Economics and management in the sphere of ict department: management and marketing

2.5 Service system processes
T he transportation process consists of the following components (as shown in Fig. 1.5):
2-graph Components of service processes.
1. Route planning establishes the route the truck will take to make the deliveries. The trade-off is between time, expense, and commitment to the customer.
2. Load planning is arranging the shipments within the truck to minimize handling. For example, one might organize a first-off, last-loaded model.
3. Truck servicing assures that the truck is fueled and otherwise properly prepared for the trip.
4. Movement is the physical movement of the truck along the planned route.
5. Delivery puts the product in the buyer’s hands and a signature (delivery receipt) from the buyer may be collected.
6. Each of these processes relies on customer information, product information, and mapping information.
III-LOGISTIC COSTS
The total cost of logistics includes five major components: transportation costs, handling costs, order processing and information costs, lot quantity costs, and inventory carrying costs. All these costs are related to each other. Fig. 1.6 shows the relationships among these various logistics costs. Cost trade-off is a balance between cost and performance, as the lowest cost transportation routing may not necessarily be the fastest option. Logistics costs deal with the expenses of various modes of transportation such as train, trucks, air, and water transport. One should not therefore think that the decision as to which transportation mode to use is simply based on transportation costs alone. It is rather complex. This suggests that the transportation management, meaning the selection and management of transportation services, is critically dependent on an understanding of the business of the customer. There are four key elements associated with transportation costs: line haul, pickup and delivery, handling, and billing and collecting. Line haul is the process in which goods are transported to their destination with any mode of transportation. The pickup and delivery services can also impact the cost of transportation. The different routes and stops for pickup and delivery need to be taken into consideration when considering the best mode of transportation. Handling is one of the most important costs. Handling includes loading, unloading, sorting, and packaging. Loading and unloading costs primarily depend on product characteristics such as weight, dimension, stockability, frazileness, value, unit load, etc.Irregularly shaped products can have significantly higher handling costs than standard products. The storage cost is the amount charged to store goods in transit at the point of origin, destination, and ports of entry during the transport. Storage charges are also assessed by companies who are in the business of renting storage space. Inventory carrying costs include the cost of warehousing unsold items, financial costs, and inventory costs.