FUNDAMENTALS OF LOGISTICS

PST 05210

BY
MBWAFU, F. A (MNMA)

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Introduction to Logistics
What is logistics?
• Logistics refers to the efficient transfer of
goods from the source of supply through the
place of manufacturer to the point of
consumption in a cost-effective way while
providing an acceptable service to the
customer. OR
• Logistics refers to the effective and efficient
forward and reverse flow of goods, service and
related information from the source to final
point of consumption in order to meet
customer requirement.
FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Introduction cont.....
• Logistics management is the process of
planning, implementing and controlling
effective and 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 customer’s requirements.
• Please note that logistics and Logistics
management terms may be used
interchangeably.
FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Introduction cont.....
• In a modern society most of the customers
take excellent logistics service from company
as granted and tend to notice logistics only
when there is a problem.
• For Example- Non availability of goods and
services which they need make them feel
badly, when they visit retail store they expect
goods to be there and in good condition, for
ex- fresh fruits, meat, vegetables, and the like

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Objectives of logistics
• To deliver quickly what customer want, when
and where wanted.
• To ensure delivery and handling of
goods/orders is done at the minimal cost.
• To minimize inventory investment meanwhile
maintaining better customer service
• To ensure the end customer obtain their
orders in good conditions.
• To move back some items for re-use, recycle
repair or proper disposal
FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
Scope/Components/Elements of Logistics
• Procurement
• Production
• Transportation
• Warehousing
• Inventory management
• Information
• Materials handling
• Packaging
• Order processing
• Customer Service
FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Element of logistics
• Procurement is defined as the process of
obtaining goods or service by buying, leasing,
renting or using any other legal means.
• Production the process of transform/turning
raw materials into finished products/goods in
a manufacturing process.
• Transportation is the movement of people or
goods from one place to another.
• Warehouse is a large building where by raw
material or manufactured goods may be
stored before their export or distribution for
sale.
FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Elements of logistics
• Inventory management is the management of
inventory and stock.
• Information is a data which have been
processed.
• Material handling means moving and storing
of materials at the lowest possible cost
through the use of proper methods and
equipment.
• Packaging is an art, science and technology of
protecting products for distribution, storage,
sale and use.
FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Elements of logistics
• Order processing is the process of picking,
packing and delivery of packed items to a
carrier. OR Refers to the activities associated
with fulfilling consumers’ orders.
• Customer service is the process of ensuring
customer satisfaction with a product or
service.

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
Scope of logistics management
Procurement Transport/Storage Production Transport Storage Transport/Storage Use

Production Finished goods

Raw Materials Customer or
processes warehouse
sub assemblies Regional consumer
manufactured Factory store warehouse
parts depot or
proprietary intermediary
parts
Packaging
other materials

Inventory Work-in- Inventory

progress

Materials management Physical distribution management

Logistics

Input phase Output phase

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MBWAFU,F.A (MNMA)
Flows in Logistics
a) Goods. Goods frequently flow/move from
producer to consumers. But in some cases
materials can move from consumer to
manufacturer/supplier as returns.
b) Cash/Fund. It normally flow from consumers
to producer as payment for goods. In some
cases customers are credited back once they
return goods to suppliers

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MBWAFU,F.A (MNMA)
Flows in Logistics
c) Information. It flows in both directions, from
producers to consumers in the form of
information on new products, new uses of
existing products, promotions, etc. The flow of
information from consumers to producers is
the feedback of the wants, suggestions,
complaints, etc.

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Problems
a) Explain different types of logistics.
b) Why product return?

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
TRANSPORTATION

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
Introduction
• Transportation refers to the safe movement
of goods or people from one point to another
point where they are demanded in a manner
that is effective and efficient. Sometimes is
called freight transportation.
• Normally goods move from point of
production to the point of consumption by
the means of roads, railways sea, air and or
pipeline.
FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
Objectives of transport
• To deliver inputs (raw materials, spare parts,
consumable) to the factory on time.
• To deliver finished goods on time to the market
places i.e. to create place and time utilities.
• To ensure delivery of products or materials is
done safely, economically and efficiently.
• To reduce environmental impact by using
vehicle that does not make noise, oil leakage or
smoke.

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
The major elements of transport
• Ways
It is a path in which the vehicles will
pass. This includes land, water and air.
• Fleet or Vehicle
This is a thing that carry freight from one
point to destination point. This includes
lorries, trains, ships, aero planes, etc.
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MBWAFU,F.A (MNMA)
 Transportation
• Terminals
This refers to the starting point and ending
point where goods are loaded and
offloaded. Examples includes railway
stations, seaports, airports, etc.
• Method of propulsion /Motives of power
This may include petrol, gas and
electricity.

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
• Freight
These are physical goods or materials to
be moved from one point to another
usually from production point to
consumption point.

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
• Government
This refers to various directives or guidelines
formulated by government to be followed by
those involved in transport sector for smooth
operations. These includes driving on a
certain side, Freight weight limit and
dimensions acceptable for carriage, Speed
limits, regulations for securing dangerous
freight, business and drivers licensing
procedures, etc.
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MBWAFU,F.A (MNMA)
 Transportation
Modes of transport
Modes of transport is the approach
through which goods are moved from the
point of production to the point of
consumption.

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
The main modes/forms of transportation
and their features (merits and
demerits) are;
• Roads freight
• Rail freight
• Pipelines
• Air freight and
• Sea freight.

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
Road Transportation

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
Road freight
• Advantages:
Advantages
1.Have ability to deliver goods directly to the
consignee (customer) very fast.
2.Highly flexible – routes and loading
routines can be easily altered, operate day
and night. Frequent, scheduled delivery
can be done.
3.It is cheaper and quick for a short distance.

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
Road freight
• Advantages cont...
4. Consignment reaches the doorsteps of
the customer (door-to-door service). Road
is not limited to a fixed route/terminal.
5. Low capital cost investment – for own
fleet as compared to other modes like rail,
air, pipeline.

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
Road freight cont….
• Disadvantages:
1.Higher operating costs – due to high
energy consumption.
2.Limited carrying capacity-Legislation limit
dimensions and gross mass of vehicles.
3.High safety and security risk - vulnerable
to hijacking, accidents, or theft.

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
• Disadvantages:
4. High environmental impact- create noise
and air pollutions.
5. Affected by road conditions e.g. traffic
congestion kills reliability and punctuality of
road transport, road closure lasting several
hours, etc.
6. Can be affected by weather conditions in
areas with severe climatic conditions e.g.
heavy fog and snowfalls.
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MBWAFU,F.A (MNMA)
Rail Transportation

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
Rail freight
• Advantages:
1.It deliver large volume of goods resulting
into reduced cost per unit. (It is cheaper)
2.Railways are suitable for any product
delivery e.g. bulk, heavy, inflammable,
explosives, toxic, etc.
3.Railways provide door-to-door deliveries
for industries/customers which have rail
siding at their facilities (plant/depots).
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MBWAFU,F.A (MNMA)
 Transportation
Rail freight
• Advantages cont......
4. The accident safety record of rail
transport is good especially with the
transport of hazardous goods.
5 Relatively reliable - less affected by
weather conditions and no traffic
congestions.

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MBWAFU,F.A (MNMA)
 Transportation
• Disadvantages of rail freight:
1.Uneconomical for small load and short
distance.
2.Railways lack flexibility- it provide terminal
to terminal service. It need support from
other modes usually road.
3.Railways transport require enormous
capital investments.
4.Products are at risk of being damaged due
to shunting involved.
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MBWAFU,F.A (MNMA)
Pipeline Transportation

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MBWAFU,F.A (MNMA)
 Transportation
Pipeline
Pipeline move only products that are in fluids
or gaseous nature like oils; crude petroleum
products, water, gas, chemical liquids.
•Advantages:
1.Pipelines are reliable mode – pilferage and
loss of product is not possible, weather
conditions cannot disrupt the service.
2.Pipelines economical i.e. consume low
energy, no return pumping process, etc.
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MBWAFU,F.A (MNMA)
 Transportation
3. Pipelines being under ground, space
occupation is minimal.
4. Pipelines operate all the time hence
reduce the total transit time.
5. It is environmentally friendly i.e. no noise.
6. Can traverse/cross difficult terrain where
other modes cannot do
7. Few labours required. Flows operations is
electronically monitored and controlled
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MBWAFU,F.A (MNMA)
• Disadvantages of pipeline
1.Highest fixed costs – cost of lying pipeline
infrastructure.
2.Pipelines serve fixed locations. Needs other
modes to move goods to customers
3.Transport only liquid or gaseous
commodities
4.Unspotted big leakage can result into heavy
loss.
5.Cannot accommodate sudden surges in
demand due to finite/fixed capacity
FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
Transportation

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
• Air freight
Air transport is mainly used for
international transport and in emergency
rather than in normal times. Used for high
value, low-weight, and time critical items.
• Advantages:
1.It move products very quickly than any
other mode because of its highest ever
speed. No jam/congestion over the way.
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MBWAFU,F.A (MNMA)
 Transportation
• Air advantages cont..
2. It is suitable for long distance deliveries
with tight deadline.
3. Suitable for high value, low weight,
perishable, and critical time goods.
4. It require less packaging to products due
to minimal handling.
5. It have high security record ascribed by
self regulations, government controls, and
employed right staff.
FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
• Disadvantages:
1.Most expensive – Cost per unit is high as
compared to the rest modes. And
Operating costs are very high like
maintenance and overhead costs.
2.Carrying capacity limited in terms of
volume, size and weight.
3.Require secondary mode of transport to
deliver to ultimate customer. Connected to
big cities only. (Limited to airport only)
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MBWAFU,F.A (MNMA)
 Transportation
• Disadvantages cont....
4.Unsuitable for some goods like explosives,
inflammables, etc.
5.Weather affects flight movements e.g.
wind, snow, fog, thunderstorm, etc.
6. Lower chances of surviving when it clash.

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MBWAFU,F.A (MNMA)
Sea Transportation

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
• Sea freight
Water transport is classified into deep-
water transportation and inland water
transportation on lakes, rivers or canals.
• Advantages:
1.It is the cheapest mode as it move large
volume of goods over longer distance
2.Ideal for goods with longer lead times as it
is the slowest mode
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MBWAFU,F.A (MNMA)
 Transportation
Sea freight advantages cont….
3. Heavy and bulk goods or any kind of
goods are transported by this mode.
4.Sea transport offers a very safe and
secure service
5. No traffic congestion on the open sea

FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Transportation
• Disadvantages:
1.It can deliver wherever there is seaport
only capable of receiving ships.
2.Water transport is the slowest mode of
transportation and unsuitable for
emergency or highly tight deadline.
3.Require secondary mode of transport to
deliver to ultimate customer.
4.May be affected by climatic condition (bad
weather) and delay freight
FUNDAMENTALS OF LOGISTICS.
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MBWAFU,F.A (MNMA)
 Modes selection factors
The following factors should be
considered when selecting mode of
transportation
• Cost of transportation.
Cost of moving the products should be
examined and the cheapest mode selected.
e.g. it can be seen that air transport is more
expensive than all means of transport,
therefore it should be used with justifiable
reasons.
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MBWAFU,F.A (MNMA)
 Modes selection factors
• Nature and features of goods (size,
weight, liquid, gas, special features e.g.
perishability, hazardous, time sensitive).
The nature of goods must also be
considered. Bulky and heavier goods are
normally transported by rail or sea while
light goods and less bulky, time sensitive
items (new paper, fashion clothes, etc) are
transported by air or road.

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MBWAFU,F.A (MNMA)
 Modes selection factors
• Distance
The length of the journey for which goods
have to be transported, decides the mode
of transport. Short journeys are more
economical by road and long ones by air,
rail and sea.

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MBWAFU,F.A (MNMA)
 Modes selection factors
• Location of destination point/customer
The ability of mode of transport to reach
any destination is important. Road
transport is more flexible than the rest and
variations and diversions can be made.
• Customer service requirements.
Order may be required quickly for a
number of reasons that override the cost
factor-e.g. order for spare parts. Air
transport is often used for this occasion.
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MBWAFU,F.A (MNMA)
 Modes selection factors
• Value of goods.
Highly valued light goods are normally
need fastest mode to minimize risk of
loss. They are frequently moved by air
mode, but low valued items are better
done on the sea, road or rail.
• Etc.

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MBWAFU,F.A (MNMA)
STATUTORY REQUIREMENTS IN
TRANSPORTATION

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MBWAFU,F.A (MNMA)
 STATUTORY REQUIREMENTS IN
TRANSPORTATION
• Companies, or firms doing transportation
business must have a valid license from
authority
• Drivers must have active valid driving license
issued.
• Transporters must adhere to the weight and
cargo dimensions allowed to be carried to
protect roads.
• Carriers should move cargo supported with
documents like delivery notes, Invoices, etc.

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MBWAFU,F.A (MNMA)
 STATUTORY REQUIREMENTS IN
TRANSPORTATION
• The vehicles in use must be registered and
licensed for such particular activities.
• Vehicles should be inspected and maintained
frequently to ensure better service and safety
to users, goods, environment and general
public.
• Vehicle speeding should be in line with
regulations when moving goods to avoid
accidents
• Abnormal goods should be moved supported
by permit from TANROADS
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MBWAFU,F.A (MNMA)