It is an essential element of physical distribution. It involves integrating the advantages of each transportation method by adopting containers and physical handling producers to permit transfers among different types of carriers.
For example, to place containers in railway flat cars and then load the containers on motor vehicles is called “piggy back” and if the containers are off loaded to water carriers, it is called “flash back.” Exchange of containers between air and truck carriers are referred to as “Air truck” or “birdy back”.
The marketing manager has to decide to (i) what mode or combination of modes of transportation (rail, truck, pipeline, water ways or air) should be used to transport products to warehouses and from there to customers? (ii) Should the transportation cost be reduced and the desired levels of c ustomer service still maintained.
- Information flow/Communications:
It is a process of passing information and understanding from one person to another. This includes the information system which should link producers, intermediaries, and customers. Computers, memory systems, display equipment and other communication technology facilitate the flow of information among other members in the channel.
A manager to be successful must develop an effective system of communication. So that he may issue instructions, receive the reactions of the subordinates, and guide and motivate them.
- Organisational Structure:
The person in charge of the physical distribution should co-ordinate all Activities into an effective system to provide the desired customer service in the most efficient manner. Examples of organizational consideration are: (i) How can the five elements of physical distribution best be coordinated so that a team effort results? How can compartmentalization thinking be avoided? (ii) If a central head is established to direct all physical distribution activities, to whom should he report—The Head of the Marketing or The Chief Executive Officer?
Modes of transportation
- MODES TRANSPORT
Transportation plays a major role in the economy. It increases the production efficiency and it links to the logistics system. Vehicle should have some characteristics which are used for easy transport of goods and services.
Transportation is generally of two types. They are public transport and transport for non generic-use. Public transport is nothing but which is used for meeting the needs of all sectors of the people for transportation of goods and services. Transport non-generic will be for the plant operations here the transportation means may be by the non-transport enterprises.
Coming to the different types of transport which are usage generally are:
- Ability of loading and unloading goods and services is more.
- Frequency of delivering the goods over long distances is more.
- Climatic conditions have no effect
- No traffic or congestion easy movement of the vehicle.
- Capital and initial investments are more.
- High material usage for the construction and even the fuel consumption
- The above are some of the advantages and disadvantages of using the rail.
- High flexibity and ability to move the vehicles fastly.
- Uses different routes to reach the destination quickly.
- Does door to door service
- High safety for the cargo.
- Chance to select the carrier which is suitable for carrying the goods.
- It mostly depends on climatic conditions.
- High cost for long distances.
- Productivity is low.
- Some of the advantages and disadvantages are discussed above.
- Highest speed
- Even delivers goods to remote places.
- High reliability
- Highest cost of transportation.
- Even adverse weather conditions effect the transportation.
- Material and fuel consumption is costly.
- It is economical mode for transporting heavy loads and even cargo.
- It is the safest mode which provides convenience to the people without accidents.
- Cost of construction and maintenance is very low.
- It even provides international transport
- It is highly affected by the weather conditions.
- It requires large initial investment
- I t is a slow process.
- FACTORS TO BE CONSINDERRD IN SELECTING TRANSPORTATION MODE.
- Cost of Service:
The cost of transportation adds to the cost of the goods so it should always be kept in mind. Rail transport is comparatively a cheaper mode of transport for carrying heavy and bulky traffic over long distances. Motor transport is best suited and economical to carry small traffic over short distances. Motor transport saves packing and handling costs.
Water transport is the cheapest mode of transport. It is suitable to carry only heavy and bulky goods over long distances where time is not an important factor. Air transport is the most costly means of transport but is particularly suited for carrying perishable, light and valuable goods which require quick delivery.
- Speed of Transport:
Air transport is the quickest mode of transport but it is costliest of all. Motor transport is quicker than railways over short distances. However, the speed of railways over long distances is more than that of other modes of transport except air transport and is most suitable for long distances. Water transport is very slow and thus unsuitable where time is an important factor.
Railways, water and air transport are inflexible modes of transport. They operate services on fixed routes and at preplanned time schedules. The goods have to be carried to the stations, ports and airports and then taken from there. Motor transport provides the most flexible service because it is not tied to fixed routes or time schedules. It can operate at any time and can reach the business premises for loading and unloading.
- Reliability/Regularity of Service:
Railway service is more certain, uniform and regular as compared to any other mode of transport. It is not much affected by weather conditions. On the other hand, motor transport, ocean transport and air transport are affected by bad weather such as heavy rains, snow, fog, storms etc.
Safety and security of goods in transit also influence the choice of a suitable means of transport. Motor transport may be preferred to railway transport because losses are generally less in motor transport. Water transport exposes the goods to the perils of sea and, hence from safety point of view, sea transport is thought of as a last resort.
- Nature of Commodity:
Rail transport is most suitable for carrying cheap, bulk and heavy goods. Perishable goods which require quick delivery may be carried through motor transport or air transport keeping in mind the cost and distance.
- Other Considerations:
A number of special services such as warehousing, packing, loading and unloading are also taken into consideration while deciding about a mode of transport. From the above discussion it is clear that each mode of transport is suited for a particular type of traffic.
The rail transport is particularly suited for carrying heavy and bulky goods over long distances. Motor transport is suitable for carrying small consignments over short distances. Air transport is suited to light and precious articles which are to be delivered quickly. Ocean transport is appropriate for carrying heavy bulky goods over long distances at the cheapest possible cost
- DOCUMENTS USED TO FACILITATETRANSPORTATION OF GOODS
- Air way bill: This is the consignment note used for carriage of goods by air. It is basically a receipt for goods for dispatch and is prima facie evidence of the conditions of carriage.
- Bill of lading: This is a receipt for goods shipped on board a vessel, signed by the person who contracts to carry them and stating the conditions in which the goods were delivered to (and received by) the ship.
- Packing list: This is a document that sets out details of the packing of the goods. The documents are required by customs authorities to enable them to make spot checks or more thorough checks on the contents of any particularly content.
- Bill of Entry : A declaration by an importer or exporter of the exact nature, precise quantity and value of goods that have landed or are being shipped out. Prepared by a qualified customs clerk or broker, it is examined by customs authorities for its accuracy and conformity with the tariff and regulations. See also customs entry.
- Consignment note:
This is a document prepared by a consignor (Supplier) and countersigned by the carrier as a proof of receipt of consignment for delivery at the destination. This document evidences the receipt of the goods an attribute which shows the truthfulness of the actual delivery of the consignment from the consignor to the consignee. The document is generally used as an alternative to bill of lading (especially in inland transport), it is generally neither a contract of carriage nor a negotiable instrument.
- Goods receipt note (GRN):
This is a document used to record the inward entry of any goods received at the premises of the organization. The document normally consist of the details of Quantity Received, Quantity Rejected and Quantity Accepted, Supplier name and Purchase order number. The practice of preparing GRNs is important as it promotes proper inventory control and restricts the unwanted, unauthorized entry of goods in the organization. The GRN preparation is a part of effective Inventory Control Management.
- Advice note:
This is a note sent to a customer (Buyer) by a supplier of goods to advise him that an order has been fulfilled. The advice note may either accompany the goods or be sent separately. Also an advice note notifies the buyer that goods have been dispatched or are ready for collection. Copies of the advice note may be sent to relevant departments e.g. purchasing and stores