Logistics is defined as “that a part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse and storage of products , services and related information from the purpose of origin to the purpose of consumption so as to satisfy customers’ requirements.
Transportation provides the flow of inventory from points of origin within the supply chain to destinations, or points of use and consumption. Most businesses manage both inbound and outbound logistics.
“Safe, efficient, reliable, and sustainable movement of persons and goods over time and space”
Transportation plays a connective role among the several steps that end in the conversion of resources into useful goods. It’s the design of these functions and sub-functions into a system of products movement so as to attenuate cost maximize service to the purchasers that constitutes the concept of business logistics.
Without well-developed transportation systems, logistics couldn’t bring its advantages into full play. Besides, an organized transport system in logistics activities could provide better logistics efficiency, reduce operation cost, and promote service quality.
Transportation and logistics cost:
The success of any supply chain are often judged from its transportation management. This is often a key process within the logistics chain, which is involved at every stage, right from the manufacturing of the merchandise , to its final delivery at the specified location and carries 40% of the logistics cost in India.
Transportation – 40 %
Warehousing & packaging losses – 26%
Inventory – 24%
Order processing and administrative – 10%
Modes of Transportation:
• Inland (Road & Rail)
Road transportation is that the most vital a part of inland transportation. This is often the main source of transportation for the movement of products from one place to a different. Road transportation comprises Truck, trailer and tankers.
- It may be a relatively cheaper mode of transport as compared to other modes
- Perishable goods are often transported at a faster speed by road carriers over a brief distance
- It may be a flexible mode of transport as loading and unloading is feasible at any destination
- It provides door-to-door service
- It helps people to travel and carry goods from one place to a different , where there’s no transportation available
- Due to limited carrying capacity road transport isn’t economical for long distance transportation of products
- Transportation of heavy goods or goods in bulk by road involves high cost
A tank truck or tanker truck or petrol tanker may be an automobile designed to hold liquefied loads, dry bulk cargo or gases on roads. The most important such vehicles are almost like railroad tank cars which also are designed to hold liquefied loads.
Rail freight transport is that the use of railroads to move cargo as against human passengers. A rattler or goods train may be a group of products wagons hauled by one or more locomotives on a railway. Trains may haul bulk material, intermodal containers, general freight or specialized freight in purpose-designed cars.
- It may be a convenient mode of transport for travelling long distances.
- It is comparatively faster than road transport.
- It is suitable for carrying heavy goods in large quantities over long distances.
- Its operation is a smaller amount suffering from adverse weathers conditions like rain, floods, fog, etc.
- It is comparatively expensive for carrying goods and passengers over short distances.
- It isn’t available in remote parts of the country.
- It provides service consistent with fixed time schedule and isn’t flexible for loading or unloading of products at anywhere.
- It involves heavy losses of life also as goods just in case of accident.
Air transport may be a vital component of the many international logistics networks, essential to managing and controlling the flow of products, energy, information and other resources like products, services, and other people, from the source of production to the marketplace.
- It is that the fastest mode of transport.
- It is extremely useful in transporting goods and passengers to the world, which aren’t accessible by the other means.
- It is that the most convenient mode of transport during natural calamities.
- It provides vital support to the national security and defense
- It is comparatively costlier mode of transport.
- It isn’t suitable for transporting heavy and hulking goods.
- It is suffering from adverse weather.
- It isn’t suitable for brief distance travel.
- In case of accidents, it leads to heavy losses of products, property and life.
India has about 14,500 km of navigable waterways which comprise rivers, canals, backwaters, creeks, etc. About 50 million plenty of cargo like 2.82 billion tone km was transported in 2005-06 by Inland Water Transport. The Indian water ways consists of the Ganges–Bhagirathi–Hooghly Rivers, the Brahmaputra, the Barak River, and therefore the rivers in Goa, the backwaters in Kerala, inland waters in Mumbai and therefore the deltaic regions of the Godavari – Krishna rivers.
- It may be a relatively economical mode of transport for bulky and heavy goods.
- It may be a safe mode of transport with reference to occurrence of accidents.
- The cost of maintaining and constructing routes is extremely low most of them are naturally made.
- It promotes international trade.
- The depth and navigability of rivers and canals vary and thus, affect operations of various transport vessels.
- It may be a slow moving mode of transport and thus not suitable for transport of perishable goods.
- It is adversely suffering from weather.
- Sea transport requires large investment on ships and their maintenance.
Pipeline transport is that the transportation of products through a pipe. Liquids and gases are transported in pipelines and any chemically stable substance are often sent through a pipeline. Sewage, slurry, water, and even beer pipelines exist; but arguably the foremost valuable are those transporting crude petroleum and refined petroleum product including fuels: oil, gas, and bio-fuels.
Distribution systems is that the path through which goods and services travel from the seller to the buyer or payments for those products travel from the buyer to the seller. A channel are often as short as an immediate transaction from the seller to the buyer, or may include several interconnected intermediaries along the way like wholesalers, distributers, agents and retailers.
A distribution system or a marketing channel may be a group of interdependent organizations or service providers working collectively to form a product or service available to the top user.
Example of Distribution system:
A farmer in Srinagar has a grove. Once the apples are ripened he sells the apples to an agent of Delhi. The agent collects the apples from Srinagar, packs them, and sells them to a wholesaler at New Delhi sabzimandi. The wholesaler then distributes them to varied retail fruit vendors throughout Delhi by selling smaller quantities. Finally, we purchase apples from those vendors as per our requirement. Thus, we discover that while coming from the producer at Srinagar, the merchandise reaches the consumers by passing through several hands like an agent, a wholesaler and a retailer. Of these three are called middlemen. These middlemen are connecting links between producers of products, on one side and consumers, on the opposite. They perform several functions like buying, selling, storage, etc. These middlemen constitute the channels of distribution of products. Thus, a channel of distribution is that the route or path along which goods move from producers to ultimate consumers.
Types of distribution System:
Wholesalers are one among the important middlemen within the channel of distribution who deals with the products in bulk quantity. They buy goods in bulk from the producers and sell them in relatively smaller quantities to the retailers. In some cases they also sell goods on to the consumers if the number to be purchased is more. They typically affect a limited sort of items and also during a specific line of product, like iron and steel, textiles, paper, electrical appliances, etc.
Brokers agents, Advisors and Counselors
The main function of those parties is to ease buying and selling to bring buyers and sellers together and to act as a negotiator between them. Brokers commonly found in land, food/commodities and insurance industries. They neither take legal ownership or physical possession of products. They simply act because the agent in between the buyers and sellers.
Merchant wholesalers also are referred to as jobbers, distributors or supply houses are independently owned and operated organizations that acquire title of ownership of the products which they handle and represent. They’ll be of full service wholesalers and limited service wholesalers.
Full Service Wholesalers
Full service wholesalers usually handle larger sales volume during a larger geographic area. They’ll perform a broad range of services for his or her customers like stocking the inventories, operating and maintaining warehouses, supplying credit lines, employing sales people to help and repair customers and delivering goods to the purchasers. They’ll be of two types:
1. General Line Wholesalers
2. Specialty Wholesalers
Limited Service Wholesalers
These sorts of retailers offer limited sorts of services to their customers, and serve to scale back the value of service. They includes:
Truck wholesalers: They deliver the service directly from their truck or vehicles, often for cash. for instance Amul delivering milk and milk products to the retailers.
Cash and carry wholesalers: Carries limited line of fast paced goods selling to smaller retailers on a cash only basis.
Drop Shippers: they are doing not carry inventory or handle the merchandise. They take the orders and transfers customer orders and shipment details to the manufacturer, who then ships the products on to the customer.
Retailing activities are the last word step within the logistics and provide chain channel which connects the majority producers to the ultimate users. Retail trade is that the process of shopping for goods or services with the target of reselling it. Retailers Buys goods from different wholesalers in bulk quantities and sells it to consumers in small quantity.