Global Logistics and Supply Chain Management - Desklib

The report discusses the concept of logistics and supply chain management with practical examples of Kmart. It covers the modes of transportation, risk management policies, and the organizational structure of Kmart. The report is relevant for students studying logistics and supply chain management. Course code, course name, and college/university are not mentioned.

Running Head: GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Global Logistics and Supply Chain Management
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1GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Introduction
The concept of logistics encompasses the entire process of getting the product of a
company end at the door of the customers. In other words, it can be said that it conveys the
products from the merchant to the consignee. The business sectors are getting benefitted by the
current use of logistics services because the logistics services execute the entire process with
much care and responsibility (Mangan, Lalwani & Lalwani, 2016). There are various hazards but
they can be mitigated by effective risk management policies and practices. When the global
logistics management consists of only the process of transporting the products to the customers,
the supply chain on the other hand comprises of the internal and the external process starting
with the supply of raw materials till the delivery of the product to the customers (Wong &
Davison, 2018). The present report will deal with the supply chain practices and global logistics
taking up Kmart as the main company to demonstrate elaborate the topic with practical
examples. The report will also analyze the risk management of transportation and conclude by
giving an overview of the entire topic.

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Discussion
About the Kmart company-
The Kmart Australia is a subsidiary of Wesfarmers. It is a chain of retail stores which
operates in almost 230 stores all around Australia. The company y has its head office located in
Melbourne (Mulgrave) (kmart.com ,2018). The company began in the year 1969 as a joint
venture between the S.S Kresge and the G.J Coles & Coy Limited in the US. The company
primarily operates in the general merchandise and clothing retail sector both nationally and
internationally. The first store of the company was opened in Burwood,
Victoria(kmart.com ,2018). The mission of the company is to become world’s top family store
where families would opt first and receive best quality product for lowest prices on everyday
products.
There are more than 34,000 employees working day and night for making the mission of
Kmart, a success. There are also 256 Kmart stores which operate in tyre and auto services in
Australia (kmart.com ,2018). These stores provide the customers with repairs and automotive
services. In the month of April, 2018, the Wesfarmers company decided to sell the Kmart Tyre
and Auto Service. The company is associated with both the national and international suppliers
including Bangladesh, China, Indonesia, India and Cambodia(kmart.com ,2018). The product-
sourcing offices of the company are also located in the above mentioned countries. The annual
revenue of the company is $6 billion as per the financial report of 2018. Ian Bailey is the
managing director of Kmart(kmart.com ,2018).
The business activities of a company are determined by its organizational structure. The
position of Kmart company in world order is formed by the combination of their successful
organizational structure and culture(kmart.com ,2018). It has a hierarchical organizational

3GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT
structure. Every employee has a supervisor expect for the CEO. The directions and mandates are
followed by each and every executive starting from the down level up to the top level. It also has
a function based organizational structure. The entre team is divided into smaller parts and each
group fulfills certain allocated tasks (kmart.com ,2018). The HR department, the IT department
and the marketing department are among the most effectives groups. The Kmart company has
another feature in its organizational structure. The new policies and strategies are directly
conveyed to the regional managers and the various store managers. The key reason behind the
success of the Kmart company is their focus on the customer satisfaction by their ingenious
supply chain management and logistics services(kmart.com ,2018). The company mainly uses
trucks as their transporting medium having 40 regional distribution centers and 140 domestic
distribution centers which keeps the entire flow of operations smooth.

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Global logistics System of Kmart
The successful logistics and supply chain management Kmart has been the biggest key
point for the company’s rapid growth. Their unique supply chain policies and practices have
supported cost savings. It also has a shipping consolidation which has increased the overall
efficiency of the entire supply chain (Arvis et al., 2018). The delivery of goods is made smooth
by the standardization of the shipping carton sizes. The company is in constant process of
developing their logistics and supply chain nationwide and global which will increase the sales
up to 55- 85%. The supply chain of the company is divided into two basic parts- strategic
logistics and strategic sourcing(kmart.com ,2018). The flow of business of the company is
determined by the flow in these fundamental. The operations starting from identification,
devising, transfer, warehouse, supply and deliver.
The Kmart company also has some regulations and tight control over aspects such as
merchant choice, superiority and ethical actions checking, price citation, export licensing,
merchandise allotment to heighten the rates of productivity within a targeted period. Their
exceptional CBX system helps to meet the requirements in different
departments(kmart.com ,2018). Their enterprise resource planning system helps by playing the
role of combining the buyers and merchants of other departments begin and end in a single
system enabling the information transmit easily from one zone to another. The new process is
helpful in securing and accessing the vendor endorsements, serious information about various
deals, profiles and presentations (kmart.com,2018). The supply chain management of Kmart
covers the cost reduction factor and optimizes the product collection.
The cross docking system was first introduced in Australia by the Kmart company. This
system analyses the types of equipment used and also conducts a complete assessment of issues

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related to the cross-belt sorting (kmart.com,2018). This supply chain system was based on
75,000 m2 DC. The reason behind why this system was adopted by the company is that it has the
capacity to arrange mechanically more than 6,000 objects per hour to 88 individual store orders.
Along with this, the cross- docking system has provided cost –efficiency to the Kmart company
and also efficiency in managing a strategic supply chain (kmart.com ,2018).
The cross –belt system used by Kmart helps to handle the locally supplied and imported
products, arrange the customer order improving order alternative costs and accuracy. The system
uses two kinds of product identification methods. The numbers are identified by the bar code
reader label and the stickers are used to signify the product is being dispatched to Kmart by the
traders(kmart.com ,2018). The label when gets scanned reveals by the help of Dematic cross belt
sorting system, which supplier has packaged the goods. The transportation of the product by the
logistics services can be tracked by this system. Finally, when the product reaches the
destination, it is marked as successfully sorted. With the help of technological advancements in
its operations the logistics and the supply chain management of Kmart company is doing
significantly well (kmart.com ,2018).
Global Modes of Transportation
A major part of a company’s annual expense is occupied by the transportation of the
products from one place to another. It is determined by what mode of transportation the company
is using in their supply chain. The Kmart company is famous for providing best quality product
at reasonable prices to its customers as compared to other retailers (kmart.com ,2018). Therefore,
it is important for the company to focus on the transportation modes as the wrong mode can
incus extra expenses that can disturb the business set up of the whole firm and subsequently
increase the product prices too (Langlois et al., 2015). Moreover, the international transport costs

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are also high and the company is supposed to be considerate about its selection of transportation.
There are main modes of transportation used by business industries for transporting their goods
and services. These are sea, road, rail and air (Fernie & Sparks,2014).
Kmart has a well- structured and inbound logistics management system. The product
distribution of maximum of goods are done by their own transportation channels. The company
owns more than 3000 tractors that are used for transportation of goods. Above 4000 drivers are
employed along with this huge number of vehicles. The company has received a huge
competitive advantage because the costs incurred by the inbound logistics are low as compared
to the costs incurred by outsourcing transportations used by most of the rival companies.
However, the inbound logistics services are limited within Australia, in case of international
transport they are to use costly transports.
Maritime Transportation has been considered as the most effective mode to move giant
size cargo carrying huge quantity of containers. It is useful because there are limited friction on
the water and its physical features includes the water conferring buoyancy. Although this system
invites high terminal costs because of the high maintenance expenses of port infrastructures, it is
most effectively used by heavy industries such as Kmart. The Kmart company makes best use of
this transportation mode. They use this mode once or twice in a month and export heavy bulks of
products one at a time to the associate countries that keeps the expense in
control(kmart.com ,2018).
Rail transportation and pipelines are also significant and useful modes of transportation.
Rail also includes the maglev and monorails. The most cost –effective mode is the railways
(McKinnon et al., 2015). This mode has the minimum amount of constraints which is highly
required by the freights. The capacity rail is 23,000 tons at a time and has been considered as the

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most efficient load carrying carrier. The pipeline routes are multitaskers as they can function on
the land as well as under water(kmart.com ,2018). The costs of this mode vary according to
distance and diameter. Kmart uses the railways modes and sketches the use of pipelines too in
their logistics operations and avail extra benefits.
Airlines are also used for the transportation of goods but there are certain constrains such
as the long space it needs for runways, the climate and fog constraints and aerial currents
(Schlegel & Trent, 2016). Kmart uses tis mode of transport when there is an emergency of
sending the goods and the product amount is limited in quantity. The costs are high so it is used
often by the Kmart company.
All of the above mentioned means of transportation used by the Kmart company come
under the multimodal transport. The multimodal transports are the most effective methods in the
logistics services to complete the supply chain in a better and cost –effective manner (Qu, Bektaş
& Bennell, 2016). The delivery of goods is conducted with special care and safety crossing many
hurdles that come on the way. The efficient combination of more than one means has enabled the
Kmart company to earn its current position as one of the best retailers in the industry famous for
their quality, price, systematics and on-time delivery of goods.
Global logistics risk management
The Kmart company uses supply chain risk management policies and practices to ensure
the risk –free transportation and delivery of goods by the logistics services. The company is in
constantly measures the risks in their system and looks forward to reduce
them(kmart.com ,2018). They apply certain tools to deal with the logistic related issues and
doubts. The firm is persistently trying to reduce exposure and ensure permanence. It stresses on
the betterment of products. The indulgence in international processes with inserting the

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managerial functions makes the supply quicker(kmart.com ,2018). It considers the regular
functions by managing stock and arranging optional sources. One of the essential part of their
risk management is their regular assessment of risks (Verhetsel et al., 2015). It tries to keep the
quality of the vehicles so that they emit low carbon and follow the legal regulations on carbon-
emission. The vehicles are loaded with safety measures to avoid sudden natural calamities (Hao,
& Yue, 2016). The vehicles try to use the shorter ways and huge amount of goods are conveyed
at a time to reduce the fuel- expenses and carbon emission rates. They focus on lesser trips and
greater volumes. The drivers are given proper training and made aware of every aspect related to
the supply chain and logistics risks.
There is an increased complexity in global supply chains and transportations which
demand highly potential risk management processes and policies that can benefit the
transportation network in the public and private sectors (Bektaş, Crainic & Van Woensel, 2017).
Therefore, it is recommended that the government should advance the international compatibility
of standards and programs. The international firms should more efficiently assess the risks as a
part of governance, management and procurement (Van den Heuvel et al.,2014). The form and
the government should cooperatively work together in order to develop trustworthy supplier
networks, competitors and customers. The information should be shared in a two –way manner
for a better risk management system.
Conclusion
Therefore, it can be concluded that the Kmart company is an extremely well-bund and
well- structured retail company which functions both locally and globally using intermodal and
multimodal means of transport and best logistics services. The logistics services work within the

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domestic areas as well as beyond the boundaries. There are various modes which are used to
transport the products from one place to another. These are trucks, railroads, water carriers and
airlines. However, the process is not at all easy. This is a huge responsibility which includes
many hazards on the way such as legal environmental regulations, natural hazards and many
others. These risks can be managed by adopting logistics risk management policies and practices.
The Kmart company is seen to be trying to mitigate the issues effectively and as much as
possible.

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References
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