Introduction to logistics

Logistics is generally seen as a differentiator in terms of the final bottom line of a

typical “hard and tangible goods” organization; enabling either a lower cost or
providing higher value.
While a lower cost is mostly a one-time feel good factor and has been the traditional
focus area in logistics, high value comes into the picture much later and may be
tangible or intangible in a good’s initial stages.
So while an organization like Zappos may look costly at a first glance, the
extraordinary customer service due to robust policies is a value which more than
offsets the slightly higher cost.
Logistics is concerned with both materials flow and information flow. While the
materials flow from the supplier to consumer, the information flows the other way
round. It is not only concerned with inventory and resource utilization, customer
response also falls under the ambit of logistics.
In simple terms, logistics can be seen as a link between the manufacturing and
marketing operations of a company. The traditional organizations used to think of
them separately, but there is a definite value addition in integrating the two due to the
interdependence and feedback channel between the two.
The level of coordination required to minimize the overall cost for the end consumer
gets tougher to achieve as the number of participants in a supply chain increase, as an
extremely efficient flow of material and information is required for optimization.
Logistics cover the following broad functional areas: network design,
transportation and inventory management.
Manufacturing plants, warehouses, stores etc. are all facilities which form key
components in the network design. Transportation: the cost and consistency
(reliability) required out of the transportation network determines the type and mode
of the movement of goods and also affects the inventory.
Buffer (or safety) stock is the reserve stock held to safeguard against shortages or
unexpected surge in demand, to avoid “stock-outs”. Fewer inventories with negligible
stock-outs — the hallmark of an efficient logistical system.

Inbound logistics + Material Management + Physical Distribution = Logistics

LOGISTICS MANAGEMENT IMPORTANCE

PROVIDE TOP SERVICE

Good logistics management helps businesses deliver better service to their customers. Correct
management of your company’s logistics should make you strive to improve delivery times and offer
better customer service to all those who buy your products. Dealing directly with your customers
gives you an advantage over competitors, but only if you give your customers what they want.
Customers ask for better service, and it’s your job to deliver it. To meet customer demands you need
to make sure you get your supplies or products on time and that you ship out products to your
customers as quickly as possible.

INCREASE SUPPLY CHAIN TRANSPARENCY

Greater visibility throughout your supply chain is one of the benefits of logistics management. You
need to know what is happening at every stage of your supply chain, take a closer look at your
logistics to help you understand how everything operates. You can take a look at historical data and
analyse real-time events too, gaining insight into how things could be improved and how to prevent
problems. You could make some significant savings by monitoring your supply chain, as well as
delivering better service to your customers and any business partners.
IMPROVE EFFICIENCY AND REDUCE COSTS
Whether you’re dealing with logistics in the UK or international freight logistics, you can improve
efficiency and reduce costs with good management. Better supply chain transparency makes it easier
to spot where you might be going wrong, as well as the aspects that your company is doing right.
You can identify cost saving measures and keep your expenses lower by keeping a close eye on how
everything is managed. Gain more control over both domestic and international freight, whether it’s
ingoing or outgoing, for greater efficiency and bigger savings.

GREATER REVENUE
Boost your revenue by improving your logistics management. If your company provides a better
service to your customers, you can attract more business. Improve your brand’s reputation by
delivering on your promises, never having to turn a customer away or let them down. With greater
productivity you can do more with your time, allowing your business to handle more orders than ever
before. People want a quick and accurate service from a company that does what it says it will do.
 Physical Distribution
The area of physical distribution concerns movement of a finished product to customers. In physical
distribution, the customer is the final destination of a marketing channel. The availability of the product
is a vital part of each channel participant’s marketing effort.It is through the physical distribution process
that the time and space of customer service become an integral part of marketing. Thus, physical
distribution links a marketing channel with its customers. To support the wide variety of marketing
systems that exist in a highly commercialized nation, many different physical distribution systems are
utilized. All physical distribution systems have one common feature: they link manufacturers,
wholesalers, and retailers into marketing channels that provide product availability as an integral aspect
of the overall marketing process.

Service Choice and Characteristics

The transportation user has a wide range of services at his or her disposal that revolve
around the five basic modes: water, rail, truck, air and pipeline. A transport service is
a set of performance characteristics purchased at a given price and the variety of
transport service is almost limitless.

The five modes may be used in combination e.g. piggyback or container movement;
transportation agencies, shippers' association and brokers may be used to facilitate
these services; small shipment carriers like, UPS or FEDEX may be used for their
efficiency in handling small packages or a single transportation mode may be used
exclusively. From among these service choices, the user selects a service or
combination of services that provides the best balance between the quality of service
offered and the cost of that service. The task of service-choice selection is not as
forbidding as it first appears because circumstances surrounding a particular shipping
situation often reduce the choice to only a few reasonable possibilities.

To aid in solving the problem of transportation service choice, transportation service

may be viewed in terms of characteristics that are basic to all services: pricing,
average transit time, transit time variability and loss and damage. These factors
seems to be the most important to decision makers as numerous studies over the
years have revealed. It is presumed that the service is available and can be supplied
with a frequency that makes it attractive as a possible service choice.

Price

Price [cost] of transport service to a shipper is simply the line-haul rate for
transporting goods and any accessorial or terminal charges for additional service
provided. In the case of for-hire service, the rate charged for the movement of goods
between two points plus any additional charges, such as pick up at origin, delivery at
destination, customs clearance, insurance or preparing the goods for shipment, makes
up the total cost of service. When the shipper owns the service e.g. fleet of trucks, the
cost of service is an allocation of the relevant costs to a particular shipment. Relevant
costs include items such as fuel, labour, maintenance, depreciation of equipment and
administrative costs.

Transit Time and Variability

Delivery [transit] time usually referred to as the average time it takes for a shipment
to move from its point of origin to its destination. The different modes of
transportation vary according to whether or not they provide direct connection
between the origin and destination points.

For example, shipments move on air carriers between airports or on water carriers
between seaports. However, for the purpose of comparing carrier performance, it is
best measure transit time door-to-door, even if more than one mode is being used.
Although the major movement of a shipment may be by rail, local pick up and
delivery are often made by truck if no rail sidings are available at the shipment origin
and destination points.

Variability refers to usual differences that occur between shipments by various

modes. All shipments having the same origin and destination points and moving on
the same mode are not necessarily in transit for the same length of time due to the
effects of weather, traffic congestion, number of stop off and differences in time to
consolidate shipments. Transit time variability is a measure of the uncertainty in
carrier performance.

Loss and Damage

Because carriers differ in their ability to move freight without loss and damage, loss
and damage experience becomes a factor in selecting a carrier. Product condition is a
primary customer service consideration.

Common carrier have an obligation to move the freight with reasonable dispatch and
to do so using reasonable care in order to avoid loss and damage. This responsibility
is relieved if loss and damage result from an act of the nature, default by the shipper
or other causes beyond the control of the carrier. Although carriers, upon proper
presentation of the facts by the shipper, incur the direct loss sustained by the shipper,
there are certain imputed costs that the shipper should recognize before making a
carrier selection.

Potentially, the most serious loss that the shipper may sustain has to do with
customer service. The shipment of goods may be for replenishing a customer's
inventory or for immediate usage. Delayed shipment or goods arriving in an unusable
condition means inconvenience for the customer or possibility higher inventory costs
arising from a greater number of stock outs or back orders when anticipated
replenishment stocks did not arrive as planned.

The claims process takes time to gather pertinent facts about the claim, takes effort
on the part of the shipper to prepare the proper claim forms, ties up capital while
claims are being processed and sometimes involves considerable expense if the claim
can be resolved via court action.

Obviously, the fewer the claim against a carrier, the more favourable the service
appears to the user. A common reaction of shippers to a high likelihood of damage is
to provide increased protective packaging. This expense must ultimately be borne by
the user as well.
 single-service choices

https://portcitylogistics.com/single-source-logistics-
advantages/

intermodal services
Intermodal is the use of two modes of freight, such as truck and rail, to transport
goods from shipper to consignee. The intermodal process usually begins with a
container being moved by a truck to a rail, then back to a truck to complete the
process. There are about 25 million containers moved via intermodal shipping each
year.

Intermodal shipping involves the combination of rail and truck services. Trucks help
move containers from your facility to the rail yard, then from the rail yard to your
final destination. Splitting transit between truck and rail helps to reduce environmental
impacts, improve highway congestion, and lower overall costs for shippers.

Rail can be especially beneficial for CPG manufacturers and suppliers with long
transits (over 1,000 miles). The mode is ideal for those with high volumes that are
looking for cost savings, more reliability, or environmentally friendly alternatives to
standard trucking services.

How do you know when intermodal is the right choice for your shipment? 

Here’s a few things to consider when deciding whether intermodal is a good fit for
your shipments.

 Intermodal transportation is most suitable for intermediate and finished goods

in load units of less than 25 tons.
 The longer the distance a shipment needs to travel, the more likely it is that
intermodal will be a good choice. Freight moving more than 300 miles, or longer
than one day by truck, are great candidates for intermodal transportation.
 Cargo with intermediate values are most likely to be moved via intermodal.
Those with high values are often sent via the most direct methods, such as air
cargo, and low value shipments frequently travel via rail or ocean.
 Intermodal transportation is a good selection when cargo flow needs to be
continuous and in similar quantities. For example, if you’re sending multiple LTL
shipments to the same location throughout the week, you may want to consider
using intermodal instead.

Agencies and small shipment services

international transportation
https://slideplayer.com/slide/3440877/

rate profiles and private carrier costing

What Is a Private Carrier?

Private carrier refers to a company that owns the vehicles used to transport its
own goods. A private carrier does not transport goods as its primary
business and, thus, does not seek to transport the goods of other companies like
a common carrier does. In this sense, a private carrier is not a for-hire carrier and
does not carry the goods of other companies as its primary business.

Semi-trailer trucks are the most common method of transport associated with
private carriers, though large businesses may also operate their own aircraft,
railcars or ships as part of their supply chain management. The composition of a
private carrier fleet depends on the types of goods the company deals in and the
destinations that it ships to. 

Understanding Private Carriers

Private carrier companies invest in their own transportation fleets for a variety of
reasons, but some of the most common reasons have to do with cost and
control. Companies may find the price of contracting out transportation to be too
expensive compared to the cost of owning a fleet. This is particularly true for
companies with a high volume of goods shipped or companies with less common
final destinations for their products.
On the control side, a company may reasonably worry about the reliability of
transportation that it does not own. Not owning part of the process, and a
possible interaction with the public and/or a customer can go against some
corporate cultures. Moreover, not owning the fleet opens up the risk that a
company won’t have transportation options available when needed due
to contract carriers being hit by high demand from competitors.