TY BBM – SEM 5

Logistics and Supply Chain

Management
DR. AMIT A. NAIK
 Syllabus
Reference Books:
1. SCM – Strategy Planning & Operation by Sunil Chopra – Pearson Publication
(Available in our Library)
2. Logistics Management by Sopale – Pearson Publication (Available in Lib)
3. Logistics & SCM – K. Shridhara Bhat – Himalaya Pub (In library)
Topics:
UNIT I: Basics of logistics management
1. Introduction to physical distribution
2. Logistics management – Ref Book 3 – Pg-3,4,5,
3. Logistics Management and its elements - Ref Book 3 – Pg 14-15 (full
explanation on Table)
4. Modern Concepts in Logistics - Ref Book 3 – Pg 7-10
5. Role of logistics in strategy –Flow dia. during class & explanation given below
6. Inbound and outbound supply chain management - Ref Book 3 – Pg-6
7. Container – types 8. Different types of cargo – Refer PPT
8. Packaging (Packaging given below) – Ref book 2 – Pg no 77,78,143,146 &
153 - Material Handling – Ref Book 3 – Pg – 110-116
UNIT 2: Basics of multimodal transport
1. Introduction to Multimodal Transport (for points 1 to 5 – Ref book 3,pg 68-79
2. Carriage By Air
3. Carriage By Sea
4. Carriage By Road
5. Carriage By Rail
6. Types of Vessels (GCR - PPT)
7. Operators (Vessel and other)
8. Freight Forwarders and NVOCC – explanation given below + PPT
9. Outsourcing of Logistics Services – Ref book 3 – Pg 221-232
10. Overview of MMTG Act (1993) – Separate notes will be given
11. Shipping Intermediaries and Formalities

UNIT 3: Commercial geography

1. Definition, Nature and Scope of Commercial Geography
2. Role of Industries in Economic Development.
3. Factors of Industrial Location – Pic attached below.
4. Weber’s theory of Industrial Location – Pic attached below.
5. Major Industrial Regions of India
6. Need for and importance of transportation in Commercial Development.
7. Geographical factors affecting International Trade
8. Major logistics routes in India (for points 8 to 10, Ref bk – pg. – 206 to 212
 9. Major trade routes in world - ppt
10. International logistics and economic development – Ppt as updated numbers
should be included.
11. Role of intermediaries in international trade

UNIT 4: SCM and recent trends

1. Introduction to supply Chain Management (SCM) – PPT (GCR)
2. Sourcing
3. Transportation – Ref book 3 -Bhat – Himalaya Pub
4. Indian supply chain architecture
5. Introduction to warehousing – Refer notes given below.
6. Introduction – recent developments in logistics
7. Transport and mobility technologies
8. Green logistics – Ref book 3 – pg. no. 9
9. Cold chain logistics
10. Block chain and big data analytics in logistics – Notes given below. & GCR
11. 3 D printing and wearable devices in logistics – Refer notes given below.
12. Transport Services, Costing and Performance
13. Administration and Control and use of IT
14. Case study on emerging logistics co in India, Role of amazon and Alibaba
group in changing SCM, Development of ports by private entity
Principles of Packaging (1.8)
The three basic principles of packaging are described as follows:
1) Protection: Packaging has a primary role in preserving product integrity by
protecting the product against potential damage from climatic, bacteriological and
transit hazards, plus any other hazards to which the product is likely to be exposed or
its journey from manufacturer to the end-consumer.
2) Containment: The second principle of any packaging is that of containment, which
may seem almost too obvious for consideration. This may help to explain why this
basic principle is often overlooked. It is during the use of the product by the consumer
that issues of containment become all too visible. Fluids such as milk, orange juice and
hairspray are obvious examples of products that require a package that contains the
product after it has been initially used. Effective containment clearly involves ensuring
the pack does not leak, fall apart or otherwise annoy the end-user. _
3) Identification: The third basic principle underlying any form of packaging is that of
identification, frequently referred to as labelling. It would be unusual to find an aisle
of brown cardboard boxes sitting on shelves in a store, but this would be the interesting
experience if products were to go unidentified or unlabelled. This role of packaging
includes:
i) Information on how the product is used; ii) Establishment of brand identity; and iii)
Promotion of sale.
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MTO (1.1)
Multimodal transport operator means any person who engaged in the business of
carriage of goods and using at least two different modes of transport under a
Multimodal transport contract, from the place of acceptance of the goods in India to a
place of delivery of the goods outside India or Within India.
Benefits:
• Communication is Easier
• Saving in Time
• Cost-efficient
• More options / Combinations
A multimodal operator is responsible to plan and execute the entire shipping process,
including the mode of transportation. Whereas a freight forwarder then simply applies
it to the process and issues the single bill of lading.
• Multimodal transportation requires only one Bill of Lading, although it involves
multiple modes of transportation such as air, rail, road, and sea.
• A multimodal transport operator license plays a key role in the Indian shipping
business.
• It’s mandatory for a shipping company or a freight forwarder to register under
the Multimodal Transportation of Goods Act, 1993.
• You can only transport your goods from and to India through multiple modes of
transportation if you are a registered MTO.
• You can increase your transparency among other members on xChange and find
containers easily if you’ve got an MTO license.
These entities can include shipping lines, freight forwarders, or NVOCC operators on
whose behalf the bill of lading is eventually issued.
The multimodal transport operator is responsible for the complete shipment of
goods/cargo from the place of pick-up to the place of delivery. They are also more or
less responsible for all kinds of communication and coordination involved in the
process.
What is the Multimodal Transportation of Goods Act, 1993?
A safe and transparent transportation process is essential for successful global trade
relations between suppliers and customers.
And having a legal document in place, such as the Multimodal Transportation of Goods
Act, 1993, can help you achieve that.
According to the Act, you can undertake the transportation of your goods from and to
India through multiple modes of transportation effectively.
The Act considers unregistered multimodal transport administrators “completely
illegal”. This means you’ve to register yourself to carry on a multimodal transportation
business.
The Multimodal Transportation of Goods Act, 1993, lays down a few key
responsibilities that you should keep in mind. Let’s look at a few of them:
The MTO is liable for any loss or damage to a consignment he’s in charge of.
This includes delays in deliveries of the consignment under his charge — unless he
can prove that none of his actions are responsible for the loss or delays.
The MTO takes over responsibility for the entire shipment from the pick-up location
to the place of delivery.
May take the responsibility for communication and coordination.
The above-stated responsibilities can benefit you if you’re looking to register as an
MTO. On a side note, multimodal transportation can turn out to be beneficial as it helps
you reach remote parts of the world.
MTO is an essential license to have to keep your shipping process as transparent as
possible. Especially if you are exporting goods from and to India via multimodal
transportation.
And once you become a registered multimodal transport operator, you can gain more
transparency among your partners on xChange. Not just this, you also get access to
1000+ vetted members, enjoy the lowest pick-up rates for one-way lease containers,
and give your cargo a smooth sail. Transportation of your goods will only see the
daylight from here on!
How is a multimodal transport operator different from freight forwarders?
This is actually pretty simple to understand. The basic difference between a multimodal
transport operator and a freight forwarder is as follows:
A multimodal operator is responsible to plan and execute the entire shipping process,
including the mode of transportation. Whereas a freight forwarder then simply applies
it to the process and issues the single bill of lading.

Role of Strategies in Logistics (Why Logistics Strategies are important)?

An effective logistics strategy can help your company minimize investments and other
costs by defining the service levels at which your organization is most cost-effective.
What Is a Logistics Strategy? (1.5)
A logistics strategy is the means of finding the most efficient manner of distributing
goods and maintaining a high level of service. What’s important to keep in mind is that
there may be several logistics strategies. These strategies can be specific to the product,
to the country, or even to the customer.
Why Implement a Logistics Strategy?
A formal logistics strategy provides a foundation for the constantly changing nature of
the supply chain. Companies are better prepared to be flexible and adapt to the changes
with a logistics strategy in place. Not having one in place means companies will not
be prepared to gauge the impact any change in the supply chain has on its operations.
This negligence can significantly impact customer service.
All the long-term decisions about logistics form a logistics strategy.
The LOGISTICS STRATEGY of an organization consists of all the strategic decisions,
policies, plans and culture relating to the management of its supply chains.
The logistics strategy forms a link between the more abstract, higher strategies and the
detailed operations of the supply chain. While the corporate and business strategies
describe general aims, the logistics strategy concerns the actual movement of materials
needed to support these aims. The business strategy calls for ‘outstanding service’ to
its customers, and this translates into a logistics strategy of organizing a very fast parcel
delivery service to almost any point in the world.
(REFER Types of Logistics Strategy diagram… Discussed in the lecture)
The strategic level designs the logistics network, including prescribing facility
locations, production technologies and plant capacities. The tactical level prescribes
material flow management policies, including production levels at all plants, assembly
policy, inventory levels, and lot sizes. The operational level schedules operations to
assure in-time delivery of final products to customers.
Strategic Decision Planning
Strategic decision planning is a long-term decision planning between 2 to 5 year
timeline. At this strategic level, the decisions made are high level because there are
difficult to change. It is associated with the recovery process, especially during the
design of the product. Coordination of supply chain network, capacity planning and
designing of the remanufacturing systems with environmental consideration also fall
under this category
Tactical Decision Planning
The tactical decision problem is a medium-term decision. It takes 1-to-2-year timeline
and generally it comes after the strategic decision planning. The decisions are related
to the production planning and inventory management as well as procurement and
integrated management of product returns with the overall organization. Return
forecasting, product return handling and aggregate production planning are related to
the product returns activities
A company that decides to remanufacture their products has some issues of tactical
decision. They need to plan on the number of used products that should be recovered
and decide on the capacity limit of the recovery products for each time. The decision
is more complex compared to the traditional forward supply chain.
Operational Decision Planning
Operational decision planning is a short-term planning which is on a day-to-day
decision. Vehicle planning and scheduling are under operational planning decision.
Most remanufacturing shops are low volume job-shop type operations. The
remanufacturing operations become more challenging as the uncertainty in the supply
and the large variance along the possible routing are increased compared to the
traditional forward production.

What Is Bullwhip Effect? (1.4)

The bullwhip effect is a phenomenon where demand changes at the end of a supply chain lead
to inventory fluctuations along the chain. Generally, slight variations in demand at the
customer or retailer level reverberate up the chain causing greater discrepancies.
This in turn causes too many or not enough supplies as needed to be purchased at each level
of the chain. These products often end up as dead stock, on backorder, or need to have their
prices greatly cut to avoid total loss.
The term is derived from a scientific concept in which movements of a whip become similarly
amplified from the origin (the hand cracking the whip) to the endpoint (the tail of the whip).

The danger of the bullwhip effect is that it amplifies inefficiencies in a supply chain as each
step up the supply chain estimates demand more and more incorrectly. This can lead to
excessive investment in inventory, lost revenue, declines in customer service, delayed
schedules, and even layoffs or bankruptcies
Bullwhip Effect Example
If this all sounds a little confusing, let's break it down with a couple of examples.
Let's say you are a food wholesaler who regularly sells 1,000 cans of tuna to a customer each
week. Then, this customer orders double the amount of tuna they normally do. You assume
that demand is increasing and purchase 2,000 cans to ensure you don't run out. Seeing your
increased purchase, your supplier may also increase the amount of tuna they stock, thus
further amplifying the issue.
On the other end of the spectrum, you can run into issues with too little supply. Let's say, in
the scenario above, you didn't increase how much tuna you purchase. However, the demand
on the customer side continued to increase. Immediately you'd run into an issue meeting
demand. You then place a larger order with your supplier who also can't meet the demand,
leading to a scarcity in cans of tuna.
Causes of Bullwhip Effect:
1. Issues with Lead Time
2. Incorrect Demand Forecast
3. Lack of or Poor Communication
4. Too many discounts or promotions
5. unnecessary anticipation in (over) purchasing

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1.9 Contract warehousing can be a huge benefit to your business. Some advantages of using
these services include:

1. Lower Capital Investment

Buying, building, or expanding a warehouse can quickly become too expensive. With a
contract warehouse, the building is already built and fully operational, significantly reducing
capital cost.

2. Lower Operational Costs and Fees

Contract warehouses are built and run for maximum efficiency, both with utilizing space and
manpower. Entering a contract saves you the fees of running the warehouse by yourself,
including utilities, maintenance, potential renovation, operation, and distribution costs. And
because the space is rented, businesses can contract on an as-needed basis, scaling up or down
as you need.

3. Benefit of Value-Added Services

Contract warehouses not only store your products, but they can also take care of pick and
pack order fulfilment, quality control checks, product handling, packaging, kitting, shipping,
and inventory management.
4. Greater Reliability
Contract warehousing and fulfilment services work hard to maintain a good reputation by
keeping product flow consistent to and from storage to on-time shipment. This is critical for
customer satisfaction and long-term success.

5. Centralized Operations
A centralized location makes shipping time even faster, especially if your business is situated
away from your target market. The ideal contract warehouse would allow for two-day
shipping across the continental United States.

6. Streamlined Processes
Operation centres often have specialized services and equipment with trained personnel to
decrease turnaround times. This saves you the cost of hiring and training warehouse managers
and staff.

Disadvantages:
1. Uncertain Economic Conditions
You may encounter a larger overhead than expected due to varying market conditions or
seasonal reasons, although this is still less expensive than having to build a warehouse from
scratch or renovate.

2. Less Control over Processes

Businesses will inevitably have less control over their inventory management when using a
contract warehouse. However, this could also be a benefit, leaving you more able to focus on
your KPI’s.

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1.1 What is public warehousing?
l Warehouse is owned and operated by a third party.
l Charges for type of services used.
l Mainly for short-term usage

1.2 What is Private warehousing?

l Also known as proprietary warehousing.
l Operated as a division within a company.
l On-site* and off-site** warehousing
l Substantial corporate fixed investment in land, building, and equipment.

1.3 What is Contract warehousing?

l A variation of public warehousing
l A long-term contract and/or services
l Warehouse is owned and operated by a third party.
l Customized services/space over a long term
l A trade-off between location flexibility for assured space over the contract period
and a lower price that is usually lower than warehousing rates.
 l Contact for either an entire building or for a defined, fixed portion of square-foot
or cubic-foot space

*On-site can be either at a central location or dispersed throughout manufacturing

facilities
**Off-site warehouses are satellite facilities located close to marketing areas to store
excess on-site inventory and to serve as distribution centre for finished goods.

2. Advantages and Disadvantages of Public Warehousing

2.1 The advantages are:
a) Zero capital investment in Warehousing:
A major advantage is there is no capital investment (eg. Leasing of bldg, material
handling equipment and startup cost of operations hiring and training personnel) from
the user to do one’s own warehousing. The cost of public warehousing is a variable cost
component.

b) Provides Capability to Expand Market:

For companies that are expanding, public warehousing provides economical and
practical means to reach out to new markets.

c) Adjusts for seasonality:

If firm’s operations has seasonality, then having public w/h allows the user to rent as
much of w/h space during peak season, since there is no commitment of $$ as compared
to public w/h. Moreover, there is this distinct advantage of allowing storage costs to vary
directly with volume.

d) Reduced Risk (Low opportunity cost):

Since there is no commitment of funds in public w/h, the user firm can switch to another
facility in a short period of time, often within 30 days. Moreover, if there is another
attractive location, which may have a lower rent, the user firm can easily switch
warehouse….

e) Permit freight to move at lower rates:

This is a major advantage to justify perhaps half of all public warehousing today. It is
possible since they handle the requirements of a number of firms; their volume allows
them to pay consolidated freight rates but not the much higher freight costs that result
from shipping small quantities at premium rates.

f) Gain Access to Special Features and Services:

Most can offer specialized services (eg. Broken-case handling, packaging services for
manufacturer products for shipping, breakbulk services, freight consolidation services).
They are resulted from the consolidation of small shipments with those of
noncompetitors who use the same public warehouse. Most public warehouses have
special features, which makes them unique.
It can range from design, when the warehouse first sets up for business, or it can evolve
into the specialty. Some examples of special features are:
l Temperature-controlled, cool and cold storage
l Crane capabilities
l Ultraclean segregated area
l Guard service around the clock
l Attractive facilities and amenities
l Dedicated docking areas for special customers
l Special staff functions like customer service, inventory ordering, etc
l Office space to rent for customer’s sales, accounting, etc
g) Greater flexibility:
Owing a long-term lease on a warehouse is a huge liability and there is a huge
opportunity cost on changing the warehouse if business conditions make it necessary for
the change. Thus, public w/h is better since there is only a short-term contract, and thus,
short-term commitments.

h) Tax advantages:
Since it doesn’t own property, it is not subjected to taxes, which is quite substantial.

i) Specific knowledge of costs for storage and handling:

When a company uses a public w/h, it knows how much exactly is spent on storage and
handling costs since the monthly bill displays all necessary information. This allows the
user to forecast costs for each different levels of activity. On the other hand, firms that
operate their facilities often find it difficult to determine the fixed and variable cost
exactly.

2.2 Its Disadvantages to the user can be:

a) Communication problem: There is a potential problem of incompatible computer
terminals and systems. They may not have another terminal just to suit the needs of just
one customer. Thus, the lack of standardization in contractual agreements makes
communication regarding contractual obligations difficult.
b) Lack of specialized services: Spaces or specialized services needed may not always be
available in a specific location. Most public warehouse facilities provide local services
which may not be useful for the big MNC who requires more specialized services.

c) Space may not be available: Public warehousing space may not be available when ans
where a firms wants it. Shortage of space can happen in some places especially during
peak season, and this may affect the firm adversely.

3. Advantages and Disadvantages of Private Warehousing

3.1 The advantages are:
a) Degree of control:
From inventory control, optimum space utilization, maintenance and equipment, internal
material flow, handling routines, supervision, and associated cost control, the firm has a
direct control and clear visibility for the product until the customer takes possession or
delivery. Thus, this will allow the firm to integrate the warehousing function more easily
into its total logistics system.

b) Flexibility:
With more control, there is greater flexibility of designing and operating the w/h to suit
the needs of its customers and the characteristics of the products. This means that
companies who have specialized handling for its products will not find public
warehousing viable. In addition, the w/h can also be modified through expansion or
renovation to facilitate product changes, which is not possible on a public warehouse.
c) Less costly in the Long term:
Operating cost can be 15 to 25% lower if the company achieves sufficient throughout or
utilization. This is possible if the firm achieves at least 75% utilization, if not, it would
be best to use public warehousing.

d) better use of Human resources:

There is greater care in handling and storage when the firm’s own workforce operate the
warehouse. This means that the company can utilize the expertise of its technical
specialists.

e) Tax benefits:
There are depreciation allowances on buildings and equipment reduce tax payable.
f) Intangible benefits:
When a firm distributes its products through a private w/h, it gives the customer a sense
of permanence and continuity of business operations. The customer perceives the
company as a stable, dependable, and lasting supplier of products.

3.2 Its Disadvantages to the user are:

a) Lack of flexibility:
The major drawback is it is too costly, because of its fixed size and costs. This means
that in the short run, the private facility cannot expand or contract to meet increases or
decreases in demand. Thus, when demand is low, the firm still assumed the fixed costs
as well as the lower productivity linked to unused warehouse space. However, the
disadvantages can be minimized if the firm is able to rent out part of its space.
Moreover, it loses flexibility in its strategic location options. They can’t change quickly
to rapid changes in market size, location and preferences, and this may mean that they
will lose an excellent business opportunity.

b) High opportunity cost (high risk)

ROI on other investments may be greater if funds are channelled into other profit-
generating opportunities. Besides, there is also a potential probability of not being able
to sell the w/h in the later period due to its customized design.

c) Low Rate of return:

Since the rate of return is about the same as the firm’s other investments, most
companies find it advantageous to use a combination of public and private warehousing.
It is best to use private warehousing to handle the basic inventory levels required for the
least cost logistics in markets where the volume justifies ownership. On the other hand,
any extra volume can be stored in the public warehouse during peak periods where
private warehouse is full.

d) High start-up cost:

Firms have to generate enough capital to build or buy a warehouse. A warehouse is often
a long, risky investment. Moreover, there is cost of hiring and training of employees,
and the purchase of material handling equipment. The high cost involved may force the
company to seriously consider public warehousing as a better option.
 Cost Private (Company) Public Warehouse
Component Warehouse “Pure” Public Warehouse Contract Warehouse
Capital Cost l Building cost (depn) Not applicable Based on contracted
l Facilities & eqm responsibilities for land,
l Matl-handling eqm buildings, and facilities
l (Un)loading docks/rails

Expenses l Safety eqm Per unit cost based on the type As stated in the contract
l Insurance, taxes, of services used
l Maintenance/ repairs
l Utilities
l Salaries/wages
l Employee benefits
Rates/ Fees Not applicable Time based: Storage charges Time and/or transaction
Transaction-based: based, as stated in the
Handling charges; in/out contract
special handling fees,
documentation, special
services, etc
Risks The company assumed all Defined and bear in Risks are assigned and
risks accordance with the standard assumed as stated in the
terms and conditions of the lease and/or contract
warehouse agreement

4.11 The Wearable Devices in Logistics (Ultimate Mobility) New Technology:

The logistics industry is rapidly changing as technology advances. Many of the technology
solutions coming to market have the potential to improve supply chains at every level; rugged
mobile computers, handheld barcode scanners, or smart printers are all excellent examples of
current warehouse technology that’s been implemented along the supply chain to increase
production efficiency, improve customer satisfaction, and lower costs. However, there are
also new technologies emerging on the market that have the potential to change the face of
logistics, including wearable augmented reality technology.

WHY WEARABLES?
The appeal of wearables goes beyond the cool factor. Wearable devices—which range from
voice headsets used for picking to wrist, ring, glove, and head-mounted bar-code scanners, to
smart glasses equipped with scanners, to wearable safety devices aimed at improving
ergonomics—are known for several key benefits including improved worker safety, increased
productivity, and the cost reductions stemming from these improvements.
Wearables help to improve three important aspects of a warehouse: speed, safety, and
accuracy. “Having access to the right data without walking up to the workstation time and
again speeds warehouse processes and operations,”. “By keeping the hands as free as
possible, wearable devices allow clerks to focus more on the physical process of material
handling.
“Devices with sensors can warn workers about potential dangers in certain activities and
locations, and even suggest preventive measures,”

Google Glass as a Logistics Tool

The household name in wearable technology is Google Glass, which allows users to interact
with whatever they are viewing through voice direction. Transport, logistics, and supply chain
industry business intelligence leader identified Google Glass as capable of handling many of
the computing tasks of mobile computers in the warehouse; it can read barcodes, connect with
and display information from a database, and even upload information to a database. But
perhaps the most compelling benefit of Google Glass within the warehouse is its ability to be
used completely hands-free. Literally freeing the hands of staff and eliminating the need for
employees to walk back and forth between their department and a computer improves
efficiency by allowing more time and opportunity for them to multitask.

Voice control headsets are one of the oldest wearable technologies and have been in use in
industrial settings for more than a decade.

Today, this technology is used almost exclusively in warehousing applications such as piece
picking; verbal commands direct operators to a picking location, tell them what quantity to
pick, and where to place the picked items. Often, the device software links with existing ERP
software, allowing real-time inventory updates and progress.
So it’s not a big leap for these warehouse applications to make their way into a manufacturing
environment such as an automotive plant. Where older devices rely on radio frequency (RF),
newer generations of voice control headsets can use WiFi so that, combined with location
detection, they can provide for much more flexible applications (for example, materials
handling in plants).
Because WiFi modules are now inexpensive, allow for easy setup of applications, and
integrate easily with existing network security, they will most likely be the better option for
manufacturers looking to “get their feet wet.”

Smart watches share many of the capabilities of fitness bands, but with more communication
functionality because they’re typically integrated with a smartphone and can display text
messages, e-mails, and calls without needing to access the phone. They also operate many of
the same applications as smartphones.

“With the proliferation of the Internet of Things, most manufacturers will already have the
systems, resources, and knowledge in place to accommodate at least some wearable
technologies”.
Both devices present interesting opportunities for the factory floor. For example, the
pedometer technology in the fitness bands can measure efficiency and ergonomics by tracking
the steps required to execute operations.
This data can then be used in simulation software to further optimize the storage locations of
tools and parts to minimize movement, like how you once videotaped changeovers to reduce
setup times. The GPS functionality in these devices may prove increasingly useful from a
safety point of view as location-based applications can automatically shut down robots or
machines when employees are in danger, including stopping a forklift that is rounding a blind
corner.
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2.8 NVOCC:
An NVOCC is a non-vessel operating common carrier and describes a company (typically freight
forwarders) who don’t own or operate any vessels. They are tasked to provide ocean transport
services using its own contract of carriage (House Bill of Lading), without operating any vessels.
Role of NVOCC:
The organizations who regularly deals with importing and exporting of materials from one point to
another often chose freight forwarders for the transportation. The freight forwarders are responsible
for the import and export of the material right from the start till then end via reefers or containers that
hold up the materials. Sometimes, these materials being imported or exported take up an entire
containers or various other containers to fit in.
NVOCC leases an existing space in a container and rent or sell it out to their own customers and they
are popularly called as ‘carriers’. They do not own any warehouse but could own a fleet of containers.
It is also said that NVOCC agency sometimes can act as a freight forwarder for the customers too.
NVOCC shipping is done in a way that these agencies make arrangements or sign contracts with ship
owners or freight forwarders under their own Bill of Lading known as the House Bill of Lading and
can act as a single point of contact of those small and medium-sized companies who do not require
the entire container for their shipment.

Cost-Effective:
The essential and most important role of NVOCC is the fact that it is cost-effective. With choosing
NVOCC shipping, importer or exporter has to only bear the cost of the container that their product
acquires. One of the reasons why NVOCC shipping is cost-effective is also because the agencies are
happy to provide their loyal customers with various benefits.
Options for transportation:
One of the reasons why NVOCC shipping is trending or is advised by people is because these
agencies provide various options for transportation as the agencies have tied up with various shipping
lines so that gives the customer options to pick the one they think is the best.
NVOCC shipping has one advantage that the communication till the product reaches the required
destination, is kept clear and precise to make the process simplified. The Non-Vessel Owning
Common Carrier acts as a single point of communication for both parties with the paperwork ready.
Process Followed by NVOCC
Non-Vessel Owning Common Carrier transports the materials from point A to point B and is
considered a one-stop-shop for shippers. The NVOCC shipping uses multiple methods of
transportation such as rail, ocean, and road. Sometimes the shipping agency outsources the warehouse
to optimize the asset and issues their own House Bill of Lading. During the shipping process, the
agents make sure that the NVOCC shipping documents are prepared and processed properly.
NVOCC shipping often offers seamless and personalized services to their clients, which is one of the
advantages that come along with the shipping. The agency usually keeps a good contact and
communication with the locals, which helps them in getting work done faster, and with minimum
interruption.
2.8 Freight Forwarder
In a globalized market, freight forwarding involves the logistical arrangement, organization and
monitoring of transported goods from a supplier and/or manufacturer to intended recipients,
internationally. This includes:
• Tracking Shipments
• Filing Documents for Customs Clearance
• Warehousing
• Negotiating Freight Rates
• Scheduling Cargo Space
• Consolidating Freight
• Supplying Cargo Insurance
In short, freight forwarders arrange the importing and exporting of goods, but do not actually move
the goods themselves (Refer Class PPT for Functions)
WHY FF:
• Hassel free Movement of Goods Consolidation
• Assurance to Best rates Root Optimization
• Insurance Agility
Difference Between the NVOCC & FF:
• The difference between the two lies in the kind of relationship they have with shippers and
other players. An NVOCC acts as a middleman between the shipper and the vessel operator
and also issues their own bills of lading. Whereas, a freight forwarder is authorized by the
shipper to act and make decisions on their behalf.
• you’ll (exporter / importer) always appoint the freight forwarder to act as your agent, whereas
you’ll employ the services of NVOCC as a carrier.
Freight Forwarder NVOCC
They are associated with the International They are not linked with any international
Federation of Freight Forwarders Association associations, thus, do not follow any standard
(FIATA); following procedures according to procedures.
FIATA standards.
Freight forwarders are agents to shippers. NVOCCs are carriers to shippers.
 Freight forwarders do not operate or own NVOCCs manage or hold cargo containers.
containers.
Freight forwarders typically own and operate the NVOCCs do not own and operate warehouses.
warehouses they use for the cargo they load Only large NVOCCs that take on nearly all
to/from airports and seaports. functions of freight forwarders own
warehouses.
Freight forwarders around the world cooperate NVOCCs work independently, using agents or
in their operations to reduce costs and improve third-party companies to support them.
timely deliveries.

=======================================================

Introduction: -Warehouse is a storage structure constructed for the protection of the

quality and quantity of the stored goods. A businessman has to keep different kinds of
goods, so there is always a need for different types of warehouses, which are as
follows.

Private warehousing: -Private warehousing are owned and managed by the

manufacturers or traders to store their own goods. Big business firms which need large
storage capacity on a regular basis construct their warehouses. Generally, these
warehouses are constructed by farmers near their fields, by wholesalers and retailers
near their business areas and by manufacturers near their factories to store their
products.

• Farmers/producers can construct private warehouses near their

farms/fields/places of work.
• Wholesalers and retailers own and manage this kind of warehouses close to their
selling centres for quick access to their inventory.
• Warehouses constructed by manufacturers near their production plants to store
raw materials required for production.
• Warehouses are taken on rent by retail stores.
• Retailers may have several regional warehouses to cater to the needs of their
stores.
• Wholesaler owned/leased warehouses from where it stores and distributes
goods.

Public/commercial warehouses: -This type of warehouses is established to provide

storage facilities to the public for payment of certain fees. It may be owned by an
individual, partnership firm, company, etc. these warehouses have to obtain the license
from the government. They are generally located near railway stations, highways,
airport, seaport, etc.
Government warehouses: -These warehouses are owned, managed, and controlled by
Central and State government or public corporations or local authorities. It is difficult
for the small traders, farmers, businessmen, etc. to own a warehouse, so these
government warehouses assist them in storing their goods at a nominal charge.

• Warehouses are owned by the government and semi-government organizations

for private companies to store goods on payment of rent.
• Warehouses owned by private logistics companies that offer services that can
allow other third-party businesses to outsource part of all of their supply chain
management function.

Contract Warehouse: Contract warehousing is an arrangement in which a partner

warehouse agrees to receive, store and ship goods for a client. The contract dictates the
terms of service and length of the agreement. The timeframe can vary from months to
years and the fee structure can be fixed cost, costs-plus or a combination of the two.
Contract warehousing agreements can provide for various other services including
handling, packaging, shipping and inventory management.

Contract warehousing companies help businesses store goods in a central location so

that products can get to their destination more efficiently. A centralized warehouse
facility reduces both the cost of transporting goods after order processing and the
delivery timeframe. Contract warehousing is a preferred alternative for many
organizations because it lowers overall costs and capital investment. Since contract
warehousing can provide access to a multitude of strategic warehouse locations, it’s
no wonder that the practice has become a popular solution for businesses.

---------------- Read on Advantages and Disadvantages of types of WH ------------

(Refer Question ans notes)

Blockchain, in basic language, is an accumulation of blocks (ledger), in a distributed

network (chain), which is utilized to record digital data of any value. The data is stored
across all the blocks in the network, consequently there is no single proprietor or focal
vault controlling it.

Blocks save data like timestamp, transaction history and so on and the strategy of
cryptography is used to change over information into a language not understandable
by humans.

How Block Chain works? -Typically, Blockchain is made of several nodes (users).
Every node communicates with another node as well as the system to issue
transactions, for e.g.:- sending cryptocurrencies from one user to another user is a
transaction. The history of this transaction is recorded by the blockchain, similarly
every event has its record on the blockchain.
-Each node has a public and a private key. At whatever point a node requests a
transaction, the combination of both these keys creates a digital signature. The
transaction is then sent over the chain for approval. Once all the nodes provide their go
ahead, the transaction stands validated. It is then placed in a new block which is
included into the blockchain.

-The block now contains the hash key of its own, as well as its preceding block,
generated by the unique hashing algorithm. It can basically be considered as the
address of the block. Hashing essentially makes a string in an encrypted format. This
string is the most basic and essential piece of the blockchain logic.

-Blockchain network follows the sequential transaction processing method. During any
transaction, every block checks the hash of the previous block and authorises the
transaction only if the hash matches.

-Any change in the data of the block modifies the hash of the block too. So, whenever
a hacker tries to manipulate data in the block, its hash changes. When its superseding
block tries to match the hash, there arises a discrepancy. Subsequently, the transaction
stands dropped, breaking the whole chain, in this manner guaranteeing security and
dependability.

--------Refer Class PPT and Question Ans notes for more info. --------------------
For Reference Blockchain in Logistics (pwc.de) Uploaded on GCR

A 3D printer is a machine used to make replicas of 3D designs by adding filaments

of a material. In other words, it takes a design created digitally and reproduces it in
three dimensions.
The functions of 3D printers are similar to those of traditional printers: both obtain
information from a digital document on what to print. The main difference between
the two types lies in the execution: while traditional printers apply ink to paper to
reproduce text and images, 3D printers employ materials to produce a three-
dimensional object.
It consists of an overlay system in which layers of material (plastic, ceramics, metal,
etc.) are added successively, giving form to an object (from decorative figures and
cell phone cases to insoles and car parts). The items are light but also strong and
resistant. Moreover, only essential materials are used, thus, minimizing waste and
polluting emissions.
Advantages of 3D:
Reduced inventory. Manufacturing on demand lowers storage costs, as you only
store the materials required and just-finished products (and for a limited time) before
sending them to customers.
Leveraged surface area. By storing less stock, the storage area you need will be
smaller (which is especially beneficial for small and medium-sized companies).
Decrease in shipments. Since you don’t need a huge surface area to print a product,
this process can be carried out in any installation near your customers. Plus, carriers
travel shorter distances when delivering goods, resulting in less pollution.
Agility and on-time deliveries. With traditional production, products had to go
through multiple phases before reaching end customers. By contrast, 3D printers
greatly simplify the complexity of product manufacturing processes, producing the
items more quickly so as to distribute them in the shortest time possible.
Fewer returns. Product personalization is a way to ensure customer satisfaction and,
in turn, prevent returns.
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3.3 & 3.4