Knowing Supply Chains Better: Terms You Should Know

Terms in Supply Chain You Should Know

Many people often believe that logistics and supply chains fall in the same categories. Yet, these terms have their own functions in the logistics industries. For instance, supply chains represent the overall sourcing, processing and delivery of goods to the end customers, while logistics specifically focuses on moving and storing goods between different supply chain organisations.

Here are other definitions in supply chain and logistics industries that are often used interchangeably but serve different functions. 

Trade 

Trade is the basic economic concept involving buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties. Global trade, also known as International trade and World Trade, is simply the import and export of goods and services across international boundaries. Trade is the reason all these businesses exist. 

See also: Airfreight Guideline for Logistics Industry

Freight

Freight refers to cargo that is carried using the shipping services offered by the shipping lines using the ships which fall under the maritime industry. There are various types of cargos that are shipped around the world, such as follows: 

  • Dry bulk – covers five major bulk commodities like iron ore, coal grain, bauxite and alumina, and phosphate rock. 
  • Minor bulk – covers commodities like forest products. 
  • Containerised cargo – covers any machinery, equipment, materials, products or commodities, including rigid, sealed, reusable, metal boxes. 
  • General cargo or breakbulk is cargo that must be loaded individually and not in intermodal containers nor in bulk as with oil or grain. 
  • Wet bulk such as tanker cargo that contains oil, petroleum products and gas. 

Maritime 

Maritime industry is anything related to the ocean, sea, ships, navigation of ships from point A to point B, seafarers, ship owning and other related activities. Until today, the maritime industry remains the backbone of global trade and has been so since the Egyptians, Greeks, Romans, and all started sailing and improvising the sailing methods from sailboats to the current ULCVs. According to UNCTAD, China is currently the country with the highest number of vessels in the world, followed by Greek, Japan, Singapore, Germany, Indonesia, and Norway. 

Shipping 

Shipping business is the act of carriage of cargo from point A to point B using which falls under the maritime industry. Cargoes are carried by various types of ships, including oil tankers, ferries, ro-ro ships, offshore vessels, chemical tankers, etc. Then, all these ships are operated by shipping lines for commercial gain and a lot of them are chartered by the shipping lines from the ship owners. 

Shipping activities include the following: 

  • Booking cargo for specific vessels
  • Ensuring that all cargo booked is planned on the intended vessels 
  • Ensuring that the cargo that is planned on the vessels is actually shipped 
  • Ensuring the stowage planning, plan and method by which different types of container vessels are loaded with different sizes, is done properly on the vessels 
  • Ensuring that all containers loaded have their verified gross mass, the weight of the cargo including dunnage and bracing plus the tare weight of the container carrying the cargo
  • Ensuring safe loading and discharging of the cargo 
  • Issuing bill of lading and other documentation for all cargo loaded 

Logistics 

Logistics service is the process involved in getting the cargo from the manufacturers’ warehouse to the receivers by the shipping lines using the ships which fall under the maritime industry. The process of logistics commonly begins way before the actual shipment takes place as it involves discussing and deciding on the delivery schedules suitable to both the buyer and seller. 

A logistics service provider should have the expertise to choose the best solution for the movement of the cargo, such as by road, rail, air or sea as each of these modes has their own peculiarities and characteristics. 

Supply chain 

Lastly, supply chain is the whole grandaddy process comprising all aspects in a product cycler, for example from picking of the fruit at a farm in point A to delivering the fruit to the shelf at a store in point B using all of the above-mentioned industries, businesses and services. It involves a network of suppliers, transporters, warehouses, distribution centres, shipping lines, logistics services providers to work together. Supply chain management is the management of all the supply chain activities in developing and running the supply chain as effectively and efficiently as possible. In short, the supply chain might be made up of a few different processes that typically starts and ends with the customers. 

Read also: Restarting & Synchronising Supply Chain with the New Normal

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