Concept of Logistics and its Components
Businesses are a part of society, and they cannot function on their own. They need support from other elements of an economy to work properly. Two such aspects of any economy that affects a company’s functionality are its transportation system and warehousing. Transportation helps companies to move their resources and products from one point to another. At the same time, warehousing facilities allow them to stock their inventory. To make the transportation of products and their storage efficient, the concept and ideas of logistics are implemented.
What is Logistics?
Logistics is the overall process of managing resources. It includes moving and storing them. The process is not simple. The idea of logistics is to create a distribution channel from the factory to a customer, but in a cost-effective manner that will be time-saving as well. Therefore, this process is vast and complicated and includes various components. This organized concept primarily came into the military for the movement of their materials and personnel. However, in the modern context, it simply means moving goods from one place to another within a supply chain.
The concept of logistics includes two major components, transportation and warehousing.
Components of Logistics
Transportation
This component of logistics deals with transportation of products, be it raw materials or finished articles. The focus here is to optimize this process via effective planning and executing them accordingly.
Transportation is a multimodal approach that includes roads, rails, sea, and ocean. With the help of an excellent transportation strategy, delivering goods from a warehouse to retail outlets to a customer is not an issue. However, this process is a lot more complex and includes planning and optimizing routes, modes of carrying, order management, freight audit, and payment. This element of logistics also includes yard management, securing warehouse transportation, etc. Additionally, carrier management is a part of this component as well. Since the prices of carriers vary regularly, one needs to keep a tab on them as well while preparing a transportation strategy.
Since businesses are expanding fast, transportation services have to keep up as well. Nonetheless, the infrastructure of the country is a factor here. In case the roads, railways, waterways, and airports are not in good condition, it will be hard to optimize this process.
Warehousing or Storing
When an item is ready to leave the factory floor, it needs a place to stay until dispatched. This is where the concept of warehousing comes into effect. A scientific and efficient storing of goods helps to keep their integrity intact. Also, it reduces the costs regarding damages.
Warehousing is not just storing goods in a place; it is a hub that controls a set of different elements. One such element is inventory management. It keeps a tab on the stock and helps manufacturing units by serving them raw materials in need. It also keeps them updated about the status of finished articles. This process helps companies to evaluate whether to speed up production to meet sudden demand, or not.
Typically, companies have their warehouse, or they can rent or lease them to continue their operations.
Apart from transportation and warehousing, other components of logistics include –
Fleet management
Materials handling
Order fulfillment
Demand planning
Along with the main components, there are auxiliary services in logistics that play a vital role as well. Such services have an impact on the entire process and play a major role in the completion of it. One such example is communication services.
Communication Services
The modern logistical process relies heavily on communication, and without it, the process will fall apart. Nowadays transportation of products includes heavy use of telecom services, which include the use of mobile phones, and the internet.
Instead of sending a receipt via postal services, companies can now use e-mail to send them directly to the receivers within a few seconds. This has eliminated the risk of misplacement of essential documents. Furthermore, the use of mobile phones and GPS services has helped companies to track their shipment. The positive effects of communication services are not limited to logistics. A company needs it to stay in touch with its customers, employees, and every other aspect connected to it.
In a nutshell, modern communication technologies have transformed the way of doing business. However, for any service to make an impact, it must be quick and inexpensive. The rapid growth of internet and telecom services has made it highly effective.
Transportation of products within the stipulated time is necessary to keep the demand and supply model intact. In this regard, logistics plays an important role. It strategizes and puts everything in place for this process to be completed without any hiccups.
Vedantu helps students to learn more about this concept with study materials and online classes. Furthermore, the doubt clearing sessions with subject experts help individuals to get their doubts cleared and aid their preparation.
FAQs on Communication Services in Transportation & Warehousing
1. What exactly are transportation and warehousing in business?
Transportation and warehousing are two key business support services. Transportation refers to the physical movement of raw materials and finished goods from one place to another. Warehousing involves the scientific and systematic storage of these goods to maintain their value and quality until they are needed.
2. Why are communication services so important for transportation and warehousing?
Communication services act as the nervous system for logistics. They are essential for coordinating all activities smoothly. For example, they are used for:
- Tracking the location of shipments in real-time.
- Managing inventory levels in the warehouse.
- Placing and confirming orders between suppliers and customers.
- Coordinating schedules for loading and unloading goods.
Without effective communication, the entire process of moving and storing goods would be slow, inefficient, and prone to errors.
3. What are the main types of warehouses a business can use?
Businesses can choose from several types of warehouses based on their needs. The most common ones are:
- Private Warehouses: Owned and operated by the business itself for its exclusive use.
- Public Warehouses: Owned by a logistics company and rented out to other businesses for short or long-term storage.
- Bonded Warehouses: Licensed by the government to accept imported goods for storage before the payment of customs duties.
4. Can you give a simple example of how communication, transport, and warehousing work together?
Certainly. Imagine you order a new phone online. First, a communication system (the website) processes your order and sends it to the warehouse. At the warehouse, staff locate the phone and update the inventory system. Next, a transportation service (a courier company) is booked, and the phone is shipped. You receive tracking updates via email or SMS (more communication) until the package arrives at your doorstep.
5. How does a business decide which mode of transport is best for its products?
The choice of transport mode depends on several factors, not just one. A business must consider:
- The type of goods: Perishable items like fruit need fast transport like air freight, while bulky items like coal can go by rail or sea.
- Cost: Sea and rail are generally cheaper for large quantities over long distances, while air is the most expensive.
- Speed and Urgency: For urgent deliveries, air transport is the fastest option, while sea transport is the slowest.
- Flexibility and Accessibility: Road transport offers the best door-to-door service and can reach remote areas.
6. What is the difference between transportation and communication in business?
While they work together, they are different services. Transportation is the physical activity of moving goods and people. Think of trucks, ships, and trains. Communication is the process of exchanging information. Think of emails, phone calls, and tracking systems. In business logistics, communication is used to manage and direct transportation activities efficiently.
7. What could happen if there is a communication failure in the logistics process?
A communication failure can cause major disruptions. For instance, if a tracking system fails, a company might not know where its valuable shipment is. If an order is not communicated correctly to the warehouse, the wrong product might be sent out. This leads to delayed deliveries, increased costs to fix mistakes, and ultimately, unhappy customers who may not buy from the company again.
