LOGISTICS

MANAGEMENT
 Introduction

Logistics is necessary to:

 Move goods from suppliers to buyers
 Move finished goods to the customer
Products have little value to the customer until
they are moved to the customer’s point of
consumption
 Time utility- products are delivered at the
right time.
 Place utility- products are delivered to the
desired location.
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 Introduction (Continued)

Logistics is:

“…that part of supply chain management

that plans, implements, and controls the
efficient, effective flow and storage of goods,
services, and related information from point
of origin to point of consumption in order to
meet customer requirements.”

Council of Supply Chain Management

Professionals
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 The Fundamentals of
Transportation

The Objective of Transportation

 Maximize value to firm through negotiation to
provide profit contribution
 Make sure service is provided effectively
 Satisfy customer needs

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 The Fundamentals of
Transportation (Continued)

Legal Forms of Transportation Transportation service

companies are classified legally as either common,
contract or private carriers.

 Common carriers- offer transportation services to all

shippers at published rates between designated
locations without discrimination.
 Contract carriers- not bound to serve the general
public. Contract carriers serve specific customers
under contractual agreements.
 Private carrier - not subject to economic regulation &
typically transports goods for the company owning
the carrier.
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 The Fundamentals of
Transportation (Continued)

Modes of Transportation
Motor Carriers (trucks)- most flexible mode of
transportation
Rail Carriers- compete when the distance is long
& the shipments are heavy or bulky
Air Carriers - Expensive relative to other modes
but fast
Water Carriers- Inexpensive, slow & inflexible.
Includes inland waterway, coastal & intercoastal,
& deep-sea
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 The Fundamentals of
Transportation (Continued)

Modes of Transportation
Intermodal – the use of multiple modes of transportation

Pipeline Carriers - are limited in variety they can

carry.
 Little maintenance once pipeline is running.
 Materials hauled in a liquid or gaseous state.

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 Share of different modes of
transport in GDP

Source: Road Transport Year Book (2009–10 and 2010–11), Ministry of Road Transport and Highways, Government of India, http://morth.nic.in/
writereaddata/mainlinkFile/File838.pdf
Modal share of transportation
in India
 Nature of Traffic versus Mode of
Transportation

Mode Nature of Traffic

Rail Extracting industries, heavy manufacturing,
agricultural commodities
Highway Medium and light manufacturing, distribution
between wholesalers and retailers.
Water Mining and basic bulk commodities, chemicals,
cement, agro-based products.
Pipeline Petroleum, gases, slurry.

Air Emergency, perishables, limited marketing

period, high value premium products.
 Cost Structure for Each Mode of
Transportation

Mode Fixed Cost Variable Cost

Rail High- equipment terminals, tracks Low
etc.
Highway Low-highways provided by public Medium- fuel,
funds maintenance.
Water Medium- ships and equipment Low-capability to
transport large amount of
tonnage.
Pipeline Highest-rights-of-way, construction, Lowest-no labour cost of
control stations, pumping capacity. any significance.
Air Medium-aircraft and cargo handling High-fuel, labour and
system. maintenance.
Transport Mode Selection
Criteria

Speed
Frequency
Availability of service
Reliability
Consistency in delivery
Capability
Cost
 Impacts of Logistics on
Supply Chain Management
Third Party Logistics (3PL)
 Provide reliable & timely delivery required by
SCM
 Used to significant degree by international
logistics
 Favored by small businesses
 Some firms outsource all of their logistics
needs to a lead logistics provider or fourth
party logistics provider (4PL)

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13
 Impacts of Logistics on
Supply Chain Management
(Continued)
Other Intermediaries
 Freight forwarder – consolidate LTL
shipments into FTL
 Load or transportation brokers bring
shippers and carriers together
 Intermodal marketing companies – purchase
blocks of rail capacity and sell it to shippers

©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
14
 Global Logistics

International Freight Security

 Transportation across national boundaries
introduces added complexity, particularly
security.
 Since 9/11 there is more conflict between
govt. & industry toward more security &
restrictions for inbound shipments.

©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
15
 Global Logistics (Continued)

Global Logistics Intermediaries

 Customs Brokers- move through customs &
handle documentation.
 International Freight Forwarders- move
goods to foreign destination
 Trading Companies- Put buyers & sellers
together & handle export/import
arrangements.
 Non-Vessel-Operating Common Carriers-
operate like freight forwarders but use
scheduled ocean liners.
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16
 Reverse Logistics

 Backwards flow of goods from customers in SC

when goods are returned by a customer in the
supply chain
 Retail returns range 6% to 40% of sales
 Often is an unwanted SC activity
 Poor reverse logistics can hurt firm
 Green reverse logistics programs - designed to
return unneeded products for recycling. These
programs reduce environmental impact on
landfills & deal with dangerous contaminants.
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Reverse Logistics

©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Impacts of Logistics on
Supply Chain Management
(Continued)
Environmental Sustainability in Logistics
 Reverse logistics aka backhauling is a
response to the need for reducing carbon
emissions and by ensuring trucks move
loaded rather than empty

©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
19
Unitization, Palletization
and Containerization
 Unitization

• Aggregation of smaller packages cargo into

higher Weight/Volume package in order to
 Minimize the handling
 Improve the productivity in the transport/delivery
chain
 Avoid handling damage
 Improve turn around of equipment in the system –
e.g. containers, ships, trucks etc
 Unitization – value chain

• Packages loaded by sling/ crane loads into

ships etc.
• Pallets
• Containers
• Pallets in Containers
• Lash barges
 Unitization - Use of slings

Use of multiple slings

Pre-slinging of pipes

Source: SPICA Services (S) Pte Ltd

 Pallets
A pallet is a platform on which One-way Pallet
cases or cartons are stacked and
strapped, and are made into a
single unit. This allows the entire
pallet to be lifted and moved by
fork lift or by cranes with rope or
wire slings.

Source: http://www.lawrencepallets.com/ Source: http://www.fpl.fs.fed.us/documnts/fplgtr/fplgtr52.pdf

 Stacking of pallets
Pallets stacked inside a container

Pallets stacked in a warehouse

Source: http://commons.wikimedia.org/wiki/
File:warehouse_md17.jpg#
 Bracing of goods on pallets
Shrink Wrapping Stretch Wrapping

Stretch wrapping of non-

homogeneous cargo

Source: Source:
http://www.globalpolysolutions.com/ http://www.activeweighing.com.au/wp-
images/shrinkbag.jpg content/gallery/fully-automated-bagging-
lines/9-automaticbagging-
system-stretched-wrapped-pallet-
accumulation-line.jpg
 Phytosanitary Compliance and
International
Plant Protection Convention (IPCC)
• Pallets used in cross-border movement of goods must comply with
the provisions of international plant protection convention (IPPC)
• The international standards for phytosanitary measures (ISPM) No.
15 specifies the standards.
• Woods used for pallets, according to these standards, must be
treated as follows:
 Heat treatment: The wood must be heated for at least 30 minutes to achieve
a minimum core temperature of 56°C. Heat treated pallets are marked HT.
 Chemical fumigation: Chemical fumigation involves treating the wood with
methyl bromide. Pallets made of fumigated wood bears the mark MB.

Source:
http://cheguebeeapiary.blogspot.in/2012/10
IPPC label /pallet-timbercan-be-safe-if-marked-ht.html
ISO Pallet dimensions and
region of use
 Palette handling equipment

©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
29
Unitization of free flowing
cargo
 Containerization

• Most favored and long standing transport unit

• Caused transport revolution
• The product was used first in Korean war for
army goods transport from US to Korea
• Today most general and value freight moved
by containers
Container dimensions, weights and
construction material
• Sizes-outside dimensions (ISO sizes)
 20’x 8’x 8.5’
 40’x 8’x 8.5’
 40’x 8’x 9.5’(High Cube containers)
 45’x 8’x 9.5’(Only used in US trades)
• Weight restriction
 20’- 24000 kgs (gross), 30000 kgs (gross) (known as
heavy duty containers) - Tare –approximately 2200
kgs
 40’- 30000 kgs (gross) –Tare approx 4400 kgs
• Body - Steel/ Aluminum/ Fiber Glass
• Frame – Steel
• Floor Board - Australian Treated Wood
 Container and its parts

Source: http://www.containerhandbuch.de/chb_e/stra/index.html?/chb_e/stra/stra_03_01_00.html
Container Unique Number and
Safety Plating

Source:
http://upload.wikimedia.org/wikipedia/en/e/e1/
Containernumber.jpg

Source: http://www.shippingcontainersuk.com/brands/shipping_containers.php
 Container Types

• General Purpose or Dry Box

• Open Top
• Ventilated
• Flat Rack
• Bulk Containers
• ISO Tank containers
• Side open Containers
• Temperature Controlled Containers
(Refrigerated Containers)
Types of Containers
Open Top Container Ventilated container

Source: http://sevenseaservices.com/wp-content/ Source:

uploads/2011/11/offshore_open_top_container.jpg http://www.cimc.com/res/products_en/container/special/Domesti
c/201001/P020100104515352120375.jpg
Tank container
Half height container

Source: http://www.langh.fi/cargosolutions/lisaykset/image/
Source: Hoover Container Solutions
kuvapankki/half_height_hard_open_top_container_20.jpg
 Types of Containers
Refrigerated Container

Platform Containers
Source: http://www.marineinsight.com/wp-
content/uploads/2010/10/ReeferContainer01.jp
g

Source: http://www.nacintgp.com/picts/ofreight/wp27bcd621.jpg
 Stowing and Securing
Containers

Stowing
containers

Source: http://www2.nykline.com/liner/cargo_advisory/dry_stowage.html

Container lashing

Source: MacGregor Finland Oy, http://www.cargotec.com/en-global/macgregor/products/Lashing-equipment/container-

lashing-
systems/Equalash/Asset%20library/Equalash_6282.jpg
 Why does cargo need to be
secured?

Source:
http://www.moc.noaa.gov/al/photos/ship.jpg,

Source: http://www.containerhandbuch.de/chb_e/stra/images/02_03/strauch_02_03_049.jpg
 Benefits of containerisation

• Faster loading and unloading

• Easier handling
• Faster turnaround time for ships
• Ease of cargo transfer across multiple modes
• Greater security from damages or theft
• Reduced cost of packaging
 Container Terminology

• TEU – Container carrying capacity of any

transport mode is denoted by twenty foot
equivalent units
• e.g. the modern ships have a capacity of 6000
TEUs which means that the ships can load
either 6000 of twenty foot containers or 3000 of
forty foot containers or such combinations one
of which is e.g. 2000 twenty footers and 2000
forty footers
 Container shipment types
• LCL/FCL
• LCL shipments are routed through Container
Freight Stations (CFS) which are common user
sheds where the cargoes are received custom
examined and containerised or vice versa for
imports
• FCL shipments are containerised at the
factories/ warehouses of shippers and
delivered to the lines at Yard or vice versa for
imports
• Container Yard-CY and Container Freight
Station -CFS
 Container handling

Empty
Container
Delivery Yard
Of Cargo

Empty
Container

Container Ship
CFS Full
Container Yard

FCL
Container from
Factory
 Container Terminology

• Container Yard (CY)

• Container Freight Station (CFS)
• Less Than Container Load (LCL)
• Full Container Load (FCL)
 Straddle Carrier

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45
 Reach stacker

©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Rail mounted gantry crane

©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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