You are on page 1of 3

Group 13.Q 3.

What are the issues related to warehouse and transportation in supply

chain management system?


A supply chain is a network that includes vendors of raw materials, plants that transform
those materials into useful products and distribution centres to get those to customers.

A warehouse is a commercial building for storage of goods. Warehouses are used by

manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are
usually large plain buildings in industrial areas of cities and towns. They usually have loading
docks to load and unload goods from trucks. Sometimes warehouses load and unload goods
directly from railways, airports, or seaports. They often have cranes and forklifts for moving
goods, which are usually placed on ISO standard pallets loaded into pallet racks.

Transport or transportation is the movement of people and goods from one location to
another. Modes of transport include air, rail, road, water, cable, pipeline, and space.


Supply chain management must address the following problems:

1. Distribution Network Configuration: number, location and network missions of

suppliers, production facilities, distribution centers, warehouses, cross-docks and customers.

2. Distribution Strategy: questions of operating control (centralized, decentralized or

shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, DSD
(direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier,
including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer on
flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishment strategy
(e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, private carrier,
common carrier, contract carrier, or 3PL).

3. Trade-Offs in Logistical Activities: The above activities must be well coordinated in

order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only
one of the activities is optimized. For example, full truckload (FTL) rates are more
economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a
full truckload of a product is ordered to reduce transportation costs, there will be an increase
in inventory holding costs which may increase total logistics costs. It is therefore imperative
to take a systems approach when planning logistical activities. These trade-offs are key to
developing the most efficient and effective Logistics and SCM strategy.

4. Information: Integration of processes through the supply chain to share valuable

information, including demand signals, forecasts, inventory, transportation, potential
collaboration, etc.

5. Inventory Management: Quantity and location of inventory, including raw materials,

work-in-progress (WIP) and finished goods.

6. Cash-Flow: Arranging the payment terms and methodologies for exchanging funds
across entities within the supply chain.

7. Location: The location of the warehouse should be near to the market as well as to the
company or where the transportation is easily available.

8. Route: The route be selected to minimize the cost and the shortest path should be selected.

Supply chain execution means managing and coordinating the movement of materials,
information and funds across the supply chain. The flow is bi-directional.


The performances of a supply chain is measured in terms of profit, average product fill rate,
response time and capacity utilization. The warehouse and transportation should be for
minimizing the cost for supply chain management. Capacity utilization for both warehouse
and transportation should be high enough to reduce overhead sufficiently, but not so high that
there is no room to grow or to handle fluctuation in demand. Lower capacity utilization
decreases downside risk since costs are reduced, but also limits the upside gain if future
demand should outstrip supply. A warehouse management system or WMS is a key part of
supply chain and primarily aims to control the movement and storage of materials within a
warehouse and process the associated transactions, including shipping. Receiving , put away
and picking. The systems also direct and optimize stock put away based on real-time
information about the status of bin utilization. The issues of transportation and warehouse
should be management properly for effective supply chain management system.