Category: University of Mumbai BMS Notes

These most common five modes of transport are: railways, roadways, airways, waterways and pipelines. Following is the brief account of each mode with reference to Indian conditions with relative merits and demerits.

1. Railways:

Indian railway system has grown into Asia’s largest and the world’s fourth largest. It has route length of 72,000 kilo meters by the end of 1990. The daily run is 15,000 kilo meters with running of 12,000 trains carrying 7 lakh tons of goods. The average cost per ton kilo meter is 27 paise.

Merits:

1. Large carrying capacity:

Compared to other means of transport, railways are known for bulk carriage of goods over long distances.

2. It is economical:

As the freight rates are telescopic and referential, it works cheaper particularly in case of heavy goods over long distances.

3. It is all weather modes:

Railways provide all season protection to the products moved on uninterrupted basis.

4. It has containerisation:

Indian railways have done a good job by containerising on major routes facilitating safe, uninterrupted and speedier movement of goods.

5. It links international markets:

Railways are the main sources of connections with the markets outside the country moving goods from interior parts to the points of overseas supply and shipping.

Demerits:

1. Costlier over short distances:

Railway transport works costlier over short distances because of tapering and differential tariff rates.

2. Slower movement:

As compared to road and air transport, the speed of movement is slower.

3. Inordinate delays:

In India we have three types of lines as broad, meter and narrow gauge resulting in frequent transhipments; again shortage of wagons and, therefore, space forces the business community to tolerate inordinate delays.

2. Roadways:

Indian road network is one of the largest in the world. It has a total road length of 18 lakh kilo meters of which 50 percent is surfaced. Of this, national highways account for 35,000 kilometers account for the 50 percent of total traffic. On this road length, 9 lakh vehicles ply carrying goods.

Merits:

1. Economical over short distances:

As compared railways, it is more economical. The studies have proved that it is cheaper by 25 percent.

2. Speedier movement:

Road transport is speedier than the railways giving point to point service resulting in price stabilisation and consumer satisfaction. The business community needs not wait because of wagon shortage, transhipment because a truck has a smaller capacity and is flexible available 24 hours.

3. Touching for-flung markets:

Much beyond the capacity of railways, the roadways are known for reaching impregnable market particularly hilly regions where railways cannot reach.

4. Lesser conditions of service:

The roadways do not insist on strict packaging requirements because of least transhipments shocks to goods carried. Again, damage claims are settled faster.

Demerits:

1. Uneconomical over long distances:

Long haulages work out much costlier because disproportionate rise in fuel and spare-parts expenses.

2. It is fair weather friend:

Roadways are closed during monsoons and winters resulting in handicapped movement of goods.

3. Not suitable for bulk transport:

Bulky and heavy goods to be moved particularly over longer distances need railway services than roadways as it has a major limitation of carrying capacity.

3. Airways:

We cannot boast of airways in India as we do in case of railways and roadways because, it is underdeveloped and underutilised. It acts as a feeder or supporting transport means. Domestic capacity available is 115 lakh ton kilo meters but utilised only to the extent of 12 lakh ton kilometres in 1990.

International capacity corresponds to 218 lakh ton-kilo meters of which 175 lakh ton-kilo meters are used. India has 4 international airports, 92 aerodromes with 50 intermediate and 40 minor aerodromes.

Merits:

1. Fastest means of transport:

Air transport provides the speediest movement of cargo over the distant places by eliminating practically spatial barriers.

2. All weather friend:

It is known for its dependable service during the times of floods, wars, earth-quakes. It is all weather means, of transport though flights are cancelled due to bad weather conditions.

3. Consumer satisfaction:

The level of consumer service and, hence satisfaction is of high order as it is known for immediacy, speed and least damage to cargo.

4. Reduced inventory holdings:

As it provides fastest and uninterrupted service, capital investments in the form of stocks of goods is less. This is of particular importance in case of highly perishable items.

Demerits:

1. It is costlier means of transport:

The cost of air transport is very high and there is limit of weight of cargo. Hence, it is suitable for light weight, high grade and costly items only.

2. Limited coverage:

The planes cannot land at all the places of our choice. It connects metropolis and some important cities only.

3. Limited cargo capacity:

The cargo capacity of a plane is much smaller because of its size as it works against the force of gravity.

4. Waterways:

Waterways of the nation provide other alternative means of transport. Unfortunately, in India, waterways are not fully developed though she has a great potentiality.

Though India has 7,000 kilo meters of navigable river waterways, only 2,500 kilometrers are used. Again, we have 4,800 kilo metres of canals of only 600 kilo metres are navigable but hardly 400 kilo meters are actually used.

Merits:

It is cheaper means of transport:

Inland waterways tariffs are much lower and, therefore it works cheaper for both short and long distances.

Most suitable for heavy and fragile products:

The items which are bulky and heavy and which are fragile can be moved with ease.

Loading and unloading facilities:

The sender of cargo has the facilities of loading and unloading from boats and wharves on and from steamers and barges. Even the receiver has the similar facilities.

No problem of congestion:

Waterways provide an independent movement unlike road system where road is meant for all kinds of vehicles creating the problem of congestion.

Demerits:

1. Slow speed:

The speed of the boats and steamers is badly limited in case of canals and rivers. Goods needing quick movement as perishable can be hardly transported.

2. Unreliable:

Changing seasons create problems. Winter may freeze the rivers and canals and summer eats the depth of rivers and canals. Again, the rivers are known for changing their course of flow.

3. Limited service:

The inland waterways are connecting the given places. Again, the cargo capacity is quite limited.

5. Pipe-Lines:

Pipe-lines are the specialized means of transportation designed to move the items like crude-oil, petroleum, chemicals, coal, lime-stone, iron-ore, copper concentrates and gas. India has made a late beginning in this regard unlike U.S.A., U.S.S.R. and Middle-East, and the development is undertaken only in case of oil refineries to move petrol and gas from sources to markets.

The total pipe length in India, at present is of the order of 8,000 kilo metres owned by private and public undertakings such as Oil India Limited, Indian Oil Corporation and Oil and Natural Gas Commission. Biggest Pipeline is planned between Iran and India.

Merits:

1. Economical:

Crude oil or coal and gas transported through the pipe­lines works out almost 1/4 of railways and roadways.

2. Uninterrupted service:

Pipe-line transportation presents all weather system to move the products. Absolutely there is no any wastage of time as it works round the clock.

3. No danger of wastage:

As there are no occasions of loading and unloading, there is no scope for spilling, evaporation, pilferage and so on.

4. Underground:

The pipe-line usually underground and, hence, takes no additional space. What is more important is that it traverses through difficult terrain.

Demerits:

1. Initial heavy investment:

Though operational and maintenance costs are minimal, the capital cost of pipe-line is rather much higher and that is why a county like India has minimum length.

2. Danger of enemy attacks:

In the periods of war and political hegemony, pipe-lines are more prone to enemy attacks thus jeopardizing the veins of supply to the entire nation. The production activities are grinded to halt.

Labor

Packaging has a significant impact on labor costs with the most obvious impact being how long it takes to package your product. The easier and quicker it is to pack the product, the less you’ll spend on labor. However, packaging actually plays a much wider role when it comes to labor. Take for example the industrial manufacturing company we worked with that made large, high-value machines. Due to their packaging design and the constraints of their operations, incoming parts were unpacked and the incoming packaging was discarded. Machines were then assembled with these parts before being partially disassembled for shipping. The parts were set on carts and sent to shipping to be packed. Altogether this meant a minimum of four touches for every item. To save time, we recommended they rearrange their process so that the person disassembling the machine places the parts directly into the shipping containers rather than onto a transfer cart. This change saves time and also ensures parts aren’t lost in transit.

A packaging system overhaul can be key to reducing the cost of labor, shipping, logistics, warehousing, and returns in addition to the direct material cost reduction.

Shipping & Logistics

When it comes to shipping, it is critical to balance the amount of packaging protection with the size of the package. Finding the right balance here means finding a solution which simultaneously minimizes the shipping cost and risk of damage. Creating packaging designs in this sweet spot can save your company hundreds of thousands of dollars per year. To do it right, you will need to consider the supply chain hazards your product will face in your supply chain as well as the shipping method used. Your solution should also take into account the pallet configuration and the number of products per shipping case. The end goal is to ensure all packaging included in your packaging system is value-added that is, it is there to serve a purpose that is worthwhile. 

Warehousing

Warehouse space is expensive, which is why it is imperative to focus on density when designing your packaging. Some warehouses use racking, while others use floor stacking. In the facilities that use racking, it is vital to take measurements of the available racking. You want to use these measurements when you design your packaging so that when a pallet is filled, it can utilize as much of the racking space as possible. Likewise, when in a floor stacking situation, it is important to design packaging and pallets to be stacked high enough to utilize the full warehouse space.

Returns & Damage

Damaged products are not only costly, but they also impact customer service and goodwill. At a minimum, your material and shipping costs are doubled because you are delivering the product twice. Your costs continue to stack up though because you also have to factor in the cost of your customer service team and reverse logistics. Avoidance is the key here ensure your packaging solution is optimized for protection the first time.

An end-to-end supply chain hazard gap analysis is helpful to start assessing your packaging designs. Once you have an idea of the hazards, you can design solutions to prevent those hazards from damaging your product and ensure all the packaging components used add value to the system. Direct material costs are just the tip of the packaging cost iceberg. Packaging optimization can be an easy win when trying to boost product profitability.

Many components influence and impact the cost of packaging. From the obvious expenses (such as raw material and labor) to the hidden (think warehousing and obsolete inventory). It’s important to consider all of the factors when calculating the cost of packaging for your business.

Hard Costs

Hard costs are those that have a direct price associated with them. These are the things that you pay for out-of-pocket during a packaging project and are relatively easy to itemize and tabulate at the end of the day. Hard costs include:

• Structural Design
• Graphic Design
• Custom Packaging Manufacturing
• Packaging Supplies and Void Fill
• Shipping

Structural Design

Depending on your specific product and application, your packaging manufacturer or an outside agency that specializes in packaging design may develop the structural design for your packaging. The cost of creating your design and converting it into a manufacturing-ready file will vary – it may or may not be included in the services provided by your chosen design partner.

You should ask for a quote upfront that details what is included and the anticipated timeline to develop your design before embarking on any packaging project. If you bring an existing file to your packaging manufacturer, they may still need to make adjustments to ensure it will work with their machinery and operations.

Graphic Design

The application of graphics to packaging varies greatly depending on the project. You may be applying a simple 1-color version of your logo to the outside of a shipping box, or you might be developing an eye-catching highly customized retail experience. For simple designs, it may be enough to provide your packaging manufacturer with a logo file in the appropriate color profile and resolution.

More intricate packaging projects may require the support of a professional graphic designer or design agency. Whichever route you take, the graphic design process is similar to that of structural design, and you should ask for a quote, timeline, and terms upfront.

Custom Packaging Manufacturing

Once your structural design and graphics are finalized and combined into a manufacturing-ready format, you are ready to begin custom manufacturing. The cost of this process depends on the material, size, run volume, print method, tooling/setup charges, and labor. Another consideration is whether or not you choose to offshore your project.

A key component to the success of any packaging project is to bring your manufacturer into the picture early on. Partnering with your Packaging Advisor as early as the product design stage will deliver insight during the formative development phases (structural and graphic design). This insight may ultimately optimize your packaging outcome, including your total cost. You don’t want to spend time and money with an expensive branding firm to develop your new packaging concept only to discover that your box has not been optimized for structural integrity or shipping costs.

Similarly, you don’t want to send your graphic designer down a creative path that ultimately won’t work for the print method that your packaging will use or your manufacturing budget. It is far better to have these discovery sessions and discussions as early on as possible and with the manufacturer in the room.

Packaging Supplies and Void Fill

Some or all of the components of your packaging project may be stock items or supplies that must factor into your cost. These can include primary packaging (such as bottles, tubes, and bags), void fill (such as air pillows or paper packaging), packing tape, labels, stretch wrap, and more. Take a look at your packaging supply chain from beginning to end and include your stock product purchases into your packaging cost calculation.

Shipping

In today’s logistics-driven environment, the cost of shipping will continue to play a significant role in your total cost of goods. Shipping has potential implications for the cost of packaging on both the front and back ends of your project. You may pay for shipping to your warehouse or fulfillment center, and you will pay again when shipping your packaged product to the end-user.

The size, shape, and material choice of your packaging affect its weight and assembled dimensions. Weight and size impact the cost of shipping adding even more incentive to involve an experienced Packaging Advisor early on in the packaging development process.

Material handling principles are as follows:

• Orientation Principle: It encourages study of all available system relationships before moving towards preliminary planning. The study includes looking at existing methods, problems, etc.
• Planning Principle: It establishes a plan which includes basic requirements, desirable alternates and planning for contingency.
• Systems Principle: It integrates handling and storage activities, which is cost effective into integrated system design.
• Unit Load Principle: Handle product in a unit load as large as possible
• Space Utilization Principle: Encourage effective utilization of all the space available
• Standardization Principle: It encourages standardization of handling methods and equipment.
• Ergonomic Principle: It recognizes human capabilities and limitation by design effective handling equipment.
• Energy Principle: It considers consumption of energy during material handling.
• Ecology Principle: It encourages minimum impact upon the environment during material handling.
• Mechanization Principle: It encourages mechanization of handling process wherever possible as to encourage efficiency.
• Flexibility Principle: Encourages of methods and equipment which are possible to utilize in all types of condition.
• Simplification Principle: Encourage simplification of methods and process by removing unnecessary movements
• Gravity Principle: Encourages usage of gravity principle in movement of goods.
• Safety Principle: Encourages provision for safe handling equipment according to safety rules and regulation
• Computerization Principle: Encourages of computerization of material handling and storage systems
• System Flow Principle: Encourages integration of data flow with physical material flow
• Layout Principle: Encourages preparation of operational sequence of all systems available
• Cost Principle: Encourages cost benefit analysis of all solutions available
• Maintenance Principle: Encourages preparation of plan for preventive maintenance and scheduled repairs
• Obsolescence Principle: Encourage preparation of equipment policy as to enjoy appropriate economic advantage.

Material handling operations are designed based upon principles as discussed above. Material handling equipment consists of cranes, conveyors and industrial trucks.

Material handling is the movement, protection, storage and control of materials and products throughout manufacturing, warehousing, distribution, consumption and disposal. As a process, material handling incorporates a wide range of manual, semi-automated and automated equipment and systems that support logistics and make the supply chain work. Their application helps with:

• Forecasting
• Resource allocation
• Production planning
• Flow and process management
• Inventory management and control
• Customer delivery
• After-sales support and service

A company’s material handling system and processes are put in place to improve customer service, reduce inventory, shorten delivery time, and lower overall handling costs in manufacturing, distribution and transportation.

Types of Material Handling Equipment

The four main categories of material handling equipment include storage, engineered systems, industrial trucks, and bulk material handling.

Storage and Handling Equipment

Storage equipment is usually limited to non-automated examples, which are grouped in with engineered systems. Storage equipment is used to hold or buffer materials during “downtimes,” or times when they are not being transported. These periods could refer to temporary pauses during long-term transportation or long-term storage designed to allow the buildup of stock. The majority of storage equipment refers to pallets, shelves or racks onto which materials may be stacked in an orderly manner to await transportation or consumption. Many companies have investigated increased efficiency possibilities in storage equipment by designing proprietary packaging that allows materials or products of a certain type to conserve space while in inventory.

Examples of storage and handling equipment include:

• Racks, such as pallet racks, drive-through or drive-in racks, push-back racks, and sliding racks, are a basic but important method of storage, saving floor space while keeping their contents accessible.
• Stacking frames are stackable like blocks, as their name implies. They allow crushable pallets of inventory, such as containers of liquid, to be stacked to save space without damage.
• Shelves, bins, and drawers. Shelves, another basic storage method, are less open than racks. Used with bins and drawers, they’re more able to keep smaller and more difficult to manage materials and products stored and organized. Shelving types can include boltless, cantilever, revolving, and tie-down.
• Mezzanines, a type of indoor platform, help to create more floor space in a warehouse or other storage building for offices or more storage. Typical types include modular, movable, rack supported, building supported, and free-standing versions.
• Work assist tooling enables safe and efficient product handling across numerous industries in applications that require the movement of products, enhancing the efficiency of assembly and manufacturing operations.

Engineered Systems

Engineered systems cover a variety of units that work cohesively to enable storage and transportation. They are often automated. A good example of an engineered system is an Automated Storage and Retrieval System, often abbreviated AS/RS, which is a large automated organizational structure involving racks, aisles and shelves accessible by a “shuttle” system of retrieval. The shuttle system is a mechanized cherry picker that can be used by a worker or can perform fully automated functions to quickly locate a storage item’s location and quickly retrieve it for other uses.

Other types of engineered systems include:

• Conveyor systems come in a variety of types, depending on what they are meant to transport, including vibrating, overhead, chain, vertical, and apron conveyors.
• Automatic Guided Vehicles (AGV) are independent computer-operated trucks that transport loads along a predetermined path, with sensors and detectors to avoid bumping into anything.

Industrial Material Handling Trucks

Industrial trucks (material handling trucks) refer to the different kinds of transportation items and vehicles used to move materials and products in materials handling. These transportation devices can include small hand-operated trucks, pallet jacks, and various kinds of forklifts. These trucks have a variety of characteristics to make them suitable for different operations. Some trucks have forks, as in a forklift, or a flat surface with which to lift items, while some trucks require a separate piece of equipment for loading. Trucks can also be manual or powered lift and operation can be walk or ride, requiring a user to manually push them or to ride along on the truck. A stack truck can be used to stack items, while a non-stack truck is typically used for transportation and not for loading.

There are many types of industrial trucks:

• Hand trucks, one of the most basic pieces of material handling equipment, feature a small platform to set the edge of a heavy object on, and a long handle to use for leverage. Whatever is being moved must be tipped so that it rests on the handle, and is carried at a tilt to its destination.
• Pallet Trucks, also known as pallet jacks, are a type of truck specifically for pallets. They slide into a pallet and lift it up to move it. Pallet trucks come in both manual and electrical types.
• Walkie Stackers transport and lift pallets like a forklift, though they don’t include a place for the operator to ride in. They come in both powered or manual versions.
• Platform trucks are hand trucks low to the ground, with a wide platform for transporting goods.
• Order pickers lift the operator several feet above the ground on a platform so they can retrieve or store goods on high shelves.
• Sideloaders, also known as VNA (Very Narrow Aisle) trucks, are meant to fit in narrow warehouse aisles, as they can load objects from different directions. They’re also good for long, awkward products that need moving.
• Many types of AGV, or automatic guided vehicles, as discussed above, shuttle products along a route automatically, without human guidance.

Bulk Material Handling Equipment

Bulk material handling refers to the storing, transportation and control of materials in loose bulk form. These materials can include food, liquid, or minerals, among others. Generally, these pieces of equipment deal with the items in loose form, such as conveyor belts or elevators designed to move large quantities of material, or in packaged form, through the use of drums and hoppers.

• Conveyors, as mentioned above, come in a wide variety of types for different types of bulk material.
• Stackers, which are usually automated, pile bulk material onto stockpiles, moving between two points along rails in a yard.
• Reclaimers are the opposite of stackers, retrieving materials from stockpiles, some using bucket wheels to carry the material while others are scraper or portal style.
• Bucket elevators, also known as grain legs, use buckets attached to a rotating chain or belt to carry material vertically.
• Grain elevators are tall buildings specifically for storing grain. They include equipment to convey the grain to the top of the elevator, where it is sent out for processing.
• Hoppers are funnel-shaped containers that allow material to be poured or dumped from one container to another. Unlike a funnel, though, hoppers can hold material until it’s needed, then release it.
• Silos are generally large storage structures for bulk materials, though they don’t necessarily include equipment to convey the material to the top of the structure like grain elevators. Different varieties include tower, bunker, and bag silos.

Following are the two major functionality of Transportation

• Product movement
• Product storage

Product Movement

Whether the product is in the form of materials, components, assemblies, work-in-process, or finished goods, transportation is necessary to move it to the next stage of the manufacturing process or physically closer to the ultimate customer. A primary transportation function is product movement up and down the value chain. Transportation utilizes temporal, financial, and environmental resources, it is important that items be moved only when it truly enhances product value.

The major objective of transportation is to move product from an origin location to a prescribed destination while minimizing temporal, financial, and environmental resource costs. Loss and damage expenses must also be minimized. At the same time, the movement must take place in a manner that meets customer demands regarding delivery performance and shipment information availability.

Product Storage

A less common transportation function is temporary storage. Vehicles make rather expensive storage facilities. However, if the in-transit product requires storage but will be moved again shortly (e.g., in a few days), the cost of unloading and reloading the product in a warehouse may exceed the profitability. A second method to achieve temporary product storage is diversion. This occurs when an original shipment destination is changed while the delivery is in transit. Traditionally, the telephone was used to direct diversion strategies. Today, satellite communication between enterprise headquarters and vehicles more efficiently handles the information.

Principle of Transportations

Economy of scale

It refers to the characteristic that transportation cost per unit of weight decreases when the size of the shipment increases. For example, truckload (TL) shipments (i.e., shipments that utilize the entire vehicle’s capacity) cost less per pound than less-than-truckload (LTL) shipments (i.e., shipments that utilize a portion of vehicle capacity). It is also generally true that larger capacity transportation vehicles such as rail or water are less expensive per unit of weight than smaller capacity vehicles such as motor or air. Transportation economies of scale exist because fixed expenses associated with moving a load can be spread over the load’s weight. As such, a heavier load allows costs to be “spread out,” thereby decreasing costs per unit of weight. The fixed expenses include administrative costs of taking the transportation order, time to position the vehicle for loading or unloading, invoicing, and equipment cost. These costs are considered fixed because they do not vary with shipment volume.

Economy of distance

It refers to the characteristic that transportation cost per unit of distance decreases as distance increases. For example, a shipment of 800 miles will cost less than two shipments (of the same combined weight) of 400 miles. Transportation economy of distance is also referred to as the tapering principle since rates or charges taper with distance. The rationale for distance economies is similar to that for economies of scale. Specifically, the relatively fixed expense incurred to load and unload the vehicle must be spread over the variable expense per unit of distance. Longer distances allow the fixed expense to be spread over more miles, resulting in lower overall per mile charges.

The impact on growth of investment in transport infrastructure varies in the different stages of a country’s economic development. In low-income countries, investment in basic infrastructure provision can make a very large difference in access to education, jobs and services. As incomes rise, better transport services are needed to support the growth of business activities, exports and value creation, and the focus for infrastructure investment shifts to supporting these sectors of the economy. In more mature economies, priorities tend to shift towards addressing issues of congestion and bottlenecks in reasonably complete networks, the upgrade and maintenance of existing assets, and providing for technological innovation. Typically, the economic impact of transport infrastructure is more transformative at lower levels of development, and the incremental impact of new investment decreases at more advanced stages of development. Transport infrastructure plays a critical role in the transition from a middle- to high-income economy. Theoretical and empirical studies have underscored the positive relationship between high-quality infrastructure and economy-wide productivity. This relationship is underpinned by a number of economic mechanisms triggered by improvements in transport infrastructure, including the following:

• High-quality infrastructure is a precondition for the provision of efficient transport services for both freight and passenger movements, which in turn supports core economic activities and removes geographic barriers to competition.
• Well-functioning logistics systems facilitate trade through lowering access costs to international markets and by improving the competitiveness of domestic firms.
• Passenger transport connectivity enhances the productive capacity of the economy by widening and deepening labour markets and through agglomeration gains, facilitating industrial specialisation and enabling face-to-face interactions between businesses and specialised workers in high-value service sectors of the economy.
• Infrastructure can be an effective policy tool to address social and territorial imbalances by connecting rural and remote areas to larger centres of production and consumption, creating more economic opportunities for residents and reducing out-migration.

When new transportation infrastructure is built, companies take advantage of the new capacity by adjusting their logistics processes and supply chains to improve service and reduce costs. In the short term, they change purchasing and operations behavior. In the longer term, they make input substitutions and reconfigure production processes to take advantage of transportation system improvements. For example, new transportation connectors, gateways, and intermodal links allow shippers to source from more distant suppliers at a lower cost; to reduce transportation costs by forming “hub and spoke” networks that connect multiple distribution points through central operating hubs; and to reduce inventory by switching from bulk shipments to smaller, more frequent orders.

Here are some other ways shippers benefit from adjusting their supply chains in response to more efficient transportation systems:

Lower sourcing costs. Companies want to source from a more diverse base of lower-cost suppliers because it increases their margins. Often this involves offshore sourcing, a strategy that requires managing logistics and transportation over long distances. The lower transportation and logistics costs achieved through efficient freight flows can make it economically rewarding for companies to source from overseas suppliers. High transportation and logistics costs, caused in part by inadequate infrastructure (and the resulting congestion), can make it uneconomical for shippers to do so.

Lower transport costs and an efficient transportation network also help shippers source from fewer locations. Because it is more affordable to ship longer distances from each facility, they are able to reduce the number of plants they operate and thereby increase their return on assets.

Reduced fleet, warehousing, and inventory costs. Infrastructure improvements increase a transportation system’s capacity and reduce or eliminate congestion, thus improving the system’s reliability. This, in turn, reduces variability in transit times, making it possible to predict on-time performance with greater accuracy. As a result, shippers need fewer vehicles to maintain service levels on congested roadways and can downsize their fleets.

Improved reliability also allows shippers to consolidate warehouses that had been holding inventory to buffer against the congestion-related unreliability of inbound shipments. Moreover, when line-haul transportation flows freely (and therefore predictably), shippers can replace traditional warehouses with efficient cross-dock operations that keep inventory in transit instead of putting it in storage.

With better transit time visibility that is, information about where shipments and vehicles are located and when they will arrive at their destinations shippers can safely postpone final assembly or configuration. This production strategy allows them to not only decrease inventory but also increase customer satisfaction (and sales) by providing a broader product mix with shorter lead times.

Increased revenue. Perhaps the biggest albeit indirect supply chain benefit of a transportation infrastructure project is the potential enhancement of revenues through the adoption of new business models. Shippers can take the savings they realize as a result of infrastructure improvements and reinvest in more competitive pricing. Infrastructure improvements can also help companies reach a broader market, facilitating increased sales. Alternatively, they may decide to offer higher service levels (shorter order-to-delivery lead times) instead of, or in addition to, pocketing the savings.

It is not easy to quantify the relationship between infrastructure investment and increased revenues for shippers. There is no question, however, that such investments improve supply chain efficiency. When one considers that some of the most successful companies are those that use their supply chains as competitive weapons Zara, Wal-Mart, Dell Computer, and Amazon.com are just some that come to mind it seems likely that investing in transportation infrastructure will provide economic benefits, including sales growth, for the companies using that infrastructure.

Quantifying the benefits

Now that we have a sense of the types of supply chain benefits that can result from infrastructure improvements, we can quantify the impact of some of those benefits.

When the consulting and research firms Boston Strategies International (then Boston Logistics Group), Cambridge Systematics, and the Economic Development Research Group collaborated on a comprehensive economic study, Guide to Quantifying the Economic Impacts of Federal Investments in Large-Scale Freight Transportation Projects, for the United States Department of Transportation in 2006, they concluded that the supply chain benefits of an infrastructure investment that reduces direct transport costs by 10 percent has the potential to reduce a company’s operating cost by an additional 0.5 percent. This estimate was based on a sample of a wide variety of industries.

Since that report was published, however, a number of significant changes have pushed transportation and logistics costs even higher. We estimate that increases in the price of fuel have raised U.S. companies’ transportation costs from roughly 5 percent to about 6 percent of their total expenditures. Meanwhile, safety stocks increased from 20 percent to 25 percent of inventory as a result of more offshoring, which made it necessary for companies to carry more buffer stock. However, labor-cost inflation in China has cut into the savings that drew companies to source there. In our estimation, the cumulative effects of these and other relevant changes have increased the potential supply chain benefit of the scenario described above to 1.0 percent of operating costs. Note that this savings does not account for the additional revenue that can be derived from improved transportation infrastructure by allowing shippers and carriers to increase service levels, convert cost savings into price reductions, and build ondemand supply chains.

This revised estimate by type of infrastructure improvement and its resulting supply chain benefits. In this analysis, the hypothetical infrastructure investment reduced transportation costs by 10 percent. If a company responded to this improvement by optimizing its supply chain (through such steps as switching to more distant but lower-cost suppliers, consolidating plants, using cheaper transportation modes, and reducing shipment size), we believe that it could see an additional 0.5-percent reduction in operating costs. This estimation is based on Boston Strategies International’s strategic sourcing survey of 182 companies in 13 service and product industries, its analyses of low-cost country sourcing economics, and a major consumer goods company’s actual experience with plant consolidation. A transportation infrastructure investment that reduced transportation costs by a higher or lower percentage would yield higher or lower benefits.

Furthermore, if that infrastructure improvement increased capacity by 10 percent, we believe that the resulting fleet and warehouse rationalization and reduction in safety stock would amount to a 0.1-percent reduction in operating cost. This estimate is based on Boston Strategies’ analysis of the inventory of 29 companies in six different types of supply chains and inventory and fleet benchmarks from its analyses of four companies’ logistics networks; data from published sources such as CSCMP’s annual State of Logistics study; and fleet data collected by the American Trucking Associations.

Finally, if that infrastructure improvement increased in-transit visibility by 10 percent, and the company takes advantage of this to implement postponement, it will be able to reduce operating costs by at least 0.2 percent. This reduction in operating costs is based on reductions in stockouts experienced at retailers such as Wal-Mart and consumer packagedgoods suppliers such as Procter & Gamble.

While the aforementioned examples are from the United States, the same principles apply to major economies worldwide, especially large countries and economic areas where shippers can take advantage of hub-and-spoke infrastructure to design more economically efficient supply chains.

Why are supply chain benefits ignored?

Despite these demonstrated benefits, government transportation officials and their consultants rarely account for short-term and longterm supply chain effects in their financial evaluations of freight transportation investments. There are two main reasons why this is so.

First, whereas the infrastructure priority following World War II was to construct highways, today’s freight movements are substantially different. Typically, freight travel involves longer distances than passenger travel, and thus it involves more governmental jurisdictions in infrastructure decisions.

Furthermore, private sector stakeholders own many key rail and marine assets, and these companies do not have standard procedures for participating in the public funding and authorization process. In addition, many freight movements today are multimodal, and infrastructure decisions for this type of traffic require deeper transportation experience and more complex analytics than had ever been needed for passenger traffic infrastructure.

Second, decision makers don’t always have the time to consider every aspect of every potential infrastructure project, especially the smaller ones. Evaluations are complicated because there are many types of costs, benefits, and impacts involved. For example, there are at least eight major types of potential consequences of infrastructure projects:

• Environmental impacts
• Safety and security benefits
• Public operating and capital expense benefits
• Direct user or carrier benefits
• Direct shipper benefits (which include access to terminals and possibly more efficient modes of transportation that could save time and cost)
• Economic impact (jobs, industry and market growth)
• Supply chain benefits
• International economic benefits (through support of international trade)

The main purpose of packaging are to hold its contents securely to prevent leakage and breakage, to protect the foods from different hazard like germs, heat, moisture loss or moisture pick up, etc. To protect the contents while distribution, etc. For all types of packaging, there are different types of packages.

The different types of packages can be classified into two groups:

Retail containers: These containers protect food or the content from different damages and at the same time they advertise the product for retail sale. For example, glass bottles, sachets, over wraps, plastic bottles, metal cans, etc. They can be used for home storage also.

Shipping containers: These containers contain and protect food and other items during distribution and transport or any other marketing function. For example, sacks, stretch, or shrink wrapped containers, corrugated fire board cartons, drums, barrels, crates, and foil bags.

Industrial packaging materials are different from the traditional packaging materials. In addition to material, attractive design also preferred. Packaging comes in many different forms, based on technical requirements throughout the supply chain, as well as marketing needs (like brand identity or consumer information) and other criteria.

Packaging is very essential to every and to any type of industry. Whether you’re in the food business, clothes manufacturing or you’re in the technology industry, packaging is crucial.  It protects the product from any potential damage that will deem the product useless.  Thus a good packaging system is a must.  

Having a high-quality taping machine and a case erector will definitely aid in achieving the very essence of packaging that is to secure the product and to keep its original state or how it was after production. Packaging will only vary in every industry depending on how the product will be marketed. Different industries will definitely use different types of packaging but the objective will still remain constant. As most businessmen would always say packaging can be the difference in successfully shipping a product to the market in one piece or in pieces. Listed below are different types of packaging:

Paper & Board

Paper is widely used because it is low cost, holds its shape, and is easily decorated. Commercially-available paper is predominantly made from cellulose fibre from pulped wood, but can also be made from other sources such as cotton, straw, sisal and hemp. All are recyclable.

Paper and board are usually measured by weight or caliper. Material weighing less than 250 grams per square metre (gsm) is referred to as paper, and material at about 250 gsm is referred to as paperboard.

The fibres of machine-made paper run parallel to the length of the machine that produced it.  This machine or grain direction affects performance:

• Paper tears easiest along the fibres
• Folding is easiest along the fibres
• Fold endurance is greatest across the fibres
• Stiffness is greatest when flexed across the fibres

Paper can also be laminated to increase strength or provide barrier properties. The materials used can be gloss or matt finished or embossed. Other materials can be laminated onto paperboard e.g. foil or plastics.

Packaging produced using paper and board includes cartons, labels, leaflets, tubes, corrugated cases, rigid boxes and pulp packs.

Glass

Commercially-available glass is made from silica, sodium carbonate and calcium carbonate. Other compounds can be added to give colour, sparkle or heat shock resistance.

Glass is a popular and useful packaging material because it is:

• Inert
• Sterilisable
• Barrier to moisture and gas
• Pressure resistant to a degree
• Can be moulded into a variety of shapes
• Transparent making the product visible
• Glass is also highly recyclable

The most obvious drawback is fragility and the danger of broken glass. The transparency of glass can be a problem where the product is degraded by light.

Glass can be directly decorated but is most commonly labelled.

Metal

The metals used in packaging are predominantly tin-plate or aluminium and are used to make food and drink cans, aerosol cans, tubes, drums and slip or hinged lid DrumsDrumsboxes for gift sets and selections of confectionery or biscuits. All packs are recyclable.

Tin-plate is tin-plated steel and the most common material used in food cans.  Steel can also be used un-plated or with coatings.

Aluminium is used for drinks cans, closures, trays, tubs and tubes. As foil it can be used in multi-laminate constructions or as a blister pack or container seal.

Metal can be exploited to produce the following packaging characteristics:

• Strong and rigid
• Barrier to gas and moisture
• Pressure resistant
• Temperature and pressure resistant / tolerant
• Corrosion resistance via coatings
• Sterilisable
• Directly decorated or labelled

The limitations of metal packaging are in weight and shapes achievable, especially when compared to plastics.

Plastics

This is the most common packaging material and, at the same time, one of the most difficult to dispose of. The factors common to all plastics are that they are light, strong cheap to manufacture. It is for these reasons that they are used so much, as an alternative to cardboard glass packaging materials.

Plastics can be used as single materials or in combination. Their properties vary considerably but usually include:

• Lightweight
• Easily mouldable into almost limitless shapes
• Can produce rigid containers or flexible films
• Can be impact resistant
• Directly decorated or labelled
• Heat sealable

The relative disadvantages of plastics are typically polymer specific and the correct choice of polymer can to a practical degree mitigate the weakness.  Factors to consider are:

• No plastic provides absolute gas and moisture barrier
• Plastics melt at temperatures ranging from 650°C to 2,300°C
• Chemical resistance varies
• Additives in plastics can contaminate some products.

Common plastic polymers used in packaging:

• Polyethylene (PE)
  Low Density (LDPE): used for flexible tubes, film and some bottles. It has a low melting point and as a film relatively poor oxygen and moisture barrier.
  High Density (HDPE): widely used for bottles and tubs. Higher melting point but not ovenable. Reasonably wide chemical resistance which can be enhanced by fluorination. Not a sufficient gas barrier for carbonated drinks.
  Linear Low Density (LLDPE) Predominantly used as a film or as a sealing layer on multi-laminate materials for bottle seals, sachets, pouches, bags. Available in expanded form for wads.
• Polypropylene (PP)
  Widely used for closures for its ability to form a hinge which resists cracking and splitting.  Also used for dispensers, actuators, bottles, jars, cartons, trays and as film on its own or within laminations e.g. crisp bags or pouches. Available in expanded form for tubs and trays.
  Typically has higher melting point than PE so although still not “ovenable” it is better suited to hot fill products.  Resistant to a relatively wide range of chemicals.
• Polyethylene terephthalate (PET)
  Widely used for stretch blown bottles containing drinks, toiletries and food, it has excellent clarity. Also used for jars, tubes and trays. By far the best gas and moisture barrier of any packaging plastic used for containers it is ideal for carbonated beverages.  Its heat resistance makes it suitable for ovenable trays for ready meals.
• Polyvinyl chloride (PVC)
  Not widely used even though only has a third of its content is derived from oil. It still has a strong presence in vacuum formings used for inserts, clam packs and blister packs, due to its good production line performance. PVC films have excellent stretch and cling properties for hand wrapping fresh produce.
• Polyvinylidene chloride (PVDC)
  While normally only used in multi-layer films, PVDC has exceptional moisture and gas barrier properties.  Many pharmaceutical products could not be packed in blister strips without using PVDC as a layer in the blister film.
• Polystyrene (PS)
  Mainly seen in its expanded form as protective mouldings for fragile products. Also available as moulded toiletries/cosmetics containers (compacts), some bottles, jars and cups.  It has good chemical resistance and excellent clarity although it can be coloured.
• Laminates and Co-extrusions
  Laminates and co-extrusions are designed to benefit from the properties of two or more materials. Technically laminates are two materials bonded together and co-extrusions are multiple polymers extruded together from molten to form a single piece material.
  The following laminates are used widely from sachets through to form-fill-seal cartons such as Tetrapaks:
• Paper (or board) / Polythene (PE)
  Typically the paper or board gives rigidity and an easily decorated surface while the polythene gives heat-sealability and liquid containment. (But not a barrier in the true sense because water vapour can pass through PE.)
• Paper or PET / Aluminium foil / Polythene
  Again the polythene provides heat-sealability while the aluminium foil provides barrier properties, with the paper or PET on the outer surface allowing for decoration.  PET in particular gives a high gloss finish.
• PET/PE-EVOH (ethyl vinyl alcohol)-PE
  As above but for a clear high barrier laminate EVOH is used in place of foil.

Wood

Mostly used for pallets and crates (heavy duty products). Some lidded or hinged boxes are produced e.g. cigars, gifts, tea, cheese. High value spirits use wood and a few caps incorporate wood.

Bamboo

Bamboo is emerging as a packaging material. The illustration shows bamboo cushions for cradling Dell netbooks and laptops.

Warehouses usually perform the following functions:

(i) Procurement:

Procurement is the very first step in warehousing. Under this step, goods are received, unloaded and moved to pre-receipt inspection point and for accounting purpose.

(ii) Sorting:

Sorting is a step in which items are received in bulk are sorted out item-wise for its better storage and easy identification. Heavy and big sized items are kept separate.

(iii) Breaking (dividing):

Under breaking, items received in bulk are broken down into smaller portions and packed separately to cater the requirements of various retail outlets and customers.

(iv) Storage:

After sorting and dividing, items are stored with proper identification and location so as to take them out as and when required. Bin location cards are used for this purpose. Big retailers also use computers and merchandise based software packages to locate, identify and maintain accounting of the items.

(v) Making items available for consignment/shipment:

In warehouses, goods are stored for short period, as per the orders from retail outlets or customers, goods are dispatched to the destinations.

(vi) Material handling:

Material handling is a part of physical distribution system consisting of proper handling equipments used for loading, unloading, lifting and moving goods from one place to another.

(vii) Display:

In order to promote sales, some warehouses display products.

(viii) Inventory control:

It includes procuring goods and keeping proper records of the goods. Warehouses are also responsible for inspection, maintenance and accounting of goods to avoid them from theft and unforeseen mishaps. Proper accounting results in avoiding large fluctuations in inventory levels.

(ix) Processing:

Certain goods are not to be consumed in the form they are produced. It requires processing to make them consumable. For instance, fruits are ripened, timber is seasoned, wheat is crushed, paddy is polished and juices are filtered etc. Some warehouses also perform these activities as per the demand from the owners.

(x) Grading and branding:

Some warehouses perform the functions of grading and branding of goods on the behalf of the producers, wholesalers or the importer of goods. Besides usual activities, some warehouses provide mixing, blending and packaging assistance for the convenience of handling and sale.

(xi) Transportation:

In few cases, warehouses provide transportation facility to big depositors. It collects goods from the factories and sends these goods to the place of delivery on the request of the depositors.

Types of Warehouses

Private Warehouses:

The private warehouses are owned and operated by big manufacturers and merchants to fulfill their own storage needs. The goods manufactured or purchased by the owner of the warehouses have a limited value or utility as businessmen in general cannot make use of them because of the heavy investment required in the construction of a warehouse, some big business firms which need large storage capacity on a regular basis and who can afford money, construct and maintain their private warehouses. A big manufacturer or wholesaler may have a network of his own warehouses in different parts of the country.

Public Warehouses:

A public warehouse is a specialised business establishment that provides storage facilities to the general public for a certain charge. It may be owned and operated by an individual or a cooperative society. It has to work under a license from the government in accordance with the prescribed rules and regulations.

Public warehouses are very important in the marketing of agricultural products and therefore the government is encouraging the establishment of public warehouses in the cooperative sector. A public warehouse is also known as duty-paid warehouse.

Public warehouses are very useful to the business community. Most of the business enterprises cannot afford to maintain their own warehouses due to huge capital Investment. In many cases the storage facilities required by a business enterprise do not warrant the maintenance of a private warehouse. Such enterprises can meet their storage needs easily and economically by making use of the public warehouses, without heavy investment.

Public warehouses provide storage facilities to small manufacturers and traders at low cost. These warehouses are well constructed and guarded round the clock to ensure safe custody of goods. Public warehouses are generally located near the junctions of railways, highways and waterways.

They provide, therefore, excellent facilities for the easy receipt, despatch, loading and unloading of goods. They also use mechanical devices for the handling of heavy and bulky goods. A public warehouse enables a businessman to serve his customers quickly and economically by carrying regional stocks near the important trading centres or markets of two countries.

Public warehouses provide facilities for the inspection of goods by prospective buyers. They also permit packaging, grading and grading of goods. The public warehouses receipts are good collateral securities for borrowings.

Bonded Warehouses:

Bonded warehouses are licensed by the government to accept imported goods for storage until the payment of custom duty. They are located near the ports. These warehouses are either operated by the government or work under the control of custom authorities.

The warehouse is required to give an undertaking or ‘Bond’ that it will not allow the goods to be removed without the consent of the custom authorities. The goods are held in bond and cannot be withdrawn without paying the custom duty. The goods stored in bonded warehouses cannot be interfered by the owner without the permission of customs authorities. Hence the name bonded warehouse.

Bonded warehouses are very helpful to importers and exporters. If an importer is unable or unwilling to pay customs duty immediately after the arrival of goods he can store the goods in a bonded warehouse. He can withdraw the goods in installments by paying the customs duty proportionately.

In case he wishes to export the goods, he need not pay customs duty. Moreover, a bonded warehouse provides all services which are provided by public warehouses. Goods lying in a bonded warehouse can be packaged, graded and branded for the purpose of sale.

Co-operative Warehouses:

As the very name implies, these warehouses are owned, managed and controlled by co-operative societies. These societies provide storage facilities on the most economical rates to their members only. The basic purpose to run such warehouses is not to earn profit but to help their members.

Distribution Centres:

This type of storage facility usually has large space, which enables fast movement of large quantities of stores for short period. While, on the other hand, conventional warehouses hold goods for long time, say 2 months or 1 year.

These warehouses basically by nature, serve as points in the distribution system at which goods are procured from different suppliers and quickly transferred to various customers. These centers provide computerized control, which make movement of goods quick, fast and reliable.

In order to minimize delivery time, these storage facilities are found close to transportation centers. In some cases, distribution centers handle the goods for less than a day period such as in case of fast foods or perishable products. Most of the goods enter in the early morning (dawn time) and is transferred/distributed by the evening time.

Once it has been determined to use a warehouse, the next step is designing it. Whether the warehouse is a small manual operation or a large automated facility, the following three principles are relevant:

• Design criteria
• Handling technology
• Storage plan

Design Criteria

Warehouse design criteria address physical facility characteristics and product movement. Three factors to be considered in the design process are:
The number of stories in the facility: 

• The ideal warehouse design is limited to a single story so that product does not have to be moved up and down. 
• The use of elevators to move product from one floor to the next requires time and energy. 
• The elevator is also often a bottleneck in product flow since many material handlers are usually competing for a limited number of elevators. 
• While it is not always possible, particularly in central business districts where land is restricted or expensive, warehouses should be limited to a single story.

Height utilization:

• Regardless of facility size, the design should maximize the usage of the available cubic space by allowing for the greatest use of height on each floor. 
• Most warehouses have 20- to 30-foot ceilings (1 foot = 12 inch; 1 inch = 2.54 cm), although modern automated and high-rise facilities can effectively use ceiling heights up to 100 feet. 
• Through the use of racking or other hardware, it should be possible to store products up to the building’s ceiling. 
• Maximum effective warehouse height is limited by the safe lifting capabilities of material-handling equipment, such as forklifts.

Product flow:

• Warehouse design should also allow for straight product flow through the facility whether items are stored or not. 
• In general, this means that product should be received at one end of the building, stored in the middle, and then shipped from the other end. 
• Straight-line product flow minimizes congestion and confusion.

Handling technology

The second principle focuses on the effectiveness and efficiency of material-handling technology.  The elements of this principle concern, i.e.:

Movement continuity: 

• Movement continuity means that it is better for a material handler or piece of handling equipment to make a longer move than to have a number of handlers make numerous, individual, short segments of the same move. 
• Exchanging the product between handlers or moving it from one piece of equipment to another wastes time and increases the potential for damage. 
• Thus, as a general rule, fewer longer movements in the warehouse are preferred.

Movement scale economies:

• Movement scale economies imply that all warehouse activities should handle or move the largest quantities possible. 
• Instead of moving individual cases, warehouse activities should be designed to move groups of cases such as pallets or containers. 
• This grouping or batching might mean that multiple products or orders must be moved or selected at the same time. 
• While this might increase the complexity of an individual’s activities since multiple products or orders must be considered, the principle reduces the number of activities and the resulting cost.

Storage Plan

According to the third principle, a warehouse design should consider product characteristics, particularly those pertaining to volume, weight, and storage. Product volume is the major concern when defining a warehouse storage plan. High-volume sales or throughput product should be stored in a location that minimizes the distance it is moved, such as near primary aisles and in low storage racks. Such a location minimizes travel distance and the need for extended lifting. Conversely, low-volume product can be assigned locations that are distant from primary aisles or higher up in storage racks. 

Similarly, the plan should include a specific strategy for products dependent on weight and storage characteristics. Relatively heavy items should be assigned to locations low to the ground to minimize the effort and risk of heavy lifting. Bulky or low-density products require extensive storage volume, so open floor space or high-level racks can be used for them. On the other hand, smaller items may require storage shelves or drawers. The integrated storage plan must consider and address the specific characteristics of each product.