Transportation infrastructure in logistics consists of the rights-of-ways, vehicles, and carrier organizations that offer transportation services on a for-hire or internal basis. The nature of the infrastructure also determines a variety of legal and economic characteristics for each mode or multi-modal system. A mode identifies the basic transportation method or form. Rail Network Since olden times, railroads have handled the largest number of ton-miles. As a result of the early establishment of a comprehensive rail network connecting almost all the cities and towns, railways dominated the intercity freight tonnage till World War II and in some cases of Europe, Asia and Africa they even connected the countries. This early superiority enabled railways to transport large shipments very economically. The capability to efficiently transport large tonnage over long distances is the main reason railroads continue to handle significant intercity tonnage and revenue. Railroad operations incur high fixed costs because of expensive Continue reading
Logistics Basics
Transportation Cost Elements
Transportation is one of the most visible elements of logistics operations. Transportation provides two major functions namely product movement & product storage. The major objective is to move product from an origin location to a prescribed destination while minimizing temporal, financial and environmental resource costs. Loss and damage expenses must also be minimized. At the same time the movement must take place in such a manner that meets customer demands regarding delivery performance and shipment information availability. Following are the essential elements of transportation to be taken into account: 1. Transport Mode — The most critical decision is the selection of appropriate mode of transport. This fixes two basic elements of distribution function: Transit time or time lapse between production and sale; Level of transportation costs. There is an inverse relationship between transit time and transport cost — the lower the transit time, the higher the transport cost. However, a Continue reading
Logistics – Definition and Meaning
According to Council of logistics management: “Logistics is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of conforming the customer requirement”. This definition clearly points out the inherent nature of logistics and it conveys that Logistics is concerned with getting products and services where they are needed whenever they are desired. In trade Logistics has been performed since the beginning of civilization: it’s hardly new. However implementing best practice of logistics has become one of the most exciting and challenging operational areas of business and public sector management. Logistics is unique, it never stops! Logistics is happening around the globe 24 hours a day’s Seven days a week during fifty-two weeks a year. Few areas of business involve the complexity or span the geography typical of logistics. Word, Continue reading
Logistical Organization and Development
Prior to the 1950s, functions now accepted as logistics were generally viewed as facilitating or support work. Organizational responsibility for logistics was dispersed throughout the firm. This fragmentation often meant that aspects of logistical work were performed without cross-functional coordination, often resulting in duplication and waste information was frequently distorted or delayed and lines of authority and responsibility were typically blurred. Managers recognizing the need for total cost control began to reorganize and combine logistics functions into a single managerial group. Structuring logistics as an integrated organization first appeared in the 1950s. The motivation behind functional aggregation was the belief that grouping logistics functions into a single organization would increase the likelihood of integration. The paradigm (model) was that functional proximity would facilitate improved understanding of how decisions and procedures in one area affect performance in other areas. The belief was that eventually all functions would begin to work as Continue reading
Activity Based Costing in Logistics
Activity-based costing seeks to relate all relevant expenses to the value adding activities performed. For example, costs are assigned to a customer or product to reflect all relevant activity cost independent of when and where they occur. The fundamental concept of activity-based costing is that expenses need to be assigned to the activity that consumes a resource rather than to an organizational or budget unit. For example, two products produced in the same manufacturing facility, may require different assembling and handling procedures. One product may need an assembly or packaging operations that requires additional equipment or labor. If total equipment and labor costs are allocated to the products on the basis of sales or units produced than both items will be charged for the additional assembly and packaging operations required by only one of them. In case of logistics, the key event is a customer order and related activities and Continue reading
3 Important Categories of Logistics
Logistics is the process of accurately interpreting customer requirements or orders or marketing strategy, as also providing manufacturing operations support, with precise execution of the process of reaching the product material from the point of origin to the point of requirement consumption ensuring suitable care of the product material throughout to avoid damage deterioration, continuously ensuring the lowest possible cost throughout the process. Logistics is concerned with getting products and services where they are needed when they are desired. The responsibility of logistics is the temporal and spatial positioning of raw materials, work in progress, and finished inventories when and where required. Integrated logistics support, when properly understood and applied, can provide the means to identify and resolve many logistic problems, frequently before they developed. Logistics, in the broadest sense of the word, can be considered as scope of activity comprised of three major areas or subsets. Subsistence logistics, Operation Continue reading