Direct Logistics Activities
Storage: A second area, which has a trade-off relationship with transportation, is storage or in some circumstances called warehousing. It involves two separate but closely related activities i.e. inventory management and warehousing. A direct relationship exist between transportation and the level of inventory and the number of warehouses required. For instance, if firms use a relatively slow means of transport, they usually have to keep higher inventory levels and usually have more warehousing space for this inventory. They may examine the possibility of using a faster mode of transport to eliminate some of these warehouses and the inventory stored therein.
Some important decisions are related to storage activities (inventory and warehousing), which includes how many warehouses, how much inventory, where to locate the warehouses, the size of the warehouses, and so on. Because decisions related to transportation affect storage-related decisions, a decision framework to examine the trade-offs related to the various alternatives is essential to optimize the overall logistics systems.
Packaging: The third most important area to logistics is industrial packaging (exterior). The type of transportation selected affects packaging requirements both for moving the finished goods to the market and for the inbound materials. For instance, rail or water transportation usually requires additional packaging expenditures because of the greater possibilities of logistical damages. In analysing trade-offs for proposed changes in transportation agencies, logistics personnel generally examine how the change will influence packaging costs. In many circumstances, changing to a premium transportation means, such as air will reduce packaging costs because there is less risk of damage. In fact, some items may not be packaged when shipped via air freight, for instance, clothing is frequently shipped with hangers.
Material Handling: The fourth most important part of the logistics system is materials handling, which is also of interest to other areas in the typical manufacturing organization. Materials handling is important to efficient warehouse operation. Logistics managers are concerned with the movement of the goods into a warehouse, the placement of goods into the warehouse, the movement from storage to order picking areas and eventually dock areas for transportation out of the warehouse.
Materials handling is usually connected with mechanical equipment for short distance movement like conveyors, forklifts, reach trucks, powered pallet trucks, overhead cranes and containers. Production managers may want a particular pallet or container type that is not compatible with logistics warehouse activities. Therefore, the material handling designs must be coordinated in order to ensure congruity between the kind of equipment being used. In addition, the company may find it economical to use the same kind of forklifts or powered pallet trucks in the plants and the warehouse as well.
