Logistics and Supply Chain Management Logistics Perspective

Question: Discuss about the Logistics and Supply Chain Management for Logistics Perspective. Answer: Introduction OMEGA is an independent fuel retailed providing fuel to the major cities in Queensland. The organization has 100 fuel outlets across the major parts of Queensland and sells close to 1000 million liters of fuel annually. The organization is planning to import refined product from various refineries present in Singapore. This report focuses on the logistics management concepts and tools to be used in the process of importing the fuel from the Singaporean refineries in order to gain competitive advantages over larger organizations like BP (Christopher, 2016). Analysis As mentioned earlier, OMEGA is planning to import refined products from various mega-refineries operating in Singapore. OMEGA has leased tank farms in Townsville, Mackey and Bundaberg. This section of the report mentions some of the logistics challenges of importing fuel from Singapore in Australia (Coyle, 2016). The transportation activities in Australia can be defined in different categories as mentioned below. Roads The roads in Australia can be divided into federal highways, state highways and local roads. The road freight industry in Australia generates close to 50 billion dollars in revenue and has more than 40000 operators. These operators range from single-truck operators to large corporations listed in ASX. One of the logistics challenges for OMEGA is to setup an effective contract with one or more of these operators to move the fuel from the ports to the fuel tanks. The identification and choice for the road operators for OMEGA is a challenge to be completed through effective analysis of the performance, trustworthiness and business model of the operators (Waters, 2014). The road freight transport industry in Australia also provides a wide range of innovative solutions and emerging technologies for the transportation of the products. OMEGA can analyze these facilities provided by the road freight operators to determine the most efficient way to transport the refined products from the port s to the fuel tanks. This is one of the important logistics challenges of OMEGA importing the products from Singapore (Ghaderi, 2015). Figure 1 Producer Price Index (source: www.abs.gov.au/) The chart above shows that the Producer Price Index (PPI) has been increasing slowly over the past 10 years. Such a trend of the PPI for the road freight transport industry suggests that the costs of transporting by road has been increasing. On the other hand, the movement of these costs have been flat since 2014, which in turn suggests a possible benefit from the decreasing fuel price and slower average wage growth (Figure 1, 2016). The decision of transporting the imported products from the ports to the fuel tanks will be a logistics challenge, which OMEGA has to overcome to be able to determine and utilize either the rail or road freight transport industry (Kinnear, 2015). Rail The rail transport industry is responsible for the generation of close to 8 billion dollars of revenue and consists of more than 25 operators. The logistics challenge for OMEGA is to decide whether to utilize the rail industry to move the fuel products from the ports to the fuel tanks and the choice of the operator among the available operators in the corresponding industry (Ghaderi, 2013). Figure 2 Rail freight routes map (source: https://transportinfrastructurecouncil.gov.au) The figure above shows the rail network in Australia connecting the major locations valuable to the business operations of OMEGA (Figure 2, 2016). OMEGA has to weigh out the benefits and costs of transporting using the rail or road freight transport industry based on the national key freight routes map shown below (Figure 3, 2016). This map contains the pictures of the routes though both the rail and road transport connecting the significant places in the country like the ports and airports. Another logistics challenge that OMEGA faces is to determine the most effective route for the transportation of the refined products imported from Singapore, which can be supported by the analysis of the below key freight routes map (Wijeweera, 2014). Figure 3 Significant rail and road freight routes map (source: https://transportinfrastructurecouncil.gov.au) Ports There are a lot of important ports scattered across Australia which can be used for importing refined products from Singapore. The figure below shows the location of the ports across the county (Brooks, 2012). Close to 4 billion dollars of revenue is generated from the Australia port industry due to the operations of close to 27 businesses. Most of these ports are facing congestion issues due to the heavy dependency of most of the import and export activities of the country on the port industry. The federal and state governments have been actively working on the design and implementation of efficient port strategies in order to utilize them more effectively. There are a large number of Figure 4: Ports in Australia (source: www.searates.com) domestic and international shipping operators present in the sea freight industry utilize these ports. The identification of the most effective shipping operator is another logistics challenge in importing refined products from Singapore. The shipping transport industry in the sea contains both foreign and domestic operators in which the domestic operators generate more than 4 billion dollars of revenue (Figure 4, 2016). The federal and state governments are also working to increase the fleet size of the country in the sea freight industry in order to provide more opportunities for the import and export activities of the organizations. Recent analysis proves that the presence of the vessels in the sea fright transportation industry is good enough to support the import activates of OMEGA (Bell, 2014). Australian biosecurity requirements The Australian Government Department of Agriculture and Water Resources includes the operation of Biosecurity Australia, which is responsible for the definition of the policies on the importation of various quarantine risk materials into the country. The Australian Quarantine and Inspection Service (AQIS) is in turn responsible for implementing these policies for the importation of materials into Australia. The importation of the refined products from Singapore by OMEGA will fall under these requirements and would need to satisfy these requirements to be able to import the products. All the vessels coming into Australia from overseas are subjected to these biosecurity requirements implemented by AQIS to be safe inside the country. The products to be imported by OMEGA should also be compliant to the international health regulations to ensure getting a permission to use the corresponding products in the Australian markets. This is one of the most significant challenges of OMEGA for imp orting the refined products from Singapore to ensure that the importation of the products from Singapore comply with the different regulations and policies implemented by the federal government of Australia. The Biosecurity Act 2015 is the regulation in place currently in Australia to ensure that the imported products from overseas are safe to be used in the Australian markets (Nelson, 2014). Recommendations This section of the report mentions a number of recommendations for the importation of the products from the Singaporean mega-refineries by OMEGA. OMEGA should focus on the effective analysis of the operators available in the sea freight industry in order to choose the best possible operator for the transportation of the refined products from the Singaporean mega-refineries to the Australian ports. The management of the organization should locate the ports closest to the fuel tanks present in Townsville, Mackey and Bundaberg in order to minimize the inland transportation costs (Pateman, 2016). The management of the organization should efficiently analyze the costs and performance of both the rail and road freight transport industry in Australia to determine the best decision for the inland transportation system to be used for the transportation of the fuel products from the ports to the fuel tanks. The management of the organization should put a lot of focus on the analysis of all the major freight transportation routes in the country covered by both the rail and road transportation system in order to minimize the corresponding costs of transportation. The importation operations of OMEGA should be effectively designed to be compliant to the Australia biosecurity requirements mentioned in the corresponding legislations as the non-compliance to these requirements may cause major disciplinary or legal actions against the organization (Hausman, 2013). Conclusion The efficiency of the business strategy of OMEGA to import the refine fuel products from the Singaporean mega-refineries to gain competitive advantage over the large organizations will depend on the effectiveness of the importation policies to be defined by the management. The sea freight industry in Australia is utilized to a significant extent and include the usage of all the important ports across the country. The inland transportation industry in the country includes both the rail and road freight transportation, which in turn provides the organization to choose either a single or a combination of the two for the transportation of the products from the ports to the fuel tankers (Pateman, 2016). References Australian Bureau of Statistics, Australian Government, 2016, Producer Price Index, [ONLINE] Available at: https://www.abs.gov.au/ [Accessed 19 August 2016]. Bell, J, 2014, Climate change and coastal development law in Australia, Annandale: Federation Press. Brooks, M R, Puckett, S M, Hensher, D A and Sammons, A, 2012, Understanding mode choice decisions: A study of Australian freight shippers, Maritime Economics Logistics, 14(3), pp 274-299. Christopher, M, 2016, Logistics supply chain management, Pearson Higher Ed. Coyle, J, Langley, C J, Novack, R A and Gibson, B, 2016, Supply chain management: a logistics perspective, Nelson Education. 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