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General Business Articles

Planning the Inventory Resources in Logistics

Planning is extremely important when it comes to inventory resources. The lack of planning can be costly to the firm either because of the carrying and financing costs of excess inventory or the lost sales from inadequate inventory. The inventory requirements to support production and marketing should be incorporated into the firm’s planning process in an orderly fashion.

  • The production side: Every product is made up of a specified list of components. The planner must realize the different mix of components in each finished product. Each item maintained in inventory will have a cost. This cost may be based on volume purchases, lead time for an order, historical agreements or other factors.
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Abey Francis

Logistics Planning Process

To match the changing environment in the logistics due to the changes in the markets, competitors, suppliers and technology, there is a need for a systematic planning and design methodology to formally include the relevant consideration and effectively evaluate the alternatives.

Read More: The Concept of Logistics Planning

The logistics relational and operating environment is constantly changing. Even for the established industries, a firm’s markets, demands, costs and service requirements change rapidly in response to the customer and competitive behavior. Just as no ideal logistical system is suitable for all enterprises the method for identifying and evaluating alternative logistics strategies can vary extensively.… Read the rest

Abey Francis

Factors Affecting Transportation in Logistics

Whether the movement of material and equipment is by rail, sea, air or road, adequate facilities for their free flow to and from the factory must be ensured. The factors which affect progress at the construction stage, and production and dispatches after commission, have been discussed below:

1.  Terminal Facilities

Terminal facilities are usually grudgingly provided. One reason for this is that any delay or any in convenience caused to truck operators is not a loss to the project. It is treated as a loss to the carrier. In some cases, this may be true. However, this usual incidence of stoppage or regulation of the production process can be minimized, if not eliminated.… Read the rest

Abey Francis

Modes of Transportation in Logistics

Transportation infrastructure 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.… Read the rest

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Abey Francis

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.… Read the rest

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Abey Francis

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.… Read the rest

Abey Francis
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