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Unit 8: International Transport System

the next stage of the manufacturing process or physically closer to the ultimate customer. Notes
A primary transportation function is product movement up and down the value chain.
Transportation utilizes temporal, financial, and environmental resources, it is important
that items be moved only when it truly enhances product value.
The major objective of transportation 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 a manner that meets customer demands regarding delivery performance
and shipment information availability. Thus, with the help of following flowchart which
is represented in Figure 8.4, you will be able to understand the movement of the product.
2. Product Storage: A less common transportation function is temporary storage. Vehicles
make rather expensive storage facilities. However, if the in-transit product requires storage
but will be moved again shortly (e.g., in a few days), the cost of unloading and reloading
the product in a warehouse may exceed the profitability. A second method to achieve
temporary product storage is diversion. This occurs when an original shipment destination
is changed while the delivery is in transit. Traditionally, the telephone was used to direct
diversion strategies. Today, satellite communication between enterprise headquarters
and vehicles more efficiently handles the information.
Although product storage in transportation vehicles can be costly, it may be justified from
a total-cost or performance perspective when loading or unloading costs, capacity
constraints, or the ability to extend lead times are considered. In this situation, movement
of goods and products has become more imperative as also wider. Raw materials of one
country are processed in the other country and sold out in a third country. Hence,
transportation has a significant link with various stages of supply chain.

Transportation plays a very strategic role in the success of any logistical system, because:
1. It ensures speedier and timely physical movement of goods from point of inception to
point of consumption;

2. It creates core competency by preventing stock-out and customer annoyance;
3. It provides protective storage during transit;
4. It ensures cost-efficient better customer service; and
5. It fulfils specific service requirements of the corporate enterprises for improvement of
logistical capabilities.
Relationships have traditionally been considered as intangible. For more than half a century,
there has been a debate about the value of tangible and intangible assets to organisations. Of
late, many have come to believe that intangible assets play a very important part in today’s
competitive environment and can be sources of competitive advantage and above normal financial
returns. When we talk of intangible assets, we are principally talking of two related types of
intangible assets:
1. Relational: Relational market-based assets are outcomes of the relationship between a
firm and key external stakeholders, including distributors, retailers, end-customers, other
strategic partners, community groups, and even governmental agencies; and
2. Intellectual: Intellectual market-based assets are the types of knowledge a firm possesses
about the environment, such as the emerging and potential state of market conditions,
and the entities in it such as competitors, customers, channels, suppliers and social and
activist groups.

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