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Figure 5.1 Logistics aggregate and the company as a part of it
Every one of the phases along the material chain must create some added value
into the final product. Processing phases may contain manufacturing, storing in various
types of inventories, packing and trade. The final customer pays all the expenses the
material chain contains and inefficiency creates unsustainability and uncompetitive
prices (see Figure 5.1).
Packing is needed for safer and more efficient transportation and storage. Without the
packing industry, our modern consumer world as we know it could not exist. The challenge
is to protect the goods and minimise the waste and loss of, for example, foodstuffs. As we are
living in a world with limited resources, it is crucial that these resources would not be wasted.
As the logistics, packing and storage challenge is very ecological in nature, the
economic and social aspects are also included. Economic growth requires efficient and
fluent material flows with minimal material losses and optimal costs. Social equity requires
similar material (food, consumer products etc.) possibilities for all human kind. Is it
possible to meet these economic and social needs with ecologically sustainable logistics?
5.1 Transportation
Transportation services are needed in different production phases of primary
production, the refining industry and commerce. Transportation is a production
contribution, and to implement it outside the company or with its own resources is a
significant cost factor. From an industrial competitiveness’ point of view, it is significant
how large the costs needed for achieving transportation services are.
Transportation is only a part of industrial logistics activity and joins closely with
purchasing, inventory and production functions. Material purchases are about 50%
of the turnover of average industrial companies. This includes raw materials, semi-
products, production supplies and fuels. Inventory and transportation costs are about