Requirement: Right Mode of Transport
Different types of goods require different types of transportation. The type of transportation of the goods depends on several factors:
- The products of the company and their type, e.g., perishables or non-perishables, breakables etc.
- Supplier production lead times.
- Product availability.
- Source of supply i.e. the pick-up destination, e.g. China or others.
- Customs and Excise rules, such as duty, quarantine regulations and others.
- Volume.
The primary modes of transport are Railways, Roadways, Airways, Waterways, and Pipelines.
Depending on the type of consignment, budget considerations, and delivery speed requirements, each mode of transport has its own advantages and disadvantages. Sometimes, depending on the client, market, or geographical demands, more than one mode of transport may be needed to deliver the goods to their destination.
When selecting the most suitable mode of transport to get products from point A to B, there are several factors that need to be considered. The selection of the right transportation mode is very critical to the business and logistics management. An effective use of transportation equipment and modes reduces shipping and logistics costs considerably.
Export planning is not simple. Depending on the destination, goods consigned to a foreign market can be transported by road, rail, air, sea, inland waterways, or a combination of these. The important thing is to make the right selection and come up with the most cost-effective combination of modes of transport.
Factors That Play a Key Role in Selecting Mode of Transport
1) Cost of Transport
When selecting the best and most suitable transport for exportation of products, the budget is the most important consideration. Costs vary based on the type and amount of goods to be transported. It is important to keep in mind that the cost of transport influences the cost of goods.
If heavy or bulky products are being transported over a long distance inland, then rail transport is the most economical. Land transport by trucks is best suited for smaller amounts of goods over short distances, as it saves packing and handling costs.
The cheapest mode of transport is water transport — albeit the slowest — but most suited for heavy or bulky goods over long distances, where time is not a major factor. Air transport is the best option for perishable, fragile, and valuable goods, even though it is the most expensive.
Importers and exporters must also consider hidden costs such as insurance premiums and finance charges.
2) Reliability and Regularity of Service
The reliability and regularity parameters of different transport modes, differ from each other. The urgency and speed by which the goods are to be delivered, influences the decision as to which mode of transport to use. All modes of transport, land, ocean and air, are affected by bad weather such as heavy rains, snow, fog and storms, which may cause delays.
3) Safety
Another crucial factor influencing the selection of a mode of transport is the safety and security of goods in transit. Land transport is more preferred to railway transport because the losses are less.
From the safety point of view, sea transport is the most risky, as water transport exposes the goods to the perils of sea, and the long duration of travel adds to the risk factors. Certain types of packaging also helps in safeguarding the goods in transit and are highly recommended, but they do influence costs as well.
Some goods also require special facilities such as refrigeration or special security measures that need to be taken into consideration when selecting a mode of transport.
4) Characteristics of Goods
When selecting the mode of transport, the size and weight of goods play a crucial role. Land and air transport primarily cater to fragile and small shipments. Rail and sea transport are a more suitable option for heavy shipments.
How dangerous, fragile or high value the products are, also influences the selection of the transport mode. For breakable and fragile, high value products, air and land transport are the best option.
5) Budget
Transportation costs are an add-on to the sale price of a product. These costs affect how much goods can be sold for, to maintain profitability.
Budget requirements must be considered carefully. The volume, weight, urgency, and perishability of goods influence the transport choice.
Typically, water transport is most cost-effective for bulky goods over long distances. Rail transport is also inexpensive for such goods. Road transport offers savings in handling and packaging costs, while air transport, though expensive, is fast — ideal for perishable and fragile goods.
6) Timescale
Air transport is best for long distances requiring urgent delivery, meeting deadlines, or for perishable items. Motor transport is faster than rail for short distances, but for longer hauls, rail is faster and more economical. Water transport is unsuitable when time is a critical factor.
7) Flexibility
The most flexible mode of transport is Motor or road transport, as it is not constrained by factors such as flight times, shipping routes or pre-scheduled timetables. Motor transport can operate day and night, at personal convenience, to suit all time frames, and has the added advantage of door-to-door delivery.
Factors to Consider When Choosing Route Optimization Software for Logistics
With routing requirements becoming complex, companies must choose Route Optimization Software carefully to save fuel costs, reduce overtime, and minimize human dependency.
Route Optimization Software Overview
Businesses often think of Route Optimization software as a guide for telling them the shortest distance between point A and B.
Even though Route Optimization software does provide that facility, modern-day
software is a lot more than chaperones for guiding shipments from one location to another.
The advanced solutions in Route Optimization allow route planners to manage a fleet, get driving directions, add multiple stops, improve productivity and increase service-level agreement (SLA) adherence.
Route Optimization can thus lead to saving fuel costs, additional pick-up/delivery stops, reduction of labour overtime costs and minimizing human dependency.
With Route Optimization becoming the need of the hour for virtually every business operation, it becomes imperative that organizations choose their Route Optimization software with utmost care.
Key Features and Selection Factors
1. Real-Time Traffic Consideration
Considering real-time traffic ensures on-time delivery and better SLA adherence. Software should calculate ETA dynamically based on live traffic data.
2. Order-Vehicle Constraints
Many a time software tend to focus on cold, hard data and ignore real life order- vehicle constraints. Often, two different genres of products, ex- electronics and perishable can’t be shipped together, at other times, a specific kind of product, say medicines can only be supplied in special vehicles. Software’s that consider these order-vehicle constraints have a better chance of helping businesses in real-world scenarios.
3. Accurate Geocoding
Accurate geocoding converts addresses into precise map coordinates. Understanding local contexts and ambiguous addresses improves delivery accuracy.
4. Historical Data Inspection
Software should analyze historical data for:
- Riders’ expertise and delivery patterns
- Customers’ availability and preferences
- Traffic patterns at different times of the day
5. Rider Preference Consideration
To reduce resistance from delivery teams, software should allow rider preferences to be integrated gradually.
6. Change Management
Software providers should assist with training, incentives, and support to make transitions smoother for on-ground teams.
7. Analytics and Report Management
Your Route Optimization software should give you the ability to track and manage your entire operations in real-time on a single platform. It should allow you to track the actual routes vs the planned routes and should help you compare the performances of your different business hubs. Your Route Optimization software should also provide you with a unified dashboard that allows you to track your operations in real-time.
8. Dynamic Route Planning
Software should handle both on-demand and scheduled orders, rerouting deliveries in real-time as customer preferences change.
How Route Optimization Helps Solve Routing Issues
The Route Optimization Engine – ‘Dispatcher’ provides intelligent route planning using geocoding instead of pin codes. With AI and Machine Learning, it helps improve every mile of delivery through automation and intelligent routing.
Benefits of Route Optimization in Last-Mile Delivery
Dispatcher (route optimization) offers AI-based route planning that considers multiple constraints and provides:
- Accurate geocoding and address detection
- Optimal fleet mix and route planning
- Intelligent order clubbing by priority, location, and delivery time
- Control tower applications for predictive alerts and operational exceptions
- Reduced turnaround time by optimizing warehouse and distribution locations
- Predictive delivery time windows for better first-attempt success
- Electronic proof of delivery (EPOD) for transparency
- Increased deliveries per day through efficient routes
With proprietary technology, Dispatcher ensures transparency, efficiency, and reduced logistics costs.
Factors in Optimum Delivery Requirement
A firm has no control over macro-marketing environment factors. The only option is to adapt and respond favorably to exploit emerging opportunities.
1. Demographic Factors
Demographic factors are related to population. Marketer must study these factors due to the fact that the market is made of people, and people constitute the population. Demographic study provides customer profile that is basic need for market segmentation as well as selecting target market. Therefore, demographic variables have direct and notable impact on firm’s operations. A marketer must analyse demographic factors to get idea about number and type of people to be served as customers.
Demographic variables include:
- Total population and population growth rate ii. Age groups and gender distribution
- Geographical (area-wise) concentration of population
- Proportion of rural v/s urban population v. Literacy rate and level of education
- Population mobility (geographical shift) or migration rate vii. Family system and household pattern
- Occupation-based classification of population.
2. Ecological Factors
These concern the natural environment and pollution (air, water, noise, land). Global efforts to protect the environment affect how companies use resources, manage waste, and design products.
Ecological analysis includes:
- Availability of natural resources
- Pollution control measures
- Legal provisions
- Eco-friendly initiatives
- Corporate environmental contributions
- Role of global organizations
3. Economic Factors
The economic environment affects costs, revenues, and purchasing power.
Economic variables include:
- Growth rate
- Interest and inflation rates
- Stock and commodity market performance
- Industrial and agricultural policies
- Fiscal and monetary policies
- Export-import policies
4. Socio-Cultural Factors
Social and cultural factors shape consumer preferences and habits. Managers must adjust marketing strategies to align with cultural norms.
Variables include:
- Norms, beliefs, and rituals
- Traditions and customs
- Family and social classes
- Role of women
- Religious events and festivals
5. Political and Legal Factors
A firm operates within a political and legal framework that influences all marketing decisions. These include:
- Political philosophy
- Legal reforms
- Government stability
- Business legislation
- Judiciary effectiveness
6. International Environment
In a globalized world, businesses must think globally but act locally. International forces influence every business, large or small.
Key variables:
- Role of international agencies (World Bank, UNO, etc.)
- Functioning of MNCs
- Global trade policies
- Liberalization and globalization pace
- Political stability in major economies
7. Technological Factors
Technological factors affect the firm’s production process, product quality, cost effectiveness and competitive ability. A wise manager must know the latest technology in the relevant field. Technology has released wonders in fields of business transactions, communication, entertainment, medical science, agriculture, and manufacturing systems.
At the same time, it has released horrors in fields of hydrogen bombs, horrible chemical weapons, crime styles, deterioration of ecological environment, and so forth. Every new technology is a force for creative destruction. New technology compels old one to exit. New technology brings superior products having more capacity to satisfy consumer needs.
Key factors:
- Availability and suitability of technology
- Pace of technological change
- R&D investments
- Innovation opportunities
- Government role in technology transfer
- Regulations and reforms
