Role of Transportation in Logistics - Logistics Management | Logistics Management - B Com PDF Download

Transportation
Transportation is an essential and major sub function of logistics that creates time and place utility in goods. Transportation management covers the area of Shipment Scheduling / Routing, Frei1ht Cost, Carrier Selection, Shipment Tracking and Parcel Management. It helps us to make the best use of available resources and keeps informed on all transportation process.

Cost Structure
Basically there are two cost contents involved in transportation process:      

Fixed Cost
Fixed cost is the expenses related to the procedural part like cost of documents, salaries of personnel, rent of the office etc. As per the product needs and the environments, loading and unloading charges are included in fixed cost.

Variable Cost

Among all logistic factors variable cost consumes main expenses. It concentrates on the product related and market related aspects:

Product related aspects are the physical attributes of products, like:

1. Density – e.g. density of sand is more than Cotton

2. Size / Shape – Transportation cost per unit weight decreases with the size of the consignment.

3. Space filling capacity – e.g. space-filling capacity of iron flat is more than that of chairs or tables.

4. Difficulties in handling – e.g. product like electronic items like TV are difficult to handle since they are easily get damaged.

Market related aspects are:

1. Distance to be traveled to customer – The cost decreases with increase in the distance.

2. Government regulations, Octroy, Road Taxes, Tolls, etc.

3. Intra-mode / Inter-mode

4. Freight Traffic

5. Domestic / International Transport

Role of Transportation in Logistics
Transportation plays a connective role among the several steps that result in the conversion of resources into useful goods in the name of the ultimate consumer. It is the planning of all these functions and sub-functions into a system of goods movement in order to minimize cost maximize service to the customers that constitutes the concept of business logistics. The system, once put in place, must be effectively managed. (Fair et al., 1981) Traditionally these steps involved separate companies for production, storage, transportation, wholesaling, and retail sale, however basically, production/manufacturing plants, warehousing services, merchandising establishments are all about doing transportation. Production or manufacturing plants required the assembly of materials, components, and supplies, with or without storage, processing and material handling within the plant and plant inventory. Proceedings of the Eastern Asia Society for Transportation Studies, Vol. 5, pp. 1657 - 1672, 2005 1661 Warehousing services between plants and marketing outlets involved separate transport. Merchandising establishments completed the chain with delivery to the consumers. The manufacturers limited themselves to the production of goods, leaving marketing and distribution to other firms. Warehousing and storage can be considered in terms of services for the production process and for product distribution. There have been major changes in the number and location of facilities with the closure of many single-user warehouses and an expansion of consolidation facilities and distribution centres. These developments reflect factors such as better transport services and pressures to improve logistics performance.

The Role of Transportation in Service Quality : The role that transportation plays in logistics system is more complex than carrying goods for the proprietors. Its complexity can take effect only through highly quality management. By means of well-handled transport system, goods could be sent to the right place at right time in order to satisfy customers’ demands. It brings efficacy, and also it builds a bridge between producers and consumers. Therefore, transportation is the base of efficiency and economy in business logistics and expands other functions of logistics system. In addition, a good transport system performing in logistics activities brings benefits not only to service quality but also to company competitiveness.

Product Movement: Transportation facilitates the movement of raw material, semi-finished items, WIP, finished goods, packaging material, rejected material.

Product Storage: Transportation provides temporary storage in stationary vehicles or Vehicles kept moving on a circuitous route. Though the product storage is expensive in a transport vehicle, but this is adopted in case of:

1. when unloading and loading is more expensive than storage.

2. when storage space is limited.

In selection of a transportation mode, the transportation managers consider the following criteria.

1. Cost: It includes freight charges, warehousing, buffer stick, broker fees, custom charges octroy etc. Generally cost per mile is considered which is should be economical.

2. Transit Time: It is the time from the shipment of goods to the receipt of goods at the destination. It should be as less as possible.

3. Speed: Methods of working for the delivery of goods to the customers place should ensure the on time delivery.

4. Safety: Safety of goods at every level from start to the end of delivery should be ensured. Proper packaging should be done to avoid any damage to quality or quantity of goods.

5. Claims Record: Claims against damages, pilferage or theft of goods should be available. Though the supplier gets money back but the customer remains unsatisfied in such cases.

6. Responsiveness: Transporter has to respond the changing needs of the supplier and he should be able to handle various products.

7. Capability: Transporter should be in a position to deliver the goods at any remote areas. He should have large number of geographic service points.

8. Accessibility: Transporter should be easily accessible by providing door-to-door pick up and delivery.

9. Reliability: It is the meeting of schedule on time as per requirement of the customer. Faster