A STUDY ON LOGISTICS COST MANAGEMENT IN INLAND CONTAINER DEPOTS (ICDs) WITH SPECIAL REFERENCE TO COIMBATORE DISTRICT

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1 A STUDY ON LOGISTICS COST MANAGEMENT IN INLAND CONTAINER DEPOTS (ICDs) WITH SPECIAL REFERENCE TO COIMBATORE DISTRICT B.SHENBAGAPRIYA 1 N.BHUVANESH KUMAR 2 1 Student of PG Department of Commerce with International Business, NGM College Pollachi 2 Assistant Professor of PG Department of Commerce with International Business,NGM College Pollachi ABSTRACT Inland Container Depots (ICDs), otherwise known as dry ports, are equipped for handling and temporary storage of containerised cargo as well as empties. This means that hinterland customers can receive the port services more conveniently closer to their production premises. The research mainly discuss to measure the levels of satisfaction and to cull out the various problems encountered by logistics service providers on Inland Container Depots and selected loading ports. Sample of 100 people were taken into study, and their data were collected. Samples for the purpose of the study are selected systematically. The study makes use of statistical techniques such as Percentage analysis and Chi- square test in analyzing the data for finding the result. It could be concluded that an optimized allocation of cargo from the various ICDs in Coimbatore district to different loading ports will definitely lead any logistics firm in to increased profitability of the firm. The logistics firm may select CWC as the point of shipment and Cochin port as the point of loading to minimize the overall logistics costs. It may be a worthy consideration for the logistics firms to recruit personnel with post graduate qualifications and great experience in this field which would help them to save over there logistics expense. Keywords: Logistics, Port, Satisfaction and Costs INTRODUCTION In India, logistics industry is spread over Roadways, Airways, Railways, Seaways and Pipelines. India is known as, the land of opportunities for logistics service providers all over the world and the Indian logistics marketing is represent `500 billion and is growing at a rate of 7 percent annually. Logistics originated from the Greek word logististike which means the art of calculating. In the distant past the word was used only in the military to describe the functions involved in sourcing, procuring, transporting, storing and making available arms, ammunition, supplies, uniforms, food, men and all other materials required for a military campaign. Slowly over the years, the word came into use in non-military parlance, as well denote a wide range of activities involved in making available goods to the consumer. The meaning of Logistics denotes the physical movement of goods and services from the place of manufacturer to the people who really need it. In other words, it is the moving process of supplying materials like purchasing, checking, warehousing, storing, loading and unloading. Generally speaking, logistics does not mean transportation alone but also it involves the value added services such as materials handling, tracking, placement of orders, packaging, information processes and the documentation. Logistics and Warehousing are important part of controlling and managing flow of goods and services. This refers to not just transportation itself, but to streamline and control the flow through the value adding processes. Logistics industry is also closely linked to other related sectors namely containers, Inland Container Depots, Seaports, Airports and Shipping Industry icmrrjournal@gmail.com

2 STATEMENT OF THE PROBLEM A continuous trend of recession around the world created a greater pressure for cost reduction to maintain at the least nominal profit margins. In this competitive world, there is an emerging need, to examine the various logistics costs to lead overall economic competitiveness in the trade. The previous research studies might not have made a detailed analysis in this direction and an attempt in this direction has been made in this study. Therefore, the focus needs to fall not only on cost minimisation, but also relying upon logistical costs specifically within the total supply chain. This is an area that has not received much attention in the previous research and therefore, it has a larger opportunity for cost optimisation. This study is not only concerned with various costs associated in the shipment of cargo but also concerned with the total cost of shipment in all the three ICDs in Coimbatore District namely, CONCOR, CWC and CLPL. OBJECTIVES OF THE STUDY The study is designed with the following specific objectives: To analyse the relationship between four aspects of the respondent s profile and the overall logistics costs from ICDs to select loading ports. To measure the levels of satisfaction and to cull out the various problems encountered by logistics service providers on Inland Container Depots and selected loading ports. SCOPE OF THE STUDY The main focus of the present study is to ascertain the components of logistics cost incurred in the ICD shipments and to find out the ways and means to determine the optimal logistics cost for different sizes of containers. This type of analytical study on costs will enable the logistics service providers to develop a standard logistics model, route charts, optimal cost plans and to evolve suitable logistics costing practices. RESEARCH METHODOLOGY The validity of any research depends on the systematic method of collecting the data and analyzing the same in a logical and sequential order. In the present study, an extensive use of both primary and secondary data was made. RESEARCH DESIGN Research design is generally a pure and simplified framework and certain plan for a study that will guide the collection and analysis of data where information needed. The function of the research design is to ensure that the required data is obtained and collected accurately and economically. Research design is basic framework, which provides guideline for the best of research purpose. SAMPLING METHOD The sampling technique involved is Convenient Sampling. The study depends on primary data. A pilot study is conducted to validate the questionnaire and to confirm the feasibility of the study. Based on the pilot study, the questionnaire is modified suitably to elicit response from the sample group icmrrjournal@gmail.com

3 SAMPLING SIZE Sample of 100 respondents were taken into study, and their data were collected. Samples for the purpose of the study are selected systematically. METHOD OF DATA COLLECTION The data for this study are of two types: - Primary data Secondary data PRIMARY DATA Primary data is the data is collected from the respondent for the first time, it is original in nature. For the purpose of collection of primary data, a well structured questionnaire was framed and filled by the respondents. The questionnaire comprises of close ended as well as open ended questions. In close ended questions, checklist questions and multiple choice questions are used. SECONDARY DATA Secondary data are collected from books, magazines, web sites etc, and both open ended & close-ended questions are incorporated in the questionnaire for the collection of data. STATISTICAL TOOLS The following statistical tools are used in the study Percentage Analysis Chi square test PERIOD OF THE STUDY The period of the study is 4 months (from December 2016 to March 2017). LIMITATIONS OF THE STUDY Though it is an in depth analysis, it is not free from the limitations. The following are the limitations of this study: Accuracy of the cost details given by the logistics service providers has not been checked. The sample size was limited to 100. There may be personal bias of the respondents, which affect the results of the study. REVIEW OF RELATED LITERATURE Hrusecka Denisa, Macurova Lucie, Junckova Eva, Kozakova Leona (2015), The Analysis of the Use of Outsourcing Services in Logistics by Czech Manufacturing Companies. The main goal is to show how intensively various logistics outsourcing services are used by Czech manufacturing companies in comparison with other world regions, and which areas of logistics outsourcing should be considered more seriously in order to increase logistic efficiency. 137 companies have been used analysed the data. The study is based on a quantitative and qualitative investigation of Czech manufacturing companies. Firstly, the brief overview of the present situation in the Czech market is presented. It is based on survey data. The results of a survey based investigation were compared with global trends icmrrjournal@gmail.com

4 Qi Dianwei (2015), The Research on Logistics Cost Accounting and Management in China. Logistics management called the third profit source is the most important for corporation. Logistics cost management is the core of enterprise's logistics management course, which plays the vital role in promoting the efficiency of the logistics management and ascertaining the logistics service level. The sample size was 150 respondents. Logistics cost is one of the core concepts in logistics. Logistics cost occupies a great proportion in the enterprise total cost. It can strengthen the core competition of the corporation to calculate and control logistics cost correctly. To reduce logistic costs and to promote modern logistic industry in China, we have to find clues from the differences and chaos domestically and abroad and to explore scientific and practical macro and micro analytical framework and accounting method of logistics cost. Nurul Izzah Mohd Shah, Liu Yao and Damhuji Rifai (2015), A review of challenges of logistics management and, barriers of e-business: how Malaysia s efficiency logistics service providers can develop services for e-business. This study focus on logistics service providers (LSPs) strategy and operations. According by Rudolf et al., (2011) shows that logistics service providers should adapt their systems and procedures to customers specific requirements, to ensure highrelationship performance. Satisfied customers especially from e-business partners should promote the providers adaptations, because these adaptations enhance the probability of contract renewal and reduce the risk of providers unexpected termination of the contract, because of the growth in online shopping has presented challenges for physical distribution service quality provided by retailers and sellers including both multi-channel and pure players, and logistics service providers. Zhou Chaoyang and Jiang Ying (2014), Research on Controlling Supply Chain Logistics Costs Based on Acivity-Based Costing. This study examines the meaning and composing of supply chain logistics costs, analyzes the basis of controlling supply chain logistics costs using ABC, and proposes a few measures to control supply chain logistics costs using ABC, such as activity elimination, activity selection, activity reduction and activity sharing and so on. The sample size was 120 respondents. This study concluded that ABC is an effective method to control and reduce logistics costs by strengthening the strategic cooperation and collaborative management among member enterprises of supply chain. But Supply chain logistics costs control involves many factors, and accurate and complete cost information is important and necessary. Robert Boute, Werner Bruggeman and Ann Vereecke (2014), Cost Management in the Supply Chain: an integrated approach. The objective of this study is to explore how effective management accounting systems can provide managers with the relevant information for their supply chain design and planning, and more specifically, how time-driven ABC provides the information needed for the optimization of the supply chain design. The sample size is 75 respondents. This study concluded that management accounting systems, in particular ABC and its time-driven version, offer insights to the manager who wants to control and reduce costs in the supply chain. These systems can thus trigger cost improvements in the routes to the market. However, the real strength of such systems lies in their potential to be integrated with the supply chain planning system icmrrjournal@gmail.com

5 ANALYSIS AND S I) PERCENTAGE ANALYSIS TABLE - 1 DEMOGRAPHIC PROFILE S.No Determinants No of Respondents (N=100) Percentage (%) 1 Age Below 25 years years Gender Male Female Place of Residence Rural Urban Semi-urban Educational Qualification School level Graduate or Diploma level PG level Professionals Type of the family Nuclear Joint Monthly income Less than Rs.10,000 Rs.10,001 - Rs.15,000 Rs.15,001 - Rs.20,000 Above Rs.20, Size of the family Less than 3 members 3-4 members 5-6 members Earning members in the family Upto 1 members 2 to 3 members icmrrjournal@gmail.com

6 9 Nature of establishment Steamer Agent Shipping Agent Freight Forwarder Cargo Consolidator Type of Logistics service Individual Proprietorship Firm Small Scale Industry Frequency of Logistics service Once in a while Once in month Once in a week Experience Up to 2 years 2 to 5 years 5 to 8 years Kind of Cargo Handled Agriculture Engineering Textile Others % From the above table shows that out of 100 respondents, Majority 52 (52.0%) of the online shoppers belong to the age group between years. Most of the respondents are female. The majority 62 (62.0%) of the respondents are residing in urban area. Most of the respondents are Post graduates. The majority 56 (56.0%) of the respondents are belongs to nuclear family. Majority 55 (55.0%) of the respondents monthly income level between Rs.10,001-Rs.15,000. The majority 46 (46.0%) of the respondents have 3-4 members in their family. The majority 58 (58.0%) of the respondents said that below 1 members are earning in their family. The majority 38 (38.0%) of the respondents are shipping agents. 49 (49.0%) of the respondents are use small scale industry service. The most 60 (60.0%) of the respondents are once in a month have using logistics service. 52 (52.0%) of the respondents have 2 to 5 years working in this field and the majority 46 (46.0%) of the respondents are mostly export textile products icmrrjournal@gmail.com

7 CHI SQUARE TABLE 2 -AGE AND LEVEL OF SATISFACTION H 0 = There is no significant association between Age of the respondents and their level of satisfaction with logistic facilities. Age Below 25 years years Calculated χ2 Value: Degree of freedom: 2 Table Value: Five per cent level: Since the calculated χ2 value (7.098) is greater than the table value (5.991).Therefore it is concluded that there is a significant association between age of the respondents and their level of TABLE 3- GENDER AND LEVEL OF SATISFACTION H 0 = There is no significant association between gender of the respondents and their level of satisfaction with logistic facilities. Gender Male Female Calculated χ2 Value: Degree of freedom: 2 Table Value: Five per cent level: Since the calculated χ2 value (10.244) is greater than the table value (5.991).Therefore it is concluded that there is a significant association between gender of the respondents and their level of TABLE 4-PLACE OF RESIDENCE AND LEVEL OF SATISFACTION H 0 = There is no significant association between place of residence of the respondents and their level of satisfaction with logistic facilities. Place of Residence Rural Urban Semi-urban Calculated χ2 Value: Degree of freedom: 4 Table Value: Five per cent level: icmrrjournal@gmail.com

8 Since the calculated χ2 value (8.144) is less than the table value (9.488).Therefore it is concluded that there is no significant association between place of residence of the respondents and their level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted. TABLE 5 EDUCATIONAL QUALIFICATION AND LEVEL OF SATISFACTION H 0 = There is no significant association between educational qualification of the respondents and their level of satisfaction with logistic facilities. Educational Qualification School level Graduate or Diploma level PG level Professionals Calculated χ2 Value: Degree of freedom: 6 Table Value: Five per cent level: Since the calculated χ2 value (18.881) is greater than the table value (12.592).Therefore it is concluded that there is a significant association between educational qualification of the respondents and their level of TABLE 6 TYPE OF THE FAMILY AND LEVEL OF SATISFACTION H 0 = There is no significant association between type of family of the respondents and their level of satisfaction with logistic facilities. Type of the family Nuclear Joint Calculated χ2 Value: Degree of freedom: 2 Table Value: Five per cent level: Since the calculated χ2 value (22.126) is less than the table value (5.991).Therefore it is concluded that there is no significant association between type of family of the respondents and their level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted icmrrjournal@gmail.com

9 TABLE 7 -MONTHLY INCOME AND LEVEL OF SATISFACTION H 0 = There is no significant association between monthly income of the respondents and their level of satisfaction with logistic facilities. Monthly income Less than Rs.10, Rs.10,001 - Rs.15, Rs.15,001 - Rs.20, Above Rs.20, Calculated χ2 Value: Degree of freedom: 6 Table Value: Five per cent level: Since the calculated χ2 value (44.631) is greater than the table value (12.592).Therefore it is concluded that there is a significant association between monthly income of the respondents and their level of TABLE 8 -SIZE OF THE FAMILY AND LEVEL OF SATISFACTION H 0 = There is no significant association between size of family of the respondents and their level of satisfaction with logistic facilities. Size of the family Less than 3 members members members Calculated χ2 Value: Degree of freedom: 4 Table Value: Five per cent level: Since the calculated χ2 value (37.193) is greater than the table value (9.488).Therefore it is concluded that there is a significant association between size of family of the respondents and their level of TABLE 9-EARNING MEMBERS IN THE FAMILY AND LEVEL OF SATISFACTION H 0 = There is no significant association between earning members in the family of the respondents and their level of satisfaction with logistic facilities. Earning members in the family Upto 1 members to 3 members Calculated χ2 Value: Degree of freedom: 2 Table Value: Five per cent level: icmrrjournal@gmail.com

10 Since the calculated χ2 value (3.387) is less than the table value (5.991).Therefore it is concluded that there is no significant association between earning members in the family of the respondents and their level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted. TABLE 10 TYPE OF LOGISTICS SERVICE AND LEVEL OF SATISFACTION H 0 = There is no significant association between type of logistics service and their level of satisfaction with logistic facilities. Type of Logistics service Individual Proprietorship Firm Small Scale Industry Calculated χ2 Value: Degree of freedom: 4 Table Value: Five per cent level: Since the calculated χ2 value (67.559) is greater than the table value (9.488).Therefore it is concluded that there is a significant association between type of logistics service and their level of TABLE 11 FREQUENCY OF LOGISTICS SERVICE AND LEVEL OF SATISFACTION H 0 = There is no significant association between frequency of logistics service and their level of satisfaction with logistic facilities. Frequency of Logistics service Once in a while Once in month Once in a week Calculated χ2 Value: Degree of freedom: 4 Table Value: Five per cent level: Since the calculated χ2 value (26.233) is greater than the table value (9.488).Therefore it is concluded that there is a significant association between frequency of logistics service and their level of 84 icmrrjournal@gmail.com

11 TABLE 12 EXPORT SHIPMENTS AND LEVEL OF SATISFACTION H 0 = There is no significant association between export shipments and their level of satisfaction with logistic facilities. Export Shipments Agriculture Engineering Textile Others Calculated χ2 Value: Degree of freedom: 6 Table Value: Five per cent level: Since the calculated χ2 value (17.639) is greater than the table value (12.592).Therefore it is concluded that there is a significant association between export shipments and their level of FINDINGS Percentage Analysis Majority 52 (52.0%) of the online shoppers belong to the age group between years. Most of the respondents are female. The majority 62 (62.0%) of the respondents are residing in urban area. Most of the respondents are Post graduates. The majority 56 (56.0%) of the respondents are belongs to nuclear family. Majority 55 (55.0%) of the respondents monthly income level between Rs.10,001-Rs.15,000. The majority 46 (46.0%) of the respondents have 3-4 members in their family. The majority 58 (58.0%) of the respondents said that below 1 members are earning in their family. The majority 38 (38.0%) of the respondents are shipping agents. 49 (49.0%) of the respondents are use small scale industry service. The most 60 (60.0%) of the respondents are once in a month have using logistics service. 52 (52.0%) of the respondents have 2 to 5 years working in this field. The majority 46 (46.0%) of the respondents are mostly export textile products. Chi-Square test There is a significant association between age of the respondents and their level of satisfaction with logistic facilities. Hence, Null hypothesis is rejected. There is a significant association between gender of the respondents and their level of There is no significant association between place of residence of the respondents and their level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted icmrrjournal@gmail.com

12 There is a significant association between educational qualification of the respondents and their level of There is no significant association between type of family of the respondents and their level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted. There is a significant association between monthly income of the respondents and their level of There is a significant association between size of family of the respondents and their level of There is no significant association between earning members in the family of the respondents and their level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted. There is a significant association between type of logistics service and their level of There is a significant association between frequency of logistics service and their level of There is a significant association between export shipments and their level of satisfaction with logistic facilities. Hence, Null hypothesis is rejected. SUGGESTION The logistics firms may give priority to the experience holders rather than the fresher or less experience holders. Because the experience holders are identified as cost leaders. The logistics firms may recruit post graduate employees for various logistics divisions to lead the overall logistics cost advantages. Because they are identified as cost leaders. The Central Warehouse Corporation (CWC) may increase the space of ICD and also the customs officials cooperation is to be enhanced. The Tuticorin port management may redress the traffic problem and the support of customs officials are to be enhanced. CONCLUSION Logistics costs are important factors that affect the competitiveness of firms and the firms may enhance its market competitiveness by reducing logistics costs. A profound knowledge of the logistics concepts and cost analysis are important for day to day life and there is no doubt that this will save the firms better from the financial risks. Therefore, it is the tool analysis for the cost analysis of logistics management and thus, firms must develop suitable cost policies in the light of their business risks. It could be concluded that an optimized allocation of cargo from the various ICDs in Coimbatore district to different loading ports will definitely lead any logistics firm in to increased profitability of the firm. The logistics firm may select CWC as the point of shipment and Cochin port as the point of loading to minimize the overall logistics costs. It may be a worthy consideration for the logistics firms to recruit personnel with post graduate qualifications and great experience in this field which would help them to save over there logistics expense. REFERENCE Hrusecka Denisa, Macurova Lucie, Juncková Eva, Kozakova Leona (2015), The Analysis of the Use of Outsourcing Services in Logistics by Czech Manufacturing Companies, Journal of Competitiveness, Vol. 7, Issue 3, pp icmrrjournal@gmail.com

13 Qi Dianwei (2015), The Research on Logistics Cost Accounting and Management in China, Advanced Management Accounting, Vol 3, Issue 1, pp Nurul Izzah Mohd Shah, Liu Yao and Damhuji Rifai (2015), A review of challenges of logistics management and, barriers of e-business: how Malaysia s efficiency logistics service providers can develop services for e-business, Journal of Scientific Research and Development, Vol 2, Issue 3, pp Zhou Chaoyang and Jiang Ying (2014), Research on Controlling Supply Chain Logistics Costs Based on Acivity-Based Costing, International Conference on Innovation & Management, Vol 4, Issue 1, pp Robert Boute, Werner Bruggeman and Ann Vereecke (2014), Cost Management in the Supply Chain: an integrated approach, Production and Inventory Management, Vol 4, Issue 1, pp icmrrjournal@gmail.com