BASIC OF TRANSPORATION MANAGEMENT

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Presentation overview
BASIC OF SCM AND LOGISTICS
TRANSPORTATION AND RELATED ACTIVITIES
WAREHOUSE

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BASIC OF SCM AND LOGISTICS

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AGENDA
Logistics
Types of logistics
Evolution of logistics
Impact of IT on SCM
Key logistics activities
Logistics management
Logistics management activities
Parties involved in logistics management
Supply chain management
Difference between logistics and supply chain

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Logistics
Logistics is the management of the flow of the
goods, information and other resources in a
repair cycle between the point of origin and the
point of consumption in order to meet the
requirements of customers.
Logistics involves:
the integration of information,
transportation,
inventory,
warehousing,
material handling,
and packaging.

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Types of logistics
Inbound Logistics:
Inbound Logistic concept comes into
picture from the purchase of raw material
till it reaches mfg. Unit.

Outbound Logistics:
Outbound Logistics dept. delivers the
finished goods or product to the customer
as per their requirement

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Evolution of logistics

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The impact of IT on SCM

Information technology refers to the use of computer-based programs to store
and manipulate information in supply chain management.
IT allows everyone in the supply chain to be integrated.
Information technology can be used to develop cost-effective supply chains.
Technology allows parties within the supply chain to identify challenges, such as
delays in manufacturing or shipment.
Market changes readily can be addressed when IT successfully is woven into
supply chain management.

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Key Logistics Activities

Customerservice.
Demandforecasting/planning.
Inventorymanagement.
Logisticscommunications
Materialhandling
Orderprocessing
Packaging

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Logistics Management

The term Logistics Management is that part of Supply Chain Management that
plans, implements, and controls the efficient, effective, forward, and 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.

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Logistics Management
activities:
Logistics Management activities
typically include
inbound and outbound transportation
management,
fleet management,
warehousing,
materials handling,
order fulfillment,
inventory management of third party
logistics services providers.

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Party involved in logistics

management:

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Supply chain
A supply chain is a system of
organizations, people, technology,
activities, information and resources
involved in moving a product or
service from supplier to customer.
Supply chain activities transform
natural resources, raw materials and
components into a finished product
that is delivered to the end customer.

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Supply chain management

Supply chain management
spans all movement and
storage of raw materials,
work-in-process inventory,
and finished goods from
point of origin to point of
consumption .

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Difference between logistics and

supply chain
Logistics:
Logistics includes physical distribution, warehousing, freight transportation i.e inbound and
outbound from manufacturing plants and in some industries customer service i.e sales order
processing, inventory planning and production planning.

Supply chain:
Supply chain includes the logistics business functions above, and also includes purchasing,
sourcing, procurement, buying, manufacturing operations ,production scheduling and inventory
control and materials management, facilities location planning, the information technology to
coordinate between suppliers, the company, and customers.

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TRANSPORTATION AND RELATED ACTIVITY

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Agenda
Modes of Transportation: Advantages and Disadvantages
Business Process flow of Transportation
Taking example of Ocean Freight Transportation
INCO Terms
Documents Involved

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Agenda
Modes of Transportation:-Advantages and Disadvantages
Business Process flow of Transportation
-Taking example of Ocean Freight Tranportation
INCO Terms
Documents Involved

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Modes of Transportation
Transport modes are the means by which people and freight achieve
mobility. They fall into one of three basic types, depending on over
what surface they travel land (road, rail and pipelines), water
(shipping), and air. Each mode is characterized by a set of technical,
operational and commercial characteristics:
1.Land
a)Road Transportation:Advantages: Cost Effective, Fast Delivery, Ideal perishable Goods, Easy to monitor
location of goods, Communication is Easy.
Disadvantages: Traffic Delays ,Pollutes Environment ,Damage due to careless
driving ,Bad weather.

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Contd..
Rail TransportationA freight train hauls cargo using freight cars
specialized for the type of goods. Freight trains
are very efficient, with economy of scale and
high energy efficiency. Authorities often
encourage the use of cargo rail transport due to
its environmental profile
Container trains
Bulk handling
Advantages:Fast Delivery, Capacity ,Environmental
Friendly ,Safe ,Cost Effective.
Disadvantages:Unforseen Delays, Inflexible , Delivery of goods
can be costly and time consuming.

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Pipeline
Pipeline transport is the transportation
of goods through a pipe. Most
commonly, liquid and gases are sent,
but pneumatic tube that transport solid
capsules using compressed air are
also used.
Advantages:Low cost ,High Capacity ,Safer, Low
maintainence cost.
Disadvantages:limited types of cargo (gas, oil,
emulsions and raw materials), low
availability of small volumes of
transported cargo.

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Water Transportation
Water transport refers to movement of goods on waterways by using
various means like boats, steamers, launches, ships, etc. With the
help of these means goods are carried to different places, both
within as well as outside the country. Within the country, rivers and
canals facilitate the movement of boats, launches, etc.
I.

Inland water transport- It is used in domestic or home trade to carry bulky goods.

II.

Ocean transport- It helps in the development of international trade

Sea transport may be of the following two types.
Coastal Shipping Ships ply between the main ports of a country
Overseas shipping Ships ply between different countries separated by sea.

In ocean transport, different types of ships are used to carry goods

These may be classified as under.
1.Liners
2.Tramps

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Types of Vessel
When it comes to seafreight cargo, there are a variety of cargo ships and modes of shipping based
on the cargoes available..

Container Vessels is currently the most common mode of transport used for carrying 20, 40 and
45 containers..

Bulk Vessels Used for the carriage of bulk commodities like wheat, sulphur, iron ore, coal etc etc..

Breakbulk Vessels Used for the carriage of various kinds of cargoes bagged cargo (cement,
sugar etc), palletised cargo (paint, chemicals etc), timber etc etc

Ro-Ro Vessels Used for the carriage of wheeled cargo like cars, buses, trucks, exacavators etc
etc.. Where the option is available, these vsls can also carry some project cargoes as long as
these are loaded on mafi trailers or any other wheeled modes.. Further classified as PCC (Pure
Car Carriers) & PCTC (Pure Car & Truck Carriers) the purpose of which are obvious from the
names..
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Continued..
Multi-purpose Vessels Used for the carriage of a combination of above cargoes.. Very versatile,
popular and useful vessels specially along certain routes which require self-geared vessels..

Tanker Vessels Used for the carriage of various liquid cargoes like oil, chemicals etc..

Crude Carriers Used for the carriage of (you guessed it) crude oil further classified as VLCC
(Very large Crude Carriers) and ULCC (Ultra large Crude Carriers)

LNG Carriers Used for the carriage of Liquified Natural Gas..

Reefer Vessel Used for the carriage of frozen cargoes or temperature controlled cargoes like fruits,
meat, fish etc..

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Contd..
Advantages of water transport
a. It is a relatively economical mode of transport for bulky and heavy goods
b. It is a safe mode of transport with respect to occurence of accidents.
c. The cost of maintaining and constructing routes is very low as most of them are naturally
made.
d. It promotes international trade.
Limitations of water transport
i. The depth and navigability of rivers and canals vary and thus, affect operations of
different transport vessels.
ii. It is a slow moving mode of transport and therefore not suitable for transport of
perishable goods.
iii. It is adversely affected by weather conditions.
iv. Sea transport requires large investment on ships and their maintenance.

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Air Transportation
This is the fastest mode of transport. It
carries goods through airways by
using different aircrafts like, cargo
aircraft etc. It carries goods that are
less bulky or of high value.
Advantages:Fastest for long distance delivery,
Reduces lead time on suppliers.
Disadvantages:Risky ,Expensive , Environmental
Pollution , Unsuitable for some goods.

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Intermodal
Intermodal freight transport involves the transportation of freight in an intermodal
container or vehicle, using multiple modes of transportation (rail, ship, and truck),
without any handling of the freight itself when changing modes. The method reduces
cargo handling, and so improves security, reduces damages and losses, and allows
freight to be transported faster. Reduced costs over road trucking is the key benefit for
intracontinental use. This may be offset by reduced timings for road transport over
shorter distances.
An intermodal container or freight container (commonly shipping container, sea can, or
conex box, a shorthand of the Army term CONtainer EXpress) is a reusable transport
and storage unit for moving products and raw materials between locations or
countries; the terms container or box may be used on their own within the context of
shipping.

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Types of Containers

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Selecting a Mode of
Transportation
Transit time
Important for highly perishable products
Important when product is needed ASAP

Predictability of delivery by a specific date

Important when buyer needs product by specified date

Cost of shipping per dollar of product value

Important to economize on costs with bulky
commodities

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Business Process Flow of

Transportation
A logistical exercise originates at the buyers end and involves multiple agencies including buyer,
seller, 3PL freight forwarder, transporters at various juncture, shipping lines, airlines, various
governmental agencies, customs departments at various locations and financial institutions like
banks to complete the entire supply chain cycle.
Smooth flowing of materials in a journey originating at one point and going through the entire
cycle of exports and imports to reach a point of consumption would mean engagement and
interaction with all of the above agencies who have a stake in the said transaction.

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Freight Flow

Factory

Truck/
Rail/
Barge

CFS
facilities

Load
port

Ocean/
Air

Discharge
port

Truck/
Rail/
Barge

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DC

Truck

Point of
sale

Freight Flow in Ocean Freight Transportation

Customer enquires about the goods he wants to buy from suppliers.
Customer receives quotation from various supplier
Customer selects the best quotation
Supplier sends the Proforma Invoice describing all details of goods like quantity ,rate
etc.
Customer then sends the Export Order
Now there can be two Scenarios for the selection of service provider, either Customer
can engage or Supplier can engage.
If Customer engages service provider the contract between customer and Supplier is
FOB for Supplier.

Now in this case the customer will transfer all related documents and details to the
Service provider lets say to some 3PL Party sitting in his country.

3PL party will transfer all the details to his team sitting in the suppliers country.

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Continued
3PL party sitting in export country will engage a local carrier giving all details about the shipment
Customer will instruct Supplier to communicate with the respective 3PL party
If Supplier is engaging Service Provider the contract between them will be CIF for the supplier
Now supplier will ask Central Excise people to come and inspect the goods , once the goods get
sealed by them only then cargo can be exported.
The Carrier collect the goods from supplier & ll issue HBOL to the 3PL
And 3PL will issue MBOL to each Supplier as a receipt that the cargo is with them.
ASN (Advanced Shipment Notification) is send either by Supplier or 3PL or Carrier to the Buyer.
Supplier sends the Packing List and Commercial Invoice to the buyer plus the copy of MBOL.
Carrier delivers the Cargo to the CFS(Container Freight Station) for consolidation and packing.
.
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Contd
Carrier then reaches port and gives relevant documents to the CHA
agents for custom clearance
Bill of Entry comes in picture for export custom clearance , once its get
stamped only then cargo can be exported, it is Let Export Document.
In the Buyers Country the again the CHA Agent ll handle all the import
custom clearance processes.
Shipping Bill is the Let Import document there.
Local carrier ll take the cargo to CFS for deconsolidation and unpacking.
Now after verifing the MBOL which buyer is having the 3PL will handover the
goods to the buyer.
3PL will collect the POD from the buyer for the payment process.

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Incoterms Internatnal Commercial Terms

Incoterms are shipping and trade terms used to define responsibility between the
importer and exporter for freight, insurance and title transfer of goods and services.
The terms are published in the Guide to Incoterms 2000 published by the
International Chamber of Commerce, Paris, France, and are used worldwide.

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Documentation
Documentation becomes important not only for the physical logistics operations involving
multiple agencies engaged in the entire chain, the financial, trading and accounting
processes of the both buyer and seller organizations and partner banks involved ,also
depend upon the entire set of documentation pertaining to each transaction to be able
to recognize the sale, recognize value of consignment and effect necessary payment.
Therefore the entire supply chain transaction involves set of standardized documentation
from buyer and seller, from 3PL carriers and documentation as required by customs at
exporting country and importing country coupled with trading or bank requirements
documents. The entire set of documents and the terms of trade have been developed
and standardized across all countries to facilitate international trade.

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DOCUMENTS NEEDED

Shippers

Origin-Destination
Carrier
Origin
Freight Forwarders

15.
16.

Export
Customs

Import Goods Declaration

Customs Release Import

Import
Customs
1.Invoice
2.Packing List
3.Certificate of Origin
4.Letter of Instruction
5.Dangerous Goods Declaration

6.
7.
8.
9.
10.

Master Air Waybill

House Waybill
House Manifest
Export Goods Declaration
Customs Release Export

11.
12.
13.
14.

Flight Manifest
Transfer Manifest
Export Cargo Declaration
Import Cargo Declaration

Standards defined are multimodal and interoperable

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Destination
Freight Forwarders

Consignees

Important Documents involved in

transportation
Pro forma invoice - basically a price quote. Describes the type and quantity of the goods
to be shipped, value of the goods, total cost of the transaction based on the terms of
sale, and other specifications
Packing List - An itemized list describing the contents of each package in a shipment.
Used in determining the total weight and volume of a shipment and for verifying the
cargo.
Commercial Invoice - Basically a bill for the goods from the seller to the buyer
Certificate of Origin - a statement required by some countries that certifies the origin of
the exported goods (eg. The NAFTA certificate of origin)
Bill of lading/Air Way Bill - a contract between the seller and the carrier. The BOL is
usually prepared by the carrier of forwarder. It documents the condition of the goods
upon the carriers acceptance. It is negotiable when it is consigned to order of
meaning the buyer is allowed to take possession of the goods.

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WAREHOUSEING AND RELATED OPERATIONS

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AGENDA
MEANING OF WAREHOUSE
NEED OF WAREHOUSING
TYPES OF WAREHOUSE
FUNCTIONS
ACTIVITY
MAJOR CHALLENGES

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MEANING OF WAREHOUSE
Warehousing refers to the activities involving storage of goods on a large-scale in a
systematic and orderly manner and making them available conveniently when needed. In
other words warehousing means holding or preserving goods in huge quantities from the time
of their purchase or production till their actual use or sale. Warehousing is one of the
important auxiliaries to trade. It creates time utility by bridging the time gap between
production and consumption of goods.

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NEED OF WAREHOUSING
Quick Supply
Both industrial as well as agricultural goods are produced at some specific
places but consumed throughout the country.,

Continuous Production
Continuous production of goods in factories requires adequate supply of raw
materials. So there is a need to keep sufficient quantity of stock of raw material
in the warehouse to ensure continuous production.

Price Stabilization
To maintain a reasonable level of the price of the goods in the market there is a
need to keep sufficient stock in the warehouses.

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NEED OF
WAREHOUSING(CONTD.)
Seasonal Production
You know that agricultural commodities are harvested during certain seasons, but their consumption or
use takes place throughout the year.

Seasonal Demand
There are certain goods, which are demanded seasonally, like woolen garments in winters or
umbrellas in the rainy season.

Large-scale Production
In case of manufactured goods, now-a-days production takes place to meet the existing as well as future
demand of the products.

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TYPES OF WAREHOUSE
Private Warehouses
The warehouses which are owned and managed by the manufacturers or traders to store.

Public Warehouses
The warehouses which are run to store goods of the general public are known as public
warehouses. Any one can store his goods in these warehouses on payment of rent.

Government

Warehouses

These warehouses are owned, managed and controlled by central or state governments or
public corporations or local authorities.

Bonded Warehouses
These warehouses are owned, managed and controlled by government as well as private
agencies.
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FUNCTIONS
Storage of goods
The basic function of warehouses is to store large stock of goods. These goods are stored
from the time of their production or purchase till their consumption or use.

Protection of goods
A warehouse provides protection to goods from loss or damage due to heat, dust, wind and
moisture, etc..

Risk bearing
Warehouses take over the risks incidental to storage of goods..

Financing
When goods are deposited in any warehouse, the depositor gets a receipt, which acts as a
proof about the deposit of goods. The warehouses can also issue a document in favor
of the owner of the goods, which is called warehouse-keepers warrant. This warrant is a
document of title and can be transferred by simple endorsement and delivery.

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FUNCTIONS(CONTD.)
Processing
Certain commodities are not consumed in the form they are produced. Processing is required to
make them consumable.

Grading and branding

It also provides facilities for mixing, blending and packaging of goods for the convenience of
handling and sale

Transportation
In some cases warehouses provide transport arrangement to the bulk depositors. It collects
goods from the place of production and also sends good to the place of delivery on request
of the depositors.

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Activity
Inventory Control
Labor Supervision

Replenishment
Picking

Shipping
Loading

Cross Docking

Put-Away
Receiving

Yard Management

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WMS tools
Barcode scanners
Mobile computers
RFID

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Inspection, Counting & Inventory

Management

Inventory Management

Manage inv. By stock keeping units

(pallets, cases, containers, units, etc.)

Inventory unique ID

Inv. By: Location ID

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Receiving
Receipt types:
Manufacturing receipts
Warehouse Transfers
Purchased receipts
Customer returns

HOST

RF Receiving

Scheduling
TEKLOGIX

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Supporting
documentation

Put-Away
User defined Put-Away Algorithms
By consignee, product group, receipt type
Space Utilization
Free Space
Physical Dimensions
Product Velocity, distances, physical constraints

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Picking
Material Selection
Stock Selection Within Customer
Specific Rules - FIFO, LIFO, Serial Number

Pick Methods
RF Supported/Guided
Paper Pick list

Container Volume/Weight
Picking Policies
Pick By Order
Pick By Item
Pick By Zone
Pick By Shipment

Pick & pack

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Shipping
Loading and Shipping
Stock verifications
Document generation
Dock Door scheduling and management

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