Transportation Mode and

Distribution Management
Ari Pranata Primisa Purba, S.T., M.T.
Ma’ruf, S.T., M.Sc.
Distribution Management
• Distribution management refers to the efficient and
successful movement of goods from the point of
production to the point of sale. It is an overarching
term that refers to the numerous activities and
p r o c e s s e s s u c h a s p a c k a g i n g , i n v e n t o r y,
warehousing, supply chain, and logistics.
• Distributon Management is the ability to deliver the
right products to the right customers at the right
t i m e fo r r e t a i l b u s i n e s s e s , a s w e l l a s f o r
manufacturers, wholesalers and distributors. The
distribution process includes the activities
necessary to make a product or service available to
the customer in the most efficient way possible.
• Distribution management includes forecasting,
transportation, warehousing, and delivery within
the larger universe of logistics and supply chain
management. These require precise tracking, real-
time information, and highly-skilled staffing to
execute effectively.
 Transportation and Distribution Management in Logistics
• Fast delivery times and high
efficiency in the distribution
network.

• Competitive product in the

market: the ability to deliver
products to customers in
accurate time, right quantity,
and in good condition.

• I n t h e l o g i s t i c s sy s t e m ,
transportation plays a role in
planning, scheduling, and
controlling activities related
to modes, vendors, and
supply movements in an
organization.
Transportation and Distribution
Basic Functions:
• The function of distribution and transportation is basically to deliver products from the location
where the products are produced to the location where they are used.
• In principle, this function aims to improve customer service level, which can be seen from: service
level achieved,delivery speed, the perfection of the goods to the customer, satisfactory after sales
service.
• Transportation and distribution management includes both physical and non physical activities.
Physical activity includes storing and shipping products. Non physical activitie includes information
processing and services to customers.
Implementation and Strategies:
1. Perform segmentation and determine the target service level.
2. Determine the mode of transportation to be used.
3. Consolidate information and deliveries.
4. Scheduling and determining delivery routes.
5. Providing value added services.
6. Saving supplies.
7. Handling returns.
1. Perform segmentation and determine the target service level
• Customer segmentation needs due to their various contribution to company revenue and the
characteristics of each customer can be very different from one another.
• The ideal situation for any retailer or manufacturer is to have just enough inventory on hand to
sell or to keep production lines running smoothly. The retailer wish to hold as little stock as
possible without running out for these costumers.
• Since most costumers require several different items, each sold or used at a different pace,
forecasting the product mix becomes an integral part of their equation. Additional variables,
such as sales promotions at the retailer or seasonal inventory build by the manufacturer, can
make forecasting difficult.

• Difference in characteristics • Inventory allocation

• Contribution per customer • Speed of service
• Distribution area
2. Determine the mode of transportation to be used
• Transportation management determines what mode will be used in delivering products to
customers.
• Each mode of transportation has different characteristics, advantages and disadvantages.
• The transportation characteristics including: speed, availability, dependability, capibility,
accessibility, and frequency of services.
• The mode choice is part of transport modelling with consist of: trip generataion, trip
distribution, modal split, and trip assignment.
• The right mode of transportation selection will affect the distribution network.
• The right distribution network strategy for the business keeps the costs low and ensure
customer satisfaction.
 3. Consolidate information and deliveries
• The trade off between fast delivery and cheap cost is the main purpose of
consolidating information and delivery.
• The consolidation icluding identifying demand data from various regional
distribution centers by the central warehouse for making delivery schedule
purposes.
• Collecting the demands of several different shops or retailers in a selected mode
of transportation.

• In term of Marine Logistics, consolidated shipping is used, as the process of

shipping a number of individual orders together. This process is used by
shippers to save costs and time.
• Consolidated shipping is a collaborative process involving business partners,
distribution companies, and retailers.
• The benefits of consolidated shipping: reduced shipping costs, less risk of
damage, excellent consumer experience by receiving their orders quickly and
safely, sustainability by minimize packaging materials, and improved quality
control.
4. Scheduling and determining delivery routes
• The Scheduling determines when a transport mode should leaved to distribute the
product.
• The delivery route determines which route must be followed to meet the demand from a
number of customers.
• Scheduling involves taking orders or service requests, determining how many employees
you need to have working to cover those orders.
• Routing determines how and where the work is to be done, what machines are to be
used and it prescribes the path and sequence of operations to be followed.
• The highly efficient schedule involves combining orders with routes and shifts in such a
way that total costs are minimized, and all business rules and service constraints satisfied.
5. Providing value added services
• When referring to distribution management in logistics, value added services
are extra actions that provide to make the shipping process easier or more
efficient.
• Packaging and Kitting: product packaging is a critical part of a brand. The
product may have memorabilia or promotional material that producers want
customers to receive.
• Cross Docking: cross docking prepares the shipment to change from one mode
of transportation to another while skipping the warehousing stage. This service
speeds up delivery time and reduces costs by eliminating storage.
• Pallet Restacking: This reduces risk of having damaged product end up at a
retailer or a customer’s door.
• Quality Inspection: Having an extra layer of quality control is essential to
creating brand loyalty and reduces costly reverse logistics services.
6. Saving Supplies

• The distribution network always involves the process of storing products either in
central or regional warehouses, or in stores where products are sold.
• Order pattern should be used for consistent purchases of either a fixed amount or
only filled to a specified stocked item or inventory.
• Reorder Point Process, most commonly used in supply chain and logistic which is
when stock is always ordered when it falls below a certain level, typically below
the specified safety stock level.
• Control Rhythm Method: which is a combination when inventory is checked at
fixed intervals and ordered for shorter stays if the minimum holding or fixed
amounts fall below the desired stock levels.
7. Handling returns

• Distribution management has the responsibility to carry out product return

activities from downstream to upstream in the supply chain.
• These returns can be due to damaged or not sold products until the deadline for
sales, such as food products, vegetables, fruit, and so on.
• Return orders are an essential part of the business. A fulfilment cycle does not just
end with delivering the goods to the buyer. Providing the customer with a choice
of returning the product or exchanging it is a part of the process.
• To reduce the rate of product returns: detailed product descriptions, ship the item
properly, update stocks regularly.
Transportation Mode
• Transportation mode refers to different ways by which goods, animals, or people are
transported from one place to the other through land, air or sea.
• The other modes are via pipelines (for gas/oil transfer), cable (internet, energy supply or
aerial tramway, elevators, escalator, conveyor, and ski lifts), a space (satellite), and UAV
(Drone).
• Each mode is characterized by a set of technical, operational, and commercial
characteristics. Technical characteristics relate to attributes such as speed, capacity, and
motive technology, while operational characteristics involve the context in which modes
operated, including speed limits, safety conditions, or operating hours. The demand for
transport and the ownership of modes are dominant commercial characteristics.
• In correlation with logistic activities, there are six main modes of transportation: road,
maritime, air, rail, intermodal, and pipeline.
The Important of Transportation Modes In Logistics
• Logistics is a very diverse and complex industry. It involves many modes of transportation and ways
of shipping goods. Sometimes, it may be challenging for a company to choose the right mode of
transportation to reach the best result. Knowing the differences and benefits of each
transportation modes will help in defining the option that will work best for the business activities.
• All of these modes are extremely important and play a significant role in the industry. However,
there are many differences in terms of price, shipped commodities, and transit distance. While
some modes may be the perfect solution to one business, at the same time may be absolutely
useless to another one.
• The mode choice in Logistics consider four main principles: whoever can move the greatest volume
of product with the greatest speed over the greatest distance at the lowest cost. All companies
hold these four traits to different levels of importance but overall this principle remains true across
the board.
• In the world of trade, the company with the ability to transport freight in the most cost and time
efficient manner reigns supreme in their industry.
Road Transportation
Advantages:
• Road is a mode that is very often used in our daily lives to meet transportation needs.
• The road mode has high flexibility as long as it is supported by an infrastructure network.
• Support non motorized forms of transportation (walking, domestic animals, and cycling).
• Most shipments that initially were carried by another mode of transportation are completed by
road transportation.
• Anything that can be shipped in small to medium quantities can be shipped by road.

Disadvantages:
• Physiographical constraints are substantial additional costs to overcome features such as rivers or
rugged terrain.
• Have high maintenance costs, both for the vehicles and infrastructures
• The external influences that play into its effectiveness, primarily weather, traffic, and road
regulations.
Maritime Transportation
Advantages:
• It is the most effective mode of transportation for long distance and large quantities of
goods.
• With containerization, maritime shipping has become the linchpin of globalization.
• Allowing trading a wide range of goods and commodities, have capacity to transport the
highest volume of freight of any mode of transportation at the lowest cost.

Disadvantages:
• The construction of channels, locks, and dredging are attempting to facilitate maritime
circulation are highly expensive,
• High terminal costs since port infrastructures are among the most expensive to build,
maintain, and operate.
• The carbon emissions produced by one cargo ship are equivalent to the emissions
produced by 50 million cars
Air Transportation
Advantages:
• High speed characteristics and can penetrate all areas that cannot be reached by other modes of
transportation.
• Air routes activities are linked to the tertiary and quaternary sectors, notably finance and tourism,
which lean on the long-distance mobility of people.
• Air transportation has been accommodating growing quantities of high value freight and is playing an
increasing role in global logistics.
• AIr transportation is the fastest and most time efficient transportation mode.

Disadvantages:
• Air transport constraints are multidimensional and include the infrastructure (a commercial plane
needs about 3,300 meters of runway for landing and take-off)
• The climate, fog, and aerial currents.
• Its cost is still the most expensive way to ship.
• The weight and volume of freight has to stay minimal to ensure the safety of the flight.
• The level of emissions produced by air transport are also the highest of any mode.
Rail Transportation
Advantages:
• This is the mode used in corridors with a high number of demands, where rail
transport vehicles run on rails.
• Energy efficient Ideal transport for bulk shipping.
• Generally cheaper when shipping long haul Rail transportation offers the same
delivery speed as trucks over long distances .
• The railway system, the rail vehicle is not influenced by traffic, points of diversion,
and switch offs between modes. This makes the rail the most dependable mode for
making long hauls across land with minimal damage.
• Trains commonly carry bulk cargo items such as coal, corn, iron, ore, and wheat,
items that would be uneconomical to ship by truck.
Disadvantages:
• The railway mode is less flexible than the road mode because it can only be used if it
is supported by a rail infrastructure network.
• However, it is limited by track location and scheduling.
Pipeline
• Pipeline is the mode that is generally used for materials in liquid or gas form.
• The pipe is laid above the ground, planted at a certain depth in the ground or even spread through the sea
floor.
• The transport of goods through a pipe typically used to transport large volumes of fuels and chemicals Most
widely used for petroleum Frequently part of an intermodal system
Advantages:
• practically unlimited as pipeline route can be laid on land or underwater,
• long distances moves of liquid in a cost effective fashion,
• Physical constraints are low and include the landscape and pergelisol in arctic environments.
• Pipeline construction costs vary according to the diameter and increase proportionally with the distance and
with the viscosity of fluids (from low viscosity gas to high viscosity oil)
Disadvantages:
• Limited route access.
• Limited object that shipped.
Unimodal, Multimodal, and Intermodal Transportation
• Uni modal: The transportation of people or goods by single type of transportation mode,
with one or more carriers.
• Multimodal: The transportation of goods with at least two different modes of transportation,
based on a multimodal transport contract that mention through bill of lading.
• Intermodal: It is the transfer of people or passenger in different transport modes to reach
their destination, such as from a bus changing to trains.
General Comparation between Modes
Performance Comparison for Selected Freight
Modes
Because of their
o p e r a t i o n a l
characteristics, freight
transportation modes
have different
capacities and
efficiency levels. While
trucks are certainly the
m o d e t h at h a s t h e
least capacity, they
have a level of
flexibility (speed and
door-to-door services)
unmatched by rail,
maritime, and fluvial
transportation
TMS Functions in Mode Choice Decision
• Planning and decision making – TMS will define the most efficient transport schemes according
to given parameters, which have a lower or higher importance according to the user policy:
transport cost, shorter lead-time, fewer stops possible to ensure quality, flows regrouping
coefficient.
• Transportation Execution – TMS will allow for the execution of the transportation plan such as
carrier rate acceptance, carrier dispatching, and EDI.
• Transport follow up – TMS will allow following any physical or administrative operation regarding
transportation: traceability of transport event by event, editing of reception, custom clearance,
invoicing and booking documents, sending of transport alerts (delay, accident, non-forecast
stops.)
• Measurement – TMS have or need to have a logistics key performance indicator (KPI) reporting
function for transport.
Transportation Mode Choice?
To help you decide which mode and transportation service provider (TSP) provides the best value to your
business, ask yourself these questions:
• What is being shipped and how is it packaged?
• Will the shipment require a special mode or are you limited in your mode selection?
• Are there time limitations for the shipment?
• Is the shipment high value, security risk, hazardous, perishable?
• Does your the business have rules and restrictions for shipping?
• Does the commodity you are shipping fall within these restrictions?
• Are available vendors capable of meeting your shipping requirements?
• How has the vendor you selected performed in the past?
In conclusion, Each mode has its advantages and disadvantages for its role in the supply chain. A primary
responsibility of logistics analyst worldwide is calculating what the best mode is for a specific shipment.
• Each factor comes into play: volume, speed, distance, and cost.
• By knowing what mode is best for your company, you can make the decisions necessary to grow your
business and create a winning supply chain.
THANK YOU