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Coal vs diamonds

In this step, we consider coal and diamonds as a way of illustrating the effects of physical characteristics.
Let’s look at the physical characteristics of coal and diamonds. They’re basically carbon, but physically coal is very different from diamonds. It’s dirty, it burns, and most people just store it outside in a pile. But when we look at diamonds, diamonds are very, very different physically. Diamonds are very small, very hard, very clear, and the key thing is they’re very, very valuable. You wouldn’t put diamonds in a big pile outside. When you look at coal and diamonds you realise that physical characteristics are what dictates the sort of distribution network that you need to provide. For coal you need big heavy trucks; you don’t need to worry too much about storage. It makes a lot of dust. It’s very dirty. It’s rock!
And it makes big dents in the vehicles, so actually moving coal damages vehicles, and of course it’s not popular with drivers because of all the dust and the dirt. Diamonds require security, they need to be locked up, and they’re very small, so you can easily transport them - you wouldn’t need anything larger than an armoured vehicle, maybe with a security person. Surprisingly, most diamonds are delivered in the post anonymously. There could be a packet with a million pounds worth of diamonds in it, and because there are millions of items of mail every day, it’s very difficult to find that bag of diamonds that might make your fortune.

In this video, Nick Wright uses the example of coal and diamonds to illustrate the impact of physical characteristics on distribution choices.

Both are products based on carbon. The chemical difference is identical, but physically, diamond molecules are stacked neatly into uniform lattices, which is why they are so hard and crystal clear.

Coal molecules, by comparison, are randomly stacked, which gives coal its colour and the fact that it burns and can easily be broken into smaller pieces.

Your task

Consider and discuss the following:
  • You need coal for heating. How does it get to your home? How is it handled and stored by the merchant who sells it?
  • You are a jeweller who makes engagement rings. How do you obtain the diamonds? What about the security of delivery? How easy is it to store a stock of diamonds?
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Principles of Global Logistics Management

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