Kasilingam (1998) believes that the way transportation is managed determines whether the goods are transported efficiently or inefficiently. The techniques used to deliver the goods, and the way the transportation process is managed determines the speed at which the goods are moved from one point to the next one. Other impacts that logistics have on transportation include the quality of delivery, the cost of transportation, the way the facilities are managed, and the way energy is conserved. In the manipulation of logistics, transportation plays a very important role. When the current transportation conditions are examined, proper implements and new management skills are necessary to ensure that transportation is made more efficient.
In this paper, I will look at logistics’ impact on future transportations and logistics management. The objective is to examine how further improvements can be made for logistics to be capable of making transportation more efficient. This paper will be useful to planners, managers, and transporters as it will help them comprehend the roles of logistics and its implications. The essay will also examine the relationship between transportation and logistics.
Researchers have focussed on logistics and the various ways in which it can be applied. Trends concerning nationalization and globalization have had a huge impact on the way logistics and transportation is handled. It is especially important for industries as they seek to find ways of producing and transporting their products efficiently using the same resources that they have yet maximising their profit margins through efficiency in transportation. In the logistics chain, the most important aspect is the transportation as it helps to link the various processes of the production and delivery. Transportation is required at almost every step of the way, starting with manufacturing to the delivery of the goods to the returns till they reach the final consumer.
There is a need, therefore, for firms to ensure that there is a proper co-ordination between each and every one of the following steps for the maximum profits. This essay will seek to define clearly the relationship between transportation and logistics by examining the various applications of the two. The essay will start by defining logistics and looking at the milestones that have been made concerning logistics. Then, the paper will examine the relationship between transport and logistics and how the two contribute to the profits of enterprises. It also describes the benefits that transportation brings to logistic activities and those benefits that logistics activities may bring to the transportation sector. When logistics are run efficiently, traffic in the roads decreases considerably.
There have been many ways of defining logistics. According to Kasilingam (1998), logistics is part of the supply chain process that plans, implements, and controls the efficient 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 (Kasilingam, 1998). There are various components of logistics, including inbound logistics, the management of materials, the physical distribution of resources, and the management of the supply chain.
Logistics is the term used to describe the entire process that the goods and products go through from the moment they are moved into the company. It also includes the products moving within the company till they reach the point where they leave the firm. Inbound logistics describes the movement of the goods that come from the suppliers into the company. on the On the other hand, material management refers to the way the materials that have been delivered to the company are handled by the managers. Physical distribution refers to the way when the final products assembled by the company are transported to the final consumer. The term supply chain management is somewhat larger than the term logistic as it encompasses the entire communication network of the company as well as the other aspects of engineering in the firm.
According to Kasilingam (1998), many analysts agree that logistics is the term that defines the transportation of the goods and services right from the beginning till the end of the production process. Logistics, however, does not stop at production. It is also involved in the distribution of the final product to the consumer and also in the process of the waste disposal. The aim here is to ensure that the needs of the customers are satisfied and the business remains competitive and profitable. This is done when the management anticipates the needs and preferences of the customers and seeks to fulfil them. Then, the materials, human resource, and finance required must be transported to the company. The products produced must be of the highest quality possible so that all consumers’ needs are met.
There are three main components of logistic systems that are closely linked together. The first component of the following system is the logistic services. These services take care of the transportation of inputs from the point where they are produced to the point when they reach the consumers. It is worth noting that it also includes the way the waste materials are disposed of, and the process is repeated over and over. The logistic services comprise both physical as well as non-physical activities. The Physical activities include the storage of the goods and the way they are transported from one point to the next one. The non-physical bit of logistic services has to do with the design of the supply chain, the way the contractors are chosen, and the negotiation of the freightage.
The second aspect of logistics is that of the information system, which takes care of the process of decision making. It is also the aspect of logistics that provides data that is necessary for the company to run efficiently and the consultation that is necessary for each step of the chain of logistics to run smoothly. The last aspect of the logistic system is infrastructure. Infrastructure includes human resource that is necessary for a company to run efficiently. Other components of infrastructure are financial resources, materials used for packaging of the goods, the warehouses where these materials are stored, the transportation of human resource, and the modes of communication.
History and Evolution of Logistics
At the beginning, logistics was predominantly a military term that referred to the process by which soldiers and munitions were transported to the battle field. However, this term has evolved and is presently an important part of every company that is involved in the production. This was mainly as a result of the recession that took place in America in the 1950s. This economic recession caused many firms to begin to put emphasis on the process of circulation of the goods and raw materials. The term, however, originates from a Greek word logistikos, meaning ‘skilled in calculating the term, which was restricted to military operations in the 17th and 18th centuries, has gained popularity and is currently used for the business activities as well.
Up until the 1960s, business logistics was not a subject that students learnt in school. It was not until the mid-1980s that logistics became a part of the curriculum. Before then, managers were more concerned with production and did not pay much attention to the logistical aspect of it. In the following period, logistics was very dormant, and many managers only looked at it as the necessary evil that they had to contend with. After the 1970s, however, many applications of logistics began to appear. This evolution attributed to the change in oil prices at that point in time. Companies realized that they had to find new ways of remaining competitive despite the increase in the cost of production.
Other factors that contributed to the focus by managers on logistics were the slow growth of the market, pressure that resulted from stagflation, and control of the transportation sector by the authorities. The competition from the third world for products also caused many companies to revisit their logistic policies. The logistics circulation is important for any firm that intends to remain profitable and competitive in the market. Managing a large company can be very costly if the proper decisions are not made and the logistics of the company are not streamlined properly. Therefore, the international industries can form an alliance that will help run their logistics centrally and save them time, energy, and funds that the individual firms would spend in managing their individual logistics.
Interrelationship between Logistics and Transportation
For logistics to take all the advantages it has the potential to bring, transportation must be managed efficiently. A well-managed transport system is necessary for logistic activities to run smoothly. A proper transportation system promotes efficiency, reduces time wastage, and saves the company funds. At the end of the day, a good transportation increases the efficiency of the logistic systems and reduces the overall running costs of the company. When the logistic system of a company or a government is managed efficiently, the firm or government is able to remain stable despite the competition.
In any logistic systems of businesses, the transport system is a very important component. More than one third of the funds meant for logistics in most businesses are spent on transportation. The National Council of Physical Distribution Management (NCPDM) estimates the cost of logistics in 1982 at about 44% of the market revenues. Transportation is important if the goods are to be moved from one point to the next in good time. The logistics activities are highly affected by transportation. As a result, transportation has the ability to influence the rate and quality of production. When managed properly, logistics allows for the highest quality of production at the lowest possible cost.
The amount of money spent on transportation varies from one industry to the other and depends on a number of factors. For those companies that produce the goods that do not weigh much or occupy a lot of space during transportation, the costs of transportation are negligible and do not count for much in their annual budgets. For those firms whose products are heavy, bulky and low in value, transportation counts for a huge chunk of their annual budget and cannot be ignored. For these companies, transportation influences their sales and must be managed properly for the maximum profits.
In the process of the goods production, transportation plays a very important connectivity role. Raw materials must be converted into the useful goods that the consumer can use. These materials must be transported to the firm before any process of manufacturing can begin. Therefore, transportation must be planned in such a way that ensures that the most profits are made at the lowest costs. A good system must be put in place from the very beginning and then managed properly. Traditionally, this planning involves contracting different companies regarding the storage, the production the transportation, the wholesale, and the retail of the product
Transportation will be required between the warehouse, the wholesale, and retail stores. Manufactures only get used to limit themselves to the production and not the storage or the distribution of the goods. Warehousing, storage, and distribution of the goods to consumers are left to other independent firms to run. Changes have been made to this effect with many manufacturers choosing to combine their storage facilities and to consolidate the transport of the goods from one point to the next one. The role of transportation is, therefore, not restricted to transporting the goods for proprietors, it goes further than that.
When the transport system is managed appropriately, the goods are transported to the right place in good time so that the demands of customers are well-satisfied. The proper management of the transport system is important for efficacy. It also forms a bridge between the consumers and the manufactuers of these goods. Transportation is considered the base of any business that wishes to remain competitive and profitable. It allows for other logistic systems to operate efficiently and for the business to make profits at the lowest cost of production possible. The quality of products of the company will also rise as a result of the better managed transportation system enabling the firm to remain competitive and profitable at the same time.
Forms of Logistics Operations
The first form of logistics operations is supply chain management. Supply chain management involves looking at logistics from a more broad perspective. Whenever a new mode of doing business is required in a particular business environment, supply chain management is necessary. Supply chain management is continually evolving and is applied in the circumstances where business adaptability is very important. There are three main activities involved in supply chain management. These include: purchasing, manufacturing, and transportation. It serves the purposes of linking the manufacturer and the consumer.
Before the goods can reach the consumer, they pass through a long process where raw materials are transported by the suppliers to the company that manufactures the products. Once the goods have been manufactured, then, they must be transported to the consumer. This whole chain involves supply chain management, which ensures that the process is smooth and efficient. The free flow of information will be important for the process to run costs effectively so that no funds, time, or energy is wasted in the process of production.
The concept of reverse logistics applies to companies that wish to optimise their customers’ experience and to recycle resources. These companies also allow consumers or distributors to return any goods that are defective through a process known as quality control. This means that their clients are assured of quality products at all time since they have the right to return any goods that do not function as they should. Reverse logistics has been adopted by many companies as they strive to remain competitive in the world that has become more globalized by the day. Globalization means that these firms no longer compete with local firms, they have to compete with firms across the world through E-commerce now. Therefore, the customer service must be improved if customers are to be retained.
Third party logistic industries are also able to benefit from reverse logistics. According to Copacino (1997), reverse logistics involves ”the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods, and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.” Information should flow to all stakeholders in the process of production. This will ensure efficiency in transportation and reverse logistics. Each stakeholder should be able to communicate with the other clearly so that confusion is eliminated and time is saved.
Reverse logistics has been praised by many analysts who see it as the direction firms should take in the future as it ensures the environmental protection. This is because reverse logistics also involves recycling of the defective products, which is a means of waste management and disposal. Reverse logistics has become more popular as environmentalists create awareness concerning the need to save the environment and the effects of global warming. Many firms and companies desire to project images of environmental awareness and concern. It is the reason why most of them are adopting reverse logistics.
The other factor is that of globalization, which is forcing these firms to adopt more cost efficient modes of production in order to remain profitable and competitive. Reverse logistics requires knowledge and skills in logistic management to run successfully. It is the reason why small and middle sized companies have often turned to the third party logistic industries for their reverse logistics needs.
The maritime industry plays a very important role when it comes to international freight. This is because the maritime industry provides a cheap way for consumers to transport a large number of goods from one place to another. There are particular goods like crude oil or grains that are transported easily using maritime modes of transportation. Maritime logistics customers have changed over the years with many of them being more concerned with the quality of the service they receive as opposed to the price they have to pay for such services.
Therefore, new Maritime logistics are necessary so that the needs of customers are satisfied. Information must be passed on to the consumers in real time so that they know the progress of the transportation of their goods. The providers of maritime logistics must also provide time windows that are accurate to their clients so that there are no unnecessary delays in the delivery of the goods to clients. They should also provide a means through which consumers can closely monitor the progress of delivery of their goods. This will encourage transparency and manage the expectations of these clients.
According to Blanchard (2007), maritime logistics can be divided into three main components. The first component of maritime logistics is liner shipping. Liner shipping implies that the maritime logistics business is based on the same ships, which operate at the same time. The routes and the voyages are the same, including the prices. The second component of maritime logistics is tramp shipping. It operates with irregular prices, and the times for the voyages are also not fixed. It transports large and bulky cargo and does not follow any particular route, and the amount of money it charges for the transportation also differs. The third component of maritime logistics is the industry shipping. The main role of industry shipping in maritime logistics is to transport raw materials. Sometimes transportation of raw materials requires specialized equipment like in the case of transportation of natural gas, which requires high-pressure containers to transport.
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Air Freight Logistics
Air freight logistics is absolutely necessary for the chain of production to be complete. Air freight logistics has several advantages when compared to other forms of transportation. Air freight logistics also provides a means of transportation of the goods with less risk of damage. It is also a means of transportation that is reliable, more flexible, and frequent for those consumers who need certain goods every often. The only disadvantage of using air freight logistics is that it costs significantly higher to transport goods or raw materials using this way. It is especially convenient when the goods need to be transported through long distances. Air freight logistics is also great especially when the land forms are not very good.
The research has shown that air freight logistics market has continued to grow over the years (Basu, & Wright, 2007). There have been new innovations and changes in the transportation industries that have enabled air freight logistics to adapt to the changes by doing things differently. Alliances have been formed even as companies seek to become much stronger. Air freight logistics has been connected with maritime logistics and reverse logistics to provide services that are from one door to the next one.
In order to link all the other logistics activities discussed above, land logistics must be used. Land logistics is necessary because the goods have to be transported to sea ports in time for maritime logistics and they also have to be transported to airports in time for air freight logistics. In this way, land logistics becomes an integral part of other logistic activities. Land logistics is used by many people because it is considered very accessible to most users. There are three modes of transportation involved in land logistics. The first mode of transport is railway transport, pipeline transport, and road freight transport.
Blanchard (2007) believes that there are many advantages associated with railway transport. The first advantage is the fact that railway transport is capable of carrying heavy loads of goods that are bulky. Trains also consume less amounts of energy as compared to other modes of land logistics. Railway transport, however, has its disadvantages. The first disadvantage is that railway transportation requires difficult and complicated maintenance. The other disadvantage is that railway transport is not flexible, especially if delivery is required urgently. A lot of time is also consumed when organizing railway transportation of goods or raw materials.
Road freight transport also has a number of advantages. The first advantage of road freight transport is the fact that buying a vehicle is cheaper when compared to other modes of transportation. Road freight transport is also more accessible and flexible. Availability and mobility are some of the other advantages of road freight transport. However, the transport also has its disadvantages. The first disadvantage of road freight transport is the fact it can only carry so much goods at a time. The other disadvantages are that the safety and the speed are much lower (Chopra, & Meindil, 2007).
Pipeline transport also has its advantages and disadvantages. The advantages are that pipeline transport can carry a lot of goods at a go and is also seldom affected by the weather conditions. The operation fee for pipeline transport is significantly lower and the conveyance is also continuous. The disadvantages associated with pipeline transport are that it uses the expensive infrastructure, requires more supervision as well as expensive maintenance from time to time, and must be highly specialized.
In general, land transport has its disadvantages. The excessive use of land logistics has been known to create massive traffic jams in the roads. Land logistics also pollutes the environment through fumes that are released into the air and noise that vehicles produce. Road accidents have also increased over the years and people have lost their lives as a result. The future reforms are required regarding land logistics if it is to be made more reliable and efficient (Chopra, & Meindil, 2007).
Globalization has led to a greater demand for accuracy and decentralized modes of production. Manufacturers have had to find ways of reducing the cost of production despite the high cost of living. This has led manufacturers to seek modes of delivery that bring the goods just when they are needed. These are the reasons that have led to the development of express delivery, which brings the goods to the right place at the right time. Express delivery has some distinct advantages that the other modes of transportation lack. First and foremost, express delivery allows the goods to be delivered from door to door.
Express delivery is also very efficient and fast. In case there is a mix up in the process of delivery, it is possible to trace the goods because the services offered by express delivery are very personalized. It delivers goods just in time and is capable of responding to the demands of consumers, which continue to grow each time. Consumers are increasingly trying to find a way of reducing the cost production in a world that has continued to be extremely competitive. The value of products has also continued to rise creating a demand for faster transportation and delivery of the goods. Companies seek modes of delivery that transport the goods really fast because when the goods are stored for too long they tend to lose their value.
E-commerce has slowly becomme the preferred way of doing business for many consumers. Many companies and consumers prefer E-commerce because of the several benefits. E-commerce has the ability to expand the market available to the consumer and the manufacturer from a regional market to a global market place. This means that a consumer can buy goods from any part of the world and have them delivered straight to their doorstep. E-commerce moves away from the traditional mode of doing business that heavily relied on the paper work. This is because business in E-commerce is conducted electronically. A company that uses E-commerce is, therefore, one that is efficient and competitive.
When E-commerce is used, the number of trips made by the transportation teams is more and each time they carry a maximum load, which means there is minimal if any wastage of energy and time. The transport infrastructure will also have to be improved as the pressure on it increases. Because E-commerce takes place online, the number of warehouses required by the companies will also reduce. This way, the cost of production is reduced as the company does not have to spend money on running warehouses or storing the goods. This means that overhead costs will be minimized, thus, resulting in the low prices of the goods, which in turn will yield more sales for the company.
E-commerce, like other modes of doing businesses has its disadvantages. The manufacturers or distributors have to worry about the security of doing business online. The internet is not always a secure place to do business because hackers are constantly trying to attack E-commerce sites and to steal from innocent consumers who may not be too careful with their pass words or personal information. For E-commerce to be conducted safely and securely, the logistic operation is to be optimal.
City logistics is a concept in logistics that seeks ways to solve the problems of congestion and traffic jams in the city by using available resources. These are problems that have arisen as a result of increase in the population in modern cities. As the population increases, more and more people are purchasing cars, which has led to horrible traffic jams in the cities everywhere in the world. The impact of congestion on the environment has caused many worries for environmentalists who feel that something has to be done if the human race is to survive in the coming years. A lot of time is also wasted sitting in the traffic jams. The time spent in traffic would otherwise be spent doing productive work.
Businesses cannot operate efficiently as the workforce spends most of their time in traffic. The transportation systems also become inefficient as they cannot stick to a particular schedule due to traffic jams. At the end of the day, traffic jams reduce the quality of life in the urban centres to high degree. City logistics aims at providing solutions to these problems that city dwellers go through on a daily basis. It does this through innovations aimed at decongesting the cities. City logistics includes several advances in techniques that allow for a better life in the urban areas.
The first technique that city logistics uses is the Geographic Information System (GIS). The second technique is the Global Positioning System (GPS). The others include logistics knowledge, modelling, and the Intelligent Transport System. They are aimed at saving the environment and improving the quality of life. Most businesses are located in large cities in most parts of the world. Cities are, therefore, very important when it comes to the economic developments of the countries or regions. Unfortunately, most cities are congested and suffer from the serious traffic jams. These traffic jams slow down the economy and affect the environment in many ways.
As such, the residents of these cities become victims of the traffic congestion. Many researchers have sought ways of dealing with congestion in the large cities so that they can become places where residents enjoy their lives (Coyle, Langley, Bardi, & Norvak, 2009). City logistics is a new approach to the issue of congestion in the large cities. City logistics can be broken down into various components, including the way goods are stored, transported, and handled. These improvements are necessary will have far reaching benefits for the society (Kulkarni, 2005).
Copacino (1997) reckons that before city logistics can be planned, it is important for the planners to consider all its elements. The first element of city logistics is freight carriers and administrators. These are the means through which the goods are carried from one point to the next one. These components are closely linked together and a slight movement in one component will adversely affect the rest of the components. City logistics need to come up with modes of transport, which is mobile, flexible, sustainable and liveable. A good City logistics system is one that is mobile and flexible, so that the goods can be transported in urban centres much more easily.
Jespersen and Skjott-Larsen (2005) believe that city logistics planners should find a way of providing enough road networks as a way of reducing congestion in the roads. Sustainability of city logistics has to do with whether the modes of transportation are environmentally safe. A good City logistics ensures that the environment is protected through minimal environmental pollution. Planners of city logistics must consider whether or not the urban centres are liveable for residents. It has to result in the peaceful, attractive and charming living conditions.
Applied Techniques in the Formulation of City Logistics
There are techniques that are commonly applied to city logistics. These techniques include cooperative freight systems, which involve the transportation of more goods through fewer trips. The companies that delivered these goods usually operate independently meaning that there is a possibility that two companies can operate in the same area at the same time. Cooperative freight systems are expected to solve the problem of having more than one Delivery Company operating in the same place causing congestion (Leeman, 2010).
Cooperative freight systems are systems where several companies come together to engage a single delivery company. This will save the individual companies a considerable amount of money as they will be paying only part of the delivery cost. This means that, during every trip that the delivery company makes, maximum load is carried. Unnecessary trips will be avoided, and there will be less pollution as a result of too much traffic. There would be no service over laps as only the necessary trips would be made. The best service would be provided and the companies would make much more profit as the cost of production would be greatly reduced.
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Controlling the Load Transported
There are some certain cities where the amount of loads that can be carried at one point. The companies that are allowed to transport goods in the urban areas ought to have a certain kind of rating. They must also have passed environmental standards that are set by the city authorities. Local authorities also must ensure that only the best companies that pass set standards are allowed to operate in the urban centres. New designs of vehicles have also been invented that are more efficient and environmentally friendly. There are those underground freight systems that have helped reduce congestion in the cities not polluting the environment.
Intelligent Transport System
The Intelligent Transport System (ITS) has been widely applied to the transportation of the goods in many parts of the world. The Global Positioning System (GPS) is applied within the Intelligent Transport System and is considered its second component. The GPS helps in the positioning of vehicles. It is particularly useful for the transportation companies when it comes to monitoring and dispatching there trucks. The Geographic Information System assists transportation firms with information concerning the various routes so that they can plan efficiently all deliveries.
Information is provided to the managers and the truck drivers’ real time so that any adjustments that are necessary are done whenever required. When the Geographic Information System, the Intelligent Transport System, and advanced technology are combined, the result is an efficient transportation system that is reliable and environmentally friendly. The quality of the service provided to consumers will be higher, unnecessary trips will be eliminated as the loading rate will have increased.
Future Possibilities of Transportations and Logistics Management
Mentzer (2001) confirms that the world has continuously turned into a global village and the improvement of transportation and logistics management is slowly becoming a necessity. These improvements in transportation and logistics management should not just be left in the hands of the government but should be collective activity of the entire community. Three revolutions in business have been proposed by analysts as the forces that drive change in business. The first revolution is the globalization of trade. The second revolution is the arrival of the era of information technology. The third revolution in business has been as a result of change in the behaviour of consumers and demands for the higher quality service by clients.
There are a number of parties that will have to be involved for the developments in transportations and logistics management to be realized. The government will have to play its role in order to ensure that the industries remain competitive. The government should ensure that there is a peaceful atmosphere where business can be conducted accordingly. The security of investments and businesses should be guaranteed so that foreign investors are attracted to come and invest. The government should also give incentives to potential investors as a way of wooing them to invest in their country. Without a stable government in place, it will be impossible for improvements in transportations and logistics management to be achieved (Lambert, 2008).
The second party that must be involved in better transportation and logistics management is the transport industry (Roussel, & Cohen, 2005). There is a possibility of growth in the global transport led by a number of factors. The first factor is that of E-commerce, which has the ability to push transportations and logistics management to a higher level. Production has changed over the years as firms strive to remain ahead of the competition in a society that has become globalized. The international cooperation has prospered in many ways. Technological developments have led to newer ways of doing things as knowledge is borrowed from one country by other countries. Multinational companies have also been known to import and export human resource accordingly.
Pressure from a globalized market has also forced even the small companies to become multinational in order to compete with other big firms all over the world. It has also become necessary for the customer service to be improved to satisfy the increasing demands of consumers whose tastes and preferences have changed over the years. Firms will have to improve their services in order to remain competitive. Consumers are more willing to spend money as long as they receive quality services. There is a new breed of consumers who have the power to purchase irrespective of the price (Leeman, 2010).
New ways of responding to demands of customers are available today. The Rapid Response Systems have been invented to ensure that complaints by customer are addressed as soon as they are raised. In the near future, such inventions will be improved and better technology will be available that will improve the entire business community. There will be a revolution in the transportation and logistics management with information technology allowing for the better service delivery. Radio Frequency ID and bar code readers are among some of the techniques that are being used today. There are prospects of better things to come in the future.