Logistics Basics

Distribution Center Decisions

When deciding upon locational decision a manager basically decides upon suppliers, plants, ware houses and markets. There may also be other facilities such as super stockists, consolidation centers or transit points.

Besides locating the facilities a manager must also decide how market may be allocated to ware houses and how ware houses will be allocated to plants. The allocation decision can be altered on a regular basis as different costs change and markets evolve. When designing the network, both location and allocation decisions are made jointly.

In some cases, companies want to design supply chain networks, in which a market is supplied from only one factory.… Read the rest

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Logistical Organization and Development

Prior to the 1950s,functions now accepted as logistics were generally viewed as facilitating or support work. Organizational responsibility for logistics was dispersed throughout the firm. This fragmentation often meant that aspects of logistical work were performed without cross-functional coordination, often resulting in duplication and waste information was frequently distorted or delayed and lines of authority and responsibility were typically blurred. Managers recognizing the need for total cost control began to reorganize and combine logistics functions into a single managerial group. Structuring logistics as an integrated organization first appeared in the 1950s.

The motivation behind functional aggregation was the belief that grouping logistics functions into a single organization would increase the likelihood of integration.… Read the rest

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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

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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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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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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

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