Abstract

INTRODUCTION

Supply chain management is the handling of the entire production flow of a good or
service starting from the raw components all the way to delivering the final product to
the consumer. Supply Chain Management can be divided into three main areas:
purchasing, manufacturing, and transport. Transportation is the movement of product,
materials and services from one area to another both inbound and outbound.
Transportation happens to be the most fundamental part of logistics management.
Transportation is an important supply chain driver because products are rarely produced
and consumed in the same location. Transportation management is one of the important
functions of supply chain. Transportation management is a subset of supply chain
management that deals with the planning, execution and optimization of the physical
movement of goods

Transportation management

Transportation management is the effective planning and management of logistics

operations to maximize the use of resources while keeping costs low. Transportation is
the beating heart of nearly every business in the world. People, products, and raw
materials are constantly on the move across town and around the globe carried by
container ships, cargo planes, freight trains, trucks of various sizes, and even pipelines.
Transportation is how manufacturers get the resources they need to build their products,
how retailers get the goods they need to stock their shelves and warehouses, and how
online businesses fulfil their customers’ orders. An organization’s ability to manage the
process of consistently transporting goods efficiently and cost effectively can easily spell
the difference between profit and peril.

Many people confuse transportation management with supply chain management or

logistics management. Others fail to understand how it relates to enterprise resource
management (ERP). Yet, transportation management is neither synonymous with nor
completely separate from these other modern business processes. Transportation is a
subset of logistics and supply chain management, so transportation management is a
more defined industry within these larger industries. Although transportation is clearly
an essential part of supply chain and logistics management, transportation management
is a separate discipline and subordinate to both. Transportation management comprises
the processes and systems used to manage the needs and requirements specific to the
physical transportation of goods and cargo as part of supply chain or logistics
management. Companies use specialized software solutions for transportation
management and often incorporate transportation management into their enterprise
resource planning. By integrating transportation management data into its ERP, an
organization can link transportation to its other business processes and gain deeper
insights into its entire operation.

Transportation Management Systems

A transportation management system (TMS) is a subset of supply chain management
(SCM) that deals with the planning, execution and optimization of the physical movements
of goods. In simpler terms, it's a logistics platform that enables users to manage and
optimize the daily operations of their transportation fleets. Transportation management
systems (TMS) are software solutions that companies use to automate many of the tasks
involved in managing their transportation operations and assist in the day-to-day processes
involved in transporting their resources, products, and people. Many of these systems
employ real-time data, which makes it much easier for organizations to efficiently manage
transportation activities related to their supply chain and logistics. The use of real-time data
can also lead to significant time and cost savings.

Reasons why organizations need transportation management systems

 Offering real-time transportation tracking

 Improving and integrating transport sourcing, planning, decision making, and
execution
 Selecting the best carrier and keeping quotes organized
 Improving transport follow-up, such as tracking shipments, sending alerts, etc.
 Creating a more efficient and higher-velocity logistics network
 Effectively measuring performance and productivity
 Lessening the impact of driver shortages
 Optimizing the capacity of containers and vehicles, consolidating orders, and
streamlining location flow and calendars
 Gathering business insights to help with future planning
 Reducing costs and increasing productivity

Benefits of TMS

For any company that is in logistics, a TMS is a system that can improve operations, drive
business and provide better service to customers. There are numerous benefits of a TMS
that assists companies to move freight from origin to the destination accurately and cost-
effectively. They are;

Reduce freight expenses

One of the greatest benefits that a TMS provides is reducing freight spends. This system is
able to provide savings by analytics and optimization. A transportation management system
provides suggestions of how to reduce expenses and uses data that provides valuable
information.

Track deliveries in real time

A TMS provides the ability to view where drivers and shipments are located in real-time.
This provides information as to the amount of time a route takes and this efficient route
schedule. Also, this provides information as to which drivers and routes are most efficient.
Increase customer service

A TMS provides improved customer service levels with the ability to monitor on-time
performance. Also, with the ability to locate where shipments are and the distance from the
destination. The TMS provides an online portal where customers are able to see exactly
where their shipments are and inform their customers. This provides increased customer
service as customers have the ability to access shipment and freight information when
needed.

Improve warehouse efficiency and productivity

With the constant flow of incoming and outgoing inventory, a well-organized warehouse is
an important part of the logistics process. Pairing a TMS with a WMS can create a record of
orders and track where they are located in the warehouse, in transit and when they arrive.
This will allow users to review processes and ensure they are efficient.

Increase supply chain efficiency

The ability to track drivers, inventory and other processes will allow your business to
increase productivity. This can improve the supply chain and reduce inefficiencies. A
transportation management system provides increased efficiencies in the supply chain and
provides savings to users.

Transportation selection decision

Every firm needs to recognize that the lowest cost carrier does not necessarily guarantee
that this carrier will result in the lowest landed cost.Therefore, the firm need to keep the big
picture in mind when attempting to select a carrier

The criteria for selecting the mode of transport

Time Sensitive

When the members of the channel stock less inventory or the customers follow just in time
then they tend to be time sensitive. Slower modes of transport cost less, may not guarantee
to reach on time. Hence, the organisation must ensure that the choice of the mode
guarantees the delivery time each time.

Cost

The cost factor has already been discussed as comprising of two parts—visible costs and
hidden costs. These two need to be minimised but not compromising on the customer
service. Sometimes to balance the cost and service multiple modes of transport might have
to be used.

Capability
This depends on the type of products that need to be moved. If the products are big then
the transport must be capable of carrying them (for example heavy machinery).

Dependability:

Each time a distribution needs to be performed the mode must be available and each time
they must ensure the products reach the right place, at the right time without any damage.

(e) Frequency:

This refers to the number of times the goods are scheduled for movement. An oil pipeline is
a dedicated mode which is present continuously and can be used at any interval of time. To
some destinations frequency of flight is high- For example, the metros like Delhi, Mumbai,
Kolkata and Chennai. Hence this mode can be made use of. For short distances buses can
be used but many a time frequency is an issue

Cross docking

Cross docking is a logistics procedure where products from a supplier or manufacturing

plant are distributed directly to a customer or retail chain with marginal to no handling or
storage time. Cross docking takes place in a distribution docking terminal; usually
consisting of trucks and dock doors on two (inbound and outbound) sides with minimal
storage space. The name ‘cross docking’ explains the process of receiving products
through an inbound dock and then transferring them across the dock to the outbound
transportation dock. In simple words Cross-docking is the practice of unloading goods
from inbound delivery vehicles and loading them directly onto outbound vehicles. By
eliminating or minimizing warehouse storage costs, space requirements and inventory
Handling, cross-docking can streamline supply chains and help them move goods to
market faster and more efficiently. Cross-docking is just one strategy that can be
implemented to help achieve a competitive advantage. If implemented appropriately and
in the right conditions, cross-docking can provide significant improvements in efficiency
and handling times.

Cross-docking usually takes place in a dedicated docking terminal in a warehouse,

where inbound goods are first received at a dock and sorted according to their final
destinations. They are then moved to the other side of the dock via forklift, conveyor belt
or other equipment and loaded on outbound vehicles.

Some of the main reasons cross docking is implemented is to:

 Provide a central site for products to be sorted and similar products combined to
be delivered to multiple destinations in the most productive and fastest method.
 Combine numerous smaller product loads into one method of transport to save on
transportation costs.
 Combine numerous smaller product loads into one method of transport to save on
transportation costs.
Types of cross docking

1. Continuous Cross-Docking

The simplest and fastest process. It provides a central site for products, so they are
immediately transferred from an inbound truck to an outbound truck. If trucks arrive at the
terminal at different times, they will incur a waiting time.

2. Consolidation Arrangements

The process of merging several smaller product loads into one truck or one big load in the
dock facility. This way, incoming freight is combined with goods stored at the terminal to
form full truckload shipments.

3. Deconsolidation Arrangements

This process is the opposite of consolidation arrangements. Large product loads are broken
into smaller loads for easy transportation. Usually, these small loads go directly to a
customer.

Advantages of cross-docking

 Reduces material handling.

 Reduces need to store products in warehouse.
 No need for large warehouse areas
 Reduced labour costs (no packaging and storing).
 Reduced time to reach customer.
 Transportation has fuller loads for each trip therefore a saving in transportation costs
while also being more environmentally friendly.
 Products are moved more quickly through a cross dock.
 Easier to screen product quality.
 Elimination of processes such as ‘pick-location’ and ‘order picking’
 Cross docking terminals are less expensive to construct than your average warehouse.
 High turnover of products with everything moving quickly through the cross docking
terminal. Products usually spend less than 24 hours here.
 Products destined for a similar end point can be transported as a full load, reducing
overall distribution cost.

Disadvantages of cross-docking

 Much management attention, time and planning is necessary to make it work effectively.
 Setting up the cross docking terminal structures would take quite a bit of time and capital
to start with.
 Some suppliers would not be able to deliver customer ready products to the cross docking
terminal.
 A sufficient number of transport carriers are necessary for the cross docking terminal to run
smoothly, therefore is mainly dependent on trucking.
 A high volume of product is necessary to be cost effective.
 The organisation has to have a comfortable reliance that their suppliers will deliver the right
product in its right amount to the cross docking terminal on time which doesn’t leave too
much room for error.

Drop shipping

Drop shipping is a supply chain management technique in which the retailer does not keep
goods in stock, but instead transfers customer orders and shipment details to either the
supplier or manufacturer for fulfilment or drop shipping is an order fulfilment method that
does not require a business to keep products in stock. Instead, the store sells the product,
and passes on the sales order to a third-party supplier, who then ships the order to the
customer. Drop shipping is the process of selling items via your own web store or many
other online selling platforms such as Amazon and eBay without the need to have the
physical products in your store. For drop shipper retailer no need to stock their own
inventory they can just sign up with a third party drop shipping company and pay them a
subscription fee in order to use their service
Advantages of drop shipping

Low start-up costs

One of the main advantages to running a drop shipping business is the low start-up cost.
Because drop ship retailers neither buy nor own the products they sell, the drop ship model
eliminates the high cost traditionally associated with buying and storing inventory. Drop ship
businesses therefore need only pay for the setup and maintenance of their website.

Low overhead costs

The drop ship model also sidesteps the high overhead costs of operating a physical
storefront or warehouse. Without a brick-and-mortar space, overhead costs such as rent,
utilities, security, equipment, packaging, and inventory tracking and management are
avoided.

Low risk

A drop ship business only buys a product once it’s been purchased and paid for by the
customer, so there’s very little risk involved if a business fails to sell products off its site.
This model offers business owners the low-pressure flexibility to experiment with selling
new products or tapping into new markets.

Location-independent

Running a drop ship business requires only a computer and internet connection, making
this business model an especially attractive option for entrepreneurs interested in travel, or
those seeking to maximize their profits by relocating to a city with a low cost of living.

Disadvantages of drop shipping

High Competition

The high competition can become a problem for drop shippers who aren’t too careful about
the way they market their products. New stores pop up every day because it is very easy to
duplicate and they will copy your store code by code. That’s why changing strategies, and
keeping above the trends is the only way you can keep yourself ahead within the
competition.

Lower Margins

Most drop shippers tend to simply give up because the profit margins are too low. However,
if you look closely at it, drop shipping isn’t a short-term business. It is all about staying in the
game and moving up the ladder one step at a time. The only way with which we can
increase the margin is selling more products. The important aspect of a drop shipping
business is that you don’t have to worry about the logistics. Simply get the tracking code
and forward it to your customers and you will not have to worry about a thing. In this way,
you will be making more profit on lower margin.

Complete Liability of Products

Drop shipping is one business where you will be selling a product that you haven’t actually
seen. Therefore, chances of a product failure are high. When that happens the whole
responsibility of returning the actual amount to the customer and returning the product to
the supplier lies on you.

Managing orders can be burdensome

One place where most drop shippers will pull their hair is when one of their products goes
viral. They will then have hundreds of orders to fulfil. Managing orders can be a strenuous
task. But now many drop shipping plugins available, this is not a major problem now.
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file:///C:/Users/acer/Downloads/99881570-Modes-of-Transport-Selection-Criteria.pdf