10. Contribution of logistics for the success of businesses

10. Contribution of logistics for the success of businesses

The process of moving people or goods from one place to another utilizing different media is transportation.

 Transport is an essential support service for the success of business activities. Transportation is not merely a medium but it is a system developed through several balanced elements. For balanced development in transportation, it is necessary to have growth in transport elements or an availability of them.

The transportation elements can be described as follows

·         Way – The various ways used in transportations.

 Example : Highways, railways,water ways, air ways

·         Mode – Various types of vehicles used on various roads.

 Examples : Motor vehicles, trains, ships, aero planes

·         Power – The types of fuel energy that is used to operate each mode of transport.

 Example : Coal, petroleum, electricity, gas

·         Terminal – This is where each of the modes of transport are parked.

 Examples : Bus station, railway station, three Wheel Park.

The way	Mode	Power	Terminal
Highways	Car Motor vehicles, Bicycle, Lorry, Bus	Man Labour, Animal Labour Diesel, Petrol , Gas, Electricity	Bus stand
Railways	Train	Coal Diesel Electricity	Railway station
Airways	Aero plane Helicopter Jet	Aviation fuel	Airport
Water ways	Ship Boat Canoe	Wind Diesel Man labor	Harbor Port

The advantages and disadvantages of each method of transportation can be stated as below:

Highway transportation

Advantages	Disadvantages
·         The ability to select the most suitable mode of transport ·         This mode being spread all over the country ·         The ability to use highways at any time desired ·         The ability to use the same mode of transport to cover the entire journey	·         The inability to transport large volumes of stock at the same time ·         The high cost of maintaining high ways ·         The high amount of delays and accidents ·         Obstacles that arise because of weather conditions

 

  Railway transportation

Advantages	Disadvantages
·         The ability to transport many passengers and a large volume of stock at the same time ·         Being safer than highway transportation ·         Carriages can be organised as per the nature of the goods ·         Being cheaper when compared with other modes of transportation ·         It is possible to obtain extra facilities such as restaurants, sleeperettes, observation cars etc	·         Railways are not available all over the country ·         Rail services are not available at preferred times ·         As it may not be possible to utilize railway services up to the final destination itself it may be necessary to use other modes of transport as well. ·         Delays can result from malfunctioning of signal lights, dilapidated railway lines etc.

 Water ways transportation

Advantages	Disadvantages
·         Being helpful for international trade ·         Ability to transport a large volume of goods at the same time ·         Ability to choose a type of vessel suited to the nature of the goods	·         Shipping services not being freely available. ·         Transportation taking an extremely long time

 Air transportation

Advantages	Disadvantages
·         Very high in speed. ·         Suitable for perishable goods ·         No cost of maintenance of air routes	·         Not suitable for the transport of bulky and very heavy goods ·         Cost of transport being high ·         Higher probability of accidents ·         Not being able to obtain services at the time required

Transport is the most important device in globalization, economic and social development. The manufacturing and consumption happens in different places because of transportation. Transport is largely responsible for the expansion of trade and also the dispersion of populations. Accordingly, the importance of transport to various parties can be stated as below:

 The importance of transport for the businessman

1.      To obtain raw materials at the required time

2.      To make finished goods available at the time it is required

3.      To get the staff to attend to work on time

4.      To maintain business connections

5.      For the expansion of the market

 The importance of transport for individuals

1.      To create and maintain social connections

2.      For employment and tourism

3.      For recreational purposes

4.      For research, exploration, and educational activities

The importance of transport for the economy

1.      For the growth of employment

2.      For the growth of international relationship.

3.      For the growth of foreign trade

 Several points that must be considered in selecting an appropriate transport method:

1.      The nature of the goods–

Here, the mode of transportation selected depends on the nature of the goods, its durability weight, value etc.

Examples:

 Use of bowsers to transport petroleum

 Use of lorries for the transport of timber

 Use of refrigerated trucks for the transport of fish

2.      Cost –

The total expense that must be borne for the transport is its cost. Since transport costs will result in an increase in the cost of the goods produced, this needs to be given extra consideration

3.      Speed –

It is necessary to transport some raw materials and goods faster. The reason for this maybe

perishability, reduction in quality etc. Quick transport will reduce the time spent in transportation

to a minimum. This gives an opportunity to carry out the transportation activity effeiciently.

Example:  Fish, Vegetables, Fruits and curd

4.      Distance –

The method and mode of transport selected will also depend on the distance, the goods have to be transported. The cost will vary according to the distance.

5.      Capacity –

This is the number of passengers or volume of goods that the selected mode of transport can carry at a time. The mode of transport selected should depend on the quantity/volume of goods / people that need to be transported.

Example:

Large stock volumes are transported in lorries while the distribution of small quantities of stocks can be done through distribution vans.

6.      Safety –

It must be possible to transport the goods or passengers in safety right through to the destination.

Examples:

 Use of airlines for the import/export of fruits like apples and grapes

 Use of ambulances for the transport of patients

While trends in the development of the transport field take place continuously, the following can be given as examples:

·         The use of tunnels.

·         Construction of fly overs

·         Construction of express ways

·         Deployment of electric motor vehicles

·         Promoting the use of environment friendly energy sources

 Example: production of fuel from vegetables and fruits

·         The ability to get transportation modes to a place an individual resits

 Forecast the future in the transport field

  Hyper loop concepts

 This is a futuristic transport system that has been introduced by Eflon Mike in 2012. Hyper loop is a proposed mode of passengers and freight transportation that would propel a pod – like vehicles through a reduced pressure tube that would exceed airliner speed.

  








Walk car, air wheel

  This is a very small type of equipment that can be utilized as an alternative to walking.

Warehousing

Warehousing is a process of storing and preserving stocks from the time of buying or manufacturing until they are sold or used or distributed.

This process contains the following

·         Receipt of stocks

·         Identification

·         Inspection

·         Verification

·         Ensuring quality

·         Putting away

·         Retrieving for issue

 Warehouse is the place where the goods are stored or a place used to keep the goods for a long term

The facts have to be considered when locating a warehouse

Layout and flow of the building

The optimum layout of the building used for the warehouse (location of doors, spaceous area, height of the ceiling, system of storing the material etc.) will have a great impact  on the operational activity (storage of the materials, distribution, packing, labelling etc.)  in the building. This will create limitations on the amount of rows available for the storing of goods, the height of the ceiling and the equipment used to store the goods in a building and to the movements of goods. It also influences the receiving of raw materials or finished goods to the warehouse or issuing of materials.

 So it should be deeply considered whether the space of the building selected is suitable for the movements of materials as expected by the businessman.

  
Zoning and intensity of use in the warehouse:

 When locating a warehouse it is necessary to consider what the speed of the operations which is done inside the warehouse, how fast the storing of goods in the warehouse and withdrawing of the goods are done. Also the functions expected to do in the future will  be considered. If the functions of the warehouse is to store and protect for a certain period or if it’s a simple assembly activity a place can be used to move the materialwith less speed.

If the operations happens for 24 hours, it is necessary to select a place with facilities to  obtain the materials and distribute fast.

It should be considered where to locate the warehouse by taking into account the factors of out going noise, out going substances and necessity of outdoor storing.

 Proximity to major linkages

 Warehouse should be located according to the main transportation method used to  transport the stored goods, such as railways, airways or waterways. It is suitable to locate the warehouse where is easy to depart from the expressway or easy to reach the airport.

 Apart from that another important factor is the proximity to the consumers. If the majority of the production is exported and the rest of the production is distributed to the retailers in the country, it is necessary to select the warehouse location where it can be easily  accessed by the express ways and railways as well to harbour.

The accessible part of the cost of a production includes the cost of transportation. Therefore, the location of the warehouse should be decided having much concern about the cost of transporting of raw materials and finished goods.

 Material handling capabilities

 The facilitation of storing the materials and handling the equipment in movement of materials is also considered when locating a warehouse. Loading and unloading terminal are needed to operate equipment which lifts the goods and trucks which are used to move the goods.

 If the goods are needed to be distributed quickly the availability of such facilities are essential.

Nature of stocked materials

 Business needs to select the most suitable warehouse to store the materials according  to their nature such as explosives and inflammables, food items, perishables and chemicals. Warehouse should be selected according to its nature and considering the environmental factors while ensuring the heat, moisture and not being harmed from fire and rain.

 E.g. If the stores item is inflammable, the availability of water supply or resources  should be considered.

 Cost

 The transport cost of carrying the raw materials to the factory, the cost of distributing the manufactured products to final consumers and loading and unloading cost should be calculated where the transport cost can be minimized, expenses like

·         Rent for the warehouse

·         Security deposits

·         Insurance rates

·         Parking premises and expenses should also be considered.

 Several ways of storing the goods in a warehouse

 Pallet racking

This is an easy and profitable method of storing. Goods are stored on several marble pallets which are kept on one another in a frame. It is easy to access any pallet at any time. Individuals can reach to any pallet of goods using a ladder or forklift truck.

 Block stacking/ Bulk storage

In this method the goods of the same type are stored on top of another on the floor of the warehouse. Accordingly various types of goods are stored on the various places of the floor as heap of goods. So the physical media like sacks or containers are not necessary to store the goods.

E.g. Rice, Sugar, Flour, Natural stones, Bricks

  



Pallet Flow

These methods of pallet racks are composed with tracks or marble belts. These can be fixed to the drive in method in which the storing of goods and removing of goods can be done on the same side or drive through method in which the goods are stored on one side and removing of goods can be done on the other side. The quality of the goods is very high when storing under this method and space can be optimized. This method is suitable to store the goods which are high in cost and stored in refrigerated warehouses. Speed controlling equipment can be fixed to prevent the damages to the goods.

  

 Push – Back Racks

In this method small baskets are fixed to the racks which have several layers. Baskets can be stored one top of another to make several layers. After placing the products on one layer it is pushed to back and the next layer is placed in front of that.

  


 Mezzanine

An additional layers is crated in between two floors of the warehouse. Any method explained above can be used to store on this layers. Existing area of the building can be doubled by this method.

Automated Storage System

A mechanical arm device controlled by computer technology is used to stock and remove the materials in the warehouse. This is very suitable to remove the stocked items of very small quantities / sizes. This method is also suitable to store and remove thousands of books and documents stored in archives.

 Several types of equipment are used in a warehouse to move the goods

·       

  Fork lift

·        

 Pallet jacks

·    

     
 Conveyor belts

·        

 Forklift Truck

Following are some advantages of using the equipment in storing and moving the goods systematically in the warehouse.

 The warehouse is well organized.

The warehouse is well organized when storing the goods systematically using suitable methods and using equipment to move the goods. Then it is easy to the owner and employees to maintain and manage the warehouse.

Safety of the stocked products and employees

There will be no threat to the employees while they are working and there will be no confusion in the warehouse. The products are safe because they are placed in respective places due to systematically storing

Contributed effort and saves time

 It is time consuming when storing and removing of goods are done using manual systems. If the systematic method is used to store the goods, it will save the effort and time of storing and removing goods.

  
Save space of the warehouse

 The warehouse is organized systematically since the goods are stored systematically. When the goods are stacked over and over instead of piling all in the same place there will be more space in the warehouse

Logistics

Logistics is the process of planning and implementation of the flow of goods, services and relevant information forwards and backwards from the point of origin to the point of consumption efficiently and effectively with the aim of ensuring the fulfilment of consumer needs and wants.

A planned system of logistics is essential for the smooth flow of operational activities of a firm. There are two basic processes in such logistics systems.

Inbound logistics- The movements of raw material or finished goods from the point of purchase to the point of production

Outbound logistics- The movement of supplying the products or relevant information from the end of the production process to the final consumers.

Vendor à Manufacturers à Wholesalers àRetailers à Customer

 << Inbound logistics >>>>  / <<<< << outbound logistic >>>>>>>>

There may be various types of logistics systems according to the nature of the firm or nature of the products as follows

 Balanced logistics systems

 The similar flows of a flow from raw material/ products up to the firm and flow to theconsumer after the production

 E.g.: Firms providing consumer goods such as Nestle, Uniliver

Heavy inbound logistics systems

 E.g.: Manufacturing firms of aeroplanes

 The manufacturing process of aeroplanes is complex because various firms and countries are connected in obtaining the necessary material and services but the process of selling the aeroplanes is not so complex

Heavy outbound logistics systems

 E.g.: Chemicals Company

 Storing of chemicals, packing and transporting should be done with special attention. So this process is complex.

  Reverse logistics systems

 E.g.: Packages like gas cylinders that will be handed over again.

 Impacts on the environment by throwing out used items.

 The necessity of logistics can be shown as follows :

1.      Logistics is needed to provide the right product, in the right quantity, at the right time, to the right place, at the right price, in the right quality to the right consumer.

2.      Logistics is needed to do the activities such as stock control, product planning, purchasing of materials, transportation and warehousing systematically.

3.      Logistics is needed to ensure that all machines and all work centers are getting the required materials, in the required quantities at the required quality, at the required time.

4.      Logistics is needed to minimize cost and to maintain the supply chain continuously by conducting market research, planning requirements, making or buying decisions etc.

Benefits of logistics

·         Can gain the reliability of consumers by providing the products to the market continuously.

·         Can minimize the cost through minimizing waste by doing all the activities according to a plan.

·         Can face competition firmly.

·         Can minimize the unnecessary cost relevant to machines and employees.

·         Can ensure the quality of products.

·         Problems are not generated due to the proper management of waste.

·         Can be leaders of the industry