Page 177 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes  Describe the Regulations in Transportation
 Understand the Transport Structure
 Discuss the Transport Service
 Explain the Transportation Administration and Documentation

Introduction

The transportation system is the physical link connecting a company with the customers, raw
material suppliers, plants, ware houses and distribution channel members. It’s interesting to
note that all these elements of logistic system are fixed points, transportation is the connecting
medium. The better is the performance and efficiency of transportation system the better will be
organisational performance in terms of cost and customer’s satisfaction. Knowledge of logistics
and transportation is fundamental to the operations of any business. Transportation adds value
to the goods by providing time and place utility, by ensuring availability of items when they
are needed, and where they are needed. For most companies there is a geographical spread
between the source and market of goods produced because of economies of scale and mass
production, specialization of labour, infrastructural facilities, etc. Transportation is the connecting
link.
In any organisation involved in manufacturing or production of goods and services, management
of logistics assumes significance. Appropriate planning, implementing and controlling the flow
of goods, its storage and the effectiveness with which several activities follow, from the point of
origin, to the point of consumption, occupies a significant place in modern business. The function
of logistics includes sourcing, procurement, production planning, scheduling, packaging,
assembly and customer services. Each one of these activities is very important. The developments
in the field of transportation and communication are resulting in emergence of global supply
chains and logistics processes. Technology is also having impact on logistics management.

8.1 Transportation Infrastructure

Transportation infrastructure can broadly be classified as hardware and software. Hardware
consists of physical assets that comprise terminals, storage facilities, right of way for movement
and vehicles/equipment. Software, which is essentially the service superstructure, consists
primarily of maintenance, operations and value added services.

The nature of the infrastructure also determines a variety of economic and legal characteristics
for each mode or inter-modal (multimodal) system. A mode identifies the basic transportation
method or form. Bulk goods are typically transported in large shipment sizes. Therefore, dedicated
vehicles and specialized modes of transport and handling are important. Industrial goods have
high value and are often critical. Therefore, there is a need for speedier transport of goods. The
selection of the mode of transportation is based on these criteria.
Transportation infrastructure consists of the rights-of-way, 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 economic and legal characteristics for each mode or multimodal
system. A mode identifies the basic transportation method or form.

8.1.1 Modal Characteristics

The five basic transportation modes are rail, highway, water, pipeline, and air. The relative
importance of each mode can be measured in terms of system mileage, traffic volume, revenue,
and the nature of traffic composition. Each mode is discussed with respect to these measures.

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