Logistics and International Distribution

of Merchandises
Module 1

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 Content

• Introduction to Logistics.
• International Commercial Logistics.
• Physical Distribution of Merchandises.
• Logistics Chain.

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 Logistics

Introduction to Logistics

In this course we are proposing a Logistics management approach according with the
vision of every one of the participants, every one of you, as a General Manager of a
IPD(International Physical Distribution), for importing or exporting cargoes and taking
decisions on the foreign commerce businesses.

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 Logistics

The main purpose of the course is to contribute that each participant from a
management standpoint can follow the Golden rule of the IPD:

“To transport the adequate product, the required amount to the

agreed place at the least total cost to satisfy the consumer needs in the
international market, just in time (JIT), and with Total Quality (TQ)”

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 VII BC
Año 1805

The word logistics, etymologically comes from

the term "logistikos", which in turn means “good
Antoine-Heinri
on the calculation" or "know how to calculate".
489 BC Jomini

1844 1940

Alfred Thayer,
Cyrus Thorpe y
Henry Eccles
Jules Dupuit Imperial College, England is the cradle
of operational research, a discipline
Establish the idea of commercially They laid important foundations in the closely linked to logistics during the
associating inventory costs with classification of logistics processes and in the Second World War.
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transportation costs. Translated by Guillermo Márquez F. 5
formation of their vocabulary.
 TIMELINE

1990’s
1966 – 1970 1971 – 1979 1980’s
1956 – 1965 Towards the future: Sinergy in
Theory of Logistics proof Change on priorities Technological Impact
Logistics conceptualization the Logistics for

• Development of the total cost analysis • Fragmented development; Materials • Energy crisis promoted the •Transport liberation encouraged • Shorter product cycles.
of logistics operations. management / Physical distribution. movement towards the improvement increased productivity through better
• Systems approach to the analysis of transport and storage. • Increase in market segmentation and
coordination of distribution,
variety of options..
of the interrelations of the logistics • Performance measurement systems •Environmental / ecology concern manufacturing and supply
system. encouraged local optimization, impacts logistics operations. •Higher expectations at the level of
avoiding integration. Micro computing technology customer service.
• Greater concern for customer • High capital and recession costs.. promoted decentralization and
service at the minimum logistics information exchange, bringing • Advances in process technology,
cost. •Strong orientation towards the customers closer to companies. products and information technology.
• Attention to distribution channels. administration of materials due to the
uncertainty in obtaining supply •Revolution of communication • Market globalization.
sources. technology and barcode, promotes
• Manufacturing and administration
coordination and integration of the
processes.
•Computing drove the development of elements of the logistics system.
logistics models. • The balance of power is changing from
producer to distributor.

• Increase in competitiveness in all

dimensions and pressure on profit
margins.
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 Colombia.

Focus: Transportation Focus: Integral Logistics

Concentration: Competitive
1990
Concentration: Problem 1960
Solving Advantage

Focus: 3PL
Focus:Physical Distribution 2000
Concentration: Integration
Concentration: Cost 1970 Operator-Client
Reduction

Focus: FD+ MRP

Focus: Infraestructure
1980 Concentration: Intermodality ACTUAL
Concentration: Planning
multimodality
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 Logistics

Results from Logistics Evolution

The evolution presented, shows that the issue of logistics is being treated with
such importance to the interior of organizations, which already manage a
specific area for their treatment.
In other words, logistics has become one of the main tools for an organization
to be considered as a first world company. His study is already seen as
strategic.

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 Logistics

Key competences for the Supply chain

¿What is Logistics?
Imagine that we have been appointed to manage the logistics area of ​a large
producing and exporting company.
¿What does it mean to manage logistics?
Normally, large production companies, whatever the sector where they are
located within the economy, produce finished goods to sell nationally and
internationally; also in certain cases, they must import raw materials to insert
them in the production process of the goods to be sold.

Someone has to manage the shipments of all negotiated raw

materials, so that they arrive when and where needed

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 Logistics

This is why the Logistics Manager

It is not one of the most glamorous

positions, but as can be seen in the
following example, it is much more
important than we think.
"It can even be a life or a death
matter."

Let us see why?:

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 Logistics

Definition

For the purposes of the course, we will “Logistics is the process of planning,
adopt the following logistics definition to implementing and controlling effectively and
know and describe in a more efficiently the flow and storage of goods,
comprehensive and precise way what is services and related information from the
the logistics within the company, which point of origin to the point of consumption in
corresponds to that established by the order to meet customer requirements. ”
Council of Logistics Management (CLM):

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 Logistics

Logistics Management Areas

1. MM is the logistics relationship between

a company and its suppliers.
2. The TM, is the logistic relationship
Towards the interior of a company, the integrated
between the facilities of a company
logistics system is made up of three operational areas:
(between plant and warehouse or
Materials Management (MM).
distribution centers, between plant and
Transformation Management (TM).
plant, etc.).
Physical Distribution Management (PDM). 3. The PDM is the logistic relationship
between the company and its customers.

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 Logistics

Logistics Management Areas

Supply Distribution

Integral Logistics Management

Production

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 Logistics

Importance of logistics

The importance of logistics is given by the need to:

Improve customer service,
Improving the marketing and transportation phase at the
lowest possible cost.
That is why management must give it the importance it
deserves in order to lead to improvements in the following
activities:

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 Logistics

Production efficiency Distribution chain

High levels Less inventory

Improvements of good
Logistics Management

Increase on
Information Systems
Production Lines
Development

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 Logistics

Benefits of good Logistics Management

The traditional definition of logistics
Optimize national and
affirms that the product acquires its
international commercial logistics
value when the customer receives it in
management
time and in the appropriate way, at the
lowest possible cost.

Expansion of the management vision to

turn logistics into a model, a framework,
a mechanism for planning internal and
Optimal coordination of all the external activities of the company.
factors that influence the
purchase decision: quality, Increase competitiveness and
reliability, price, packaging, improve the profitability of companies
distribution, protection, service. to meet the challenge of globalization.

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 Logistics

All these changes have forced logistics companies to introduce changes in their
internal structure, due to great advances, such as in:

Advanced technological
Storage equipment Distribution
incorporation

They should not pack large The store and the logistics You must also adapt the truck
orders for the same site. You company must have a wealth of fleet, since now you will not need
must meet small orders for information and cooperation large vehicles to meet the order
different places. So it must be through the Internet very of a store, but you can meet
reorganized to classify orders. important, since at present, orders with smaller vehicles.
everything is based on the
network..

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 Logistics

Funtions

It is mainly based on the management flows (raw materials, finished products, etc.)
taking into account the resources (human, consumables, etc.), the necessary goods
(warehouses, tools, computer systems, trucks, etc. ), and services (transportation or
subcontracted warehouses)

Under this scheme we can establish that the objective of logistics is based on the
satisfaction of demand in the best conditions of service, cost and quality.

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 Logistics

Functions

By managing these processes within

the company's supply chain, it
becomes an efficient process to
satisfy customers, where the
effectiveness of the entire chain is
more important than the
effectiveness of each department
separately, through its functions.

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 Logistics
Functions

Supply Chain Integration

Quality Product Client Service

Order Processing
Minimun Cost
Suppliers Clients

Preferred Supply Production Distribution

Partners

Distribution

Common Goals
and Objectives

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 Logistics

Objectives and Goals

By establishing the objectives and goals of logistics, you can determine and
coordinate optimally the right product, the right customer and the right time.

Logistics is therefore not a functional activity but a model, a referential

framework; It is not an operational function, but a planning mechanism.

Logistics is a way of thinking that will even reduce uncertainty in an

unknown future.

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 Logistics

Objectives and Goals: Atributes

• Right Product
• Precise Amount
• Exact Moment
• Minimun Cost
• Flexibility
• Trust in delivery
• Delivery Time
• Inventory Level

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 Logistics

Logistics Strategies

Within companies, the role of marketing is to stimulate

demand and for this it needs the implementation of
logistics strategies to satisfy it.
To do this they must develop a detailed analysis of the
demand in terms of level, location and time in order to
determine the starting point for the achievement of the
result in order to meet said demand in terms of costs and
effectiveness.
As companies develop logistics processes, strategies
should be implemented in activities such as:
• Transportation
• Inventory Level
• Order processing
• Inventory Management
By implementing strategies in these four activities or processes, customer satisfaction will
be achieved and the company will obtain cost reduction in the chain, which is one of the
factors by which organizations focus on logistics.

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 Logistics

¿How to achieve a good functioning of the logistics administration?

Have a formal Strategic

logistics Alliances
organization.

It is necessary to
implement certain
comparative strategies, Logistics part of
leaders in logistics Logistics at a
the stratagic
planning
management, which management
level
lead to the
implementation of a
logistics strategy
Logistics with More Logistics
the value added planning tan
concept High experience Outsorcing as operational
Client handling part of the
orientation unexepected business
strategy

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 Logistics

Logistics Cost System

Efficiency in product delivery, compliance and

competition are factors that relate physical
distribution to the success of a company's
sales.
Imagine a scenario in which products that
are shipped to a destination abroad,
This is why the costs and times of the logistics
which will cross three (3) different
chain must be clearly established.
geographical paths, namely:

In the DFI logistics area, the basic system of

the chain's logistics costs is established
through the following example:

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 Logistics
Administratives Merchandise
Preparation
Agents

Merchandise
Unitarization

Banks

Logistics Actions
Merchandise
Manipulation

Customs

Merchandise Transportation

Documents
Cargo
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Insurance 36
Logistics

To have permanent control in each of the stages

of the DFI, it is important to implement a
LOGISTICS that allows the exporter to design
agile, flexible and simple processes to:

Generate a Differentiate the

competititive Company from
advantage. the competitition

Be first choice
For the client
 International Commercial Logistics

International
Commercial Logistics

Definition:
MARKET
It is the one that determines and DEMAND
manages the production and
distribution material flows with the
information flows to adapt the STORAGE
INVENTORIES
company's offer to the market demand TRACKING AND
TRANSPORTATION
in optimal quality conditions. NETWORK

SUPPLY

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 International Commercial Logistics

¿Why?
!Atention !
In order to meet
customer requests,
This is where the
logistics management logistics management must
administration comes at work on the structure of
all levels, and as an the logistics system
The client is unloyal
• Request the best product
area manager you inmediately
should have answers to • It will move to
competition, even if
the customer. there are few cents less
in price

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 International Commercial Logistics

IPD + Logistics

I wish efficiency, low

costs, profits, I wish to receive the
opening new requested product,
markets, to position at the agreed place,
my peoducts and to just in time, with
receive the quality and to cancel
EXPORTER payments, the adequate price IMPORTER

Adequate logistics
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 International Commercial Logistics

Demand Prospects

Planning requirements

Purchasing

Transportation Planning

Production Inventory

Materials
Logistics System Management
Storage
Structure LOGISTICS
Packaging
Physical
Distribution
Distribution Inventory

Distribution PLanning

Order Processing

Transportation

Client Service

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 Merchandise Physical Distribution

Definition

Set of operations necessary for the

displacement of products prepared as
cargo from the place of production or
manufacturing in the country of export to
the importer's premises in the country of
destination under the concept of optimum
quality, reasonable cost and delivery just in
time. EACH OPERATION REQUIRES: A
PROCESS, A CONTRACT,
A DOCUMENT, IMPLIES A COST AND
GENERATES A TIME

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 Merchandise Physical Distribution

Elements of the process of physical distribution

Storage and
Banking Customs aand
Manipulation Unitarization
Insurance
Management

Package, packaging and

Documents Transportation Distribution cycles of
marking
Management the products

In the physical distribution not only the actions that must be taken into account at the
service level are analyzed, but also a series of elements that integrate the physical
distribution process.

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 Merchandise Physical Distribution

IPD environment

Commercial Environment Operational Environment

Governmental Private Customers Suppliers

Institutions Organizations

Ministries Chambers and Exporters Packaging

associations
Specialized Container
Customs Importers operators
DFI environment Associations
Promotions Traders Storage
It has to do with the Institutions companies
identification of the
commercial and operational Port operators
environments with which it Transporters
will interact in the
construction of the IPD
Insurance
logistics chain
Banks
Agents

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 Merchandise Physical Distribution

IPD BASIC COMPONENTS

COSTS TIME SERVICE QUALITY

DIRECT INDIRECT DURATION DEPENDABILITY

PACKAGE ADMINISTRATIVE INTERPHASES COMPETENCE

PACKAGING INVENTORIES TRANSIT TIME COMPLEMENTATION

UNITARIZATION DELIVERY TIME EFFECTIVITY

Basic components of the IPD DOCUMENTS EFFICIENCY

Essential aspects for the HANDLING FREQUENCY

construction of the cost and STORAGE IMAGE
time matrix of the IPD chain.
TRANSPORTATION RISKS
INSURANCE AGILITY
CUSTOMS

BANKS
AGENTS
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 IPD TRENDS

2015 - 2017 2018 - 2020

Robotic warehouses. Some distribution centers have already established part
Negotiate with service levels. It is important to determine the relationship
of automations in their warehouses, they are incorporating robots, such as
between the level of service provided and the level of service expected.
robotic forklifts that help robotic picking.
Establish delivery commitments negotiated with commercial. Objectively Digitization. In the logistics sector, it has allowed the creation of new business
take into account the possible dates and delivery times of the products to models that add value to the work chain, and its greatest impact is seen
their customers. through the points of sale or customer service that are already done digitally.
Establish and refine the forecasting system. Carry out a study of current and Autonomous transport. Autonomous trucks, drones, autonomous forklifts. It is
future demands to provide them with relative accuracy, in order to plan and still too early to invest in it for security reasons, however it will bring many
organize physical distribution activities. benefits to logistics in productivity and fatigue reduction.

Sustainability of the supply chain. Based especially on the reduction of the

Manage stocks of finished products. Make use of computing, to manage and
carbon footprint and therefore develop ecologically responsible chains as a
control the stock levels of finished products.
synonym for modernity

International Commercial Geopolitics. We are in charge of two commercial

Negotiate the manufacturing plan with production. Strengthen relations positions found, protectionism (Trump and his "America first", together with
between production and distribution plans taking into account the requests Brexit, etc.) and, on the other, the consolidation of commercial blocks (through
made by customers. trade agreements, economic integration, etc.) who try to win the battle for the
hegemony of world trade.

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 IPD TRENDS

2015 - 2017 2018 - 2020

Hire physical distribution services. Do not hesitate to outsource those The improvement in the last mile. It is the most expensive phase of the entire
physical distribution services with specialized entities in order to minimize supply chain operation. It is a very upward trend derived from the rise of
costs and improve customer service. (Convert fixed costs into variable electronic commerce. The consumer of today demands total flexibility in the
costs) distribution.
Reduce the number of stores. Reduce the number of regional stores Artificial intelligence. Special to optimize routes, in terms of cost and speed of
without affecting customer service, supported by communications and arrival, and will be able to organize the delivery and collection of goods. All this
information technology. thanks to continuous self-learning by means of intelligent analysis.

Increase the number of direct shipments. With the decrease of the Big data .Large volumes of data run through the logistics industry and the data
regional warehouses, the direct delivery of products to the customer is that it produces are of such value that they allow to improve the efficiency of
stimulated, in order to reduce the costs of handling, storage and in many operations, mitigate risks, optimize routes in real time, and help the
cases of transport. sustainability of the supply chain.

.
Increase the size of the minimum delivery. It is important to increase the 3D printing. It is the big bet of the future. Its improvement will allow to create
size of direct shipments to reduce transportation costs and encourage great opportunities and transformations in the field of logistics.
better utilization of truck capacities.

Environmental Protection. Design renovation, recycling and collection The collaborative logistics. It is a potentially disruptive trend for the supply
programs that do not affect the environment chain strategy.

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 IPD TRENDS

2015 - 2017 2018 - 2020

Augmented reality. The use of augmented reality glasses or helmets that allow
Systematize the transmission and processing of orders. With the most
the detection of places to place the merchandise, redistribution, the quantity of
intensive use of information and communications systems, orders can be
fulfilled in real time. merchandise, is already being used in warehouses and distribution centers in
picking tasks.

Internet of things. The connection between objects is a growing trend in

Systematize and automate maintenance: systematize warehouses in the logistics. This is what is called Smart Logistics, which is implemented in RFID
activity of handling goods. cards or through GPS and is constantly growing, due to its impact on the
improvement and efficiency of supply chains.

Blockchain and smart contracts. The blockchain has the ability to go further,
which is why smart contracts have the ability to automatically execute the
Systematize the design of distribution routes: Manage programs for the design payment process when a contract condition is met. In this way, it is possible to
of distribution routes with the objective of minimizing costs and which results avoid conflicts with unpaid. This technology is expected to have a great impact
in improving customer service. on almost all companies, while with the current contract it shares the
definition of the terms and conditions.

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 Mistakes in Logistics and IPD

What are the most common mistakes, what are their causes and how to avoid them?

1- Do not inform the logistics operator in time that the merchandise shipment arrived at
the port.
2- Do not carry out the prior review of the documents of rigor, by the customs agency.
3- Send the goods to other destinations.
4- The delays of the container in the port.
5- Storage (seasonality - outsourcing)
6- The breach of the transporters.
7- Theft of merchandise in storage warehouses.
8- The inaccuracy of the inventories of the stored merchandise.
9- Storage of unusable material
10- Lack of planning

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 Mistakes in Logistics and IPD

How to avoid mistakes?

Planning: the definition of strategic objectives, goals, projects and indicators is crucial to
establish times and flows of supply chains. It is always necessary to have a plan B and a C in case
the alternative fails.
Knowledge of the rules and training: foreign trade logistics is determined by the rules of
commercial law. For that reason, it is key to inform and know them. Employee training will
prevent paperwork and documentation from becoming a nightmare.

Technology: In the Colombian market there are very few logistic operators well equipped
with integral software that allow to manage the times and places of the operation, from
loading and storage to distribution. The investment will always be a key to the consolidation
of the process, which will necessarily have an impact on efficiency and positioning. Efficiency,
remember it well, is never improvised.

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 Logistics Chain

The logistics Chain

.
The Logistics Chain is the imaginary
Recall that the international supply
way, where the movement of goods
chain refers to the activities and
from its origin to the final consumer. La Cadena Logística y sus Áreas de Gestión
processes that involve customers
and suppliers so that the
This mobilization is carried out
merchandise is produced and
through the service, handling,
distributed in the correct quantities,
transformation, displacement and
to the agreed places and in the
storage that products suffer from
stipulated time in order to meet the
when they are raw material until
needs of customers
they are processed as final product.

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 Logistics
Supply
Management
Supply Logistics Orders
It is the one that ensures the supply of Supply
Purchasing
merchandise necessary for the production in Negotiations and
Planning agreements
order to avoid the missing ones before the
clients, through the supply and purchasing Purchases
Reference
Orders Price
Change
procedures.. Claims checks
Orders
Commercial
Logistics Relations

For this it is necessary to carry out an adequate

management of the information and administrative
flows such as: Activities
• Supply planning.
• Transportation Coordination
• Supplier Administration

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 Logistics Chain

Selección de proveedores
Supplier´s selection

Calidad de los
Product
productos
Quality

We should remember:
Warranty
Garantía de
That the most important function in Key points Returns
devolución
purchasing management is to look for for supplier’s selection
the right supplier before making the
acquisition, taking into account the key The
El mejor precio
aspects of the figure. Best Price

Excellent
Excelente servicio
service

Prompt
Entrega oportuna
Delivery

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 Logistics chain

Logistics activities and value added generation

Value Added
Clients
Provisioning leads us to an equally
sensitive activity: storage, which
must be managed very efficiently in
order to avoid cost overruns in the
logistics chain, taking into account
that each process must generate
value. Total Cost
Purchasing Production Adequation Distribution
Storage

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 Logistics Chain

Palletization Handling at storage Localization

Discharge Misplace at
picking

Storaging
Handling at picking
Activities Delivery

Feeding
Cargo picking
Pallets or
boxes

Destination
consolidation

Moving cargo Product

to delivery Handling
Package, packaging
Order
and weight
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GroupingF. 62
 Logistics chain

Storage
In the storage process,
activities, such as orders,
inventories, receipt of goods,
Consolidation/
dispatch, etc., are interrelated, Orders Inventories Reception desconsolidation Delivery
which we can observe in the d

following graph

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 Logistics Chain
Reverse logistics activities

Information

The activities included in reverse logistics

are the following:
Ports Alternate Chains

Recycling Remanufacturing
Reuse Returns • Withdrawal of the description.
Making parts
• Classification of the description.
Distribution Consumption
Raw mtrls and pieces
Production
• Reconditioning.
• Returns
Suppliers
• Destruction / Recycling
• Administrative processes
• Recovery of packaging, packaging and
Eliminate hazardous waste.

Information

The activities are multiple and therefore must be classified by type namely: returns, waste or
products out of use and capacity utilization
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 Logistics Chain

Green Logistics

Packaging
• Eliminate use of materials Storaging
• Reduce packaging weight • Construction Materials
• Use Recycled material • Natural Light
Green logistics is the answer to the • Design for the flow of • Save in Light Energy
growing concern to protect the products return or • Save in heating/air
environment. recycling conditioning

That is why companies implement

practices and techniques in order to
implement green logistics, promoting them Green Logistics
among their workers and the community in
general at the level of well-being and
environmental responsibility, as a way to
make their products more attractive in the Transportation Distribution
market. • Change to more nergy • Reduce distances
efficient modes • Cargo optimization
• Low pollution • Colaborative distribution
transportation means planning
• Eco driver policy • Local Supply
• Reuse Resources

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 Logistics Chain
Green Logistics Scheme

Green package and

packaging
The objective of green logistics is to promote
Intensive use of
Green Load and
effective and efficient action plans, which are widely
resources and
recycling discharge known by those responsible for their execution, in
order to communicate to the community the efforts
made by the company in environmental matters
through three perspectives:
Green Logistics
Scheme
•
Environmental footprint How transport and
Green logistics affect the environment.
Geen storage
Information
Management
• Performance reports To know the best practices
of Corporate Sustainability Reporting and share
them at the sector level.
• Performance improvements To know in which of
the processes you can be green and commit the
Green
Green Distribution
transportation company to the environment.

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