NAME: AKSHATHA S

SEMESTER: 3rd Sem Aviation

SUBJECT: LOGISTICS & AIR CARGO MANAGEMENT

UNIT- 1

LOGISTICS & AIR CARGO MANAGEMENT

SUPPLY CHAIN MANAGEMENT (SCM):

• Supply chain management is the handling of the entire production flow of a goods or
service — starting from the raw components all the way to delivering the final product to
the consumer.

• A company creates a network of suppliers (“links” in the chain) that move the product
along from the suppliers of raw materials to those organizations that deal directly with
users.

FIVE COMPONENTS OF TRADITIONAL SUPPLY CHAIN MANAGEMENT

SYSTEMS
 • Planning: Plan and manage all resources required to meet customer demand for a
company’s product or service. When the supply chain is established, determine metrics to
measure whether the supply chain is efficient, effective, delivers value to customers and
meets company goals.

• Sourcing: Choose suppliers to provide the goods and services needed to create the
product. Then, establish processes to monitor and manage supplier relationships. Key
processes include: ordering, receiving, managing inventory and authorizing supplier
payments.

• Manufacturing: Organize the activities required to accept raw materials, manufacture

the product, test for quality, package for shipping and schedule for delivery.

• Delivery and Logistics: Coordinate customer orders, schedule deliveries, dispatch loads,
invoice customers and receive payments.

• Returning: Create a network or process to take back defective, excess or unwanted

products.

GLOBAL SUPPLY CHAIN:

A global supply chain refers to the interconnected network of organizations, activities,

information, and resources involved in the production and distribution of goods and services on a
global scale. It encompasses all the stages from the procurement of raw materials to the delivery
of finished products to end consumers, often involving multiple countries and diverse
stakeholders. The evolution of technology, transportation, and trade agreements has greatly
facilitated the development of complex global supply chains.

Key aspects to consider in global supply chains:

Complexity and Interconnectedness: Global supply chains are inherently complex, involving
numerous entities, such as suppliers, manufacturers, distributors, and retailers, often spread
across different regions and countries. The interconnected nature of these relationships requires
effective coordination and communication to ensure smooth operations.

Globalization and Market Expansion: The rise of globalization has driven companies to expand
their operations beyond domestic borders, seeking access to new markets and resources. As a
result, supply chains have become more geographically dispersed, contributing to increased
efficiency but also introducing new challenges.

Supplier Relationships: Effective global supply chain management requires strong relationships
with suppliers. Companies must carefully select and collaborate with suppliers who can provide
quality materials, meet demand fluctuations, and adhere to ethical and sustainable practices.
Risk Management: Global supply chains are susceptible to various risks, including geopolitical
uncertainties, natural disasters, and supply chain disruptions. Robust risk management strategies,
contingency planning, and real-time monitoring are essential to mitigate these challenges and
ensure business continuity.

Technology and Data Analytics: The integration of advanced technologies, such as artificial
intelligence, IoT, and data analytics, has transformed global supply chain operations. These tools
provide real-time visibility, optimize inventory management, and enhance decision-making
processes, contributing to greater efficiency and responsiveness.

Regulatory Compliance: Navigating diverse international regulations and compliance

requirements is a significant aspect of global supply chain management. Companies must stay
informed about trade regulations, customs procedures, and product standards to ensure legal
compliance and avoid disruptions.

Sustainability and Corporate Social Responsibility (CSR): Increasingly, global supply chains are
under scrutiny for their environmental and social impact. Companies are adopting sustainable
practices and incorporating CSR principles into their supply chain strategies to address
environmental concerns, promote ethical labor practices, and meet the expectations of socially
conscious consumers.

Resilience and Agility: The ability to adapt to changing market conditions and unexpected
disruptions is crucial in a global supply chain. Building resilience and agility into the supply
chain helps companies respond quickly to unforeseen challenges, ensuring continuity and
minimizing the impact of disruptions.

E-commerce and Consumer Expectations: The growth of e-commerce has reshaped global
supply chains to meet the demands of online consumers for faster deliveries, flexible fulfillment
options, and transparent tracking. Companies are adjusting their supply chain strategies to align
with evolving consumer expectations.

INTRODUCTION TO LOGISTICS

• The word, ‘Logistics’ is derived from French word ‘Loger’, which means art of war
pertaining to movement and supply of armies.

• Logistics is the process of planning and executing the efficient transportation and storage
of goods from the point of origin to the point of consumption.

• Any Manufacturing or marketing activity will be difficult to achieve without any

logistic planning

• The goal of logistics is to meet customer requirements in a timely, cost-effective manner.

HISTORY OF LOGISTIC

• The concept of logistics management was evolved during the second world war (1939-
1945).

• In the early part of 1991 the world was given a dramatic example of the importance of
logistics.

• As a precursor to the Gulf War it had been necessary for the United States and its allies
to move huge amounts of material great distances in what were thought to be impossibly
short time-frames. Half a million people and over half a million tones of material and
supplies were airlifted 12,000 kilometers with a further 2.3 million tones of equipment
moved by sea - all of this achieved in a matter of months.

• Late in 1820’s movement of food from rural areas to the urban consumption markets.
LOGISTICS FIRMS PROFILES

• Blue Dart Express Limited is an Indian logistics company providing courier delivery
services. It has a subsidiary cargo airline, Blue Dart Aviation that operates in South Asian
countries.

• TNT India is a part of global logistics company TNT Express which provides unmatched
speed with urgent deliveries such as medical supplies, machinery and its critical parts,
legal documents etc.
COMPONENTS OF LOGISTICS

1. Demand planning: To guarantee customer order fulfilment, demand planning is an

essential logistics function. By ordering merchandise in the correct quantities and at the
right price and mobilising suitable transport, customer demand is met and profits
protected.

2. Storage and materials: Because demand is unpredictable, it’s important to have surplus
goods on standby until consumers demand them. Warehouses are responsible for the
storage, care, retrieval, packaging.

Figure: Warehousing
 3. Inventory management: Inventory management controls the flow of goods in and out of
a warehouse. It dictates how much stock to hold and where to locate it using targeted data
to predict consumer demand.

4. Transportation management: Logistics involves mobilising different modes of

transport to move merchandise from one stage of the supply chain to the next.
Merchandise might need to travel via road vehicles, freight trains, shipping, or even air
travel for long-distance supply chains

5. Control: Logistics is a complex operational procedure that requires a lot of precise

information to be effective. Forecasting demand, transportation times, and inventory are
crucial to keeping the operations to a tight timescale.

6. Inventory management: Inventory management controls the flow of goods in and out of
a warehouse. It dictates how much stock to hold and where to locate it using targeted data
to predict consumer demand.

7. Transportation management: Logistics involves mobilising different modes of

transport to move merchandise from one stage of the supply chain to the next.
Merchandise might need to travel via road vehicles, freight trains, shipping, or even air
travel for long-distance supply chains

8. Control: Logistics is a complex operational procedure that requires a lot of precise

information to be effective. Forecasting demand, transportation times, and inventory are
crucial to keeping the operations to a tight timescale.

ADVANTAGE OF LOGISTICS

• Enhanced Distribution Network – When having a good logistics system, with different
logistics operators, you are able to optimize the times along with the distribution chain.
There are a variety of companies out there that are available to take care of your logistics
needs at a national and international level.

• Costs Reduction -- Due to automated facilities and other globalized distribution systems,
transport cost and handling costs are able to be reduced. A more efficient logistics chain
will improve both final customer satisfaction and the service.

• Delivery Fulfillment – Delivery fulfillment is extremely important to modern-day

customers. Through adequate logistical processes, delivery times have been greatly
reduced as compared to a few years ago.

GLOBAL LOGISTICS

Global logistics is a crucial component of modern supply chain management, encompassing the
planning, implementation, and control of the efficient movement and storage of goods, services,
and information from the point of origin to the point of consumption. It plays a pivotal role in
connecting producers and consumers across the globe, facilitating international trade, and
contributing to the overall functioning of the global economy.

Global logistics include:

 Supply Chain Integration: Global logistics involves the seamless integration of various
supply chain components, such as transportation, warehousing, distribution, and
information management. Efficient coordination between these elements is essential to
ensure the smooth flow of goods across borders.
 Transportation: The movement of goods over long distances requires well-established
transportation networks. Various modes, including air, sea, road, and rail, are utilized to
optimize the transit of goods based on factors such as time sensitivity, cost, and nature of
the products.
 Warehousing and Inventory Management: Global logistics involves strategically
placed warehouses to store goods in transit. Efficient inventory management ensures that
products are available when and where they are needed, reducing delays and enhancing
customer satisfaction.
 Customs Compliance: Navigating the complexities of international trade requires
compliance with various customs regulations, import/export restrictions, and
documentation procedures. A deep understanding of global trade laws is crucial to avoid
delays and penalties.
 Information Technology: Technology plays a pivotal role in global logistics through the
use of advanced systems for tracking, monitoring, and managing inventory. This includes
the use of GPS, RFID, and sophisticated software solutions for supply chain visibility and
optimization.
 Risk Management: Global logistics professionals must address various risks, including
geopolitical uncertainties, natural disasters, and fluctuations in currency exchange rates.
Robust risk management strategies are essential to mitigate potential disruptions to the
supply chain.
 Environmental Considerations: Sustainable and environmentally friendly practices are
increasingly becoming a priority in global logistics. Companies are exploring ways to
reduce carbon footprints, optimize transportation routes, and employ eco-friendly
packaging solutions.
 Globalization Trends: The increasing interconnectedness of economies has led to a rise
in global trade, necessitating agile and adaptive global logistics strategies. Companies
often operate in diverse markets, and efficient logistics contribute to their
competitiveness in a global context.

Role of Global Logistics:

• Globalization helped in doing business beyond the national boundary

 • The world has become global village in real sense

• Internet has made easy to do business across the globe

• Speed and Efficiency in the movement of goods is focused more.

• Global operations of business increase the complexity of logistics.

DHL INTERNATIONAL GMBH (DHL)

• DHL International GmbH (DHL) is an international courier, package delivery

and express mail service, which is a division of the German logistics firm Deutsche Post.
The company delivers over 1.5 billion parcels per year.

• It connects people in over 220 countries and territories worldwide. Driven by the power
of more than 360,000 employees, it deliver integrated services and tailored solutions for
managing and transporting letters, goods and information.

LOGISTICS CHANNEL

A logistics channel, often referred to as a supply chain or distribution channel, is a network of

organizations, people, activities, information, and resources involved in moving a product or
service from the supplier to the customer. The primary goal of a logistics channel is to efficiently
and effectively deliver goods or services from the point of origin to the point of consumption.
This process involves several key components:

Supplier: The logistics channel typically begins with the supplier, who provides the raw
materials, components, or finished products. Suppliers are crucial in determining the quality,
cost, and availability of the goods in the supply chain.
Manufacturer/Producer: The next stage involves the transformation of raw materials into
finished products by manufacturers or producers. This stage may also include assembling
components, packaging, and quality control.

Distribution Center/Warehouse: Goods often pass through distribution centers or warehouses

where they are stored, sorted, and sometimes processed further before being shipped to retailers
or directly to consumers. These facilities play a key role in inventory management and order
fulfillment.

Retailer: Retailers acquire products from distributors or directly from manufacturers and make
them available to consumers through various sales channels, including brick-and-mortar stores,
e-commerce platforms, or other distribution methods.

Consumer: The final stage of the logistics channel involves the end consumer who purchases
and uses the product or service. The efficiency of the logistics channel greatly influences
customer satisfaction and can impact a company's competitiveness in the market.

Transportation: Throughout the logistics channel, transportation is a critical element. It

involves the movement of goods from one point to another and can include various modes such
as road, rail, air, and sea. The choice of transportation mode depends on factors like speed, cost,
and the nature of the products being transported.

Information Flow: A smooth logistics channel relies heavily on the flow of accurate and timely
information. This includes data related to inventory levels, order processing, shipping status, and
demand forecasting. Technology, such as integrated software systems, plays a vital role in
facilitating this information flow.

Reverse Logistics: In addition to the forward flow of goods from suppliers to consumers,
logistics channels also involve reverse logistics. This includes processes for the return of
products, recycling, or disposal, and is essential for managing product returns, recycling, or the
disposal of defective or obsolete goods.

Third-Party Logistics (3PL) Providers: Many companies use third-party logistics providers to
manage certain aspects of their logistics channels. These providers offer specialized services
such as transportation, warehousing, and order fulfillment, allowing companies to focus on their
core competencies.

Global Logistics: In the context of a globalized economy, logistics channels often extend across
international borders. Managing global logistics involves dealing with additional complexities
such as customs regulations, currency fluctuations, and geopolitical considerations.

The various goals of logistics channel are as follows:

 Meeting customer service level

  Minimize cost

 Increased sales

 Building relationship for better logistics execution

A simple logistic channel can be viewed as follows:

INVENTORY MANAGEMENT

• Definition: Inventory management is an approach for keeping track of the flow of

inventory. It starts right from the procurement of goods and its warehousing and
continues to the outflow of the raw material or stock to reach the manufacturing units or
to the market, respectively. The process can be carried out manually or by using an
automated system.

• When the goods arrive at the premises, inventory management ensures receiving,
counting, sorting, arrangement, storage and maintenance of these items, i.e. stock, raw
material, components, tools, etc., efficiently.
FLOW OF INVENTORY

INVENTORY MANAGEMENT OBJECTIVES

• Preventing Dead Stock or Perishability: With an optimal inventory level, the chances
of wastage in the form of goods spoilage or dead stock.
 • Optimizing Storage Cost: It reduces the chances of maintaining excessive stock, even
the requirements are pre-determined, which ultimately cuts done the unnecessary
warehousing costs.

• Maintaining Sufficient Stock: Now, the production department need not worry about
the shortage of raw material or goods because of its constant supply.

• Enhancing Cash Flow: Inventory has a significant impact on the cash flow of the
company. With effective inventory management, the organization can ensure sufficient
liquid cash to enhance its operational efficiency.

• Reducing the Inventories’ Cost Value: When there is a constant purchase of goods or
stock, the organization can ask for discounts and other benefits to decrease the purchase
price.

TYPES OF INVENTORY MANAGEMENT

• While installing an inventory management system, the organization has to consider the
various aspects like cost, budget, utility and accessibility. However, it can be classified
into the following types:

• Bar-code Inventory Management – The barcode system is its automated and simplified
version. The management can find out the stock remaining with just one click on a
computer device. The scanned barcodes enable the software to maintain a track of all the
purchases and the flow of inventory.
 • Continuous Inventory Management – It links the barcode and radio frequency
identification with the accounting inventory system, inventory received, and point of
sales systems along with the production system, to trace the path of inventory movement.
It is mostly beneficial for accounting purpose. This is also termed as perpetual inventory
management.

• Periodic Inventory Management – It is a manual process, which is used for

determining the closing inventory value, for putting it up in the ledger at the end of a
financial year. Depending on the organizational need, it can also be analyzed quarterly.
However, it is a time-consuming way, since the inventory has to be physically counted.

INVENTORY MANAGEMENT COSTS

• Inventory costs are all costs associated with ordering, holding and managing the
inventory or stock of an operation or business.

• These inventory costs include Ordering costs, holding costs, and shortage costs.

• It is therefore important to understand and have the ability to manage these different
inventory costs when making production/purchasing, logistics, or inventory holding size
decisions including determining safety stock levels

DIFFERENT INVENTORY COSTS

• Inventory ordering costs: These include costs incurred in ordering a batch, production
run, or purchase of externally made parts or products. Costs such as administration and
order approval costs including the costs to run an inventory management and ordering
system are included in this category.

• Inventory holding costs: These are costs incurred while holding inventory or stock in
storage or a warehouse and managing its delivery to customers. Most of these costs can
be quantified easily. Some common inventory holding costs include :Warehousing and
logistic costs, Insurance, Spoilage/breakage losses, Obsolete inventory write offs, and
opportunity cost of tied up capital.

• Inventory Shortage costs: Inventory shortage costs refer to the costs, some intangible,
of running out of stock and not being able to supply customers with the goods they
demand in a certain timeframe or lead time . Most of these costs are difficult to quantify.
The effects of a stock shortage, and cost, mainly relate to lost sales and profits, lost
customers, stock-out fines and contract disputes
MODEL OF INVENTORY MANAGEMENT

• The most popular inventory control models are

• Economic Order Quantity (EOQ)

• Inventory Production Quantity
• ABC Analysis.
• Material Requirements Planning (MRP)
• Distribution Resource Planning (DRP)
• Just-In-Time (JIT)

ECONOMIC ORDER QUANTITY (EOQ)

• The Economic Order Quantity inventory management method is one of the oldest and
most popular.

• EOQ lets you know the number of inventory units you should order to reduce costs based
on your company holding costs, ordering costs and rate of demand.

• How to calculate EOQ:

• But the EOQ makes some big assumptions that won’t work for every company. It
assumes your rate of demand, ordering costs and unit price of inventory is constant. So if
you tend to have periods of time where the demand for your products is a lot lower or
higher than other periods, the EOQ number will be meaningless.

INVENTORY PRODUCTION QUANTITY

• Also known as Economic Production Quantity, or EPQ, this inventory control model tells
you the number of products your business should order in a single batch, in hopes of
reducing holding costs and setup costs.

• It assumes that each order is delivered by your supplier in parts to your business, rather
than in one full product.
 • This model is an extension of the EOQ model. The difference between the two models is
the EOQ model assumes suppliers are delivering inventory in full to your customer or
business.

• How to calculate Inventory Production Quantity:

 K is setup (order) costs

 D is demand rate (units)

 X is Demand Rate / Production Rate

 h is yearly holding cost per product

• This model could be a good fit for business if:

 business tends to order inventory from suppliers in parts rather than one full order, such
as for an automotive company.

 Demand for products is consistent over periods of time.

ABC ANALYSIS

• ABC analysis categorizes the inventory based on levels of importance. By knowing

which inventory is the most important, the attention will be focused.

• To be most effective, ABC Analysis is frequently used with other inventory management
strategies, such as the Just in Time method.

• Inventory is categorized into either group A, B or C.

• So how do you know which category to put inventory under? It’s based on the 80/20 rule,
also known as the Pareto Principle
THE PARETO PRINCIPLE

 Category A: Inventory under this category brings in the most money and is only a small
amount of your total inventory. It’s only 20 percent of the inventory but brings in 70
percent of total revenue. Category A inventory is given the most amount of attention and
has tight ordering controls in place.

 Category B: Unlike Category A inventory, this B inventory is not vital for the business
to survive, but it still matters. It’s 30 percent of the stock with 25 percent revenue.

 Category C: Inventory categorized under C is 50 percent of the products with 5 percent

revenue. This inventory doesn’t bring in as much profit as A and B, but it’s consistent.
Inventory controls are pretty loose here since it brings in such a small amount of
income.

• A good example is Amazon, whose products cover a large range of prices. Not every
item you see listed on their website is in stock. That would lead to incredibly high
holding costs, making it difficult to turn a profit. So instead they order inventory based on
what they see with their ABC category guidelines.

MATERIAL REQUIREMENTS PLANNING (MRP)

• Material requirements planning (MRP) is a system that helps manufacturers plan,

schedule, and manage their inventory during the manufacturing process. It is primarily a
software-based system.

• MRP's objective is threefold:

1. Make sure raw materials are available for production when required

2. Maintain the lowest possible material and component levels

3. Plan and schedule manufacturing activities

HOW DOES MRP BENEFIT A BUSINESS?

• Ensures that materials and components are available when they're needed

• Inventory levels are optimized and associated costs are minimized

• Manufacturing efficiency is improved significantly

• Customer satisfaction is increased due to reduced lead times

WHAT ARE THE INPUTS OF MRP?

• The three basic inputs of an MRP system are the master production schedule (MPS),
inventory status file (ISF), and bill of materials (BOM).

• The MPS is simply the quantity and timing of all end goods to be produced over a
specific time period. MPS is estimated through customer orders and demand forecasts.

• The ISF contains important real-time information on a company's inventory. It lets

managers know what they have on hand, where that inventory is, and the overall status of
the inventory.

• The BOM is a detailed list of raw materials, components, and assemblies required to
construct, manufacture or repair a product or service.

DISTRIBUTION RESOURCE PLANNING (DRP)

Distribution Resource Planning (DRP) is a comprehensive logistics and supply chain

management system that focuses on the efficient distribution of finished goods to meet customer
demand. DRP is an extension of the Material Requirements Planning (MRP) system, which
primarily deals with the production of goods, and it is particularly valuable for companies with
complex distribution networks and diverse product lines.

Scope and Purpose: DRP is designed to manage the flow of finished goods from production
facilities to distribution centers and ultimately to end customers. Its primary goal is to ensure that
products are available in the right quantities, at the right locations, and at the right times to meet
customer demand.

Integration with MRP: DRP is closely linked with MRP. While MRP focuses on materials
needed for production, DRP extends the planning process to cover the distribution and delivery
of finished products. The two systems work together to create a seamless end-to-end supply
chain planning process.

Distribution Network Modeling: DRP involves the creation of models that represent the
distribution network, including production facilities, warehouses, distribution centers, and retail
locations. These models consider the movement of products through the entire distribution
channel.

Lead Time Considerations: Like MRP, DRP takes into account lead times associated with the
distribution process. This includes the time required for transporting goods from production
facilities to distribution centers and, subsequently, to retailers or end customers.

Inventory Management: DRP helps in optimizing inventory levels within the distribution
network. It considers factors such as safety stock, order quantities, and reorder points to ensure
that products are available to meet demand without excessive holding costs.
Order Generation and Fulfillment: Based on demand forecasts, inventory levels, and
distribution network constraints, DRP generates order recommendations for the replenishment of
stock. This includes orders for transferring goods between distribution centers and fulfilling
customer orders.

Transportation Planning: DRP includes transportation planning to optimize the movement of

goods from one point to another. This involves selecting the most cost-effective and efficient
transportation modes and routes to meet delivery requirements.

Dynamic Adjustments: DRP is not a static planning tool; it adapts to changes in demand,
production schedules, and distribution network dynamics. The system continuously monitors and
adjusts plans to ensure alignment with the evolving business environment.

Technology Integration: Advanced DRP systems often integrate with other technologies, such
as Warehouse Management Systems (WMS) and Transportation Management Systems (TMS).
This integration enhances the overall efficiency of the distribution process.

Benefits of DRP:

• Optimized Distribution: DRP helps in optimizing the distribution network, reducing lead
times, and improving the overall efficiency of the supply chain.
• Improved Customer Service: By ensuring products are available where and when they are
needed, DRP contributes to enhanced customer satisfaction.
• Cost Reduction: Efficient distribution planning minimizes transportation costs, reduces
inventory carrying costs, and contributes to overall cost savings.

JUST-IN-TIME (JIT)

Just-In-Time (JIT) is a management philosophy and production strategy that aims to produce
goods or deliver services precisely at the moment they are needed and in the quantity required.
The key principle of JIT is to eliminate waste and inefficiency throughout the production process
by synchronizing production closely with customer demand. This approach originated in Japan
and has been widely adopted by companies around the world.

Fundamental elements of Just-In-Time:

Demand-Driven Production: JIT operates on a demand-driven model, meaning that production

is initiated in response to actual customer demand. This is in contrast to traditional
manufacturing approaches that rely on forecasts and produce goods based on predetermined
schedules.

Minimization of Inventory: A core tenet of JIT is the reduction of inventory levels at various
stages of the production process. This includes raw materials, work-in-progress, and finished
goods. By minimizing inventory, JIT aims to reduce carrying costs, prevent overproduction, and
identify defects or quality issues sooner.

Pull System: JIT uses a pull system rather than a push system. In a pull system, production is
triggered by the immediate needs of downstream processes or customers. Work centers produce
goods only when there is a demand signal, often conveyed through visual cues like Kanban cards
or electronic systems.

Continuous Flow: JIT emphasizes a continuous and smooth flow of materials and information
throughout the production process. This is achieved by minimizing batch sizes, reducing setup
times, and eliminating bottlenecks to ensure a steady and efficient workflow.

Takt Time: Takt time is the rate at which products need to be produced to meet customer
demand. JIT uses this concept to determine the pace of production, ensuring that it aligns with
the rate at which products are required by customers.

Kanban System: The Kanban system is a visual signaling method used in JIT production. It
involves the use of cards or other visual indicators to signal when to produce or replenish goods.
This system helps maintain optimal inventory levels and supports a smooth production flow.

Flexible Workforce: JIT encourages a flexible and multi-skilled workforce. Employees are
trained to perform various tasks, enabling them to adapt quickly to changes in production
requirements. Cross-training contributes to a more agile and responsive manufacturing
environment.

Total Quality Management (TQM): Quality is a fundamental aspect of JIT. By focusing on

producing high-quality products in the right quantity at the right time, JIT reduces the need for
extensive inspection and rework. TQM principles are often integrated into JIT practices to ensure
continuous improvement.

Supplier Relationships: Collaborative relationships with suppliers are crucial in JIT systems.
Suppliers are expected to deliver high-quality materials in the required quantities exactly when
they are needed. Close collaboration with suppliers is essential to maintain the smooth flow of
materials.

Continuous Improvement (Kaizen): The philosophy of continuous improvement, known as

Kaizen, is inherent in JIT. Companies practicing JIT are committed to continually refining
processes, enhancing quality, and optimizing efficiency over time.
ENVIRONMENTAL ISSUES OF LOGISTICS

• Greenhouse Gas Emissions: One of the most significant environmental concerns in

logistics is the emission of greenhouse gases (GHGs) such as carbon dioxide (CO2),
methane (CH4), and nitrous oxide (N2O).

• Air Pollution: The logistics sector is a source of air pollution, with the emission of
pollutants like nitrogen oxides (NOx), particulate matter (PM), and volatile organic
compounds (VOCs). These emissions can harm air quality and public health, especially
in urban areas where transportation is dense.

• Noise Pollution: Logistics operations can generate noise pollution from activities like
truck and rail transportation, loading and unloading of goods, and operation of
distribution centers.

• Habitat Disruption: The construction and operation of transportation infrastructure, such

as roads, railways, and airports, can disrupt natural habitats, leading to habitat loss and
fragmentation. This can impact local wildlife and ecosystems.

• Resource Depletion: Logistics requires the use of substantial resources, including

energy, water, and materials. Overuse of these resources can deplete natural reserves and
exacerbate resource scarcity issues.

• Waste Generation: Packaging materials, obsolete equipment, and general waste

generated by logistics operations contribute to solid waste problems. Ensuring sustainable
waste management and recycling practices is essential.

• Congestion: Traffic congestion is a byproduct of logistics activities in urban areas,

leading to fuel waste, increased emissions, and reduced overall efficiency. It can also
have economic and social impacts.

• Water Pollution: The shipping industry is a significant source of water pollution due to
the discharge of ballast water, cargo residues, and other pollutants into oceans and water
bodies. These pollutants can harm marine ecosystems and aquatic life.
UNIT-2
TRANSPORT SYSTEM MODEL & WAREHOUSING

WHAT IS A TRANSPORTATION MANAGEMENT SYSTEM

• A transportation management system (TMS) is a logistics platform that uses

technology to help businesses plan, execute, and optimize the physical movement of
goods, both incoming and outgoing, and making sure the shipment is compliant, proper
documentation is available.

• This kind of system is often part of a larger supply chain management (SCM) system.

• Sometimes known as a transportation management solution or transportation

management software, a TMS provides visibility into day-to-day transportation
operations, trade compliance information and documentation, and ensuring the timely
delivery of freight and goods.

• Transportation management systems also streamline the shipping process and make it
easier for businesses to manage and optimize their transportation operations, whether
they are by land, air, or sea.
IMPORTANCE OF TRANSPORTATION MANAGEMENT SYSTEM

• Transportation management systems play a central role in supply chains, affecting every
part of the process—from planning and procurement to logistics and lifecycle
management.

• The broad and deep visibility afforded by a powerful system leads to more efficient
transportation planning and execution, which results in higher customer
satisfaction. That, in turn, leads to more sales, helping businesses grow.

• With such a dynamic global trade environment that we live and transact in, it is important
to have a system that will allow you to successfully navigate complicated processes
around trade policies and compliance.

WHO USES A TMS?

• Transportation management systems are primarily used by businesses that need to ship,
move, and receive goods on a regular basis, including:

• Manufacturers

• Distributors
 • Ecommerce companies

• Retail businesses

• Companies that provide logistics services, such as third-party and fourth-party logistics
(3PL and 4PL) companies and logistics service providers (LSPs)

THE BENEFITS OF A TMS

• Reduced costs for the business and the end customer

• Simplification of supply chain processes across geographies, modes, and carriers

• Automation of business operations for faster and more accurate billing and
documentation

• Improvement in visibility and security, especially in transit

• Time savings—fewer manual steps result in fewer delays and faster delivery times

• The ability to track freight, both locally and globally, on a single platform

• Better import and export compliance minimizing penalties and shipment delays

• New business insights as better reporting leads to faster action and process improvement

• Improvements in customer service and customer satisfaction with real-time updates and
fewer shipment delays

• The ability to scale the business by meeting and exceeding customer demands for fast,
on-time shipments

MODES OF TRANSPORTATION

• The mode of transportation is an important consideration when planning the shipment

process.

• Besides the costs, the urgency of the shipment, the value of the goods being shipped as
well as the size and weight of the goods need to be evaluated when determining the form
of transportation.

• The five modes of transportation

 Railways

 Roadways

 Airways
  Waterways

 Pipelines

Ocean:

• Seaborne trade accounts for about 80% of the global trade measured by volume, and as
per UNCTAD.

• Because of size or volume, there are several types of cargoes that cannot be or is
economically unviable to move by other modes of transport than the sea.

• Ocean freight is a less expensive method of shipping goods, but the drawback is a longer
transit time.

• Another benefit for ocean freight is while size and weight may be an issue for air; it is not
for ocean freight.

• Ocean freight is used quite extensively for the movement of bulk commodities such as
agri-products (wheat, maize, soya, etc.), coal, iron ore or for wet bulk products such as
crude oil and petroleum. Also, larger, odd-shaped items including engines and propellers
may move via this mode as well, depending on how sensitive the delivery time is.

Airways :

• Air freight is a critical mode of transport. It serves markets and supply chains that
demand speed.
 • The automotive and retail industry utilize air freight to achieve ‘just-in-time’ (JIT)
inventory replenishment. JIT option allows stores, production lines to place order
fulfilment based on demand as, and when required. It provides greater flexibility and
reduces inventory and storage costs.

• Also, perishable goods such as foods, flowers, and some pharmaceuticals also take
advantage of shorter transit time.

• Another positive for air freight is that there’s less handling of cargo overall, so the
likelihood of damage or theft is less likely when utilizing air.

• But air freight also has its own disadvantages such as being one of the most expensive
due to the requirement of speed and the fuel that is used.

• It also has its size and weight limitations.

Railways:

• Another mode of transport which is also considered a ‘green’ option is rail. Trains burn
less fuel per ton-mile than road vehicles

• A train which can have as many than 100 wagons, only needs one driver.
 • On average, longer journeys tend to be less expensive by rail, and shorter journeys are
less costly by road.

• Benefits of railways:

• Reliable transit times and schedules

• Railroads are the most efficient form of land transportation. One train can haul the
equivalent of over 400 trucks

• Fast and cost-effective deliveries over long distances. Typically over 500 miles

• Traditionally, rail has a strong safety record.

• Helps in alleviating road congestion, thus lowering emissions

Roadways:

• Road freight is one of the most common of all modes of transportation

• Road freight provides several advantages over other modes of transportation such as

• Cost-effectiveness

• Quick and scheduled delivery

• Local, over border, long or short haul deliveries even in rural areas

• Flexible service

• Saving in Packing Cost compared to other modes

 • Track and trace of cargo and truck

• Complete door-to-door service and it is one of the more economical means of transport.

• However, truck transport is limited somewhat as to what it can carry by the size of the
vehicles used and by size and weight restrictions. Another limitation is that it is affected
by weather, road conditions and traffic.

Pipe-Lines:

• Pipe-lines are the specialized means of transportation designed to move the items like
crude-oil, petroleum, chemicals, coal, lime-stone, iron-ore, copper concentrates and gas.

• India has made a late beginning in this regard unlike U.S.A., U.S.S.R. and Middle-East,
and the development is undertaken only in case of oil refineries to move petrol and gas
from sources to markets.

• Crude oil or coal and gas transported through the pipelines works out almost 1/4 of
railways and roadways.

• Pipe-line transportation presents all weather system to move the products. Absolutely
there is no any wastage of time as it works round the clock.

• As there are no occasions of loading and unloading, there is no scope for spilling,
evaporation, pilferage and so on.

• Though operational and maintenance costs are minimal, the capital cost of pipe-line is
rather much higher and that is why a county like India has minimum length.

WAREHOUSING

• A warehouse may be defined as a place used for the storage or accumulation of goods.
The function of storage can be carried out successful with the help of warehouses used
for storing the goods.
 • Warehousing can also be defined as assumption of responsibility for the storage of goods.
By storing the goods throughout the year and releasing them as and when they are
needed, warehousing creates time utility.

FUNCTIONS OF WAREHOUSING

ROLES OF WAREHOUSING IN LOGISTICS

• Inventory control

• By having a warehouse, it is much easier for businesses to manage a large amount of

inventory. Warehouses can help when a company needs to match supply with demand in
a fast-changing environment.

• For economic reasons

 • Because of their efficient operations, warehouses offer many economic benefits to
businesses, which is a key reason to invest in one.

• Costs such as transportation, outbound delivery and shipping are massively reduced with
a warehouse

• Centralising the products

• With all its products in one place, a business will have a much easier time of receiving,
storing and distributing its goods.

• This also reduces transport costs associated with the business as staff at the warehouse
can organise the goods straight from the premises, including identifying, sorting and
dispatching.

• An emergency buffer

• Warehouses have an unusual role in maintaining the integrity of a business. Why?

Because if an emergency strikes, such as faulty products or delays to transportation, the
business has spare goods in stock to turn to.

• Adding value

• Warehousing is just one part of an efficient logistics system. All goods are kept together
in one place, available to access whenever the time is right. They are there, ready, for
other necessary activities to take place, such as order consolidation and mixing products.
They are also a key part of the packing and shipment stages of logistics.

• Keeping goods safe

• A warehouse’s role is also to protect a business’s goods. Warehouses have both security
personnel and excellent security technology to ensure sites can’t be accessed without
permission.

TYPES OF WAREHOUSES:

 Distribution Centre
 Public Warehouse
 Private Warehouse
 Bonded Warehouse
 Climate-controlled Warehouse
 Smart Warehouse
 Consolidated Warehouse
Distribution centre

Distribution centres are warehouses that have larger space than any other warehouse. These
centres enable faster movement of large quantities of goods within a short time. Goods are
procured from multiple suppliers and are quickly transferred to various customers.

These centres make an important part of the supply chain, as they provide fast and reliable
movement of goods. Most of these centres have computerised control leading to higher
efficiency. To further increase efficiency and lower delivery time, these centres are often located
close to transportation centres.

In the case of perishable products, goods are stored in the centre for less than a day, as they enter
early morning and are distributed to customers by evening.

Reasons to Choose:

 Efficiency of operations
 Storage capacity

Public warehouse

Public warehouses are the ones owned by the government or semi-government bodies. They are
lent out to private sector companies to stock up on goods upon paying a certain amount of rent.

It’s a great option if you’re a small business or an eCommerce startup which is not in a position
to own a warehouse and needs to store goods for a short time period. This storage facility allows
small businesses to deal with the overflow of goods until they are ready to own an additional
warehouse.

Reasons to Choose:

 Affordable option
 Open accessibility

Private warehouse

As the name suggests, private warehouses are privately owned by large retail corporations,
wholesalers, manufacturers or distributors. Large online marketplaces also have privately owned
warehouses to store merchandise.

These private companies purchase products in bulk for the peak season and store them in the
warehouse for the systematic distribution of orders that are bound to come their way.
Private warehousing, also known as proprietary warehousing, requires capital investments by the
owner. Hence, it’s best for well-established companies. Although it warrants investment in the
start, it turns out to be quite cost-effective in the long run.

Reasons to Choose:

 Less long-term cost

 Better regional presence

Bonded warehouse

Bonded warehouses are mainly owned and run by a government or private agencies. This type of
storage facility is used to store imported goods before customs duties are levied on them, as the
companies storing goods in these warehouses do not pay any duty charges until their items are
released.

The private agencies that run bonded warehouses must obtain a government license before
getting into this business. Through this mechanism, the government ensures that importers pay
their taxes on time. Without paying the duties, no importer can open their goods.

Bonded warehouses are perfect for importers, as they can keep their items duty-free even for a
long time until they find their customers. Such warehouses play a crucial role in cross-border
trade, making them ideal for eCommerce businesses involved in international trade.

Reasons to Choose:

 Low overall cost

 Helps in international trade

Climate-controlled warehouse

As the name goes, these warehouses are used to store items that need to be kept at a specific
temperature, mostly perishables. Climate-controlled warehouses can range from humidity-
controlled environments that can store fresh fruits, flowers, etc., to freezers that store frozen
foods.

Reasons to Choose:

 Protection against natural elements

 Better inventory security
Smart warehouse

When we talk about automation these days, warehouses are not left much behind. Smart
warehouses use artificial intelligence in their storage and fulfillment process. Everything is
automated, starting from packing items to transporting goods to the end customers.

These warehouses require minimal manual supervision, as they operate using the latest
technologies. Smart warehouses are increasingly being used by eCommerce giants like Amazon
and Alibaba.

Reasons to Choose:

 Lesser chances of error

 Reduced manual efforts and cost

Consolidated warehouse

Consolidated warehouses are third-party storage facilities wherein various small shipments are
collected from various suppliers and combined into a bigger and more economical truckload,
bound for a similar geographical location.

Reasons to Choose:

 Economies of scale
 No capital investment

TECHNOLOGY TRENDS SHAPING THE FUTURE OF MATERIAL HANDLING

"BIG DATA" AND ANALYTICS

• One of the most common definitions of "big data" is data that exceeds the processing
capacity of conventional database systems.

• In the context of warehouse management, big data includes the processes required to
aggregate, inspect, clean, transform, and model data with the goal of discovering useful
information, suggesting conclusions, and supporting decision making.

THE INTERNET OF THINGS

• The Internet of Things describes the sensors and data-communication technology built
into physical objects that enable them to be tracked, coordinated, or controlled across a
data network or via the Internet.
 • While a contributor to the big data trend, the Internet of Things is distinct in that it
represents direct machine-to-machine communication and coordination, while big data
generally encompasses data from a variety of sources that are consolidated for human
analysis.

• In the warehouse, the Internet of Things will support communication and coordination
across conveyors, automated storage and retrieval systems, forklifts, and other systems to
enable new levels of visibility and automation.

MOBILE TECHNOLOGY

• Mobile technology refers to the use of tablets, smartphones, and other handheld or
wearable devices for communication and information.

• As material handling operations increase their use of analytics and automation, mobile
technology will emerge as the primary platform for displaying data.

• With mobile technology, warehouse managers will have access to a wealth of data,
including equipment status and performance reports, wherever they may be

ADVANCED ROBOTICS

• Robotic equipment has been used in material handling for some time. But a new
generation of advanced robots incorporates enhanced levels of sensing capabilities and
algorithms that allow them to better sense their environment and make decisions based on
changes in that environment.
 • This is an important development in the use of robotics in material handling. Material
handling tasks typically have been too variable to make them good candidates for
robotics.

• As in manufacturing, the use of robots in material handling will free humans from
performing routine tasks and bring greater speed and accuracy to repetitive tasks,
supporting the ultimate goal of reducing material handling costs.

ADVANCED ROBOTICS
AUTONOMOUS VEHICLES

• Autonomous vehicles are driverless, but not all driverless vehicles are autonomous.
Autonomous vehicles are capable of making decisions in response to their environment.

• Driverless vehicles, such as automatic guided vehicles (AGVs), are controlled from
outside the vehicle or are limited to a programmed path.

• The AGVs used in warehouses today typically follow preplanned routes and can't
navigate around obstacles. When obstacles are encountered, an AGV simply stops in its
tracks. Human intervention is required to remove the obstacle and restart the AGV.

• To be truly autonomous, AGVs need decision-making capability that allows them to

perform tasks with a high degree of freedom from external control.

AUTONOMOUS VEHICLES
INBOUND LOGISTICS

• Inbound logistics refers to the transportation, the storage and the receiving of goods into a
business.

• It relates to goods procurement for office use or for the production unit. In a
manufacturing company, the production unit purchases raw materials or components
from its suppliers for the production of other goods.

• In summary, the process of bringing in purchased goods into the company is known as
inbound logistics

INBOUND LOGISTICS

PURCHASING

• Purchasing is the organized acquisition of goods and services on behalf of the buying
entity.
 • Purchasing activities are needed to ensure that needed items are obtained in a timely
manner and at a reasonable cost.

• A purchasing department is especially necessary in a manufacturing business, where

large amounts of raw materials and components must be obtained on a recurring basis.

• The purchasing department's primary goals are as follows:

• To locate suppliers that can provide goods and services in accordance with the buyer's
requirements.

• To buy items that meet the quality specifications of the buyer.

• To create a stream of deliveries into the buyer's premises that minimize the raw materials
inventory investment while still ensuring that goods are available as needed.

• To minimize the amount of cash invested in inventory.

TRANSPORT SECURITY

• Owing to the increased threat of terrorist attacks and criminal activity on public transport,
the industry has called for greater levels of security in its daily operations.

• For a variety of services from general transport to airlines and cash carrying vehicles,
there is a certain risk of danger.

• Improving the breadth and scope of security in today’s world can provide peace of mind
on public protection and improved national and international security.

• Transportation security typically involves airlines, banks, cash transportation vehicles or

train terminals
 • Implementing transportation security measures requires the following considerations:

• Procedural security measures. Ensuring that the introduction and removal of cargo
from the supply are recorded and can be verified. A similar process applies for passenger
transportation where for the manifest of conveyances such as airplanes and trains is
monitored. It also includes the various measures along the transport chain to maintain
security, such as cargo and passenger monitoring.

• Physical security measures. Ensuring that the infrastructures, namely the modes and
terminals, are secure in terms of access.

• Employee security measures. Ensuring that the personnel involved, from management
to cargo handling, have been screened and been subjected, depending on the sensitivity of
the concerned transportation modes, to background checks.

• Information systems security measures. Since the data involved in the management of
supply chain has a commercial value, it is important that the information and
telecommunication systems are secure. Additionally, a tier access structure to the
information must be established based upon which information is relevant to whom.

PRODUCT PACKAGING

• Packaging is the technology of enclosing or protecting product for distribution,

storage, sale and use
 • Packaging also refers to the process of design, evaluation and production of packages

• Packaging can be described as coordinated system of preparing goods for transport,

warehousing, logistics, sale and end use

• Packaging contains, protects, preserves, transports, informs.

PACKAGING IN LOGISTICS

• Packaging should be done in the way so that: movement of goods between incoming
transport, storage, processes and outgoing transport should be flexible and easy, should
not hamper the constituent material throughout the path along the logistics

• The right packaging ensures the constituent product is: in the right condition at the right
place in the right position in the right sequence for the right cost by using the right
methods.
IMPORTANCE OF PACKAGING IN LOGISTICS

1. Products Are Protected:

• Products that get damaged in the transportation process can create significant difficulties.
It will not only cost you the value of the damaged product and shipping cost but, there is
also a possibility you also need to send replacements. Which gives you an additional cost.
Damaged goods upset clients, and gives the company a poor name. A good logistics
packaging keeps products safe, and ensure that your product arrives at their address in the
perfect form and free from any damage.

2. Give vital information to the customers:

• A distributor requires a lot of information about the product. And a transportation

packaging is a suitable position to display the same. Numerous things can be printed on
the packaging boxes. Simple things, like which way up the transportation package
required to put, or the products in the package are fragile or not. One can also give
detailed handling guidance, for example, an appropriate temperature range for the
products which is getting delivered.

4. A good packaging makes storage of goods possible

A suitable packaging allows to store products easily. It really does not matter what the size of the
product, or how delicate a product is if the right packaging is done.
4. Product packaging can even help you in increasing your sales figures
If the packaging of your product is retail ready, your goods can be displayed on the counters in
their custom display. By selecting packaging that highlights brand colors, product information,
and other information which is required to know by a customer, the chances of sales goes up are
quite bright.

TRANSPORTATION PRICING/COST

• There are four basic cost elements in transportation. Knowledge of these costs enables a
shipper to get a better price by selecting the right shipping mode. The four basic costs are
as follows:

• Line haul

• Pickup and delivery

• Terminal handling

• Billing and collecting

Line-haul costs

• When goods are shipped, they are sent in a moving container that has a weight and
volume capacity. The carrier, private or for hire, has basic costs to move this container,
which exist whether the container is full or not. For a truck, these include such items as
the driver’s wages and depreciation due to usage. These costs vary with the distance
travelled, not the weight carried. The carrier has essentially the same basic costs whether
the truck moves full or empty. If it is half full, the basic costs must be spread over only
those goods in the truck.

Pickup and delivery costs

• Pickup and delivery costs are similar to line-haul costs except that the cost depends more
on the time spent than on the distance travelled. The carrier will charge for each pickup
and the weight picked up. If a shipper is making several shipments, it will be less
expensive if they are consolidated and picked up on the trip.

Billing and collecting

• Every time a shipment is made, paperwork must be done and an invoice made out.
Billing and collecting costs can be reduced by consolidating shipments and reducing the
pickup frequency.
 Terminal handling

• Terminal handling costs depend on the number of times a shipment must be loaded,
handled, and unloaded. If full truck loads are shipped, the goods do not need to be
handled in the terminal but can go directly to the consignee. If part loads are shipped,
they must be taken to the terminal, unloaded, sorted, and loaded onto a highway vehicle.
At the destination, the goods must be unloaded, sorted, and loaded onto a local delivery
vehicle.

• Each individual parcel must be handled. A shipper who has many customers, each
ordering small quantities, will expect the terminal handling costs to be high because there
will be a handling charge for each package.

GLOBAL SUPPLY-CHAIN

• Global supply-chain management is defined as the distribution of goods and services

throughout a trans-national companies' global network to maximize profit and
minimize waste.

• Essentially, global supply chain-management is the same as supply-chain management,

but it focuses on companies and organizations that are trans-national.

• Global supply-chain management has six main areas of concentration: logistics

management, competitor orientation, customer orientation, supply-
chain coordination, supply management, and operations management

• These six areas of concentration can be divided into four main areas: marketing, logistics,
supply management, and operations management.
 • Successful management of a global supply chain also requires complying with various
international regulations set by a variety of non-governmental organizations

• Successful global supply-chain management occurs after implementing the appropriate

framework of concentration, complying with international regulations set by governments
and non-governmental organizations, and recognizing and appropriately handling the
risks involved while maximizing profit and minimizing waste.

AREAS OF CONCENTRATION

Marketing

• Marketing should be emphasized by global supply chain managers to create customer

value, satisfaction, and loyalty. Customer value, satisfaction, and loyalty lead to
improved profit margins, which in turn leads to overall corporate growth.

• Managers need to think about their strategies and the implication of the strategy on the
entire supply chain. One market strategy that is commonly used among businesses with
global supply chains is the customer perspective strategy.

Logistics

• When managing a global supply chain, it is important to place emphasis

on logistics performance as there has been an increase in business-to-
business international marketing.

• Logistics is inherently difficult and complex for a global supply chain as it deals
with trade regulations, shipping distances, and cross-currency issues.

• Companies and/or organizations who place an emphasis on logistics management can

find themselves with a serious competitive advantage as it has a clear visible impact on
customers

• To stay competitive, organizations need to develop global logistic strategies that

appropriately and effectively appeal to the customer's needs. By doing this, companies
are able to take advantage of the increasingly profitable global market

Supply management

Supply management deals with the development and management of the critical
business and supplier relationship.

• As the market becomes progressively global, the strategy of outsourcing suppliers has
increasingly used. Outsourcing suppliers has several benefits for a business if they can
effectively develop the relationship.
RISKS OF OPERATION

Supply-side risk

• Supply-side risk is a category that includes risks accompanied by the availability of raw
materials which effects the ability of the company to satisfy customer demands.

• Several issues can arise from operating a global supply chain. Common supply side risks
are often the fact that it takes a long time to receive products from around the world, and
suppliers may not necessarily operate to the same quality standards

Demand-side risk

• Demand-side risk is a category that includes risks that pertain to the availability of the
finished product.

• Demand-side risks mainly occur when companies are unable to deal with the demands of
the customer base.

• This can happen when customer demand is higher than supply, and the company does not
have enough stock to appropriately deal with the customer demand. Since customer
demand changes so frequently it is tough for managers to forecast what is needed for the
next month which creates the risk of running out of stock.

INTERNATIONAL DOCUMENTATION

• There are numerous documents involved in International Trade: commercial documents,

financial documents, insurance documents, and more. Here let’s look at some of the
common documents used for transport in global supply chain management.

• Delivery Order

• A Delivery Order (D/O) is a document from a consignee, an owner or an agent of a

freight carrier that orders the release of the transportation of cargo to another party. This
written order allows for the direct delivery of goods to a warehouseman, carrier or
another person who issues warehouse receipts or Bills of Lading. This document should
not be confused with delivery instructions. Delivery Instructions provide specific details
to carriers regarding the arrangement made by the forwarder to deliver the merchandise
to a particular destination.

• Dock Receipt

• A Dock Receipt confirms that cargo has been received for shipment. This document is
issued by a shipping company and transfers the accountability for the safe transport of the
cargo from the shipper to the carrier. It is the basis for preparing the bill of lading.
 • Bill of Lading (B/L)

• A Bill of Lading is evidence that there is a contract between a shipper of goods and a
carrier. The customer typically needs this original copy as proof and in order to take
ownership of the goods. This document includes the conditions under which the
transportation was conducted and acts as a receipt. This document may be endorsed or
transferred to a third party even while goods are in transit.

• Sea Waybill

• A Sea Waybill is a contract that is not needed for cargo delivery and is only issued as a
cargo receipt. This document of title is used on a trust basis between the shipper and
importer, which means that no Bill of Lading is necessary and goods
are automatically authorized to be released once they arrive at the destination.

• Air Waybill

• An Air Waybill (AWB) is used when carrying goods via air transport. This document
acts as a receipt of goods and reports the condition of the goods.

• This is a non-negotiable document that must name a recipient (may be the buyer). The
AWB indicates acceptance of goods for carriage. It is prepared by IATA agents or
airlines.

• Shipping Guarantee

• A Shipping Guarantee is a written document issued by the bank which will take on joint
liability. It is handed from the importer to the carrier or its agent for picking up the goods.
This document is used in case of arrival before shipping documents.

• Packing Note or List

• A Packing List provides the information needed for transportation purposes. It includes
the details of the invoice, the buyer, the consignee, country of origin, transport date,
delivery destination, shipping and container marks, weight and volume. It is a more
detailed version of a commercial invoice and excludes pricing information. It is typically
attached to the shipment and a copy is sent to the consignee so that he or she can check
the shipment once received. It is not required by all countries, but by some.

IMPROVING LOGISTICS PERFORMANCE

• A company’s logistics performance is key to distribution success. A well-functioning

warehouse is one that efficiently receives and stores stock, picks and packs it speedily
and accurately, and then distributes it to customers quickly.
 • But how can you make your warehouse operations more efficient so that you can improve
your logistics performance, and in turn increase your profits?

Optimize your warehouse layout

• Having the optimal warehouse layout for your operation is key to maximising
productivity. You need your products to be located in the best positions, so that the
general flow through the warehouse is unproblematic. Business intelligence is vital for
discovering which products are selling well. Fast-moving stock needs to be quickly
accessible so that operatives aren’t spending too much time traversing the warehouse.

• A warehouse must react to changes in sales velocity. If products become more popular, of
if they are seasonal, then a flexible strategy needs to be adopted so that products can be
moved in and out of the prime picking positions as needed. There are many strategies that
can be employed: looking at slotting can identify which product lines should be placed
where in your warehouse, and cross-docking can be employed for fast-moving items.

Choose the best picking strategy for your operation.

• The faster your employees pick orders, the better. So it’s essential that you choose the
right picking strategy for your warehouse.

• There are many methods to choose from. Driven by your warehouse management system
(WMS), task interleaving is an advanced strategy that can combine multiple tasks on one
trip through the warehouse.

• Other ways of maximising operatives’ picking time include wave picking, batch
picking and zone picking. In general, batch picking is good for warehouses stocking
small items; wave picking is efficient for companies with a larger number of SKUs and
zone picking is effective for larger operations.

• Another way to ensure that you more orders get out of the door on time is whether you
choose a picker to goods or goods to picker approach.

Employ technology and robotics

• Technology and robotics can automate and speed up processes within the warehouse.

• It might be that you consider employing voice picking, where hands-free operation
allows workers to be more productive. Rather than checking picking notes or manually
checking off items as they are picked, voice control can direct operatives to pick and
there’s no need for clipboards or handheld scanners.

• Labour-saving robots can operate 24 hours a day, 365 days a year, without lighting,
heating or stopping for tea breaks. You don’t’ need to fully automate a warehouse
 though. Robots can undertake tasks like transporting shelves or bins to pickers. Or they
can take replenishment stock to operatives for putaway.

• Other technology like WMS, transport management (TMS), and multi-carrier

management – all integrated into a single platform – can enhance warehouse processes.
They also allow you to have full visibility of your warehouse operations so that you can
measure logistics performance.

Use stock planning and forecasting software

• Balancing varying demands in the warehouse can be tricky. Having the right amount of
stock is vital to ensure customer demand is met, but that not too much money is held up
in slower-moving stock.

• Advanced replenishment and stock planning and forecasting each bring significant
improvements in warehousing, helping to streamline stock management.

• Planning, forecasting, replenishment and optimisation of stock can even be automated,

with software such as Valogix. It can improve item availability, reduce stock-holding,
minimise out of stock situations and even bring an increase in sales.

Set and measure KPIs

• Of course, no attempt to improve efficiency and logistics performance can be achieved

without measuring what you’re doing. You need to be able to assess your performance,
set targets for improvement and then measure how you’re faring as you go on.

• We recommend that warehouses track 7 core KPIs. Together, these give a holistic view
of logistics performance and allow distributors to continually monitor and improve.

WHAT IS QUALITY

• ISO definition: "The totality of features and characteristics of a product or service that
bear on its ability to satisfy stated or implied needs".

• In simpler words, one can say that the service has good quality when it "complies with
the requirements specified by the client".

• In Principle there are three levels from Top Down

• Quality Management

• Quality Assurance

• Quality Control
QUALITY MANAGEMENT

• Quality Management is the assembly and management of all activities aimed at the
production of quality by organization of various kinds.

• A statement of objectives and policy to produce quality should be made for every units in
the organization. It will identify the internal organization and responsibility for the
effective operation in the Quality system.

QUALITY ASSURANCE

• Quality Assurance in ISO definition:

• The assembly of all planned and systematic actions necessary to provide adequate
confidence that a product, process, or service will satisfy given quality requirements.

• The result of these actions aimed at the production of quality, should be audited by
Independent Quality Assurance Officer.

• In case of special project, customers may require special quality assurance measures or a
Quality Plan

QUALITY CONTROL

• Quality Control defined by ISO as “the operational techniques and activities that are used
to satisfy quality requirements. “

• An important part of the quality control is the Quality Assessment.

• Quality control is primarily aimed at the prevention of errors. Yet, despite all efforts, it
remains inevitable that errors are be made.

• “Five Ws”

• what error was made?

• where was it made?

• when was it made?

• who made it?

• why was it made?

TOTAL QUALITY MANAGEMENT

• A core definition of total quality management (TQM) describes a management approach

to long-term success through customer satisfaction. In a TQM effort, all members of an
organization participate in improving processes, products, services, and the culture in
which they work.

• The history of total quality management (TQM) began initially as a term coined by the
Naval Air Systems Command to describe its Japanese-style management approach to
quality improvement. An umbrella methodology for continually improving the quality of
all processes, it draws on a knowledge of the principles and practices of:

• The behavioural sciences

• The analysis of quantitative and non-quantitative data

• Economics theories

• Process analysis

HISTORY OF TQM

PRIMARY ELEMENTS OF TQM

• TQM can be summarized as a management system for a customer-focused organization

that involves all employees in continual improvement. It uses strategy, data, and effective
communications to integrate the quality discipline into the culture and activities of the
organization. Many of these concepts are present in modern quality management systems,
the successor to TQM.
• Customer-focused: The customer ultimately determines the level of quality. No matter
what an organization does to foster quality improvement—training employees,
integrating quality into the design process, or upgrading computers or software—the
customer determines whether the efforts were worthwhile.

• Total employee involvement: All employees participate in working toward common

goals. Total employee commitment can only be obtained after fear has been driven from
the workplace, when empowerment has occurred, and when management has provided
the proper environment. High-performance work systems integrate continuous
improvement efforts with normal business operations. Self-managed work teams are one
form of empowerment.

• Process-centered: A fundamental part of TQM is a focus on process thinking. A process

is a series of steps that take inputs from suppliers (internal or external) and transforms
them into outputs that are delivered to customers (internal or external). The steps required
to carry out the process are defined, and performance measures are continuously
monitored in order to detect unexpected variation.

• Integrated system: Although an organization may consist of many different functional

specialties often organized into vertically structured departments, it is the horizontal
processes interconnecting these functions that are the focus of TQM.

• Micro-processes add up to larger processes, and all processes aggregate into the business
processes required for defining and implementing strategy. Everyone must understand the
vision, mission, and guiding principles as well as the quality policies, objectives, and
critical processes of the organization. Business performance must be monitored and
communicated continuously.
• An integrated business system may be modeled after the Baldrige Award criteria and/or
incorporate the ISO 9000 standards. Every organization has a unique work culture, and it
is virtually impossible to achieve excellence in its products and services unless a good
quality culture has been fostered. Thus, an integrated system connects business
improvement elements in an attempt to continually improve and exceed the expectations
of customers, employees, and other stakeholders.

• Strategic and systematic approach: A critical part of the management of quality is the
strategic and systematic approach to achieving an organization’s vision, mission, and
goals. This process, called strategic planning or strategic management, includes the
formulation of a strategic plan that integrates quality as a core component.

• Continual improvement: A large aspect of TQM is continual process improvement.

Continual improvement drives an organization to be both analytical and creative in
finding ways to become more competitive and more effective at
meeting stakeholder expectations.

• Fact-based decision making: In order to know how well an organization is performing,

data on performance measures are necessary. TQM requires that an organization
continually collect and analyze data in order to improve decision making accuracy,
achieve consensus, and allow prediction based on past history.

• Communications: During times of organizational change, as well as part of day-to-day

operation, effective communications plays a large part in maintaining morale and in
motivating employees at all levels. Communications involve strategies, method, and
timeliness.

STRATEGIC MANAGEMENT

• Strategy is defined as "the determination of the basic long-term goals of an enterprise,

and the adoption of courses of action and the allocation of resources necessary for
carrying out these goals”

• Strategies are established to set direction, focus effort, define or clarify the organization,
and provide consistency or guidance in response to the environment

• Strategic management involves the related concepts of strategic planning and strategic
thinking

• Strategic management is often described as involving two major

processes: formulation and implementation of strategy
STRATEGY FORMULATION

• Strategy is a broad plan developed by an organization to take it from where it is to where

it wants to be. A well-designed strategy will help an organization reach its maximum
level of effectiveness in reaching its goals while constantly allowing it to monitor its
environment to adapt the strategy as necessary.

• Strategy Formulation is the process of developing the strategy. And the process by which
an organization chooses the most appropriate courses of action to achieve its defined
goals. This process is essential to an organization’s success, because it provides a
framework for the actions that lead to the anticipated results.

• Sometimes Strategic Formulation called “Strategic Planning”. A strategic plan also

enables an organization to evaluate its resources, allocate budgets, and determine the
most effective plan for maximizing ROI (return on investment).

• A company that has not taken the time to develop a strategic plan will not be able to
provide its employees with direction or focus.

• Strategy Formulation requires a defined set of six steps for effective implementation.

• 1. Define the organization, 2. Define the strategic mission, 3. Define the strategic
objectives, 4. Define the competitive strategy, 5. Implement strategies, and 6. Evaluate
progress.

• Step 1.

• Define the Organization: defining an organization is to identify the company’s

customers.

• Without a strong customer base, whose needs are being filled, an organization will not be
successful.

• A company must identify the factors that are valued by its customers.

• Is the value based on a superior product or service relative to the competition?

• Are your customers buying your products for your low prices?

• Do you produce products meet image needs of your customers?

• Step 2.

• Define the Strategic Mission: An organization’s strategic mission offers a long-range

perspective of what the organization strives for going forward.
• A clearly stated mission will provide the organization with a guide for carrying out its
plans.

• Elements of a strong strategic mission statement should include the values that the
organization holds the nature of the business, special abilities or position the organization
holds in the marketplace, and the organization’s vision for where it wants to be in the
future.

• Step 3.

• Define the Strategic Objectives: This third step in the strategic formulation process
requires an organization to identify the performance targets needed to reach clearly stated
objectives.

• These objectives may include:

• market position relative to the competition

• production of goods and services

• desired market share, improved customer services,

• corporation expansion, advances in technology, and sales increases.

• Step 4.

• Define the Competitive Strategy

• Its requires an organization to determine where it fits into the marketplace. This applies
not only to the organization as a whole, but to each individual unit and department
throughout the enterprise.

• Each area must be aware of its role within the company and how those roles enable the
organization to maintain its competitive position.

• Three factors must be considered when determining the overall competitive strategy: the
industry and marketplace, the company’s position relative to the competition, and the
company’s internal strengths and weaknesses.

• Step 5.

• Implement Strategies

• Developing a strategy is only effective if it is put into place.

• An organization may take all the necessary steps to understand the marketplace, define
itself, and identify the competition. However, without implementing the strategy, the
organization’s work will be of little to no value.

• The methods employed for implementing strategies are known as tactics. These
individual actions enable an organization to build a foundation for implementation.
Companies are able to identify which of their efforts are more successful than others and
will uncover new methods of implementation, if necessary.

• Step 6.

• Evaluate Progress

• As in any plan, a regular evaluation of processes and results is vital to ongoing success.
An organization must keep track of the progress it is making as defined by its strategic
plan.

• An organization should consider the following questions on a continuous basis in order

to evaluate progress:

• Have market conditions changed that may require a change in corporate direction?

• Are there new entries in the marketplace to pose a competitive threat?

• Has the organization been successful in translating their strategy into actionable steps?

• An organization will be able to successfully implement its strategy both now and in the
future through evaluating feedback.

STRATEGY IMPLEMENTATION

• Strategy Implementation refers to the execution of the plans and strategies, so as to

accomplish the long-term goals of the organization.

• It converts the opted strategy into the moves and actions of the organisation to achieve
the objectives.

• strategy implementation is the technique through which the firm develops, utilises and
integrates its structure, culture, resources, people and control system to follow the
strategies to have the edge over other competitors in the market.

PROCESS OF STRATEGY IMPLEMENTATION

• Building an organization, that possess the capability to put the strategies into action
successfully.
• Supplying resources, in sufficient quantity, to strategy-essential activities.

• Developing policies which encourage strategy.

• Such policies and programs are employed which helps in continuous improvement.

• Combining the reward structure, for achieving the results.

• Using strategic leadership.

ASPECTS OF STRATEGY IMPLEMENTATION

• Creating budgets which provide sufficient resources to those activities which are relevant
to the strategic success of the business.

• Supplying the organization with skilled and experienced staff.

• Conforming that the policies and procedures of the organisation assist in the successful
execution of the strategies.

• Leading practices are to be employed for carrying out key business functions.

• Setting up an information and communication system, that facilitate the workforce of the
organisation, to perform their roles effectively.

• Developing a favourable work climate and culture, for proper implementation of the
strategy.
UNIT: 4

AIR CARGO

• Air cargo is growing in popularity as the medium of choice when it comes to shipping
time sensitive goods, belongings, documents and information from one place to another.

• Air cargo refers to the act of using an air carrier as the transport vessel for shipment
purposes.

• The benefits of air cargo are the speed and convenience of using such a service.

• Air cargo can get your shipment to its overseas destination within a day in many
instances and it has become an integral and important part of the global logistics network
chain.

TYPES OF AIRCRAFT

• With air transport, cargo can be transported in different types of aircraft:

• Passenger aircraft

• in the cargo area below the passengers, the so-called "belly"

• in the passenger cabin as hand-carry by a so-called "on-board courier" (OBC)

flying as passenger, sometimes also called "hand-carry services"

• Cargo aircraft or Freighters

• on the main-deck or in the belly ; by means of nose-loading, where the whole

nose is opened, or side loading, through a large cargo door

• Combi aircraft

• on the main-deck behind the passengers’ area with side loading through a large
cargo door, and in the belly

WHAT ARE THE ADVANTAGES OF AIR FREIGHT?

• Time – transporting goods with air freight saves time – it’s much faster than shipping,
rail or road transport

• Reliable – flights generally have reliable arrival and departure times with very few
delays, so the shipment of cargo by air is very likely to arrive on time

• Low insurance premium – due to the shipment duration being so short, insurance
premiums on air freight are generally lower
 • Secure – the shipment of cargo by air is tightly managed by security, so the chance of
cargo being stolen or damaged is low

• Less warehousing requirements – the clearance time for air freight is fast, and there’s
generally less stock to unload than that for cargo ships, so customs clearance is fast, and
the need for local warehousing is much lower

WHAT ARE SHIPPED BY AIR FREIGHT

• Air cargo contributes by carrying important shipments all over the world and facilitates
the supply chain of:

• foodstuff, mail, automotive parts, electronics, flowers, vaccines, medical supplies, high-
value shipments like jewellery, livestock, horses, airplane parts, and many other
important shipments that support businesses and keep jobs around the globe.

WHAT NOT TO SHIP BY AIR FREIGHT

• The following goods cannot be transported by air:

• UN classified dangerous goods

• Lithium Batteries

• Power Supplies or Power Banks

• Illegal Goods

• Firearms

• Flammable Substances

• Explosives

• Biochemical Products

THE PROCESS OF AIRFREIGHT

• Airfreight involves the shipment of packages and goods via an air carrier. An air carrier
could be commercial or charter. Transportation via air carriers allows shipments an easier
gateway to anywhere that airlines fly and land.

• The process of air cargo requires many vital steps taken by the freight forwarder and the
air carrier.

• Shipping
• There are 3 vital steps that are followed under the process of shipping.

• 1. Assembling the Shipment

• Collecting goods for consignee and preparing the packing materials and the packing list
is important. Once the shipment is assembled we move onto the next step.

• 2. Making RFT (Read for Transport)

• It is also important to ensure you pack your goods and label packages clearly. Following
the packaging, your freight forwarding agent will prepare any required security
documents and other relevant transportation documentation and prepare for shipment.
Transco Cargo can help you any step of the way.

• 3. Ordering Transport

• Once the package has arrived, it will be sent to the freight forwarder warehouse and left
at storage ready for pick up.

• Forwarding Out

• When your goods are being exported, the below steps apply during transportation.

• Goods are picked up following the order received and given a POA (Proof of
Acceptance)

• An incoming check is performed and sorted according to flight dates for goods to
be transported

• Recheck for labelling errors and re-label if required and make necessary security
declarations

• Prepare all relevant customs documents and clear for customs

• Consolidate all goods according to all regulations of necessity and prepare a

master AWB (Air Waybill)

• Arrange transport to airline and inform receiving end of the incoming package

• Air Transport

• Prepare and plan for handling and storage shipments based on confirmed
bookings.

• Perform incoming and administration checks

• Sort good and documents

 • Perform outgoing and administration checks

• Prepare ULDs (Unit Load Devices) according to specific instructions

• Prepare ramp transport and security checks

• Load onto aircraft and prepare for flight

• Once landed prepare for ramp transport of cargo

• Receive ULDs and breakdown ULD according to instructions

• Check incoming shipments against documents

• Prepare for warehouse storage and clear flight manifest

• Load goods onto truck and dispatch

• Forwarding In

• Importing goods via air transportation is considered a convenient method to transfer

packages.

• Picking up documents once notified by the airline and arranging local pickup of
the documents

• Preparing customs documents, aiding with clearance and printing the customs
release note

• Arrange local pick up of the package from the airline

• Arrange delivery to consignee with all relevant documentation and receive POD
(Proof of Delivery)

• Consignment

• Receiving shipment – once the shipment is received the check for all number of
goods and if any visible damage can be identified. Once cleared, provide a POD.

• Unpacking goods– unpack goods and thoroughly check for any damages that
have occurred during transportation.

• Check goods with administration – count present goods with the packing list or
procurement order to verify any missing items. Arrange for any warranty claims
along with payments for transport supplier where necessary. Make arrangements
for customs declarations when required.
REGULATORY AND POLICY ISSUES FOR AIR CARGO DEVELOPMENT

• Regulations and policies affect every movement in the air cargo system.

• These regulations and policies can create challenges and risks for airports, and affect air
cargo market performance and future development.

• Security, safety, and environmental regulatory changes have the potential to impact air
cargo operations.

• SECURITY POLICY

• The 9/11 Commission Act of 2007

• to screen 100 percent of cargo transported on passenger aircraft in the U.S. to

ensure high risk cargo is inspected.
 • The CCSP allows TSA to certify cargo screening facilities and enables freight
forwarders and shippers to pre-screen cargo prior to arrival at the airport.

• TSA’s Known Shipper Program

• TSA’s Known Shipper Program prohibits air carriers from accepting cargo that
does not originate from shippers who meet TSA’s Known Shipper requirements.

• TSA-approved security programs for Indirect Air Carriers

• Each IAC must adopt and carry out a TSA-approved security program.

• SAFETY REGULATIONS

• Air cargo carriers must follow an FAA-approved aircraft maintenance program.

• ENVIRONMENTAL REGULATIONS

• Airports must be aware of and be prepared to address the additional noise and emissions
that could occur with increased air cargo operations.

• INTERNATIONAL REGULATIONS AND POLICY

• International aviation is governed by bilateral and multilateral agreements between two

or more countries’ governments.

• Freedoms of the Air are the international aviation agreements that were developed
during the Chicago Convention to set forth a framework for air commerce. There are nine
freedoms of the air that grant a country’s airlines the right to enter and land in another
country’s airspace.

TYPES OF AIR CARGO

• There are two types of air cargo – general and special cargo

• General cargo includes high-value goods, such as electronics, jewellery and

pharmaceuticals. Air shipping is more expensive than shipping by sea, but due to the high
margins and the fact that many electronic goods are fragile, air freight is the most
appropriate form of transport.

• Special cargo requires special conditions for transporting goods, such as temperature
control, certain air conditions or protected casing (e.g. if the goods are hazardous or
livestock).
SHIPPER'S LETTER OF INSTRUCTION

• Shipper’s Letter of Instruction (SLI) is a ‘letter’ from the exporter instructing the freight
forwarder on how and where to handle the export shipment.

• The exporter is granting permission to the forwarder to act as the authorized forwarding
agent for U.S. export control and customs.

• All U.S. export shipments require a completed SLI.

IMPORTANCE OF CARGO TRANSPORTATION SERVICES PROVIDERS IN

LOGISTICS MANAGEMENT

• 1. Cost Reduction

• With the ever increasing freight rates and freight volume, outsourcing cargo transport can
prove to be effective on the price front. These service providers allow businesses to
leverage the experiences and know-how pool with them, resulting in substantial money
and time-saving.

• 2. Reduced Risks

• In instances of loss, damage or theft of cargo, service providers cut the risks by claiming
responsibility and mitigating losses arising due to unforeseen circumstances. Masters in
their field and well versed with laws and procedures, they ensure that correct processes
are followed, and clients are not subjected to fines and penalties.

• 3. Technological Edge

• Technology is an obvious component of logistics management. Transport service

providers have their hands on cutting-edge technology through which they continuously
optimize the routing and distribution system. Real time information, metrics, and tracking
facilities are made available to businesses, which can be used to perform other essential
functions.

• 4. Industry Experience and Contact

• A successful service provider had good relationships with authorities and established
industry contacts which can prove to be beneficial in negotiating a cheaper freight or fuel
surcharge rate. Also, they have a massive fleet of carriers to depend on for timely
delivery and reliable services for their customers.

• 5. Scalable Services

• One of the main reasons for transportation service providers to emerge as important
constituents of logistics management is the scalability and flexibility of their services.
 With a vast network of resources at various locations at their disposal, they promise high-
quality transportation services which cannot be managed in-house.

AIRWAY BILL

• An airway bill or AWB is a document that accompanies goods shipped by an

international courier, which allow for tracking.

• It serves as a receipt of goods by an airline, as well as a contract of carriage between the

shipper and the carrier. It’s a legal agreement that’s enforceable by law.

• AWBs are non-negotiable instruments and must include the shipper's name and address,
consignee's name and address, destination airport, and value of contents, among other
things.

• The AWB is a standard form that is distributed by the International Air Transport
Association (IATA).

FUNCTIONS OF THE AWB

• Evidence of receipt of goods by an airline

• Contact information among all parties

• Contract of carriage between shipper and carrier

• Freight bill

• Customs declaration

• Description of the goods

• Guide for handling and delivering goods

• Tracking of shipment

What is the purpose of the airway bill?

An Airway Bill is a legally binding document that serves as proof of receipt of goods by the
issuing authority.

Validity of AWB

• An air waybill is a contract—an agreement enforceable by commercial law. To become a

valid contract it has to be signed by the shipper or his agent and by the carrier or its
authorized agent. Although the same individual or organisation may act on behalf of both
the carrier and the shipper, the air waybill must be signed twice one each in the respective
 carrier and shipper boxes. Both signatures may be of the same person. This also implies
that the air waybill should be issued immediately upon receipt of the goods and letter in
instructions from the shipper.

• As long as the air waybill is neither dated nor signed twice, the goods do not fall within
the terms of the conditions of the contract and therefore the carrier will not accept any
responsibility for the goods. The validity of the air waybill and thus the contract of
carriage expires upon delivery of the shipment to the consignee (or his authorized agent).
UNIT: 5

AIRCARGO HANDLING

Aircraft Handling with Cargo

• Safe operation of aircraft requires all hold cargo and baggage to be weighed (or an
accurate estimate of weight provided by using “standard” values), it must be loaded
correctly and secured to prevent movement in flight.

• Loading should be in full accordance with the generally applicable regulations and
limitations, the operators loading procedures and in accordance with the instructions
given by the person with overall responsibility for the loading process for a particular
flight.

Bulk Loading

Many narrow body short haul aircraft are bulk loaded with loose individual items of baggage and
cargo. In this case, baggage loading will be by item count, with prescribed assumptions about the
average weight per bag used to complete the load and trim sheet; precise figures will often vary
according to NAA regulations or be more restrictive to meet the aircraft operator’s own checked
baggage rules. Average checked baggage standard weight assumptions usually vary depending
on whether the flight is domestic, international, charter (holiday flight) or scheduled. Standard
baggage weights must be applied with care. Incidents have occurred where standard weights
have seriously under-stated the actual mass of the loaded baggage causing both an error in the
total mass of the aircraft and a centre of gravity outside the approved safe envelope.

Netting is used to restrain bulk loaded loose baggage items within holds so that they do not move
in flight. Any load that shifts in flight will move the aircraft’s centre of gravity and can cause
control difficulties (in extreme cases causing loss of control) and prevent baggage door opening
post flight. Cargo netting may also be used to divide larger holds into sections.

Bulk loading is usually accomplished by delivery of items to the aircraft in a baggage train of
towed trailers. To help ensure each hold compartment is loaded correctly, a particular trailer may
only contain the baggage destined for only one designated compartment. The trailer is unloaded
into the aircraft hold via conveyor belts and finally positioned in the hold by loaders working
within it. Usually, bulk loading of baggage items uses a system whereby loading crews are
informed that the last bag for loading on a particular flight has arrived by use of an ‘End Bag’
identification tag - the tag is applied to the last checked bag sent to the aircraft. A system of
stickers and a reconciliation sheet may also be used, where each printed baggage tag has a bar-
coded sticker, which is removed and stuck onto the re-conciliation sheet as the bag is loaded.
This helps ensure that all checked baggage for that flight has been loaded and accounted for.
Unit Load Devices
Most wide bodied aircraft, and increasingly some narrow bodies, are able to use the much
simpler system of aluminium containers called Unit Load Devices (ULD). These can be used to
consolidate baggage or cargo items before being loaded into the aircraft hold by specialised
hydraulic lift equipment. The ULDs are then manoeuvred manually to a final position on board
by use of a roller floor, before being finally secured in position.

ULDs must either be weighed, or the number of baggage items per container must be within a
specified range and standard baggage unit weights applied.
Special Procedures
Under either system, special procedures may be prescribed for abnormal loads such as:

 those covered by Dangerous Goods Regulations

 heavy items
 oversize items
 items with have unusual dimensions/proportions.
Heavy objects which exceed the hold floor-loading limit published in the AFM may be able to be
carried if prescribed arrangements for load spreading are available and applied.

Mass and Balance Gross Error Checks

A load instruction/report form will be issued for every aircraft departure to instruct loading teams
on the quantity of baggage/cargo to be loaded into each hold. Where a computerised or electronic
load and trim sheet is prepared on behalf of the operating crew, usually the handling agent or
airline will produce the Load Instruction/Report Form with reference to the load and trim sheet.
The Load Instruction/Report form will then be given to the loading supervisor to instruct the load
team how the aircraft needs to be loaded and to record formally the actual loading and any
deviations.

When the operating crew produces a manual load and trim sheet, the crew, in consultation with
the loading supervisor, may also complete the Load Instruction/Report Form.

Once the aircraft is loaded, the Load Instruction/Report Form is generally provided to the crew
for cross-checking against the load and trim sheet, though sometimes the crew are provided with
a certificate stating that the baggage/cargo has been loaded in accordance with the load and trim
sheet instructions.

With numerous mass and balance documentation formats and different industry procedures, it is
very difficult to provide definitive details of how to conduct gross error checks. In line with the
best industry practices, UK CAA guidance material - CAP 1009: Gross Error Checks provides
information on how any significant discrepancies in the loading process can be identified and
corrected before departure.

As with the load and trim sheet, there are a number of key entries on the Load Instruction/Report
Form that must be checked for accuracy:

 Airline/Operator
 Flight details (Routing, Flight number and Date)
  Aircraft type, variant and registration
 Distribution of hold loads (including baggage, cargo, ballast, spares, COMAT, and mail
etc.)
 Void/nil fit positions
 Bags per ULD/hold
 Weight allocation to each compartment does not exceed limits
 Document edition number (if applicable)

Consequences of Mis-loading
 Loss of Control in flight
 Runway Excursion during take off or landing
 Aircraft hold damage during flight

CARGO TERMINAL

Cargo terminal means a transportation facility in which quantities of goods or container cargo
are stored without undergoing any manufacturing processes, transferred to other carriers or
stored outdoors in order to transfer them to other locations. Cargo terminals may include
accessory warehouses, railroad yards, storage yards, and offices.

CARGO TERMINAL FACILITIES

1. Airside Facilities

Appropriate airside facilities including runway length, taxiway, apron parking, navigational aids,
approaches, and lighting should be in place to accommodate the aircraft being flown by the air
cargo carrier. The facility needs will vary by airport based on the demands of the aircraft utilized.

2. Road Access

Good road access, including highway access, for the rapid and reliable surface transport of air
cargo shipments is a critical part of the supply chain. Rail access is useful, however, for growing
the overall distribution capability of a site, which generally has some spin-off benefits to air
cargo.

3. 24/7 Customs Operation

Given that many cargo flights operate at night, the ability to clear customs at any time of day and
any day of the week is an important factor.
4. On-site Customs Brokers

It is helpful to have customs brokers on-site at airports to expedite any problems that may arise
related to international shipments.

5. Common-use Cargo Facility

Although air cargo can be handled on the cargo apron outside of the aircraft, freight forwarders
and carriers prefer to use dedicated cargo facilities. Forwarders are unlikely to make the financial
commitment necessary to build their own on-airport facilities, so the existence of a common-use
facility can make an airport more attractive to the air cargo community.

6. Main-deck Loader

If dedicated freighters are to effectively serve a market, a main-deck loader needs to be available.
These specialized pieces of ground-handling equipment facilitate the safe and efficient loading
and unloading of freighter aircraft.

7. Widebody Passenger Operation

The presence of widebody passenger aircraft which can accommodate large pallets and unit load
devices, is a strong supporting element for the development of cargo services. This widebody
capacity provides forwarders and shippers with greater flexibility and service options. Further,
belly capacity tends to be attractive from a cost perspective as it is marginally priced due to the
fact that the passenger services are the primary source of revenues for these operations.

8. Extensive Network

A large number of destinations served by air carriers at an airport provide forwarders and
shippers with more options for direct flights to the ultimate destinations of their shipments.

Air Cargo Carriers

Air cargo services are provided by a segmented group of air carriers that provide differing
services based upon wide ranging customer demands. The following four basic types of carriers
provide these services:

• Integrated express operators

• All-cargo carriers
• Commercial service passenger airlines

• Ad-hoc cargo charter carriers

• Integrated express operators (FedEx, UPS, DHL) operate a fleet of scheduled aircraft,
trucks, and couriers offering door-to-door delivery service. These carriers operate
extensive hub-and-spoke networks providing expansive geographic coverage

• All-cargo carriers (Atlas Air Cargo, Gemini) generally operate scheduled widebody
aircraft from one major airport to another

• Commercial service passenger airlines (United, Delta, US Airways) are scheduled

passenger airline operators

• Ad-hoc cargo charter carriers (Grand Aire, Volga-Dnepr) are unscheduled air charter
operators who move goods from airport-to-airport.