A. Product Movement
-Primary function is the movement up and down the value chain.
-As transportation uses temporal, financial and environmental resources, the movement of materials should take place only when it enhances the product value.
(a)Uses temporal resources because the product is inaccessible while in transit.
-Due to JIT strategies transit inventories are becoming more significant thereby reducing manufacturing and distribution centre inventories.
(b) Expenses incurred internally for private fleet of vehicles or externally for commercial or public transportation constitute financial resources.
(c) Transportation consumes fuel and oil and also creates environmental expenses through congestion, air pollution and noise pollution.
B. Product Storage
-Temporary storage through vehicles becomes expensive as in-transit storage is required to be moved again in a short duration of time.
-Sometimes temporary storage becomes advantageous as the cost of unloading and reloading the product in a warehouse may exceed the daily charge of storage in transportation vehicles.
-Many times where the warehouse space is limited, utilizing transportation vehicles becomes a viable option.
•The options available to a transporter in case of warehouse space constraints are
(a)Instruct driver to take a circuitous or indirect route to its destination, as the transit time would be greater as compared to direct route. Thus transport vehicle is used as temporary storage option.
(b)Change the shipment destination i.e. temporary storage is achieved through diversion.
-For instance, product that is, say, scheduled initially from Mumbai to Hyderabad gets diverted mid way to Vishakapatnam (Vizag) as Vizag warehouse may be in greater need of product and has the storage capacity.
-Traditionally, the telephone was used to direct diversion but nowadays satellite communications between headquarters and vehicle handle such tasks more efficiently.
-Though product storage in vehicles can be costly, it can be justified from a total cost perspective when loading, unloading costs,or capacity constraints are considered.
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