Communication Services, Transportation and Warehousing

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Concept of Logistics and its Components

Businesses are a part of society, and they cannot function on their own. They need support from other elements of an economy to work properly. Two such aspects of any economy that affects a company’s functionality are its transportation system and warehousing. Transportation helps companies to move their resources and products from one point to another. At the same time, warehousing facilities allow them to stock their inventory. To make the transportation of products and their storage efficient, the concept and ideas of logistics are implemented.


What is Logistics?

Logistics is the overall process of managing resources. It includes moving and storing them. The process is not simple. The idea of logistics is to create a distribution channel from the factory to a customer, but in a cost-effective manner that will be time-saving as well. Therefore, this process is vast and complicated and includes various components. This organized concept primarily came into the military for the movement of their materials and personnel. However, in the modern context, it simply means moving goods from one place to another within a supply chain.

The concept of logistics includes two major components, transportation and warehousing.


Components of Logistics

  1. Transportation

This component of logistics deals with transportation of products, be it raw materials or finished articles. The focus here is to optimize this process via effective planning and executing them accordingly.

Transportation is a multimodal approach that includes roads, rails, sea, and ocean. With the help of an excellent transportation strategy, delivering goods from a warehouse to retail outlets to a customer is not an issue. However, this process is a lot more complex and includes planning and optimizing routes, modes of carrying, order management, freight audit, and payment. This element of logistics also includes yard management, securing warehouse transportation, etc. Additionally, carrier management is a part of this component as well. Since the prices of carriers vary regularly, one needs to keep a tab on them as well while preparing a transportation strategy.

Since businesses are expanding fast, transportation services have to keep up as well. Nonetheless, the infrastructure of the country is a factor here. In case the roads, railways, waterways, and airports are not in good condition, it will be hard to optimize this process.

  1. Warehousing or Storing

When an item is ready to leave the factory floor, it needs a place to stay until dispatched. This is where the concept of warehousing comes into effect. A scientific and efficient storing of goods helps to keep their integrity intact. Also, it reduces the costs regarding damages.

Warehousing is not just storing goods in a place; it is a hub that controls a set of different elements. One such element is inventory management. It keeps a tab on the stock and helps manufacturing units by serving them raw materials in need. It also keeps them updated about the status of finished articles. This process helps companies to evaluate whether to speed up production to meet sudden demand, or not.

Typically, companies have their warehouse, or they can rent or lease them to continue their operations.

Apart from transportation and warehousing, other components of logistics include –

  • Fleet management

  • Materials handling

  • Order fulfillment

  • Demand planning

Along with the main components, there are auxiliary services in logistics that play a vital role as well. Such services have an impact on the entire process and play a major role in the completion of it. One such example is communication services. 

  1. Communication Services

The modern logistical process relies heavily on communication, and without it, the process will fall apart. Nowadays transportation of products includes heavy use of telecom services, which include the use of mobile phones, and the internet.

Instead of sending a receipt via postal services, companies can now use e-mail to send them directly to the receivers within a few seconds. This has eliminated the risk of misplacement of essential documents. Furthermore, the use of mobile phones and GPS services has helped companies to track their shipment. The positive effects of communication services are not limited to logistics. A company needs it to stay in touch with its customers, employees, and every other aspect connected to it.

In a nutshell, modern communication technologies have transformed the way of doing business. However, for any service to make an impact, it must be quick and inexpensive. The rapid growth of internet and telecom services has made it highly effective.

Transportation of products within the stipulated time is necessary to keep the demand and supply model intact. In this regard, logistics plays an important role. It strategizes and puts everything in place for this process to be completed without any hiccups.

Vedantu helps students to learn more about this concept with study materials and online classes. Furthermore, the doubt clearing sessions with subject experts help individuals to get their doubts cleared and aid their preparation.

FAQ (Frequently Asked Questions)

1. What is the role of transportation in logistics?

Transportation plays a crucial role in logistics. It helps companies to move their goods around the world, and get the raw materials they need for production. There are four modes of transportation, road, rail, water, and air. Each of them has its own set of benefits and drawbacks. 

A successful transportation strategy can help companies to use the benefits of these modes of transportation to their advantage. They can plan and streamline this process accordingly to deliver a product quickly and in a cost-efficient way.

3. What is the function of a warehouse? What are its types?

The function of a warehouse is to store products. Companies use such facilities to store their raw materials as well as finished articles. However, this process is scientific and includes a well laid-out system. Warehouses help companies to keep their products in a safe place and systematically manage inventory. There are various types of warehouses, but based on the ownership they are of 3 types, private, public, and bonded warehouse.

3. What is business communication?

Business communication reflects the ways a company stays in touch with its employees and customers. An effective communication strategy helps firms to eliminate any gap in this process and instances of misunderstanding. Hence, it increases productivity and creates a positive working environment within the company. Additionally, it also allows firms to serve their customers better and keep them satisfied.