Introduction to Logistics - September 7th, 2010

“The service of providing the right resources at the right time and right place for efficient and
effective performance of a goal-oriented activity, including consumption is called as logistics.”

In simple words, “Logistics is the process of anticipating customer needs and wants; acquiring
the capital, materials, people, technologies, and information necessary to meet those needs and
wants; optimizing the goods- or service-producing network to fulfill customer requests; and
utilizing the network to fulfill customer requests in timely way.”

Logistics is the support element of the enterprise. It helps in managing the movement and storage
of:

 Material into the enterprise.

 Goods in the enterprise.

 Finished goods from the enterprise.

Its focus should be upon its inbound logistics system (movement of material within the
organization) and its outbound logistics system (meeting the requirements of its customers). The
definition above accurately defines the logistics process but is too restrictive under the modern
concept of logistics. Logistics, as a support element of the enterprise, incorporates activities
beyond those identified in the preceding definition.

Consider an example, the enterprise that introduces a new product or a significant change in the
existing product. Support of the new product or feature may require training, the development of
technical publications and the acquisition of spare parts and special tools or repair (test)
equipment. These items also belong under the umbrella of logistics; thus our definition must be
revised to include them.
This is the simplified definition of logistics, which states logistics objective clearly:

“Getting the right item to the right customer, in the right quantity, in the right condition, at the
right place, at the right time and at the right cost.”

The right item in the right quantity here prefers to the raw material, finished goods, trained
personnel, spare parts or service created, required or procured by a firm based on ordered or
forecasted customer (whether internal or external) requirements. This indicates the following role
for logistics:

(1)Accurate interpretation of customer requirements or orders or marketing strategy, as also

providing manufacturing operations support.

The right customer at the right time and the right place refers to the requirement of:
(2)Precise execution of the process of reaching the product from the point of origin to the point
of requirement/consumption.

The right condition concerns:

(3)Suitable care of the product from the point of origin to the point of requirement consumption
in order to avoid damage and/or deterioratio

At the right cost indicates:

(4)Efficiency to ensure the lowest cost during execution.

Hence, logistics is the process of accurately interpreting customer requirements or orders or

marketing strategy, as also providing manufacturing operations support, with precise execution
of the process of reaching the product material from the point of origin to the point of
requirement consumption ensuring suitable care of the product material throughout to avoid
damage deterioration, continuously ensuring the lowest possible cost throughout the process.

Logistics is concerned with getting products and services where they are needed when they are
desired. The responsibility of logistics is the temporal and spatial positioning of raw materials,
work in progress, and finished inventories when and where required. Hence, one of the basic
functions of logistics is the provision of availability.

FUNCTIONS OF LOGISTICS

 Facility of location & Network design:

Facility of location & network design refers to the design of the geographical structure of
logistics facilities from where logistics operations are carried out. The number, size, location of
logistics facilities like manufacturing plants, warehouse, cross dock operation, wholesaler &
retail outlets affects to the aspects of other logistical function. This activity is necessary location
& network structure.

 Information management:

It involves ensuring fast & accurate information for efficient & effective performance of
logistical activities. Information also threads together all the activities in to an integrated process.
Information gives a link of many activities such as order processing, Inventory management,
forecasting, production scheduling. Many firms developed growing interest in logistics because
of 1) Advancement in information technology 2) Growing recognition of system approach3)
Higher emphases on customer service4) Total cost concept & etc
 Transportation management:

Transportation enables the means of transfer of inventory given the location & network
framework developed earlier. This involves the selecting the modes of transportation like Air,
Water, Rail, Road & the decisions relating to outsourcing this activities to other agencies.
Selection of the modes of transportation depends on the following factors: A) Speed & reliability
B) loss& damage C) Inventories D) Freight rate E) Market competitiveness F) Company policy
& customer influence G) External market influences. The aspects of transportation management
is an essential factor 1) Facility Location 2) Transportation cost3) consistency.

 Inventory management:

Inventory management concerns with the decision regarding the amount of type & material
stored at various facility location. These decisions will be affected by the decision made under
the function of facility location & transportation e.g.: the location of warehouse & retail
outlets.& modes of transport whether fast or slow will affect the quantity type of material to be
stored at facilities location.

 Warehousing management:

Warehousing provide the adequate space for the inventory at the right location, unpack aging,
sorting, & consolidation of material & modification of material elements if required .the role of
warehouse provide the economic & service benefit to the logistical system. Economic benefits: -
movement consolidation, break bulk, cross-dock, processing /postpone movement & stock
piling. Service benefits are spot stocking, assortments, mixing & production supports.

 Material Handling system:

Material handling activities are required while unloading, moving & loading material at
facilities. These include the variety of mechanical equipment like Conveyors, Forklift, Truck,
and Crane. One of the considerations of effective material handling is the minimization of
product damage during handling.

 Packaging:

It helps in achieving the objective of maintaining the material in the right condition through the
logistics process. Packaging decision is impacted by requirement of other activities like
protection & facilitation during transportation, material handing & storage as so ultimately
customer requirements.
THREE CATEGORIES OF LOGISTICS

Integrated logistics support, when properly understood and applied, can provide the means to
identify and resolve many logistic problems, frequently before they developed. Logistics, in the
broadest sense of the word, can be considered as scope of activity comprised of three major areas
or subsets.

(1) Subsistence logistics,

(2) Operation logistics, and
(3) System logistics.

Subsistence logistics is concerned with the basic necessities of food, clothing, and shelter .At any
given time, within any given environment, subsistence logistics is relatively stable and
predictable. Men and women, as rational begings, know within very narrow limits what is
needed, how much is needed, where it is needed, and when it is needed. Subsistence logistics is
primary activity of primitive societies and is an essential ingredient of an industrial society. It
provides foundation of operations logistics.

Operation logistics extends beyond the bare necessities by incorporating systems that produce
the luxuries or niceties of life. By definition, operations logistics incorporates the raw material
required by the enterprise in the production. This category of logistics is also relatively constant
and predictable. All enterprise, from the automobile manufacturer to the fast food chain store can
determine the quality of materials and the resources needed for its production with high degree
of accuracy. Operation logistic can not, however, determine when a component of the enterprise
is going to break down ,what will be required to repair it ,or the duration activity .Operation
logistics, which is concerned with the movement an storage of material in to ,through ,and out of
enterprise ,provide the foundation for system logistics .

System logistics incorporates the resources required in keeping a system in operating condition.
These resources, or logistics elements, are spares and repair part, personnel and training,
technical publication, test and support equipment, and facilities. A well designed integration of
these logistics elements is critical when, for eg; repair instructions describe one methods of
repair and tools are developed for another method . Thus repair may be impossible

VALUE-ADDED ROLE OF LOGISTICS

Four principal types of economic utility add value to a product or service. Included are form,
time, place, and possession. Generally, we credit manufacturing activities with providing form
utility, logistics activities with time and place utility, and marketing activities with possession
utility. We discuss each briefly.

 Form Utility: Form utility refers to the value added to goods through a manufacturing,
production, or assembly process. For example, form utility results when raw materials are
combined in some predetermined manner to make a finished product. This is the case, for
example, when a bottling firm adds together syrup, water, and carbonation to make a soft drink.
This simple process of adding the raw materials together to produce the soft drink presents a
change in production form that adds value to the product.

 Place Utility: Logistics provides place utility by moving goods from production surplus points
to points where demand exists. Logistics extends the physical boundaries of the market area, thus
adding economic value to the goods. This addition to the economic value of goods or services is
known as place utility. Logistics creates place utility primarily through transportation. For
example, moving farm produce by rail or truck from farm areas to markets where consumers
need this produce creates place utility. The same is also true when steel is moved to a plant
where the steel is used to make another product. The market boundary extension added by place
utility increases competition, which usually leads to lower prices and increased product
availability.

 Time Utility: Not only must goods and services be available where consumers need them, but
they must also be at that point when customers demand them. This is called time utility, or the
economic value added to a good or service by having it at a demand point at a specific time.
Logistics creates time utility through proper inventory maintenance and the strategic location of
goods and services. For example, logistics creates time utility by having heavily advertised
products.

To some extent, transportation may create time utility by moving something more quickly to a
point of demand. Time utility is much more important today because of the emphasis upon
reducing lead time and minimizing inventory levels through logistics-related strategies such as
JIT inventory control.

 Possession Utility. Possession utility is primarily created through the basic marketing activities
related to the promotion of products or services. We may define promotion as the effort, through
direct and indirect contact with the customer, to increase the desire to possess a good or to
benefit from a service. The role of logistics in the economy depends upon the existence of
possession utility, for time or place utility make sense only if demand for the product or service
exists. It is also true that marketing depends upon logistics, since possession utility cannot be
acted upon unless time and place utility are provided. Order fulfillment is the critical and often
final step for meeting customer requirements.

WAREHOUSE MANAGEMENT
Introduction to Warehousing
A warehouse is a location with adequate facilities where volume shipment are received from a
production centre, broken down, reassembled into combinations representing a particular order or
orders, and shipped to the customer’s location or locations.

The concept of distribution warehouse or a distribution centre is vastly different from the earlier
concept of a godown for storage. The godown is merely a dumping place. Godowns are maintained
merely for storage of surplus goods. The earlier concept, which led to the establishment of warehouses,
was based on the need for ensuring a continuous, uninterrupted supply of goods in the market area for
the following:
(1) Ensuring protection against delays and uncertainties in transportation arising from a variety of
factors.
(2) Eliminating lack of sophistication in production control and consequent uncertainties in the
availability of product at the desired time and place.
(3) Providing for adjustment between the time of production and the time of use because production
and use can be seldom synchronized.

From the foregoing, it is obvious that earlier a warehouse was considered a necessary evil which was to
be toletated, but which did little to provide a differential advantage. The modern distribution centre or
distribution warehouse is a pivot in the physical distribution system. According to this system,
movement is the primary objective of a warehouse. As per this new concept, a warehouse is a location
where inputs (incoming factory shipment) are converted into outputs (outward shipments representing
orders of customers).this conversion takes place without consuming too much time. The goods may be
received over a period of time from different places, combined or broken down into each individual
customer’s orders, and dispatched to the next point in the distribution channel without their coming to
rest within the confines of the distribution centre. Because of the usual and often inevitable lack of
coordination between inbound and outbound goods, storage facilities of a temporary nature must be
provided for in the scheme.

Characteristics of warehouse activity

The warehouse activity work is “non-value adding” work. It is pointed out for better profits the stores
should not exist. Also the material movement should be reduced to zero. These are “non-value adding”
activities.

This is because “value” is what the customer is prepared to pay for. A customer is willing to pay for is the
physical conversion/ processing of material into product. The configuration of the product forms only
one element of what a customer is willing to pay for. Also customer needs other points such as
following.
 The product should be available,
 At a required location
 At required time.

Warehouse provides these values. These are apart from value added due to conversion. For that reason
management must pay the maximum attention to the stocking and handling related activities.

The reduction and elimination of unnecessary activity requires care and attention in the planning of
these activities so that the performance of the system improves. For that it is observed that the
locations of most stores, they tend to be placed at a remote corner, out of sight and mind. What is really
required is that the storage of material be as close to the point of use as possible. This facilitates
communications with production, and also makes the movement of material simpler. Warehouse away
from factory may be acceptable coupled with good transport arrangements and good information
communication system backed with computer arrangements.

Functions of warehouse
The functions of warehouse are as follows.
 Receive the Material: - Receiving and accounting of products. This receiving is to be done from
manufacturing factories and subcontractors directly. Count for proper quantity as per the documents.

 Store the Material properly: - Provide the right and adequate storage and preserve the material
properly. Ensure that the materials do not suffer from damage, pilferage or deterioration. When
receiving the material it is to be seen that often the products come in big packs of more number of
quantity.

 Mixing of material: - The products and subassemblies are received from different sources are often
requiring mixing and assembling together to satisfy need of customers. This job is at increasing day by
day. Some main warehouses of engineering goods are coupled with a small assembly shop and finishing
work like just attaching nameplate after final check up.

 Remove the material when required: - Facilitating easy location and removing materials.

 Deliver the material to right place: - Fulfilling the demand of customer and markets by proper issue of
items on the receipt of authorized documents. This includes consolidating the requirements from
customer. In a package of order there will be number of products, subassemblies, which are to be
collected from different suppliers.
 Keep the records perfectly in discipline: - To maintain proper records and update receipt and issue of
materials

 Packaging and waiting for order: - Often warehouse person has to make package for delivery till the
final order is received with payment conditions fulfilled by customer. The material is then loaded
carefully in the transport vehicle to present to the customer in appropriate condition.

 Maintaining good housekeeping: - Keeping the warehouse clean and is good order so that the
handling, preservation, stocking, receipt and issue can be done satisfactorily.

 Keep proper control: - Keeping a vigil on the discrepancies, abnormal consumptions, accumulation of
stocks, pilfaration, theft etc. Exercising control measures.

 Manage the people in perfect discipline: - The people working have to be followed as per the written
policies and manual.

 Avoid keeping surplus material: - Minimization of surplus and obsolescence through proper inventory
control, and effective disposal of surplus and obsolete items.

 Verification of stocks at regular interval: - Verifying the bin card balances with the physical quantities
in the bins and initiating the purchasing cycle at appropriate time so as to avoid the out of stock
situations.

 Arranging transport: - For presenting the product consignment to the customer it is essential to plan
and arrange proper vehicle. This needs to be done for keeping economy and quality. The placing the
product upside down etc as per need is very much required to maintain the product quality.
WAREHOUSE ORGANISATION

The organization of the warehouse is a shown in figure above. This is a major marketing function. It is
having the main section as receiving, transport, finished goods stores and accounting. The movement
department is often reporting to materials manager. However it has link with stores management. This
is administratively reporting to stores management but functionally it is with marketing departments.

From the total control point of view the warehouse may get included with the rest of materials
activities. This facilitates the coordination among related materials activities from the point of view of
operations. It has also important job of inventory control.

Warehouse activity is related with the production department. That is because of the following.
 In order to run the production operation smoothly the production management must complete
understanding of product mix to market their schedules.

In order to supply the required products to the market the production shops have to plan the materials,
manpower, machines etc.

PRIVATE AND PUBLIC WAREHOUSES

A warehouse may be privately owned and operated by a company making its own goods. This is called
private warehouse. A ware house may be owned and operated by another organization, including a
government agency, and only used by a company on certain terms and conditions. This is called a public
warehouse. A public warehouse may be owned by a company in the private sector but used by the
general public. Irrespective of whether a warehouse is a private or a public, the following factors have to
be taken into account to work out the cost of storage:

 Interest on the cost of buying the site.

 Interest on the cost of furniture.

 Cost of repairs and maintenance.

 Depreciation on building and equipment.

 Insurance.

Private Warehousing
The construction and maintenance of private warehousing facilities can be extremely costly. All
expenses have to be carefully analyzed and evaluated. These are:

 Fixed expenses and building and land acquisition cost, which are high.

 Expenses incurred on ensuring that warehouses are properly equipped with material-handling
equipment like conveyors, fork lifts, hand trucks, racks and bin, and dock levelers.

 The cost of salaries of staff required for peak activity periods, which can be very high.
 The cost of maintaining insurance records and of the premiums paid for fire, theft, and also for
workmen’s compensation.

 To this must be added the cost of regular maintenance and repairs and the cost of such items as fuel,
air-conditioning, power and light.

Advantages of Private Warehousing

The advantages of private warehousing are as follows:

 Private warehousing offers better control over the movement and storage of products as required by
the management from time to time.

 There is less likelihood or errors in the case of private warehousing since the company’s product are
handled by its own employees.

 In sum locations, for certain products or materials, public warehousing may not be available and only
solution possible may be the establishment of a private warehouse.

Public Warehousing
All the foregoing cost operates in public warehousing as well. But, in public warehousing, the expenses
are distributed over several other consignments of other clients. Therefore, the net result is lower cost
for each.

Advantages of public warehousing

Some of the advantages of public warehousing are:
 It is generally less expensive and more efficient.

 Public warehouses are usually strategically located and immediately available.

 Fixed costs of a warehouse are distributed among many users.

 The cost of public warehousing can be easily and exactly ascertained, and the user pays only for the
space and services he uses.

 Public warehousing is sufficiently to meet most space requirements, for several plans are available for
the requirements of different users.

TYPES OF WAREHOUSES

Bonded Warehouses
Private and public warehouses can be “bonded under the customs and excise act and municipal
corporation regulations, facilitating deferred payment of customs, excise or octroi duty. The
warehouseman releases only those goods on which the duty is paid on production of roof of such
payment and release order issued by the appropriate authority.

Field Warehouse
Field warehouses are those which are managed by a public warehousing agency in the premises of a
factory or company which needs the facility for borrowing from a bank against the certification of goods
in storage or in process by an independent professional warehouseman.
Cold Storages:
Cold storage facilities are provided for perishables against payment of a storage charge for the space
utilized by different parties. In a cold storage, it is essential that the temperature is regulated and
temperature variation is controlled to the degree particularly for certain sensitive items.

Agricultural Warehouses:
These warehouses are meant storing agricultural produce grown in a certain area and are located in
assembling or regulated markets. These warehouses receive agricultural commodities either directly
from the farmers or through their commodities agents, or from wholesalers.

Distribution Warehouses:
These warehouses are located close to the manufacturing concerns or consuming areas. Their location
depends on the nature of the product, the time taken for transit, operating coast and the need to make
the product available in the market in obedience to the demand for it.

Buffer Storage Warehouses:

These warehouses are built at strategic locations with adequate transport and communication facilities.
They store food grains or fertilizers, etc.

Export and Import Warehousing:

These warehouses are located near the ports from where international trade is undertaken. They
provide transit storage facilities for goods awaiting onward movement. Facilities for break-bulk,
packaging, inspection, marketing, etc., are available at these warehouses.

WAREHOUSE DESIGN
The stores activity has characteristic of non-value added activity. Just by saying that there is tendency to
view at it poorly. However the need cannot be neglected. And it is essential to have better look at the
design of the stores lay out and facilities. It should be not be located at a remote place, as is done
number of factories. We can eliminate or reduce stores but not at the cost of stoppage of production.
That way the stores can add the value to the production activity.

There is no uniquely ideal manner to deign all stores. In the view of objectives, in the correct proportion,
depends on the situation and on the experience and knowledge of the designer. Some of the objectives
of the storage function are presented here. The intent is not to prescribe a formula for designing a store,
but to outline the consideration that could play a role in the design.

A thing has to be kept in the mind that the stores design is not like any other office design. Office design
can be changed on and often. Changing the stores design is costly matter. One cannot do it often. So
proper thinking has to be done well before taking actions.

Consideration for Design

• How well does the store meet the needs of its customer?
• Is appropriate technology being used?
• How well are the resources utilized in the store?
• How manageable is the store?
• How flexible is the store?

How well a store meets the needs of its customer depends on the customer and what his needs are.
Speed of response, stock rotation, and the flexibility to accommodate a variety of parts etc. could be
some of the needs that may be need to be addressed. Customer need is an output expected from the
store. The equipments can be used in the stores are narrated in the further chapters. The staff and the
workers need to be provided with training. It is necessary to study what equipments will be useful for
satisfying the needs. Apart from the cost of the following points
must be studied along with volume of receipts and the dispatches before deciding.
 Should be use for workers.
 The physical matters like dimensions, weights, and speeds of the equipments.
 Should be easy to maintain.

WAREHOUSE LOCATION
The following considerations determine the location of a warehouse:
• Market service area and cost of distribution from the warehouse to the market area.

• Satisfaction of transport requirements and facilities available in the form of rail spur, link roads and
vehicles.

• Transportation rates prevailing in the area and distribution cost per unit.

• Competition by rival companies and whether they have warehouse in the same area.

• Availability of power, water, gas, sewerage disposal and their cost.

• Labour supply and labour cost in the area.

• Industrial relation climate and labour productivity.

• Pricing arrangements and the level of service desired to be rendered in terms of availability of the
product to the customer.

• Individual company requirements and constraints, including commitments, if any, made to employees
and others about a particular location which may influence a decision.

• Real estate, excise and government taxes assessed in the area.

• Attitudes of local residents and government toward establishment of the warehousing.

• Potential for later expansion.

• Cost of land for the warehouse and other costs.

• Possibility of change in the use of the facility at a later date if the company so desires, and lease or sale
of the land and building.

An ideal warehouse location has following characteristics:

• It protects the stocks against ground moisture, rain, objectionable odours, insects, rodents, birds,
poultry, cattle, thieves, wind, fire, etc.

• It provides the necessary facilities for manual and mechanical operations, inspection, disinfection,
cleaning, reconditioning, packaging, etc. of the commodities.

• It is an economic unit, close to the market or railway siding with adequate covered platforms and
connected by good motorable roads.

• It offers the necessary amenities, such as water for drinking and fire-fighting, office and residential
accommodation, etc.

• As far as possible, it is located away from grain mandies, grocery or shopping centres, grain fields,
garbage dumping grounds, sewerage tanks and disposal plants, dairies, poultry farms, tanneries,
factories, because their close proximity is detrimental to healthy storage facilities.

• Within a given general areas chosen for a warehouse, the choice of a particular site depends on
access, availability of transportation to and out of the site, are its proximity to major customers.

• The site is not cut off from any part of the total service area by a river or other geographic barriers.
CAPACITY OF WAREHOUSE
The term capacity of a warehouse refers to the overall cubic content of the warehouse building, as well
as the length, width, and height. The volume content of a warehouse building is affected by a number of
factors. Some of these are enumerated below:-

• Type of material to be handled;

• Handling system to be used;
• Stock layout arrangements;
• Dock requirements;
• Local building codes;
• Office area required.

Setting up a fixed warehouse at a given location becomes a constraint on warehouse operations for
number of years. The internal layout may be changed with a relative ease. But it is difficult to change the
overall size of the warehouse. Through the warehouse size may be expanded at a later date or extra
place may be leased, the resulting available space may not be ideal. In general, poor planning of the
warehouse leads to either higher material handling costs in the warehouse with lower designed capacity
or unnecessary space cost if larger space than what is require is designed.
WAREHOUSE OPERATIONS
The essential processing of materials in a warehouse involves following operations:

Receiving Goods:
A warehouse accepts the merchandise delivered by a transporter or an attached factory and then
accepts the responsibility for this merchandise.

Identifying Goods:
The appropriate stock- keeping units are identified and a record made of the number of each item
received.

Sorting Goods:
The economic goods are sorted out for appropriate storage area in the warehouse.

Dispatching Goods to Storage:

The goods are kept aside where they can be found later, when needed.

Holding Goods:
The goods are kept in storage under proper protection until needed in the warehousing.

Retrieving Selective or Packing Goods:

Items ordered by customers are taken out from storage and grouped in a manner useful for the next
step.

Marshalling Goods:
The several items making up a single order are brought together and checked for completeness and
order records are prepared or modified.

Dispatching Goods:
The consolidated order is packaged suitably and directed to the right transport vehicle.

Preparing Records and Advices:

The number of orders received, the items received and on hand etc., are recorded for replenishment
action and stock control.
A warehouse may be used as a physical processing station. For example, goods may be stored for aging,
a form of processing. In some systems, minor assembly work, conditioning, breaking bulk, adaptive
work for special requests, etc., may be carried out as a part of warehouse activity.

1) Receipt of Goods
The following operations are carried out before the acceptance of goods for storage and issue of a
warehouse receipt:
• The user of the facility or depositor tenders the goods for storage.

• The technical assistant attached to the warehouse examines the goods visually to determine whether
the stocks are worth storage.

• The goods are in good condition and can be stored; the depositor is required to submit an application
for storage of goods, with details of his name and address, nature of the commodity, number of
packages, their weight and value, etc.

• If the goods or commodities require cleaning to bring them up to an acceptable standard, this must be
done by the depositor.

• The goods are sampled as per a set procedure of sampling, depending on the nature of the
commodity.

• The samples so taken are analyzed as per the specifications provided by law.

• The stocks are graded on the basis of such characteristics as moisture content, foreign matter,
shriveled grains dirt, etc.

• If the packages or bags of the stock are not of a standard weight, they are standardized at the
warehouse.

• The bags or packages are counted, if they are standardized, before unloading from the truck and after
stocking, to be doubly sure that the correct number of packages has been tendered.

• Warehouseman takes the specimen signature of the depositor or his agent for future verification on
the cards kept at the warehouse.
The warehouseman prepares a warehouse receipt with all the particulars, such as location of the
warehouse, name of the depositor and his address, description of commodity, its quality or grade,
weight, etc.

2) Storage in Warehouse
One of the fundamental features of warehousing is scientific storage and preservation of goods. In order
to ensure that the quality remains the same and is well preserved, the following steps are taken:
• One of the samples obtained after a scientific sampling of the stocks is duly sealed with a signed
sample slip put inside the bag and is handed over to the depositor for future verification in the event of
any dispute as regards quality of the commodity.
• The warehouse is demarcated into different sections for storage of different commodities or items
according to their nature. These commodities or items are accepted in the specific section meant for
such goods.
• Different stacking methods are adopted, depending on the size of the packages and the duration of
storage.
• Quick moving goods are stored in a separate section, generally close to the doors, and those goods
which are likely to remain in storage for a long time are stored a little away.
• Gangways and operational spaces between stacks are left for necessary disinfestations operations, re-
stacking, turn-over, etc.
• The goods are periodically inspected to check that there has been no damage during storage.
• If there is damage of goods or if it is found that the goods are not capable further storage, the
warehouseman can take action to have them delivered.
• If the depositor indicated in the notice does not take delivery of goods within the stipulated period,
the goods may be auctioned in the prescribed manner. A notice of auction will be sent to the depositor
indicating the date, time and place of the auction well in advance.

3) Delivery of Goods
The delivery of goods is conditioned by the following factors:

• The goods stored in the warehouse may be delivered in one lot or in installments, as required by the
depositor.

• If the depositor is given an opportunities to examine his goods before taking delivery and if he find on
the time of taking delivery that the goods have been allowed to deteriorate or to get damaged, he may
lodge a protest within 72 hours of his examination, and defer taking delivery. He has also to advise the
licensing authority under the act for necessary investigation and redressal.

• An application for delivery of goods has to be tendered by the depositor or his authorized agent.

• The warehouse receipt is surrendered, duly discharged.

• The specimen signature is verified before delivery is made.

• The storage charges, insurance charges, etc., payable are worked out and collected before delivery is
made.

• If a part delivery is required, such delivery is endorsed in the column provided for it in the warehouse
receipt, and the receipt is returned to the depositor or the bank which has produced the receipt for such
delivery.

• If the goods are to be delivered in full, the warehouse receipt, duly discharged, is surrendered to the
warehouseman.

• Necessary entries in the stack-wise register, godown register, depositor’s ledger, stock register etc. are
made after delivery is made.

• The stocks are delivered against an acknowledgement of the depositor or his agent to the effect that
the goods have been received in goods condition and the sample kept in the warehouse is returned to
the depositor at the time of delivery.

Inventory at Multiple Locations - Square Root Formula

Currently popular approach is to consolidate inventories into fewer stocking locations in order to reduce
aggregate inventories and their associated costs. The root law (SLR) help determine the extent to which
inventories may be reduced through such a strategy. Assuming that the total customer demands remain
the same, the SLR estimates the extent to which aggregate inventory needs will change as a firm
increases or reduces the number of stocking locations. In general greater the number of stocking
locations greater is the amount of inventory needed to maintain customer service levels. Conversely, as
inventories are consolidated into fewer stocking locations, aggregate inventory level will decrease. The
extent to which these changes will occur is understood through application of the square root law.
The inventory level is normally proportional to the square root of number of warehouses. The square
root law states that the total safety stock inventories in a future number of facilities can be
approximated by multiplying the total amount of inventory at existing facilities by the square root of the
number of future facilities divided by the number of existing facilities.
X2 = [X1] x N2
N1
Where,

N1 = no. of existing facilities, N2 = no. of future facilities

X1 = total inventory in existing facilities, X2 = total inventories in future facilities.

Assumptions:
Although the square root formula is simply stated, the model is base on several reasonable assumptions:
1) Inventory transfers between stocking locations at the same levels are not common practice;
2) Lead time do not vary and thus inventory centralization is not affected by supply uncertainties;
3) Customer service levels as measured by inventory availability, is constant regardless of the number of
stocking locations
Demand at each location is normally distributed

WAREHOUSE SECURITY
The hazards for the goods stored in a warehouse are of the following nature:
 Theft and house breaking.
 Fire.
 Floods.
 Riots and civil commotion.
 Moisture, insects and rodents.

Though goods are generally insured against all these risks, except the last one, it is nevertheless
advisable to take adequate precautions to protect them. For this purpose, the following measures are
undertaken

1. Location & Structural Unity

A warehouse is constructed on a site away from colonies which breed anti-social elements. The selected
site is also away from low-lying areas, rivers etc., so that the flooding might be avoided when the river is
in spate. The structure is designed in such a manner that the plinth is atleast one metre above the
ground level. The platform of the verandah and plinth of the warehouse are constructed in such a way
that is made rodent-proof. It generally has a compound wall of sufficient height, with only one gate for
entry and exit to ensure better and closer watch on incoming and outgoing persons and vehicles.
A warehouse is also located away from dumping grounds, garbage pits, etc., to ensure that insects which
normally breed in such places, do not damage the goods in warehouse.

2. Internal Security
The owners of goods, their agents and other dealing with the warehouse are screened so that entry is
permitted to only such persons as come on genuine business and do not indulge in pilferage or other
adverse activities of sabotage, etc. sufficient surveillance measures are taken to ensure that the staff
working in the warehouse do not indulge in pilferage, thefts, etc. should be left for this has to be
decided also in relation to the uncertain needs of the future.

LICENSING OF WAREHOUSE IN INDIA

Each state has passed a warehouse act, which governs the working of the warehouse of the central or
state warehousing corporations or any private warehouseman. Under this act, every warehouseman has
to obtain license. The following are some of the conditions laid down for the grant of a license for
warehousing:
 The warehouse must be suitable for proper storage of the class of goods intended to be stored.
 The applicant must be competent to conduct such a warehouse.
 The applicant must fulfill any other conditions that the state government may notify from time to
time.
 The applicant must pay the fees prescribed for the issue of a license and also furnish security.
 Under the state warehouses acts, a warehouseman takes such care of the goods stored with him as a
man of normal prudence would take of his own goods.
 The warehouseman must keep his warehouse clean and in a hygienic condition, and take all the
necessary precautions against rats, pests, etc.
 Goods are required to be compulsorily insured against damage by fire, floods, theft or any other
accident.
MATERIAL HANDLING

The handling of material is a human activity which has been performed since time immemorial. The
construction of the great pyramids and other historical monuments all over the world called for the
handling of various types of materials in various form methods. Material handling has now become an
important and specialised function of all industrial activity. It is as important as, costs and the
production process.
A modern manufacturing plant works on assembly line principles. In an automobile plant, the chassis
moves along the assembly line where different workers attach different parts in turn tighten a bolt or
make certain adjustments. Finally, the finished car emerges at the end of the process. A similar
procedure is followed for other assembly line production processes. Before it reaches the ultimate
customer, the product has to pass through a series of handling processes – from the procurement of raw
materials to the sale of the final article.
The manufacturing establishment first receives the raw material or spare parts which go into the making
of the product. They are conveyed to the place where they are stored. Then they are taken to the
preliminary fabrication or manufacture or the first production process. Thereafter, they are again sent to
the storage before they are moved into the various stages of manufacturing operations.
Once the machine and processing operations are finished, the semi-manufactured or finished product
moves to final inspection and packaging. When all the manufacturing operations are completed, it is
again sent into storage to await transportation to consumers.
Material handling is an essential production function. Organisations do not pay adequate attention to
this function. On an average, fifteen to twenty percent of the cost of a product is incurred on material
handling. Over and above this tangible cost of material handling and of labour and machinery costs, they
are the hidden costs of material handling which arise from the damage of raw materials to the finished
products, delay in transportation, deterioration in the quality of the product, waste of productive labour
time and loss of production. This total material handling cost must be minimized by designing a proper
system.
Material handling is undertaken at every stage of logistics activity, and is an integral part of the other
elements of logistics function. Material is handled during the production process, warehouses or
storage, in transport, during packing and when goods are returned by the customer for one reason or
the other. This would insure cost reduction in the operation of the overall material handling function
and increase productivity.

MATERIAL HANDLING SYSTEM

Material is handled at the following stage

i. Raw material is transported from the vendor to the vendor to the warehouse of the production unit. It
is received by trucks, by rail wagons or even by ship. At the warehouse the handling of material takes
place. Thereafter, the material is stored.
ii. At the time the material is required for production process, it is again handled. It is fed into the
production process.
iii. This time the material handling is generally an integral part of the production process.
iv. After the material has been finally processed and turn into a finished product, the finished product is
handled and loaded for dispatch by a given mode of transport to a field warehouse or a dealer.
v. Sometimes, the finished product is packed and directly loaded for transport.

vi. The material produced at the end of the process may be intermediate finished product, so it also
required handling.
vii. The semi-finished product is transported to other production unit so; this required another material
handling process.
viii. Assuming that the product has been stored in its final finished form, it has to be finished before
dispatch from the production center.
ix. The goods may be dispatched straight to the customer; in this case the handling of the goods is done
by the customer himself.

x. The goods may be dispatched to a field warehouse of the company, or to a public warehouse, or to
warehouse of stockist or distributor. In this case they are stored suitably for dispatching to a customer,
retailer or dealer, as the case may be.

Material handling involves the following point:

a) Receiving or dispatching of goods involving unloading, loading;
b) Flow of material within the production unit and warehouse;
c) Weighing of raw materials and finished products at warehouse;
d) Sampling of raw materials, intermediate products and finished products at nominated stages;
e) Documentation.
Each of the above functions have been discussed in more detail in the following paragraphs.
Receipt and dispatch & loading – unloading
The receipt of raw materials or the dispatch of finished products, at the production center, plant
warehouse or field warehouse may be considered a part of the transportation function.
Receipt
i. Receipt of wagons, trucks, ships, etc., in a nominated area or location.
ii. Unloading of individual truck, wagon or ship.
iii. Storage of the goods (whether raw material or finished product) unloaded.
iv. Weighing of the goods received.
v. Documentation for receipts of goods.
vi. Documentation for the storage of goods.
vii. Communication to all concerned about the receipt of the goods.
Dispatch
i. Receipt of road trucks, rail wagons, ships, etc., in a nominated area or location.
ii. Weighing if goods whether directly or indirectly.
iii. Loading of individual truck, wagon or ship.
iv. Storage of adequate material to ensure uninterrupted loading.
v. Sampling of goods that are loaded.
vi. Documentation of dispatches, storage, weighing and samples.
vii. Communication of information about dispatches to all concern.

In general, the activities performed under material handling for the receipt and dispatch of goods would
require arrangement for:
i. The loading and unloading of trucks, wagons or ships;
ii. Waiting space for trucks, wagons and ships;
iii. Adequate storage space;
iv. Weighing facility;
v. Sampling facility;
vi. Documentation and communication system.
These arrangement are discussed briefly in the following paragraphs

1) Loading and unloading

The loading and unloading of goods has to be examined from the standpoint of speed of loading and
unloading , convenience and the saving on damage during the unloading/ loading operations. The
loading and unloading facilities include suitable civil engineering structures for the berthing of trucks,
rail wagons or the ships and the loading unloading and handling machinery.

Unloading structures
Fixed unloading structures include a sufficient number of properly designed docks for the unloading of
road trucks, adequate length of a platform of a proper design for unloading rail wagons, and an
adequate number of berths or wharfs of suitable design for ships.
RAIL PLATFORMS
Rail platforms are so designed that the wagons stand alongside a rail platform. The height of the rail
platform, measured from the top of the rail surface, is kept at 105 cms. But the platform may be at the
rali level, depending on the consignments required to be unloaded or loaded. Heavy crane consignments
are usually unloaded on open rail-level platform, for crane movement is convenient on such platforms.
Loose consignments like coal, sand, earth, etc., are also loaded on rail-level platforms. These platforms
have only paved surfaces.
The width of the platform is determined on the basis of the storage space required, the space for the
movement of the men or machinery. But special care has to be exercised to keep loaded or unloaded
materials away from the track so that no derailment occurs.
The length of a rail platform is determined by the number of railway wagons required to be unloaded or
loaded at one time. The number of wagons placed at one time for unloading or loading should be
determined on the basis of the incoming or outgoing materials for the rated capacity of the plant.
Infrastructure facilities should be liberally provided so as to take care of an increase in the capacity for
loading and unloading operation. Increases in loading and unloading capacity may not be possible or
become too expensive if sought to be undertaken only at a later date, for then a major change may be
called for in the layout of the rail-yard platforms, which may not be possible or may require major
structural changes, including demolition, and this may turn out to be expensive.
Often, it may be convenient and some times desirable to split the length of the platform to achieve
greater flexibility in loading and unloading operations. This would take care of the practical problem
which arises when one wagon in the middle of a large number of wagons lined along the platform is
found to be defective or not loadable for some reason. The platforms may be of equal lengths and
positioned along two tracks.
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII IIIIIIIIIII

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII IIIIIIIIIII

Platform length distributed over two or more platforms

This arrangement may be further modified to achieve greater flexibility in loading and unloading by
positioning a platform on either side of a track.

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII IIIIIIIIIIII

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII IIIIIIIIIIII

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII IIIIIIIIIIII

One platform on either side of track

But the arrangements become inconvenient by reason of the existence of the island platform and
present difficulties in conveying the material from or to the island platform. This arrangement, however,
is convenient when loading and unloading operations are arranged with the help of an overhead or
underground conveyor.
SHIP WHARFS
Wharfs or berths are provided for the berthing of ships. Ships are berthed alongside a wharf. The length
of a berth or a wharf and the draft set a limit to the capacity of the ship handled at the berth. The length
of the ship to be handled at a wharf has to be less than the length of the wharf, so that the vessel can be
anchored fast to the bollards. The draft at wharf has to be more than the draft of the ship, which is
determined by the weight of the vessel. Thus, the draft at the wharf determines the maximum load that
can be brought in by the ship. It is always better to bring in a ship with the maximum load so that the
freight charge per tonne may be the minimum.

Bollard

Schematic design of a ship alongside a wharf

Owing to the silting that takes place because of natural and man-made reasons in many ports, the draft
has a tendency to decrease. Desilting operations may have to be undertaken to accommodate a
particular capacity ship.

TYPES OF HANDLING MACHINERY

Normally, road trucks, rail wagons or ships can be unloaded manually. But with the large volume of
materials to be handled, the manual system becomes unwidely, and some degree of mechanization has
to be resorted. Also in order to speed up the loading/unloading of materials and to make it convenient
and cheaper, handling machinery may be installed on truck docks, railway platforms and wharfs
Handling machinery is of two types. Fixed machinery, such as granty cranes, or fixed cranes which have a
certain reach required by vehicles to come close to them for loading and unloading cargo. If a dock or
platform is occupied for one reason or the other, the machinery cannot be utilized for loading and
unloading. In this case, the second type of machinery can be used to move near the vehicle. In this
category fall the various types of mobile cranes or fork lifts or pay loaders, which lift the material from
the truck, wagon or ship. To speed up the operations, various types of conveyor systems may also be
installed.

Receipt and Despatch of vehicles

The incoming or outgoing vehicles cannot be straightaway placed for loading and unloading, especially
when the preceding vehicles are under operation. For example, while some trucks are being unloaded at
the docks, more trucks may come in. Similarly, some railway wagons may be under unloading, in
meantime, more wagons may come in. Special arrangements such as Circulating area for road vehicles,
Marshalling Yard for Rail wagons, etc. have to be made for these vehicles, wagons and ships.

 Circulating Area for Road Vehicles

For road vehicles, a circulating area is provided where vehicles can be parked, awaiting their turn for
handling, otherwise they would have to wait outside the factory gates and may block the entry or exit of
vehicular traffic. Arrangements should also be made for sufficient number of toilets so that the crew do
not commit nuisance outside.

 Marshalling Yard for Rail Wagons

Railway wagons on their inward and outward journey, a marshalling yard is provided. The wagons meant
for the factory is sorted out and are taken to the factory. The marshalling is also required to sort out
empty from loaded wagons. The design of a marshalling yard calls for a specialized skills. A marshalling
yard consists of two or more lines, suitably connected with loading lines. The design of a marshalling
yard calls for careful railway operating considerations, so that there may be an easy flow of wagons from
and to the loading points and a quick marshalling of different wagons.

EQUIPMENT
Storing
The different kinds of equipment which are used in a storeroom can be broadly classified into two
categories, viz. A judicious selection of different store equipment is a key of the successful operation of a
storeroom. Once a typical set is done it is difficult to change the set up in future. The commonly used
equipment in storeroom are as follows:

 Cabinets
 Stacking boxes
 Special storage racks
 Gravity feed racks
 Outdoor platform and racks
 Open and closed shelves
 Trays
 Drums

The selections of the equipment shall be governed by size, shape, other physical characteristics, and the
extent of preservation required. The selection of the material for racks etc. wood or steel should be
carefully done. The steel equipment has advantages of strength, cleanliness and fire resistance.

Material Handling Equipments

In any given set up the material handling equipments the layout of the stores, production shops is to be
coordinated well. They are closely related with each other.

Manual material handling

Here the initial investment is low. The equipment used in such systems are racks, drawers, bins, hand
trucks, and gravity conveyors. The operations are done manually. So the problems related to labour
control exist. The systematic working, handling higher loads, speed of operation is generally at low level.
Utilisation of available space cannot be done beyond certain height due to natural human constraints
The common type of material handling equipment used in stores is as follows:
 Trolleys
 Hoists
 Monorail
 Belt conveyor
 Roller conveyor
 Crane
The selection of the material handling equipment depends upon the size, shape and weight of the item
the location of the item in the stores, etc.

Manual equipments
Hand carts – Unpowered wagons, dollies, and trucks pushed about by workers.

Hydraulic scissor-lift tables

These are used for loading and unloading heavy materials like tools, die etc. these are used as goods lift
from transporting and raw material from ground level to finish first floor level. They are driven by
electric-operated power pack.

Stackers and portable cranes:

These are used for loading and unloading heavy materials from trucks. Also loading heavy dies on the
press machines. These are operated hydraulically.

Manual stacker
These are fabricated from steel channels for strength. They can be shifted any where in the shop.
Without bending they can lift heavy materials. By hydraulic pump they lift or lower the material.

Hydraulic Pallet trucks

 Quick lift pumps design.
 Ultra-urethane wheels and sealed dual-precision ball bearings require less than 75 lbs. pulling force at
full capacity.
 Hydraulic pump includes overload and upper limit relief valve.
Fingertip lever control for selecting raising, neutral or lowering positions. Articulation steering wheels.

 Include two steering wheels and two front load rollers.

 Steering wheels include bearing dust covers, providing longer life.
 Spring-loaded loop handle automatically returns to vertical position which not in use.
 Hydraulic pump design facilitates easy-access seal replacement.

Red powder coat finish is helps as antirust. Pedal lift elevating shop tricks, mechanical material stackers,
and motorized stackers. Monorail traveling trolleys, portable gantry cranes are useful equipments in
stores.

Pallet Trucks
These are used for low level of working, to lift the material, move the material. Height is adjustable for
any essential height. It is manually operated, safe and move on castor wheels, which are easy to move.

Castor Wheels
These are made with the pressed thick steel, base. They are versatile to be used for all moving material
carrying equipments. These make the equipments easy to maneuvering the equipment. They have
thrust bearings for easy movements. Rubber or polyurethane material is used for low load capacity
requirements.

Fork-lift truck
These trucks are much used in the production shops and warehouses. They are good in moving the
material from a place to place. Over and above the tote boxes on the forks can be elevated to desired
level above the ground level.

Ladders
Different types of ladders are required in stores for placing of the material at high level points. They are
of different types. As per the requirements they are used.
 Wall supporting extendable ladder.
 Self supporting extendable ladder.
 Trolley based strong ladder, with solid steel base, the safety locks are provided.
Normally the ladders are made of thick aluminium sections. This makes them light in weight, non-
rusting, and rust proof.
Safety locks, rubber shoes, ropes, pulleys and castor locks are provided for ease of movements.

Mechanised systems
Mechanized and automatic equipments need higher level investment. On long term they may be
economical. Machine power, electrical energy or mechanical engineering techniques are used in place of
labour. They use forklift trucks, tow tractors, order picker trucks, cranes and conveyors

Conveyers
Conveyer system to move material or products has given start for the engineers. Steel/plastic balls or
rollers are mechanical mounted on the side channels and the products move on them by driver motor or
the power of gravity.
Belt-Motor-driven chain that drags. Materials along a metal slide base

Rollers
These are good for moving heavy materials from one place to other place. The path is well guided by the
number of rollers mounted on a structure. The rollers can be powered by motor.

Cranes
Cranes are useful to pick up and shift the heavy material from one place to other place. Hoists are
mounted on overhead rails; they lift, swing, and transport large and heavy materials. The cranes and
hoists are having limited travel distance. These are specifically used to shift heavy goods from and to
ships.

Elevators
A type of crane that, while in a fixed position, lifts materials usually between floors of buildings.

Turntables:
This device is used to mechanize the working on components in the different stages in continuation to
avoid handling. The stations on turn table hold, index, and rotate materials or parts from operation to
operation.
Automated systems
The concept of a totally automated storage and retrieval system has been inviting the attention of
professionals to match the storage system/ with the rapid developments in the technology.
In automated systems computer programs are used to achieve controls on the movements of
equipments. Here the total movement is co-coordinated and perfectly synchronized. These are systems
for receiving orders for materials from anywhere in operations or unloading areas, collecting the
materials from locations within warehouse, and delivering the materials from locations within a
warehouse, and delivering the materials to workstations in operations or loading areas. Computers and
communication systems are used for placing orders for materials, locating the materials in storage,
giving commands for delivery of the materials to locations for loading/unloading/operations, and
adjusting inventory records showing the amount and location of materials.

Automated Guided Vehicle Systems (AGVS)

 Take the material order as per the list
 Automatically load the containers of materials from unloading area.
 Deliver to the place.
 Unloading the material.

The operator carries with him the list of items to be items to be retrieved. By making use of predefined
system he goes through the storeroom, stops the handling equipment at respective bins and completes
the list in a picking tour. He may go aisle-by-aisle or according to items in list or by any other system.
Operation Research techniques of sequencing, routing, etc., can be applied to determine the optimal
locations of items and optimal route in a picking tour.

Benefits
 Increase storage capacity.
 Increase system throughout due to their continuous and tireless use. Reduce the labour costs.
 Product quality is improved with the elimination of human error.
 Identify parts based on bar codes.
 Offer higher return on investment.
Better capability than standard inventory control systems.

PACKAGING

Introduction
The term packaging may be defined as the use of containers and parts, together with the decoration and
labeling of the product in order to contain, protect and identify the merchandise and facilitate the use of
the product. Sales promotion is an important consideration in the selection of packaging aids in
motivating a customer to buy the product. The degree of motivation depends on the type of product,
the type of customer and the demand and supply situation. The printing matter and the company
emblem or trade mark project the manufacturer’s image to the customer.
All kinds of products, namely, solids, liquids, gases suspensions and colloids, have usually to be packed
before distribution. Depending on the market area, packaging may be classified as for domestic sale or
for export sale.
The various goods may be classified into the following broad categories:
1. Engineering goods;
2. Consumer goods;

1. Engineering goods
These may be divided further into the following:
(a) Heavy engineering goods, such as pumpas, compressors, engines, machinery, spares, etc.
(b) Light engineering goods, such as instruments, small electronic motors, etc.
(c) Domestic appliances, such as sewing machines, fans, mixers, radios, tvs, etc.

2. Consumer goods
These may be classified as under:
a) Food products:
Canned products like vegetables and fruits.
Bakery products like biscuits, bread, cakes, etc. beverages, alcoholic, soft drinks, juices, tea, coffee,
cocoa, etc.
Toffee, chocolates, etc.
Other products like sugar salt, spices, etc.

b) Cosmetics, such as toothpaste, hair cream, shampoo, face powder, nail polish, etc.

PACKAGING MATERIALS
Jute
Since it has been recognized that renewable resources should continue to be the mainstay, for a number
of applications, the use of jute, also known as hesian or burlap, is common and encouraged.
Interestingly, India still continues to export a sizable portion of its jute packaging production. New
varieties of jute, better methods of weaving and imparting improved functional qualities to it-like
making it odour free- are some of the areas which have received special attention. There is a general
shift towards the use of synthetics in performance to jute in bulk packaging.

Packaging Paper and Board

In the field of paper and board, the country is entirely dependent upon indigenous forest resources
which, however, are being rapidly depleted. Bamboo constitutes the main supply source of paper raw
materials. Research is under way on the use of quick yielding timber varieties and of hard woods for
paper manufacture.

Glass
The use of glass containers still continues to be encouraged for milk, liquid, pharmaceutical
preparations, fluid beverages, etc. India has abundant supplies of minerals which are required for the
manufacture of glass.

Tinplate
India produces hot dipped tinplate. Presently most of the mills adopt the electrolytic process of coating
tin. Attempts have been made to manufacture differential coatings as well. Tinplate consumption is
restricted by the slow growth in the processed food industry, and large-scale uses continue to be for
petroleum oils, edible oils and paints. Tinplate containers for packaging have been adopted in India
because of the necessity for long periods of shelf –life and the inadequacies of the system of handling
and transportation which has made high- strength packaging compulsory. With the view to reducing
dependence on tinplate, dual packaging systems have been adopted for certain food products, whereby
the use of refill packages is encouraged.

Cellophane
A small quantity of cellophane is manufactured by a few units in India. There has been hardly any
expansion in its use in this country owing to the high cost of inputs for the manufacture of cellophane
and adverse atmospheric conditions and marketing systems.

Aluminium Foils and Tubes

The use of aluminium foils is confined mostly to pharmaceuticals, foods and tobacco. The alternatives to
aluminium foil are metalised plastics. Even though the introduction of collapsible tubes was generally for
tooth-paste and pharmaceutical ointments a great variety of typical Indian products have got into
collapsible tubes.

Plastics
The Indigenous production of plastics had its origin in industrial alcohol. The setting up of petro-
chemical complexes has had considerable impact on the promotion of plastic raw materials. Earlier, the
country was dependant on high and low density polyethylene. Small quantities of imports of other
thermo-plastics used to meet the country’s packaging requirements. The versatility of plastics and their
ability to upgrade indigenous materials has naturally encouraged their greater use.

a) Laminated Jute Packaging:

Even during the early sixties, India began to export jute bags made from polyethylene extrusion coated
or polyethylene laminated jute materials. The large-scale expansion of the fertilizer industry in the
country resulted in the expansion of markets for this material. Many export commodities use this as a
packaging or as a water proof wrapping material for the safe transit of goods.
b) Other laminates and coatings:
In the absence of oriented polypropylene, polyethylene-coated papers have had the maximum share of
the flexible pouch market. Industries have found polyethylene-coated materials to be inexpensive and
have favoured their use. Polyethylene- coated foil, glassine paper, poster-paper-all find extensive
markets in the country.

c) Shrinkable Films:
India uses shrinkable films and heat-set plastic films. In the area of shrink packaging, however, the
industry has limited it to the intermediate packages rather than extend it to transportation packages.

PRODUCT AND PACKAGE DESIGN

Many products must be distributed in the way they are manufactured. These may be costly to protect
and may be subject to frequent damage. A product can undergo slight changes in design so that
objectionable obtrusions maybe reduced or removed or the weak elements, which are likely to become
damaged in shipment, may be strengthened. It is not adequate realized that obtrusions or weak points
can result in unnecessarily higher transportation, packaging and damage costs.
The size, shape or closure of many consumer packages often offer sufficient flexibility to sufficient
flexibility to effectively create a modular packaging or to standardizes a reduced number of different
packages or containers of improved designs.
The manner in which a product is sold or packaged also has a direct bearing on transportation costs. The
higher the density the lower the transportation cost.

Protective packaging
The problem of protecting the product through the distribution process without damage is a major
concern of the marketing and logistic manager. The objective is to arrive at an optimum protection level
that will meet the desired customer service standard at a minimum packaging expense. Only the most
critical and highly expensive items should be packaged for full protection.
Reduction in the protective levels must be evaluated against the added costs of warehousing,
compulsory use of racks and expensive redesign of mechanized and automated handling system
subjecting the packages to drop and impacts.

Cost reduction in packaging

The problems of the higher costs of physical distribution are caused when we examine packaging
narrowly and departmentally. The marketing management continues to look at packaging strictly from a
sales point of view. Packaging engineers, who are under purchasing or manufacturing, examine it only as
a protective device. Only a physical distribution manager can look at packaging broadly and conceive of
changes in design, size, mode of transportation, etc. which will contribute to the effectiveness of the
distribution system. Most companies continue to deal with packaging as an engineering problem
without the total system outlook.

Transport Packaging
For the internal movement of goods, the Indian railways have introduced specially designed containers.
They differ from inter-modal containers in dimensions and in capacity; but they meet the requirements
of the reduction of gloss and damage in transit, and minimized the packaging costs.
The development of inter-indol containers has been undertaken in India. The country’s maritime
transport has been geared to carry container cargo. Efforts have been made to develop container ports
in the country.

Testing of Packaging
Tests on packaging are performed mainly to determine its compatibility and transport-worthiness. The
various tests carried out are to determine tensile strength, breaking load, burst factor, tearing strength,
resistance to humidity (with salt spray) and vibrations, drop strength, etc. The Indian Standards
Institution has now developed various standards for packaging.