November 20, 2006	Monday	Shawwal 27, 1427

AS the world manufacturing business is thriving, the role of supply chain is growing immensely and its management is proving to be one of the biggest competitive factors after technology integration.

Logistics is one of the dynamic aspects of supply chain and requires effective utilisation of transport facilities. Various entities are used for transportation which includes carts, loaders, trucks, trains, boats, ships.

Logistic operation is considered as non-value added entity in the value chain of a product. This is an unavoidable liability to product value chain. Efforts are made to decrease usage of this resource and make it as cost-efficient as possible. This is done by standardising logistic codes, maximising utilisation of vehicle capacities, using new and state of art vehicles, building better road infrastructure and warehouses at strategic locations and applying efficient operation research methodologies to boost performance.

Standardising logistic codes implies developing country-wide standards for vehicles, containers, pellets, handling/monitoring systems, informational exchange and physical pathways. This has substantial impact on cost savings and supply chain response is also enhanced. This standardising has also a positive effect on vehicles’ capacity utilisation. Trucks and loaders can better manage their loads. It also substantially decreases transport cost on products.

Road vehicles are made by leading automotive manufacturers around the world and key elements to manufacturing correspond to designs, flexibility, and adaptability to local conditions, efficient fuel consumption and workability. There are lots of companies which manufacture trailers and add-ons to vehicles. They make use of the basic engine and structure made by automotive companies and then fit their custom-made body over it. In Pakistan, there are a number of companies engaged in such manufacturing.

Cost of operations and logistics is at the minimum possible level for a truck when it is in its first-three years of operation depending upon various factors. After that, it rises on account of wear/tear and damages. The cost of operation for old trucks is the highest as too many resources are drained in fuel, spares and maintenance. This makes a logistic operation incomparably expensive. This is the reason why European countries stick to use and import inefficient and old trucks.

Truck transport sector is not organised in Pakistan and there is no fully functional logistic company in the private sector. The biggest is NLC, owned by army which is subsidised by taxpayers.

A majority of trucks used are dilapidated. There is neither any formal channel of repairs and maintenance for trucks under a company nor any authority monitors the condition of goods’ vehicles on regular basis. As a result of which, poorly managed vehicles are used to transport goods. This not only damages quality of goods but also increases the cost of goods transportation. Costs of operation associated with quality loss of deliverables due to bad vehicle condition, bad maneuvering and accidents are exorbitantly high. The environmental damage as a result of exhausts and fuel consumption is also excessive.

Human resource problem is a grave issue in this case. Logistic firms and government bodies in the developed countries employ supply chain professionals to manage, design, re-engineer and build logistics infrastructure. They employ state of the art tool and techniques for designing and routing of vehicles and also monitor the performance of supply chain operations—both, technically and financially as well.

Such a technical job in private companies in Pakistan, is usually done by illiterate persons while in the government sector, this task is carried out by regular civil engineers, mainly at operational level.

With limited logistic knowledge, they are satisfied of their planning as long as goods are moved properly from different locations. Strategic level relating to issues like cost, time and quality is never emphasised.

On the whole, the net loss that this sector causes to Pakistan’s and international trade is quite high. National resources lost in the import of spares, fuels and export-quality products amounts to billions of rupees.

Under the circumstances, logistic standards for the country should be devised and an official body be formed to control the transportation vehicles. New vehicles and trucks be imported to replace old and refurbished ones.

Companies be given incentives to utilise new transport vehicles. Further, banks and financial institutions should give easy loans financings to boost logistic business.

Proper qualified operation research or supply chain management personnel be inducted in logistic companies and governmental bodies at tactical and strategic level and institutions be strengthened to initiate practical research in this specific area of logistics and supply chain management.