Transport and Logistics Management in a Company - Literature review Example

Transport and logistic Name Institution Instructor Subject Date Abstract Transport and logistics plays an important role in the trade amongst various regions. This is apparent with regards to undiminished human wants. Apparently, the way in which the finished products and the raw materials move all over the world greatly depend on the way in which logistics is conducted. This calls for an ardent management aspect of transport facilities so as to ensure that, there is a smooth movement of goods. This brings the culmination in which trade may scientifically be managed. This ensures the transporting agents such as planes, trains, trucks and ship reach their required destinations on time. This would require the involvement of the party providers (3PLs, 4PL) to satisfy the logistic needs. This paper elucidates, the way in which transport and logistics management may be manifested in a company. Table of Contents Table of Contents 3 1The role of transportation in chain management 4 2 Roles and modes of transport 5 3 Managing flow of logistics 8 4 Mode and cost trade off 9 5 Review 11 6 Transport planning, control and strategy 13 7 3PL AND 4PL 13 7.1 3PL in general 15 7.2 4PL (Fourth Party Provider) 15 8 Federal economy and safety regulations 16 9 Export -import transportation issues 17 9.1 Identification and standardization 18 10 Customer delivery and service level 18 11 Technology in transport management 18 12 Conclusion/ Review 19 1The role of transportation in chain management Supply chain management in a broad sense involves handling all production procedures both within a firm and outside. As noted by Chopra and Peter (2007), the management of the supply chain will demand strict observance and call for smart and innovative decisions. It joins activities which are separated, occupying one-third of the logistical costs and has huge influence on the performance of a logistical system. Generally, transportation is required in the entire production procedures, from manufacturing to the distribution of finished products to the customers at their disposal and finally the disposal of the waste. A connective role played by transportation in the name of ultimate consumer helps in the conversion of resources into useful goods. All the functions and sub-functions are planned into a movement system of goods with an aim minimizing cost and maximizing service to the constituents of business logistics which are the customers. Consequently, the service quality manifested by transportation in logistics system is more sophisticated than mere carrying of goods for the proprietors. This role brings efficacy by ensuring that, goods are sent to the right place and at the right time fulfilling the time and place utility in meeting customer demands as noted by Lawrence and Ronald (2011). This is achieved through use of high quality management hence, forming a bridge between the consumers and producers. In essence, transportation forms the basis of efficiency and economy in chain management and expands other function of the same. Moreover, Brynjolfsson and Hitt (2005, pp.23-26) notes that, this brings benefits such as improving service quality and firm’s competitiveness. 2 Roles and modes of transport There are different modes of transport each with specific roles in the whole supply chain and logistics systems. The three fundamental modes of transport are: Land transport, Air transport and water transport (Klügl, Ana, Bazzan, and Sascha, 2005). Firstly, water transport often referred to as maritime logistics, which is the transportation on waterways by means such as boats, ships, steamer, launches etc, plays a vital role in international freight through provision of cheap and bulky goods for consumers. In connection to this, it is employed in transportation of particular goods, such as grains and crude oil. The major shortcoming of this mode of transport is that it is dependent strongly on weather and requires long transport time. The two broad categories of water transport are: Inland water transport which uses mainly boats, barges, launches etc to ferry goods and people on rivers and canal routes. Often they are referred to as inland waterways and they are not common in most places. Ocean transport which involves the movement of passengers and ships through oceans or seas. In addition, it is used to transport goods in coastal areas. It has fixed routes and links almost the whole world. It can be further sub-divided into: coastal shipping which plies between the main ports in a country which helps in carrying passengers and facilitating home trade. The other is the ocean shipping industry operation which is divided into three: a) Linear shipping -where there is the use of the same ships, price, routes and regular voyages. b) Industry shipping with the focus on consistent supply of raw materials and may require customized containers such as high-pressure containers for gas. c) Tramp shipping characterized by unsteady transport routes, schedule and irregular transport price. Mostly used for conveyance of specific goods such as crude oil and Dry Bulk Cargo. Water transport is an economical mode of transport of bulky and high carrying capacity goods, safe with minimal cost of repairs and maintenance and promotes international trade. Apart from water transport there is, the air transport (Air Freight Logistics) which is the mode of transport which carries passengers and goods through airways by different aircrafts such as passenger aircraft, helicopters or cargo aircraft etc. It is the fastest mode. For successful completion of supply chain and functions by many industries and services Air transport is important. The speed of delivery is high, it’s flexible, and there is good frequency and accessibility for regular destinations and poses a lower risk of damage. The main pitfall of air transport is the high delivery fee, this mode of transport is selected when speed of delivery is a vital factor and value per unit weight of shipments is high. From research data it can be shown that the air freight logistics keep the market growing. Air transport is basically characterized by: Allowance for speed delivery at far destinations. Non-effect by the landforms such as hills or mountains. Separation of airports and airplanes hence the need for preparation of planes for operation only. Finally, the land transport, (Land logistics) is a very vital link in transport activities. It provides extension services on the air and maritime (water transport) transport from the seaports, docks and airports (Mangan and Chandra, 2008). It has a positive characteristic in that it has its accessibility in land areas high. The main modes of land transport are road freight transport, pipeline and railway. The advantages of road transport are the cheaper initial capital outlay, high mobility, high accessibility and availability with shortcoming of low capacity, slow speed in comparison with other modes such as air and low safety. The railway on the other hand, is minimally influenced by weather, can transport bulky and heavy goods and low energy consumption (Christopher, 1999). It has a number of disadvantages namely: it lacks elasticity of urgent demand, long organization time for railway carriages, very exorbitant costs of essential facilities and complexity in design making maintenance difficult and expensive. The pipelines are the continuous conveyance, less weather effects, lower operation fee and high capacity. The disadvantages are that it is hard to supervise, requires goods specialization and regular maintenance needs and the high cost infrastructures. Other modes of transport include the express delivery characterized by traceability, JIT principle, door-to-door services, growing various delivery demands and efficiency. The E-commerce is another upcoming logistics mode which brings many benefits for both companies and consumers through: a) Expanding market area from regional to global b) Increasing number of trips and hence reducing the average load of single trip thus need for high carriage while using the same means of transportation. c) Use of electronic techniques instead of traditional paperwork promoting industries efficiency and competitiveness. In future the E-commerce is expected to impact on the transport system through increased trips and reduction of warehouses and the stock cost and prices could be lowered. However, there are other new topics which accompany the system and hence the need for concern such as internet security, door-to-door services and transport impacts. 3 Managing flow of logistics In the context of business, logistics can be explained as the process of strategically managing the acquisition, conveyance and storage of materials, families of parts and finished inventory through its marketing channel and organization in a way that both current and future profitability is optimized or maximized through cost-effective accomplishment of orders. Availing goods at the right place and at the right time adds respective utilities to the good which is achieved by application of the appropriate logistic means (Heizer and Barry, 2001). For proper flow of the logistics there is the need of proper flow of information which calls for an elaborate management information system. Information system can be described as a method of collection, storage, adaptation, transfer and presenting information in an effective way for all the users of that information system. Internet has helped in the expedition of information exchange on a large scale at speed which is fast enough for consumption normally. With this most companies are now making effective use of data, from management systems in the warehouses which have the customer and supplier inventory levels and important patterns of customer ordering. Also, from the transportation management systems information regarding the location of vital supply chain assets, for example vehicles or products is stored and retrieved at the point of its use. The integration of all this, plus other information flow systems such as electronic commerce which is associated with business to business transaction capabilities have revolutionalized the way supply chain operates. The latter has seen reduced cost and improvement of services to customers by reducing shipping and receiving cycle times, increasing inventory accuracy and shipment with subsequent reduction of lead time which all have impact on logistics cost. 4 Mode and cost trade off Each of the above the above transport modes have its own shortcomings hence, the need for a cost tradeoff based on its performance and how it best suits the need. There are measurable parameters used in making this decision. Some of these include Traffic-based measurements, accessibility-based measurements and mobility-based measurements. The traffic- based perspective is anchored on the assumption that the fundamental way of improving quality of transportation system is by increasing vehicle mileage and speed. It uses indicators such as, level of service ratings, and average traffic speeds (Ross, 2004). This favors high-volume roadways and high-speed which leads to more automobile-dependent transportation systems and land use patterns. It defines logistics in terms of barriers, risks and costs to motorist. Since this perspective favors increased road and parking capacity, vehicle ownership, roadway traffic speeds the only way of benefiting the non-drivers is by helping them become motorist and by making travels by taxi and automobile inexpensive and convenient. The mobility approach assumes “trip” means freight-vehicle or person trip and “travel” refers to ton-miles or person-miles. The users here are mainly motorists even though it recognizes some individuals use non-automobile modes and that some areas have large numbers of rideshare, cycling trips and transit. In this perspective public facilities are best located in areas with combination of convenient roadway access, transit service, adequate parking and cycling routes. Mobility approach defines transportation problems in terms of barriers on physical movement, and therefore favors solutions geared towards improving capacity and speed of motor vehicle systems, not excluding ridesharing and transit improvement, road and parking facility improvements, intermodal connections and aviation. Non-drivers can only best benefit by improving automobile and motorized transport such as taxi and transit modes and giving consideration of walking and cycling. Additionally, the accessibility-based perspective reflects both the land use patterns and mobility that are utilized. It gives a key attention to accessible land use patterns and non motorized modes. Multi-modal transportation, mixed-use and more compact transportation optimizes accessibility and thus reducing amount of travelling needed to reach destination. The range of transportation problems and solutions considered is expanded by accessibility –based planning. These problems include barrier, cost or risks which prevent people from attaining desired opportunities (Alic, Mowery and Rubin, 2003). The probable solutions include mobility substitutes e.g. use of telecommunication and delivery services, traffic improvements, more accessible land use and improvement of mobility. Trade-offs is inherent in the different modes of transport. For instance, in the case of land transport different forms of accessibility occur because land use patterns and roadway design is generally optimal for one mode but less suited for another. Therefore, roads designed with many driveways and intersections with aim of maximizing accessibility don’t accommodate higher-speed traffic safely as noted by Willington (2011). On the other hand, highways with maximum vehicle mobility have very poor accessibility. Land use patterns focused on maximizing motorized accessibility have a tendency of poor non motorized access and transit while transit-oriented development increases parking and traffic congestion. High traffic speeds and wide roads create barriers to walking thus conflicting the pedestrian and vehicle street design objectives. In conclusion transportation decisions tradeoffs which should allow access by other modes. For example, in the road transport how much space is to be devoted to different modes and how much parking is required at the destinations optimized for vehicle traffic may often provide poor access by other modes. 5 Review Transportation plays a major role in supply chain management throughout the production procedures. It fulfills the logistical function of ensuring that place and time utilities are achieved by taking the good or passenger to the right place and at the right time. It occupies approximately a third of logistical costs. There are different modes of transport namely: The land transport which involves conveyance of goods and passengers on land. It has a positive characteristic that it has high accessibility on land areas. It also offers extension services on other modes, such as; water and air, from seaport and airports. It can be sub-divided into: road, railway and pipeline transport. Water transport which is the conveyance of goods and passengers on waterways by means of ships, steamers, boats and launches. There are two main categories of water transport: the inland water transport (transport people and goods on rivers and canals) and the ocean transport (transports goods and passengers on oceans and seas). The main advantage of water transport is that it is convenient for bulky and heavy goods with the main limitations as the poor navigation of rivers for inland water transport, adversely by the weather and long transportation time. Air freight logistics (air transport) which involves transportation of goods and passengers through airways. It is characterized by high speed of delivery, high flexibility, a good frequency and accessibility of regular destinations with lower risk of damage. The only disadvantage of air transport is that it charges a high delivery fee. Other modes of transport are the e-commerce and the express delivery which is characterized by use of JIT principle, door-to-door services and traceability. Each of these modes play important role in improving the performance of the transport system by substituting each other based on the suitability and the tradeoff in relation to the accessibility. An information system is usually very important in the management of the flow of information in a logistic system as noted by Bhatnagar and Millen (1999, pp.569-672). This has been eased in the recent past by use of internet and e-commerce. Management systems at the warehouses provide information on the supplier and customer inventory levels. It further gives an insight on the customer ordering patterns. Transportation management systems on the other hand provide information regarding the location of supply chain assets. Proper management of flow of information in a logistics system helps in reducing logistics costs and lead time while at the same time improving the level of service quality. 6 Transport planning, control and strategy Transport as a key element in supply chain needs to be planned and controlled thus, a good strategy needs to be laid out. Some of the transportation planning and control methods include the use of queuing system such as Monte Carlo simulation model and use of transportation assignment problem as noted by Willington (2011). However, electronic road pricing technique has played an important role in overcoming the environmental and economic costs associated with congestion of traffic. It replaces the rationing strategy of road use by queuing. The queuing system consumes unnecessary fuel and wastes people’s time. The road pricing is a method which is precise enough for impacting on traffic demand. In addition, other strategies are employed for sustainable transport. This has emanated from the fact that global warming is posing a challenge to future transportation sector development. This strategy focuses on addressing the social, economic and environmental issues in the transportation such as the emissions of greenhouse gases. Research and development has thus been engaged to develop technologies that minimize these emissions. These technologies once developed should be brought to commercial and introduced to market place for providing direct support. 7 3PL AND 4PL In the business world, supply chain management is one of the most vital areas of management. Supply chain management will affect the daily running of business as it will manage the movement of finished and W.I P goods. We can say it is key player in inventory management. The players in logistics mainly known as LSPs, in the form of third party logistics have reinvented themselves and become a crucial part of supply chain management in the corporate world. These service providers have of late integrated themselves with their shipper customers to enhance the operation of business (Transportation Management and Public Policy, 2003). This relationship is realized through the formation of strategic alliances and other partnerships with other corporations in the business sector hence enhancing the total value proposition being offered. Still in the same context, we have lead logistics providers who have also emerged in the sector. These are known mostly as LLPs and they are engaged with the provision of integrative services which stretch far from basic transportation and w3arehousing as known by many. We also have other new models in supply chain management which include 4PLs (fourth party logistics providers) and the joint service companies referred as JSCs, in these two, the whole set of supply chain management is usually passed over or outsourced to other independent management entities. Of late, we have also witnessed the configuration of the two models and they appear as corporations strive two become less stiff and to grow access to capabilities without having to chuck out large long term equity investments. In the global market, we have had so much confusion of terms in the supply chain management outsourcing. Most people do not get to understand the difference of terms like LSPs, the third party logistics (3PLs), LLPs and fourth party logistics. This is aggravated by the way 3PLs are currently advertising as 4th party logistics providers and even others jumping the odds to cal themselves 4PLs. The fruits or the benefits enjoyed from outsourcing sometimes are not even incremental but we see companies improving their supply chain management systems and creating performance gaps which distinct themselves from other players in the fields or the competitors (Dwivedi and Tim, 2009). The first and foremost step to gain the benefits from supply chain management is usually to implement and come up with procedures which will help improve and sustain operational excellence and distinct the company from competitors. Secondly the companies can sit and integrate or formulate supply chain integration and formulation whose main aim is to increase value addition to the clients and other collaborators or business partners. After achieving this, supply chain supply chains and other business models can be established and consequently lead to higher revenues margins. 7.1 3PL in general These supply chain management player are contractual providers in logistics with the main goal of maximizing their property or assets, and with portrayed focus on logistics and issues in supply chain. In the business world, there usually less experienced managers in supply chain management to work with the clients. Despite the lack of this we also have less investment in research and development, poor investment in information technology as well as projects management. 7.2 4PL (Fourth Party Provider) This is an integrator with the capability to bring together resources, capacity and technology of the providing company to other client company to facilitate the designing, building and running of a wholesome supply chain solution as noted by Willington (2011). This will encompass the respect of cultures, politics and the commercial acumen and not only improve value as well to create rousing and other sustainable deals which will bring incentives to all the parties concerned. The 4 PLS generally develop due to a deficiency in capacity. They provide answers with unique combinations and they tend to transform the clients businesses.4PL is renowned for its great capability to manage a variety of services and its capacity to precisely and accurately deliver complicated solutions on behalf of customers.4PL has the ability to develop and grow in e-market or across a variety of companies and create a management synergy. 8 Federal economy and safety regulations We have several safety regulations required in logistics companies. Everybody is bound by the specifications in the federal economy. A key element in these safety regulations is the specification of the work place code of conduct. It is required that companies set high standards and call foe employee ethics since this affects the end user no matter how many miles he is away from the company, another issue is the observance of basic labor laws. Apparently, the employees need to be respected and their needs addressed without any oppression. Additionally, the minors should not be employed in these companies. The federal economy calls for observance of ethical trading initiatives where no one company oppresses another but all have a level playing field in logistics. Corruption in the award of tenders should be shunned from as indicated in (Transit, 2006). Another key regulation is the observance and conservation of the environment. It is the social responsibility of every logistics company to ensure that it conserves the environment through reduction of emissions harmful to the environment, reduction in energy conservation and participate in environment cleaning. 9 Export -import transportation issues Years back, logistics was seen as a passive function doubling as an absorbing function in business enterprise. Nowadays this perception has greatly changed and logistics is a highly strategic factor requiring major decision making and with the capacity of providing great and unique competitive advantage and a package of other benefits. As a matter of fact, a broad spectrum of value added transport and stores management is linked to the mobility of goods from the suppliers to the consumers. The integration and the use of high end information system have changed the conduct of logistics and transport system. Moreover, supply chain management a logistics services are critical players in formulating sustainable programs with the capacity to help the companies manage their energy conservation. In the globalised world of today, there is great importance to ensure that logistics management and transport optimization is achieved, since clear and excellent communication and coordination is of vital importance as goods and services move within borders. This has called for the change in which logistics is managed; this one has seen the integration of traditional methods with newer ones and greater relationships with the business partners, suppliers and the clients (Goulder, 2004). The companies do not only focus on operations but also on long term success of the business which is related to the actions and the decisions the company makes on upstream and downstream. 9.1 Identification and standardization In logistics and transport system, we have some regulations requiring the use of several standardization keys. These are: GS1 identification keys. These include the global trade identification number (GTIN), the global location number (GLN), the global shipment identification number. GS1 data carriers. These include GS1 barcodes, EPC /RFID tags. GSI communication standards. It includes GSI e-com, the global data synchronization network. 10 Customer delivery and service level The customer is the most important person in business and should be treated well to ensure that he is satisfied with the services on offer. The logistics company should ensure that there is timely delivery of the goods and services to the customers, with the quality of the goods being maintained (Terterov, 2003). The logistics should also ensure that there is an information document to the customer to reduce complaints, the logistics company should also develop a contingency plan for use in case of emergency and also formulate a logistics network and service plan for application to the customer. Above all the company should integrate I.T in its operations to enhance service delivery and hence higher satisfaction levels. 11 Technology in transport management Management of cost, improvement of quality and ensuring timely delivery are the key elements being pursued in logistics. The adoption of advanced information technology has helped solve logistical problems together with container size standardization. Logistics management will only make sense if there is adequate transfer of information at various points in the supply chain (Elahi and Mehran, 2006). Different technologies whose positive role I improving logistics management include Automatic Equipment Identification( AEI), the much known GPS (Global positioning Systems) or the intelligence Transport Systems(ITS). As noted by Evans and Jade (2008), technology has also brought on board the good identification i.e. bar coding system and electronic data interchanges have all played a major role in transport management. Currently, we have a system known as National Transportation Exchange which utilizes the internet and connects shippers at different locations. This system helps in creating a market by providing real time information daily based on the information provided by fleet managers. 12 Conclusion/ Review The management of supply chain is a crucial role which calls for the sobriety and utilization of knowledge by the managers as it demands the use of constraints resources for maximization of profits as well as ensuring timely delivery of the goods and reduction in costs. Logistics requires proper planning and control strategies which will ensure tat the transportation problems are dealt with. This will encompass the use of different methods such as Monte Carlo, simulation, game theory etc. Supply chain has also seen development of 3PLs and 4PLs who are outsourced supply chain managers all with the intention to ensure that the management of supply chain is taken to higher grounds and the results are as required by the majority. Still the supply chain management industry should not be geared towards the maximization of profits only but should also follow the set federal economy and safety regulation which will call for proper observance of business ethics as well as the conservation of the environment. It is impossible to achieve an integrated wholesome supply chain management system if we do not adopt the technology currently available. The technology has made conduct of business easier as wee as ensured that there is real time exchange of data and information between stakeholders. References Alic, J., Mowery, D. and Rubin, E., 2003. ‘U.S. Technology and Innovation Policies’, Pew Center of Global Climate Change, Arlington, VA. Bhatnagar, S., and Millen, 1999, Third Party Logistics Service: a Singaporean Perspective, International Journal of Physical Distribution and Logistics Management, 29(9), pp. 569-587. 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