Transportation & Warehousing

Introduction

Warehousing or storage refers to the holding and preservation of goods until they are dispatched to the consumers. Purpose of warehousing is for the protection of the quality and quantity of the stored produce. The need for a warehouse arises due to the time gap between production and consumption of products. Warehousing and warehouse management are part of a logistics management system, which is itself a component in supply chain management. Although viewed by some as simply a place to store finished goods, inbound functions that prepare items for storage and outbound functions that consolidate, pack and ship orders provide important economic and service benefits to both the business and its customers.

Transportation is the activity that physically connects the business to its supply chain partners, such as suppliers and customers, and is a major influence on the customer’s satisfaction with the company. India’s transport sector is large and diverse; it caters to the needs of 1.1 billion people. Among the services sectors, the key indicators of railways, namely, the net tonne kilometres have shown growth rate of 1.8 in 2013-14. In case of other transport sectors, passengers handled by the civil aviation registered growth rates of 3.4 per cent, while the sales of commercial vehicles, cargo handled at major ports, cargo handled by the civil aviation registered the decline of 8.1 percent, 1.0 percent and 2.1 percent respectively during 2013-14 over the year 2012-13.

Most businesses manage both inbound and outbound logistics. Inbound logistics involves the procurement of materials and goods from supplier locations. Outbound logistics involves the distribution of materials and goods to customer locations. Logistics is a logical extension of transportation and its related areas to achieve an efficient and effective goods distribution system. It encompasses the activities of inventory management, order processing, warehouse and materials handling and physical distribution. The annual logistics cost in India is valued at Rs. 6,750 billion (US$ 135 billion) and it is growing at 8-10% annually. Logistics sector in India is expected to touch US$200 billion by 2020. The cost of logistics in India is valued at 13 – 14% of GDP where as in developed nations the cost is in the range of 7-8% of their GDP.