Transportation is probably the most visible element of logistics. Everyone understand putting a box on a truck and driving it somewhere. Few people understand how to calculate the Economic order quantity.
Transportation functionality provides two major services. Product movement and product storage.
Lets talk about Product Movement first….
This is basically the movement of inventory (whether it is materials, components, WIP, of final goods) to a specific destination.
This inventory can be “captive” such as on a ship or flexible such as on a truck. A ship could also be flexible, as well as a truck can also be restrictive.
This movement is not cheap… it is estimated that transportation is 60% of the cost of logistics. There is also an environmental impact, such as the consumption of oil and gas. Lastly, if you have ever driven on a highway. You have see the traffic congestion and noise caused by transportation.