Transpotation Mgt - Class

7/29/2019 Transpotation Mgt - Class

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Transportation Management

in Supply Chain


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Transportation

Physical Transport

Handling (terminals, harbours)

Storage (warehousing)

Information systems


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Transportation Strategy

Customer relationship

Timeliness

Mode selection

Carrier choice

Measurement

Regulatory Impact

Flexibility


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Transportation Modes

1. Motorway

2. Railways

3. Waterways

4. Airways

5. Pipelines


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Modal Characteristics


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Motorways

Flexible routing and scheduling

Package size Small to medium

Truckload

Low fixed and variable costs

Major Issues

Utilization Consistent service

Combining of loads Less Than Truckload (LTL)

Higher fixed costs and low variable costs

Major Issues Location of consolidation facilities

Utilization

Vehicle routing

Customer service


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Railways

Fixed routing and scheduling

Freight Bulk, oversize, containers, intercity,regional.

Key Issues Scheduling to minimize delays/improve service

Off track delays (pick up & delivery)

Yard operations

Variability of delivery times

Competitive rates by Indian Railways


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Waterways

Short and deep sea ships, platforms

Fixed routing and scheduling

Natural or artificial channels

Cargo Bulk, cargo, mostly containers


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Airways

Planes, helicopters, balloons and zeppelins

Rigid or semi-rigid routing and scheduling

Enabler in Responsive supply chain

Freight High value items.

Key Issues

Location/Number of hubs

Location of fleet bases / crew bases

Schedule optimization Fleet assignment

Crew scheduling

Yield management


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Pipelines

Commonly oil, also drinking water and natural gas

Rigid or flexible routing and scheduling

Typical uses

Fluids

Material handling in rough terrain

Tunnels (concrete, excavated material)

High rise construction (concrete)

Bridge constructor (concrete)


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Modal Choice

By appearance:

Bulk (dry and wet)

Containers

Neo-bulk, general cargo (pallets, sacks, drums, logs of wood,...)

By value density

Low value bulk

High value bulk

High value non-bulk

Low value non-bulk


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Modal Choice

A good transportation plan must consider the efficiency& inefficiency of each mode, with respect to:

Cost

Travel time Convenience

Flexibility

Reliability Responsiveness.

They should complement each other


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Multi-criteria Evaluation

of Modal ChoiceAttributes Weig

ht Mode 1 Mode 2 Mode 3 Mode m

Cost w1 S11 S12 S13 S1mReliability w2 S21 S22 S23 S2mEase ofavailability w3 S31 S32 S33 S3m

Convenience w4 S41 S42 S44 S4mFlexibility w5 S51 S52 S53 S5mCarton sizecarried

w6 S61 S62 S63 S6m

Environmental impact w7 S71 S72 S73 S7m

n th attribute wn Sn1 Sn2 Sn3 SnmTotal score TS1

=w1.S11+w2.S21w7.S71

TS2=w1.S12+w2.S22w7.S7

2

TS3=w1.S13+w2.S23w7.S7

1

TSm=w1.S1m+w2.S2mw7.S

7m


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Transportation System

Design


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Alternative Transportation

Design

1. Direct Shipment Network

Goods are shipped directly to retailers

Routing of each shipment is known; thesupply chain manager needs to decide theshipment size and mode of transportation.

Operation and coordination is very simple. Eliminate need for intermediate

warehouses.


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2. Direct Shipping with Milk Runs Delivery from single supplier to multiple retailers; from

multiple retailers to single retailer

Supply chain manager has to decide the route of each run.

Also eliminate need for intermediate warehouses.

Lowers the transportation cost.

Replenishment lot size at the retail store may requireLess than truck Load (LTL), but with the use of this

method, shipments can be consolidated for number ofretailers.

Toyota uses this method to implement its Just in time,shipping parts from single supplier to its many closelylocated assembly plants.


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3. Through central distribution center

Shipments routed through a distribution center

The retail stores are divided into geographic regionsserved by a distribution center (DC), an extra layer

between the supplier and the retailer serves twoimportant functions:

to store inventory

to act as transfer location

DC are very useful if inbound supply is in largequantities and manufacturer is far from retailer.

DC can store these materials and ship to retailerswhenever they need in smaller quantities.


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4. Cross Docking

Take a finished good from themanufacturing plant and deliver it directly to

the customer with little or no handling inbetween.

Reduces handling and storage of inventory

See lecture on distribution system design


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To help manage above mentioned transportation andstorage needs and concentrate more on their coreactivities companies have started outsourcing logistics.

Outsourcing logistics in short span of time has become a

multi-billion dollar industry. According to the director ofoutsourcing consulting, George Loge Mann, andoutsourcing is $30 bullion to $ 40 billion global industry.

And it is growing !!

For companies whose core competency is not distributionand neither have the resources to make it one, outsourcinglogistics function can be a smart decision. It can freeresources both in terms of time and finance to focus onmission-critical and core activities.


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Tradeoffs in Transportation

Design

Transportation, facility, and inventory costtradeoff

Choice of transportation mode

Inventory aggregation

Transportation cost and responsiveness tradeoff


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Concluding Remarks

Transportation as an enabler in Supply chain

Typical tradeoffs in transportation involves :responsiveness vs cost

Issues: selection and evaluation of various modes

Various models for such evaluation

Documents

Transpotation Mgt - Class