STUDENTS' CORNER - 104

Next objective of the logistics we are going to study is ‘Movement Consolidation’.

We have already seen that business exists only on the movements of the products and movement involves transportation of the goods from the place of origin to the place of final consumption. This long journey includes smaller journeys between the intermediaries like agents, stockists and retailers.  Every movement costs; it points to the fact that logistics cost is very essential in any business and an efficient business aims at and achieves as much as possible reduction in the logistics cost.
Consolidation means simply putting things together towards a purpose or a goal. Movement consolidation aims at reducing as much as possible transportation cost without damage to the company’s reputation; that is, it should not delay delivery of the product to the customer and at the same time it must try to reduce the transportation cost.  Small shipments cost much when you have to deliver the products to the customer sometimes forced to use expensive mode of transport due to some unforeseen events or even human lapses in between. On the other hand, if it is possible to plan to put together all small shipments and succeed, it will cost to the company much less since in a single transport ; many kinds of shipments of products are clubbed together without compromising the interests of the customer.  The cost per unit transported comes down when products are shipped in bulk; the greater the number of the products transported, the lesser is the transportation cost per unit.
It is common knowledge that large shipments on a long distance haul reduces the transportation cost per unit. Transport consolidation is also known as cargo consolidation. Supposing there are ten customers for ten different products and the customers are in ten different places. Out of necessity in the interests of business, ten transportation schedules become a must, though it cost heavily to the company.  But if the ten different customers are located close by to one another in a locality, the ten different products can be transported all in one go to the ten customers with obviously less transportation cost per unit. This process of clubbing different cargoes in a single transport is popularly called cargo consolidation.  Even if the ten customers happen to be customers for different companies, it is still possible to send the products together in a single shipment thus reducing the logistics cost.
This process of cargo consolidation is taken care of by freight forwarders.
From this, we can understand that efficient business houses take all care that the logistics cost, the transportation costs are well monitored and managed.  It also implies that a good coordination must be present among different kinds of companies. In other words, a good business house is sensitive to market dynamics; it not only knows who are his close rivals but also is aware of the leaders in different businesses.