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Logistics and transport all about

This is a very loaded questions as there is enough to logistics, transport and supply chain management to have a degree in this area. So I will provide a basic ‘short version’ along with some books you can purchase if you are interested.

Logistics

  • Definition:

Logistics is the process of planning, implementing and controlling procedures for the efficient and effective transportation and storage of goods, including services and related information from the point or origin to the point of consumption for the purpose of conforming to customer requirements.

This may be quite confusing if you are not familiar with SCM (Supply Chain Management) so many people look at it as the eight ‘rights’, as in the eight things that logistics tries to achieve.

Get the right product
In the right way
In the right quantity
And right quality
To the right place
At the right time
To their right customer
At the right cost.

 

Transportation

  • Definition:

Transportation is an integral part of SCM and involves moving items from one location to another, usually achieving a set of parameters such as fixed a variable cost, speed, availability, dependability, frequency, capacity and access to a location, using one or a combination of the available five transport methods: air, road, water, rail and pipeline.

While this definition remains quite simple when it comes to the ‘type’ of transport it becomes more in depth as their choice depends on the needs and associated costs (both financial and non-financial e.g. pollution). Here is a summary of this.

1. Road – Fixed cost is low as the physical transport infrastructure such as motorways are in place through public funding; variable cost is medium in terms of rising fuel costs, maintenance and the increasing use of tolls and congestion charges. In terms of operating characteristics, road as a mode of transport score favourably on speed, availability, dependability and frequency, but not so good on capability due to limited capacity on weight and volume. Uniquely among transport modes, it can allow direct access to a site or distribution centre.

2. Rail – Fixed cost is high and the variable cost is relatively low. Fixed costs are high due to expensive equipment requirements such as locomotives, wagons, tracks and facilities such as freight terminals. On relative operating characteristics , rail is considered good on speed , dependability and especially capable to move larger quantities of freight. However, it may need another mode to be transported to precise locations.

3. Air – Fixed cost is on the lower side, but high variable cost that includes fuel, maintainence, security requirements, etc. The main advantage of air is speed; it is however limited in uplift capacity , similarly other modes of transport are required to take freight from airports to the final destination. Air scores fairly on dependability and frequency but this varies and can change based on weather conditions.

4. Ocean – Fixed cost is on the medium side including vessels, handling equipment, terminals and containers. Variable cost is low due to the economies of scale that can be achieved by carrying large volumes of freight. Like air, location is limited to ports, it can be dependable and weather and is usually quite slow

5. Pipeline – Fixed cost is high due to rights of way, construction and installation, but the variable cost is low and generally encompasses routine maintenance and ongoing inspections and security. On operation characteristics, the dependability is excellent, and it provides a steady flow, but it may be quite slow, but large quantities can be achieved but is limited to what can be transported, and is only useful in limited situations.

Here are the very basics for you, but there is a lot more on closer inspection. I hope this helps give you some understanding.

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