Экономические науки /7. Учет и аудит

Beysenbaeva A.K., Ph.D., Associate Professor,

Bektursynova A.E., Master degree of accounting and auditing

Al-Farabi Kazakh National University, Kazakhstan, Almaty

The importance of logistics and transport development

Logistical activities have always been vital to organizations, and therefore business logistics and supply chain management represents a synthesis of many concepts, principles, and methods from the more traditional areas of production, purchasing, transportation, economics, as well as from the disciplines of applied mathematics, and organizational behaviour. It concentrates on important activities of management such as planning, organizing, and controlling, and also on a three-way relationship of related transportation, inventory, and location strategies, which are at the heart of good logistics planning and decision making. Selecting a good logistics strategy may yield a competitive advantage. Transportation provides the flow of materials, products and persons between production facilities, warehouses, distribution centers, terminals and customer locations. The progress in techniques and management principles improves the moving load, delivery speed, service quality, operation costs, the usage of facilities and energy saving. A strong system needs a clear frame of logistics and a proper transport implements and techniques to link the producing procedures. The transportation takes a crucial part in the management of logistic. Without well-developed transportation systems, logistics could not bring its advantages into full play. A good transport system in logistics activities could provide better logistics efficiency, reduce operation cost, and promote service quality. The process determines the efficiency of moving products and energy saving. Improvements in transportation and logistics make valuable contribution to production and consumption activities. That’s why the objective of this paper is to define and clarify the role of transportation in logistics and of logistics in development, for the reference of further improvement. The present study was undertaken to define and understand the elementary views of logistics and its various applications and the relationships between logistics and transportation.

For many years, logistics were always an issue in war matters. During the time, those who won the wars were the armies or generals with strategic planning on logistics. This was a good inspiration for today’s business environment.

Starting from the early ‘60s, many factors such as competitive pressures, information technology, globalization, or profit leverage, contributed to the growth of logistics science in the form we know it today. Logistics refers to all the move-store activities from the point of raw materials acquisition to the point of final consumption. Its core elements include customer service, order processing, inventory management and transportation :

- transportation is concerned with the ways in which physical items are transferred between different parties in a supply chain

- inventory management is about managing appropriate inventory levels to serve the demand in a supply chain

- customer services relates to the quality with which the flow of goods and services is managed

- order processing involves all the activities in the order cycle including collecting, checking, entering and transmitting order information.

Relevance of logistics is explained by several factors:

- Economic factors as now the main priority of the company is to search of opportunities of reduction of production expenses and distribution costs for increase in profit of firm and growth of quality, rendering a complex of services to the consumer therefore in the conditions of development of the market relations "calculation+benefit+consumer" conducts the principle to growth of importance of logistics;

- Information factors as the informatics connects the market and logistics as a subject, means and a component of logistic processes are information streams;

- Technical factor is shown that logistics as a control system, its subjects and objects develop on the basis of technical achievements in the warehouse economy and the sphere of management that providing decisive success on commodity wounds.

The expanding global competition, emerging new technologies and improved communications have increased customers’ expectation of full satisfaction with the products and services that they purchase. These changes have, in recent years, brought to many manufacturing and service firms the challenges of improving the satisfaction of their customers and the quality of their products and services. Faced with these needlings, business firms worldwide are prompted to look for ways to reduce costs, improve quality and meet the ever-escalating demands of their customers. In face of the challenges of global competition, business firms are concentrating more on the needs of customers and seeking ways to reduce costs, improve quality and meet the ever-rising expectation of their customers. To these ends, many of them have identified logistics as an area to build cost and service advantages. Therefore logistics in business aim to reach maximum customer service level, to achieve minimum possible costs, to ensure high quality, and o be flexible in the constant market changes. Logistics is a diverse and dynamic function that has to be flexible and has to change according to the various constraints and demands imposed upon it and with respect to the environment in which it works.

The classification of logistics into materials management and physical distribution (inbound and outbound logistics) is very useful to logistics management or control in an organization. Frequently, the movement and storage of raw materials in an organization is different from the movement and storage of finished goods. For example, a dry-wall manufacturer transports gypsum and other bulk commodities to its plants in rail cars. Storage is very basic and consists of enclosed domes (located outside the plant) with an opening at the top through which the gypsum rock is transferred from the rail cars. Finished goods movement and storage for drywall is different. Transportation is usually provided by specially designed rail cars or flatbed motor carrier vehicles. Storage of the finished drywall product is totally inside the facility where pallets of drywall sheets are stacked and readied for loading. This internal storage is necessary to prevent the drywall from getting wet.

The different logistics requirements that might exist between materials management and physical distribution might have important implications for the design of an organization’s logistics system. The design for each of these two activities might be quite different. In spite of these differences, close coordination between materials management and physical distribution is still critical.

Additional perspectives related to viewing logistics in terms of materials management/inbound logistics and physical distribution/outbound logistics deserve consideration. In fact, from the inbound and outbound requirements perspective, organizations can be classified into four different types of logistics systems.

Transportation plays a connective role among the several steps that result in the conversion of resources into useful goods in the name of the ultimate consumer. It is the planning of all these functions and sub-functions into a system of goods movement in order to minimize cost maximize service to the customers that constitutes the concept of business logistics. The system, once put in place, must be effectively managed. Traditionally these steps involved separate companies for production, storage, transportation, wholesaling, and retail sale, however basically, production/manufacturing plants, warehousing services, merchandising establishments are all about doing transportation. Production or manufacturing plants required the assembly of materials, components, and supplies, with or without storage, processing and material handling within the plant and plant inventory. Merchandising establishments completed the chain with delivery to the consumers. The manufacturers limited themselves to the production of goods, leaving marketing and distribution to other firms. Warehousing and storage can be considered in terms of services for the production process and for product distribution. There have been major changes in the number and location of facilities with the closure of many single-user warehouses and an expansion of consolidation facilities and distribution centres. These developments reflect factors such as better transport services and pressures to improve logistics performance.

Transportation plays an important role in logistics system and its activities appear in various sections of logistics processes. Without the linking of transportation, a powerful logistics strategy cannot bring its capacity into full play. Transportation and logistics systems have interdependent relationships because logistics management needs transportation to perform its activities and meanwhile, a successful logistics system could help to improve traffic environment and transportation development. Without well-developed transportation systems, logistics cannot bring its advantages into full play. A good transport system in logistics activities could provide better logistics efficiency, reduce operation cost, and promote service quality. A well-operated logistics system increases a lot the competitiveness of the enterprise. Transportation plays a connective role among the several steps that result in the conversion of resources into useful goods in the name of the ultimate consumer. It is the planning of all these functions and sub-functions into a system of goods movement in order to minimize cost maximize service to the customers that constitutes the concept of business logistics. Transport affects the results of logistics activities and, of course, it influences production and sale. Value of transportation varies with different industries. For those products with small volume, low weight and high value, transportation cost simply occupies a very small part of sale and is less regarded; for those big, heavy and low-valued products, transportation occupies a very big part of sale and affects profits more, and therefore it is more regarded.

The role that transportation plays in logistics system is more complex than carrying the goods. The integration and promotion of business activities have to involve transportation systems at different stages. The integration of various applications brings the convenience through promoting the system of information flow and business operations. Transportation complexity can take effect only through highly quality management. By means of well-handled transport system, goods could be sent to the right place at right time in order to satisfy customers’ demands. Transportation brings efficacy, and also it builds a bridge between producers and consumers. Therefore, transportation is the base of efficiency and economy in business logistics and expands other functions of logistics system. It is virtually inconceivable in today’s economy for a firm to function without the aid of transportation. Transportation is the most important sub-function of logistics that creates time and place utility in goods. Reviewing the current condition, a strong system needs a clear frame of logistics and a proper transport implements and techniques to link the producing procedures. Transportation systems and techniques are needed in almost every logistics activity. If even customers and firms could make business easier through e-commerce and Internet, physical delivery still relies on the transportation system to finish the operations. That’s why logistics systems have a more and more important position in the society activities.

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3. John J. Coyle, Edward J. Bardi, and C. John Langley Management of Business Logistics: A Supply Chain Perspective, 2002.

4. Tseng, Y., Yue, W.L. and Taylor, M. The role of transportation in logistics chain, Proceedings of the Eastern Asia Society for Transportation Studies, Australia. 2005