Chapter One

Overview of transportation system

 Chapter one
An Overview Of Logistics And Transportation
• What is logistics?
• Council of Logistics Management (1991) defined
that logistics is ‘part of the supply chain process
that plans, implements, and controls the efficient,
effective forward and reverse flow and storage of
goods, services, and related information between
the point of origin and the point of consumption in
order to meet customers’ requirements’.
• supply-chain management is somewhat
larger than logistics, and it links logistics
more directly with the user’s total
communications network and with the
firm’s engineering staff.
 What is transportation?
• Transport refers to the movement of products
from one place to another and that the
beginning of the supply chain in dealing with
customers.
• Transportation is one of the hallmarks of
industrial world.
• Transport physically moves products from
where they are produced to where they are
needed.
• This movement across space or distance adds
value to products.
• This value address is often referred as place
utility.
• Transportation also a factor in time utility; it
determines how fast and how consistently a
product moves from one point to another ,this
known as time in transit and consistency service
respectively.
• Transportation is one of the largest logistics
costs and may account for a significant
portion of selling price of some products.
• Generally the efficient management of
transport between more important to a firm as
inbound and outbound transportation shares
of the products cost increases.
 The Role of Transportation in Service Quality

• By means of well-handled transport system, goods could

be sent to the right place at right time in order to satisfy
customers’ demands.
• It brings efficiency, and also it builds a bridge between
producers and consumers.
• Therefore, transportation is the base of efficiency and
economy in business logistics and expands other functions
of logistics system.
• In addition, a good transport system performing in logistics
activities brings benefits not only to service quality but also
to company competitiveness.
 Cont…
• Transportation impacts customer service by
offering the following operating services.
– Dependability –consistency of service
– Time in transit- make fast deliver from shipment time
until delivery on the hand of customer.
– Market coverage –the ability to deliver door to door service
– Flexibility-handling a variety of products and meeting
special needs of shipper.
– Loss and damage performance.
 Role of Transportation

• Transportation is an important supply chain driver because

products are rarely produced and consumed in the same
location.
• Transportation is a significant component of the costs
incurred by most supply chains.
• Transportation is essential for moving any shipment in a
logistic system such as raw materials from sources to
manufacturer, semi-finished products between plants, and
final goods to retailers and customers
• Other critical competitive factors are reducing lead
times, delays, and whole transportation costs, as well
as increasing efficiency, reliability, safety, and
reactivity in their service systems.
 Transportation has the following roles:

• Saves time: arrival of goods and services at right time.

• Balance regional development: resource allocation and
good communication
• Create employment opportunities. Example , loading
and unloading
• Source of income for individuals and government/tax
purpose
• For success of war: for defended foreign aggression
• For economic growth: as trade and investment and
improved per capital of citizens.
• Greater competition: Without a good transport system, the reach of
the market is limited to areas immediately surrounding the point of
production. With an efficient transport system, the costs of products
in distant markets can be competitive with those of other products
for sale in the same markets.
• Economies of scale: Wider markets can result in lower production
costs. Inexpensive transport also facilitates the separation of markets
and production sites. This provides a degree of freedom in selecting
production sites such that production can be located at places that
offer cost advantages.
• Reduced price: Inexpensive transport also contributes to reducing
product prices because transport is a component cost, along with
production, selling, and other distribution costs, which make up the
product price.
• Importance of transportation from Purchasing
point of view
• Transportation plays as vital linkages throughout a
firm’s inbound and outbound distribution channels.
There are three major transportation linkages:
Between a firm and its supplier
Between a firm and its manufactures
Firms with multiple production and warehouse
facilities.
 From Marketing Point Of View
• Transportation is important in market development,
expansion, and completion.
• The movement of products from where they are
produce to the consumption center is by
transportation.
• Transportation is important to achieve a
competitive advantage by helping satisfying
customer needs faster and at low cost