Element Of Logistics And Transportation

Introduction Logistic management plays an important role in automobile manufacturing industry. Toyota is one of the successful companies and created a profitable margin by controlling cost through logistic management over the years. Logistic is defined as a business planning framework for the management of material, service information and capital flows. It includes the increasingly complex information, communication and control systems required in today’s business environment. – (Logistix Partners Oy, Helsinki, FI, 1996) Logistic consist of seven Rs which are right cost, right place, right time, right quantity, right condition, right product and right customer. There are eight activities to be discussed of it importance. Production Planning Production planning is one of the crucial activities in logistic. It affects the budget of procurement directly which then the cost. Toyota had adopted the principles of Henry Ford which is “doing it right at the first time” and came out with Toyota Production System (TPS) which is a better system. After decades of applying TPS, in 2007, Toyota had become the best auto seller in U.S. Any wastes while production will cause a significant lost to the company. For example, overproduction which is producing more than immediate needs, defects which result particular product to be reproduce, exceed of inventory which is exceeded requirement in raw material or finished goods to meet customer needs and over processing which is using extra energy or activity to produce the product. Over production is delivering the product before they are needed and caused large volume fluctuation that distorted true demand. With the computer technology nowadays, stock check can be done by weekly basis and stock replenishment orders are to be received throughout the day compare to olden days where stock check were done on monthly basis and with man power. This has showed the application of latest technology in assisting control or plan production accurately in order to control cost efficiently. Storage and Warehouse Warehouse is the place where raw material and finished goods are to be stored in. Warehouse size has to suit the size of a company to prevent underused of the asset. Goods are store in warehouse before they are moved to next place. Features of warehouse are to hold stocks which acts as buffer against fluctuating demand, hold stocks so that more economic production runs can take place and enable materials to be held in case shortage of supply. With the movement more than 8million parts and accessories every month in U.S. for Toyota company, it has resulted two distribution centers to be built in California and another in Kentucky to fulfill the requirement in that region. About thirty years ago, Toyota had eight months supply of inventory in U.S. regional parts distribution center. But for recent, due to the more frequent movement of inventory, the level has gone down to just one month supply. It has

reduced the storing spaces and enables to work more efficiently in shorter period. In other word, warehouse with application of latest technology is able to reduce the investment of warehouses but able to perform more efficiently with less expenses. Besides, warehouse is to store inventory such as finished goods and raw material to enable them to perform optimally although after a long period of storing. Warehouse has the function of keeping inventory in a safe and optimum mode to eliminate unnecessary wastes that can be prevent. Procurement Procurement or purchasing is an important activity as it will affect the wastage or expenses of a company thoroughly and also affect the production directly. Procurement is the inbound activity in a supply chain where inbound is the activity of purchasing raw material. For example, Toyota has a wide range of raw material such as engine compartment, car airconditioning, electronic parts and etc to complete the assembly of finished goods. Procurement also included the purchase of warehouse handling equipments, necessary parts and material. Equipments are such as forklift trucks. Suppliers are from all over the world to obtain the quality of item at a low price and in a timely manner. And also Toyota has been cooperated with suppliers to promote environmental preservation to meet other demand of society. Procurement is normally from local supplier in order to provide an efficient performance and also contribute to the local community. Packaging Packaging is the activity where raw material or finished goods are to be protected while damages can occur during transportation or handling and storing in warehouse. Other than that, packaging can differentiate the goods by labeling and also reduce the error of presenting the incorrect goods to customer. The mispresentation will lead to a poor customer service. Different inventory has different material to protect or wrap. Shrink-wrap is the most common material to be used in packaging. For Toyota, during transportation of diesel engines, ORBIS that is Toyota preferred outsourced packaging supplier, has produced a uniquely profiled reusable plastic ‘engine cell’ to house the engines securely within the metal rack. This has successfully created a container that was robust and durable as well as economical to use in long haul journeys to assembly plants as far as Turkey from Japan. This packaging is providing the unbeatable protection for critical high value components where loss and damage can have unacceptable time and cost consequences for Toyota’s business. Packaging is important in the fact that securing the originality and perceived functions of products when present to customers. The way of packaging will also determine the quantity of goods to be transported in a time. Proper packaging will not only reduce the rate of spoilage but also allows a larger quantity of goods to be transported in one time.

Materials Handling Material handling will affect company business in the way of efficiency and spoilage rate. Moving goods in warehouse is a very time-consuming progress and it determines the levels of customer service. Time is very important to all. If any serious delays or waiting, it might cause the company to lost a significant market share. There are material handling equipments can be use. The most common equipment is forklift truck, which commonly found in warehouses or docks. Forklift truck has a range of sizes for different purposes. It can save time by loading or unloading in a bulk and also convenient to use. Then, pallet is also one kind of material handling equipment and is use to enhance the activity of handling material. Pallet provides an organized form of goods for more efficient handling, as it is able to hold a large quantity of goods in a time. This can help to reduce dependent on manpower then save cost indirectly for long-term period. The efficient handling will enable the company to focus on monitoring the fleet operations. Furthermore, improper handling of material will then cause damages to the goods. A well management of material handling can help company to save cost in term of manpower and also minimize error or reduce spoilage rate when presenting to customers. Transportation Transportation plays an important roles in logistic as it is the only activities that transporting goods from one place to another. It has to be a proactive management to assure every movement has worth what it cost and most important is to get the goods reach on the right time and the right place. Transportation modes consist of air, land and sea mode. Normally various modes will use together to complete a transportation. For example, Toyota has many distribution centers (DC) around the world but for most DC in underdevelopment country like South Africa, they will need to import parts like engine from Japan or U.S. or Europe. In this case, Toyota has to transport the engines with container by using truck and sea carrier to achieve the goal within the cost allowed. This will allow Toyota to reach their customer in the acceptable time. But for some cases, there are shipper using the air mode to transport. This is the most uneconomical way to transport due to the high cost compare to others modes but it gives the best capability and security as it can reach customer within 24 hours around the world. Then, cost of transportation has the major part of the cost calculating. It shows the importance of negotiating the cost of transportation with carriers to obtain the lowest rate but best quality of services. However, timely manner is the most important issue among transportation. In cases of Toyota delivering parts and units to St. Petersburg, Russia, Toyota has been using sea mode previously but in recent, they are gradually curtail sea mode to start using the Russian Transsiberian Railway (Transsib). Although sea mode is the cheapest way but due to the 60 days of duration, they preferred to use Transsib to transport where it is three times quicker – in 20 days. Transportation activity requires consideration not only cost but also other factors like carriers’ capability, accessibility, reliability and security provided.

Customer Service In logistics, customer service applied in the place where customers are to be. Customer service is the key link between logistic and marketing. It requires a more dynamic, proactive approach that recognized the value-added role of logistic supply chains in creating and sustaining competitive advantage and providing win-win outcomes. There are few elements such as time, dependability, communications and convenience to determine standards of customer service provided. Customers are the purchaser of companies and these companies need to maintain the relationship to obtain sales after sales. Value added on services or product may create a partnership with the customers where customers found the service or product provided is suitable for them. This has resulted locking-up customers in the form of relationship. Customer service can be considered as the feedback of a company performance where with customer service, company can prevent stock-out, reduce order cycle, and upgrade distribution system in flexibility to meet unexpected needs and response time and quality of service after sales. Stock-out will possible outcome delaying customer, reprocess order, loss of sales and lost of customers. This will significantly affects the business of a company. Toyota has a wellmanaged customer service where they provide 24hours of calling center to assist the customers who have problems with their vehicle during a journey. Besides, they also promised to deliver parts and accessories within a week to the smaller distribution centers around the world. It has brought in more business to Toyota with maintaining the excellent relationship with customers.

Order Fulfillment Order fulfillment refers to processing order of customers efficiently to deliver the goods to customers in right time, right price, right quantity, right condition, right product and also right customer. Back order will occur in the case where orders are not completed in the first time. This will cause to reprocess order including rearrangement of transportation to the same customer. It will add on the cost. Any delay between the activities will probably cause the customer order information to be delayed too. Stock-out will also cause order cannot be fulfilled and back orders. It will then have the chain reaction where might loss of sales and also loss of customer. To fulfill customers’ orders, it will need a smooth linkage between logistics activities. For example, Toyota has realized because the separation of production, warehousing and transportation activities each of these functions are often unaware of the schedule for the subsequent process. Then, by coordinating production and shipping operations, Toyota can avoid the shipment delaying and then fulfill customers’ order efficiently. Conclusion

In conclusion, every activity plays an important role in logistics management. Each activity is link to each other to create an optimum performance and well-managed will have cost controlled efficiently. Logistics management is always achieving the seven R’s to bring the biggest profit to company. Logistics has the function not only controlling cost but also managing the production line and maintaining relationship with customers to take care of the business. Basically logistics have to work proactively to ensure the operation of company running smoothly. Therefore, logistics management is all about activities of managing from inbound to outbound in supply chain. With the successful facts from Toyota Company, making larger profit than other manufacturer by focusing in logistics management, this has proven logistics management is playing a big part in a company where it can efficiently brought in profit to company.