Hello everyone! We’re going to start a series where we end each month with a glossary of some logistics key words for those of you that are outside of the logistics world. We’re kicking new monthly blog post off with some basic terminology that is currently important to know with regards to logistics and supply chain news this week:
Offshoring
Definition: the process by which one uses an outsourcing service provider located in a country other than where the client is located.
This is currently a hot topic today especially considering the controversy surrounding the Rana Plaza tragedy in Bangladesh. While sweat shops have always been an issue when it comes to offshore manufacturing, consumers are now becoming more and more demanding of supply chain awareness. Western suppliers are currently faced with the challenge to keep their supply chain less sweat-shop and more fair-trade.
Nearshoring
Definition: A term coined as sort of the opposite of offshoring, where companies look to find an outsourced service provider located closer to the country of origin or within the country itself; usually in a move to solve current supply chain issues such as cost-cutting.
Nearshoring is currently a hot topic as big companies are thinking about (and some are already) making a move to bring their manufacturing closer to home. With the current difference in pricing lowering in North America (the US and Mexico specifically), the pricing power of Chinese offshoring is constantly diminishing. Meanwhile, American companies are looking to Mexico to solve their supply chain needs.
Tracing and Tracking
Definition: These two go hand-in-hand. It is used in the logistics industry to refer to the process by which shipment movements from origin to destination are recorded and monitored.
This term is relevant to current trends because as we mentioned in one of our previous blog posts, creating a more synchronized and efficient way to do tracking and tracing is extremely beneficial to the logistics industry. Not only can an improved system reduce errors along the supply chain, it can also make it harder for criminal activity along the supply chain (both cyber and real-world) as well as reduce costs! The current development for tracking and tracing to look out for is Radio-Frequency Identification or (RFID).
SOP: Standard Operating Procedures
Definition: a collection of documents, or manuals, that outlines how and organization carries out their activities and procedures. In the world of logistics, this is the guideline for how the operations in the supply chain should be executed.
This is currently a hot topic as the demand for cost-cutting in many product-based industries are looking to their logistics and supply chain to find solutions. For example, the recent recession has caused a conundrum in the restaurant industry as consumers demand higher quality food at lower prices. And now Standard Operating Procedure visibility is now something that supply chain executives in the restaurant industry are attempting in order to meet the demands of consumers so that the end product results in better quality food at the same (or lower prices).
And this wraps up our first month of blogging at Morai Logistics! We really hope you’ve been enjoying our posts so far and we hope you have a stellar weekend. To keep up with our posts, and to see other content related to logistics and supply chain don’t hesitate to follow us on Twitter or subscribe to our blog! If you’re interested in what we do as a company, feel free to check out our services. Looking forward to seeing you in June!
