is keeping track of constant inflow and outflow of goods. Warehouses must deal with transportation issues such as costs of maintenance, insurance, and fuel, delays, tracking and communication, and warehouse safety.
b) Considerations
The logistics industry is highly dependent on reliable transportation for timely deliveries. The element of time is specifically important to humanitarian agencies implementing quick response programs in natural disasters. For other businesses, the growth of online shopping has increase the demand for efficiency in delivery forcing companies to innovate. Logistics managers need to focus on compliance with expectations of shipment tracking by communicating any deviations and enforcing regulations for dealing with distressed shipments. It is imperative to collaborate with carriers to grow a positive reputation among customers. Freight data must be used to gain insights into cost drivers, and mode optimization explored without compromising delivery schedules. Setting up a transport department may be an option to enable dealing with transportation metrics and planning.
5) Conclusions
a) Effect upon Organization
For-profit or not-for-profit organizations face challenges to streamline their logistics operations to meet the rising expectations of the end users. Warehousing is central to the success of logistics operations, and the type of warehouse and transportation contribute immensely towards the goal. Therefore, organizations must innovate using existing software and technology by adopting and implementing warehouse management systems to boost service delivery, reduce costs, and improve efficiency and effectiveness. Companies that fail to change risk stagnating and losing customer trust, hence the need to keep up with the latest trends in the industry.
b) Recommendations
Individual organizations must take into considerations design parameters specific to the type of warehouse of interest to ensure ease of inventory management and reduction in costs.
Due to the high cost of setting up privately owned warehouses, agencies can explore the opportunities presented by collaboration with third party service providers.
All agencies must focus towards lean supply chains that optimize efficiency, a critical aspect in reduction of transportation fleets and associated carbon footprint in a bid to address rising consumer concerns about greening logistics.
Adoption and implementation of WMS to remain competitive through customization of services based on the customer and the company needs.
References
Apte, A. (2010). Humanitarian logistics: A new field of research and action. Foundations and trends in technology, information and operations management , 3(1), 1-100.
Demirel, T., Demirel, N. Ç., & Kahraman, C. (2010). Multi-criteria warehouse location selection using Choquet integral . Expert Systems with Applications , 37(5), 3943-3952.
Jeroen van den Berg Consulting. (2001). Warehouse management systems. Retrieved from https://pdfs.semanticscholar.org/3c56/ca678a98d7b2bddda7978da5392eec873e8f.pdf.
Meneghetti, A., & Monti, L. (2015). Greening the food supply chain: an optimisation model for sustainable design of refrigerated automated warehouses. International Journal of Production Research , 53(21), 6567-6587.
Ramaa, A., Subramanya, K. N., & Rangaswamy, T. M. (2012). Impact of warehouse management system in a supply chain. International Journal of Computer Applications , 54(1).
Randall, W. S., Nowicki, D. R., & Hawkins, T. G. (2011). Explaining the effectiveness of performance-based logistics: a quantitative examination. The International Journal of Logistics Management , 22(3), 324-348.
Sainathuni, B., Parikh, P. J., Zhang, X., & Kong, N. (2014). The warehouse-inventory-transportation problem for supply chains. European Journal of Operational Research , 237(2), 690-700.
Shen, C., Zhao, L. M., & Li, Y. (2010). The research on the constitution of Financial Logistics Management System. In Industrial Engineering and Engineering Management (IE&EM), 2010 IEEE 17Th International Conference on (pp. 1448-1452). IEEE.
Tatham, P. H., & Pettit, S. J. (2010). Transforming humanitarian logistics: the journey to supply network management. International Journal of Physical Distribution & Logistics Management , 40(8/9), 609-622.
