OTM Domain

Knowledge
- Naveen

Contents

Supply Chain Management

Transportation
Logistics
Modes of Transportation
Freight Forwarding
Containers
Bill Of Lading
INCO Terms
Bullwhip Effect
Push And Pull Strategies
Domestic service
International Services

Warehouse
Hazardous Material
House Airway bill (HAWB)
Customs clearance
Pool
Just In Time (JIT)
Advance Shipment Notices
Commodity
Consignor and Consignee
Cross-Docking
Value-Added Service Order
Consolidation and
Deconsolidation
PL Types(Party

Supply Chain Management

A supply chain is network of facilities and distribution options that

performs the functions of procurements of materials, transformation of
these materials into intermediate and finished products, and the distribution
of these finished products to customers.

Supply chain management flows can be divided into three main flows:
(a) The Product Flow
(b)The Information Flow
(c)The Finance Flow
The product flow includes the movement of goods from a supplier to a

customer, as well as any customer returns or service needs. The information

flow involves transmitting orders and updating the status of delivery. The
financial flow consists of credit terms, payment schedules and consignment
and title ownership arrangements.

Transportation

Transport or transportation is the movement of people, animals

and goods from one location to another.

Modes of transport include air, rail, water, cable and space . The field can
be divided into infrastructure, vehicles and operations.

Transport is important because it enables trade between persons, which is

essential for the development of civilizations.

Logistics

Logistics is the integration and management of the product value

chain from suppliers to the customer. It includes all aspects of the chain of
production, including design, suppliers, financing, information, energy,
transportation, distribution and sales.

Modes of Transportation

There are basically four modes of transportation which are used

commonly.
They are:

Road

Air

Ocean / Marine

Rail

Road

Road plays a major role in handling cargo in small towns.

Road transport is done through Lorries/Trucks.

All cargos cant be handled by one mode.

Rail

Through rail goods can be transported from port to the various parts of the
country.

Rail have the special wagons to carry the goods.

Through railway large number of cargo can be transported in a short period

of time.

Airways

Air is the fastest means of transportation.

Through air only valuable and less weight goods are transported.

Waterways

Water ways is the cheapest mode of transportation.

Large volume of worldwide trade is done through ships.

Ships handle cargo from one country to other through ships.

Freight Forwarding

A freight forwarder or forwarding agent also known as a non-vessel operating

common carrier (NVOCC)

He is a person or company that organizes shipments for individuals

or corporations to get goods from the manufacturer or producer to a market,
customer or final point of distribution.

A forwarder does not move the goods but acts as an expert in the logistics network.

A forwarder contracts with carriers to move cargo ranging from raw agricultural
products to manufactured goods.

Fright:
Goods carried by a vessel or vehicle, especially by a commercial carrier; ca
rgo.

Fright Forwarding

Containers

Containers are those which are used to carry the goods.

There are different types of containers used to carry the goods.

1.
.

Dry storage container:

The most commonly used shipping containers; they come in various
dimensions standardized by ISO. They are used for shipping of dry
materials and come in size of 20ft, 40ft and 10ft.

2. Flat rack container:

With collapsible sides, these are like simple storage shipping containers
where the sides can be folded so as to make a flat rack for shipping of wide
variety of goods.

3. Refrigerated ISO containers:

These are temperature regulated shipping containers that always have a

carefully controlled low temperature. They are exclusively used for
shipment of perishable substances like fruits and vegetables over long
distances.

Bill Of Lading

A bill of lading is a standard-form document.

It is transferable by endorsement (or by lawful transfer of possession) and

is a receipt from shipping company regarding the number of packages with
a particular weight and markings and a contract for the transportation of
same to a port of destination mentioned therein.

INCO Terms

International Commercial Terms are a series of pre-defined commercial

terms published by the International Chamber of Commerce (ICC).

INCO Term gives a clear picture of rights and responsibilities during the
delivery process.

INCO terms provide definitions for delivery points, loading and unloading
obligations and customs clearance.
Eg: FOB (Free On Board):FOB means that the shipper/seller uses his
freight forwarder to move the merchandise to the port or designated

point of origin.
FCA (Free Carrier): the seller is responsible for arranging transportation

Different INCO terms

The Bullwhip Effect

When each member of a group in a supply chain tries to maximize his or

her own benefit without regard to the impact of other members of the
group, the overall effectiveness may suffer. such inefficiency in staged
supply chains is the bullwhip effect.

Push And Pull Strategies

A push promotional strategy involves taking the product directly to the

customer via whatever means, ensuring the customer is aware of your
brand at the point of purchase.

This is also known as outbound marketing, since it pushes marketing out to

customers.

A pull strategy involves motivating customers to seek out your brand in an

active process. "Getting the customer to come to you.

This is also known as inbound marketing.

Example of push and pull strategies

Domestic service

Designed specifically to meet the needs of the Indian domestic market,

these air and ground services have been introduced to address the noncommercial and commercial shipping requirements.
Eg: Indian Postal Services
DTDC

International Services

Designed specifically to meet the needs of the International market

DHL International Courier delivery service

FedEx Offers you the fastest courier services around the world daily.
FedEx Express is your 24 hours solution for the best courier service.

Warehouse

Warehouse is a storage structure constructed for the protection of the

quality and quantity of the stored produce. The need for a warehouse arises
due to the time gap between production and consumption of products.

Warehousing or storage refers to the holding and preservation of goods

until they are dispatched to the consumers.

Hazardous Material

A substance or material, including a hazardous Substance , which has been

determined by the Secretary of Transportation to be capable of posing an

unreasonable risk to Health safety, and property when transport.

Examples:

Explosives

Blasting agent Gases

Flammable liquid

Flammable Solids

Oxidizer

Radioactive material

Corrosive

House Airway bill (HAWB)

When a shipper books cargo with a freight forwarder by air, he issues a

document of receipt of goods from shipper which is called House airway
Bill.

Customs clearance (Import/Export)

A document given by customs to a shipper to show that customs duty has

been paid and the goods can be shipped.

Pool

Pool Distribution is the distribution of orders to numerous destination

points within a particular geographic region.

Instead of directly delivering all the LTL, all the orders are bought to one
terminal within that region from there they are delivered to the destination.

Just In Time (JIT)

It is an inventory management method whereby materials, goods, and labor

are scheduled to arrive or be replenished exactly when needed in the
production process.

The goal of JIT is to decrease costs by keeping only enough inventory on

hand to meet immediate production needs.

JIT also speeds the production process, thereby eliminating long lead times
and improving delivery performance.

Advance Shipment Notices (ASNs)

An Advance Shipment Notice (ASN) is transmitted via Electronic Data

Interchange (EDI) from a supplier to let the receiving organization know
that a shipment is coming.

The ASN contains details including shipment date, time, and identification
number; packing slip data; freight information; item detail including
cumulative received quantities; purchase order number; and returnable
container information.

Commodity

Commodity is specifically used to describe a class of goods for which

there

is

demand,

but

which

is

supplied

without

qualitative differentiation across a market.

Commodity is a marketable item produced to satisfy wants or needs.

Consignor and Consignee

If a sender dispatches an item to a receiver via a delivery service, the

sender is the consignor, the recipient is the consignee, and the deliverer is
the carrier.

Cross-Docking

Cross-docking is a practice in the logistics of unloading materials from an

incoming semi-trailer truck or railroad car and loading these materials
directly into outbound trucks, trailers, or rail cars, with little or no storage
in between.

This may be done to change the type of conveyance, to sort material

intended for different destinations, or to combine material from different
origins into transport vehicles (or containers) with the same destination.

Example of Cross-docking

Value-Added Service Order

We can use a value-added service order (VAS order) to perform valueadded services (VAS) in the warehouse through VAS activities, and to
document them.

The VAS order defines which product processing must be performed by

warehouse employees in the work centers.

We can also use a VAS order in the goods issue process to assemble kits
for your customers, and to pack them on a customer-specific basis using
this VAS order.

Consolidation and Deconsolidation

Combine numerous smaller product loads into one method of transport to

save on transportation costs.

This process can be described as

consolidation

Break down large product loads into smaller loads for transportation to
create an easier delivery process to the customer. This process can be
described as deconsolidation.

PL Types(Party Logistics)

1PL or First Party Logistics: A First party logistics provider is a

company or an individual that need a product to be transported from a
point A to a point B.

Example: Company A needs its product to be transported to the company

B. They are both 1PL.

2PL or Second Party Logistics: A Second party logistics provider

specializes in one particular area of the supply chain, usually transportation
This company owns the means of transportation.

Example: Company A delivers companys B merchandise with its own

means of transportation, Company A is a 2PL. DHL or UPS are 2PL

3PL or Third Party Logistics: A Third party logistics provider is a

company that can be used to satisfy most or all the logistics needs of a
company.

Example: Company A outsources part or all its logistics to a Company B

which takes care of the whole process. Company B is a 3PL.

4PL or Forth Party Logistics: A Fourth-party logistics provider dont

necessarily provides logistics services itself but rather gives advice and
solutions to other companies regarding their logistics.

Example: Company A advises Company B to use Company C for their

supply chain and logistics needs, Company A is a 4PL. For example
Deloitte and Accenture

Diagram representing PL types

Thank you