TRANSPORTATION &

LOGISTICS
ASSIGNMENT

SUBMITTED BY:
Contents

INTRODUCTION TO MULTIMODAL SUPPLY CHAIN..............................................................................3

WHAT IS A MULTIMODAL SUPPLY CHAIN........................................................................................3
BENEFITS OF MULTIMODAL SUPPLY CHAIN.....................................................................................4
IMPACT OF PERISHABILITY ON SUPPLY CHAIN.....................................................................................5
CHALLENGES IN THE SUPPLY CHAIN.................................................................................................5
MAKING THE SUPPLY CHAIN MORE EFFICIENT................................................................................6
DESIGNING A MULTI-MODAL SUPPLY CHAIN NETWORK FOR THE PERISHABLE INDUSTRY................7
VALUE CHAIN ANALYSIS....................................................................................................................7
DEEP DIVE INTO THE VALUE CHAIN..................................................................................................7
 INTRODUCTION TO MULTIMODAL SUPPLY CHAIN

Every day, a sizable number of perishable goods are shipped worldwide, each with specific
traits and preservation needs. If they are not adequately transported or stored, these things
degrade in value or quality over time. Animal products, some pharmaceuticals, and
horticultural products are examples of perishables.
Most industries rely on quick and direct transportation (like air or road), which is typically
expensive and not environmentally preferable due to the short shelf-life of these products
and the high degree of supply and demand uncertainty. However, choosing the least costly
and environmentally friendly mode of transportation (such as waterways) results in longer
delivery times and, consequently, perishable goods. When sustainability, cost-effectiveness,
and agility are top priorities for all economic sectors, where is the trade-off? In order to
provide affordable and environmentally friendly transportation, it is necessary to transition
away from air and road travel and toward higher utilization and consolidation. Consolidation
and mode switching are two of multimodal transportation's most obvious advantages.

WHAT IS A MULTIMODAL SUPPLY CHAIN

The movement of goods across at least two different modes of transportation is referred to
as a multimodal supply chain. It provides a potential foundation for more effective,
dependable, adaptable, and environmentally friendly freight transportation. However, it is
challenging to plan operations for a multimodal system when perishable goods also need to
be preserved. A box, a container, a swap body, a road or rail vehicle, or a vessel can be the
means of transportation. As a result, long-distance pickup and delivery services, as well as
regional or national regular and express delivery systems, are examples of multimodal
transport.
Pre-haul (or the first mile for pickup), long-haul (the door-to-door transit of containers), and
end-haul are the three primary divisions of a transportation chain (or the last mile for the
delivery process). Although long-haul transportation can be done by road, rail, air, or water,
pre- and post-haul transportation are typically done by vehicle. As was already mentioned,
long-distance transport frequently combines multiple modes, but pre-and post-distance
transportation is also increasingly using multimodal systems, for example, using a
combination of trucks and bicycles in city logistics.

Developing a multimodal approach involves a three-step process:

1. Use technology to build segments based on channel, customer, and product profiles
(revenue, margin, volume, variability, profitability, strategic importance, service-level
agreements, lead times, and product lifecycle).
2. For each segment, identify the customer value proposition.
3. Match various value propositions profitably to their corresponding cost-to-serve models,
then deliver each segment effectively.

BENEFITS OF MULTIMODAL SUPPLY CHAIN

1. Saves costs: Through effective vessel utilization, a multimodal supply chain helps to make
better use of the infrastructure that is already in place and, as a result, helps to obtain
competitive freight prices from vendors.
2. Allows for faster transit of goods: Multimodal transport reduces the drawbacks of being
far from markets. This allows for faster transit of goods.
3. Minimizes delays: Reduces delays at trans-shipment points by maintaining
communication channels and coordinating seamless onward carriage interchange at trans-
shipment points.
4. Creates a single point of contact: In the event of a delay in the delivery of goods to their
destination, the consignor only needs to contact the Multimodal transport operator.
5. Lowers the cost of exports: The inherent benefits of a multimodal transport system will
help export costs be lower and their pricing competitiveness in the global market segment.

IMPACT OF PERISHABILITY ON SUPPLY CHAIN

The quality of perishable commodities decreases with time due to environmental factors. Examples
include fish, seafood, fruit, vegetables, raw milk, dairy products, meat and meat by-products,
pharmaceuticals, and chemicals. Food loss owing to toxic deterioration, microbial development,
discoloration, and a general decrease in the economic worth of the product can occur if such
products are not maintained at the proper temperatures along the supply chain.

Food waste occurs at the retail and consumer levels, whereas "food losses" happen in the supply
chain, on the farm, during transit, processing, and storage.

CHALLENGES IN THE SUPPLY CHAIN

Here is a list of some of the most frequent challenges that arise when transporting
perishable commodities.
Maintaining the required temperature
Perishable commodities must be preserved at a specific temperature throughout their route
from the source to the destination, perhaps the most evident challenge. This necessitates
cold storage facilities at both ends of the travel and temperature-controlled transportation.
Tracking vehicles and temperatures
Although drivers are incredibly trusted members of any logistics operation, issues might
occur, and it is impractical to rely on them to constantly report their whereabouts and
status, let alone monitor the goods' temperature as they travel routinely. A more automatic
solution is consequently needed.
Get to the destination on time
Perishable food transport equals time-critical food transport, as even temperature-
controlled goods have a shelf life. While other delivery operations can tolerate delays, cold-
chain logistics cannot.
Avoid Cross-Contamination
Cross-contamination has the potential to prove lethal for the product, cause the suppliers to
lose a lot of money, and pose a substantial health risk to the people using the transportation
system and the consumers of the items.
Keeping Costs in Check
Without proper planning and supporting supply chain technologies, efficient, time-sensitive
transportation costs might skyrocket. Manual efforts make tracking and model transit data
impossible to determine the most affordable solution while ensuring cold chain regulations
are met.

MAKING THE SUPPLY CHAIN MORE EFFICIENT

Use the Right Equipment
Choosing the appropriate truck and container is the first step in delivering perishable
commodities. Dry vans, refrigerated freight, or specially designed temperature-controlled
tankers like those used to transport raw milk are all viable modes of transportation. The
danger of delays from the start of the supply chain to the ultimate destination can be reduced
by using the right equipment.
Leverage IoT and Telematics technologies
IoT sensors keep track of the container or tanker's temperature while perishable items are
transported. Using loT-enabled sensors ensures that the temperature has not dipped or risen
above the desired level. Telematics tools add to this information by offering real-time data on
the whereabouts and condition of vehicles. This transparency ensures that problems can be
fixed swiftly without compromising the product.
Accurately plan transport routes in advance
Route plans are accurate and consider all supply chain-relevant elements when using
purpose-built technologies created for particular industries. While some delays, such as those
brought on by inclement weather or heavy traffic, are unavoidable, using the right route
planning technology can assist in reducing or even eliminating them.
Maintain visibility into routes throughout the day
The damage from tainted goods must be contained as soon as possible. Real-time
notifications give planners visibility and assist them in making adjustments before minor
problems turn into expensive ones.
Model different scenarios to find the lowest cost, highest performing solution
Plan modifications for the transportation of perishable commodities might have a significant
impact on expenses. A 60-minute delay might mean the difference between saving or spoiling
an entire shipment. It is possible to prepare for any contingency and determine the cost-
effectiveness of any potential change by running several scenarios.

DESIGNING A MULTI-MODAL SUPPLY CHAIN NETWORK

FOR THE PERISHABLE INDUSTRY
 VALUE CHAIN ANALYSIS

Value Chain analysis is used to formulate the various business activities and processes involved in providing a
service or creating a product. A value chain can consist of several stages in the life cycle of a product or service,
including research and development, sales, and everything in between.

The following are examples of primary activities that directly contribute to the production of a good or the delivery
of service:

Activities including the receipt, storage, and inventory control of raw materials and parts are referred to as inbound
logistics.

Operations: Tasks involved in transforming components and raw materials into a finished good. Distribution-related
activities such as packaging, sorting, and shipping are referred to as outbound logistics.

Marketing and sales: Activities involved in promoting and selling a good or service, such as price strategy,
advertising, and promotion. Services rendered following the completion of a sale, such as installation, training,
quality control, repair, and customer support.

DEEP DIVE INTO THE VALUE CHAIN

Procurement:
The consumer products sector is undergoing a shift because of digitization, pressure on sales and profitability, and
intense competition.

In addition to acting, achieving the ideal balance between short- and long-term requires changing the way that
procurement interacts with the company.

o The lowest cost: This is reasonable pricing where both the supplier and the consumer may profit from a
long-term margin—it may not be the lowest price.
 o Effectiveness in operations: In practice, there are two ways that your supplier's technological ability may
be measured:

i) Reliability of supply:

 On Schedule
 Under Budget
 Efficient use of resources
 Prompt responsiveness to the rising need

Being out of stock was recognized as the main issue affecting ROI by 83% of decision-makers in the FMCG sector. A
supply chain interruption may cost a company up to $5 million, damage a brand forever, and send customers
running directly to a rival's store. This type of interruption may be avoided by developing a strategic supplier
relationship.

ii) Rapid market entry

How effectively is your supplier helping you take advantage of emerging market opportunities? First to the market
entails:

 Locking out a rival

 Dominating customer perceptions
 Gaining a larger share of the market

The amount of time it takes to introduce a new product to the market has a significant impact on ROI.

o Quality: There are two factors that might affect ROI:

 No matter where the product is created, the quality must always be consistent with the brand's
promise. It must also be maintained even while demand is rapidly increasing.
 Costs averted should be considered when calculating ROI.

You and your rivals are engaged in an arms race over quality. Every time your rival makes improvements to their
offering, they alter the rules of the game. ROI is satisfied with a provider who can handle significant improvement
improvements.

o Innovation and technical proficiency

To survive, brands must innovate. 96% of new initiatives fail to achieve or surpass the ROI goals set by the
company.

Brands are increasingly lacking the resources necessary to innovate successfully.

• Only 25% of businesses have enough funding to complete all of their planned initiatives.

• 75% of development staff are overworked on average.

Manufacturing:
FMCG companies can either manufacture the product in-house or outsource the manufacturing i.e., contract
manufacturing.
While establishing the manufacturing in-house for a product, there are a no. of factors that the company needs to
look into:

Components of In-House manufacturing Decisions:

>Capability: Firms must decide whether production facilities will be flexible, dedicated, or a combination of both.
Also, the capacity must be decided to keep in mind the demand forecast 5-6 years down the line.

>Location: There are a no. of factors when it comes to deciding a location i.e., rents, taxes and tariffs, quality of
workers, cost of workers, availability of infrastructure, connectivity to the Distribution and storage centers, and
proximity to customers.

Contract Manufacturing:
There could be different types of contracts based on the service level and the risk sharing

Buy-Back contracts: In this contract, the seller agrees to buy back unsold goods from the buyer for some agreed-
upon price higher than the salvage value. Clearly, this gives the buyer incentive to order more units, since the risk
associated with unsold units is decreased. On the other hand, the supplier’s risk clearly increases.

Revenue-sharing contracts: Observe that, in the sequential supply chain, one important reason for the buyer to
order a limited number of units is the high wholesale price. If somehow the buyer can convince the supplier to
reduce the wholesale price, then clearly the buyer will have the incentive to order more units. Of course, a
reduction in wholesale price will decrease the supplier’s profit if it is unable to sell more units. This is addressed by
revenue-sharing contracts. In a revenue-sharing contract, the buyer shares some of its revenue with the seller, in
revenue for a discount on the wholesale price.

Quantity-Flexibility contracts: These are the contracts in which the supplier provides a refund for returned items if
the number of returns is no larger than a certain quantity. Thus, this contract gives a full refund for a portion of the
returned items, whereas a buy-back contract provides a partial refund for all returned items.

Sales Rebate contracts: Sales rebate contracts provide a direct incentive to the retailer to increase sales by means
of a rebate paid by the supplier for any item sold above a certain quantity.

TRENDS AND INNOVATION:

Sustainable packaging:
In the FMCG market, sustainable packaging is moving from being purely cost driven, towards using a
strategic resource management approach. In the past few years, the market for sustainable
packaging in India was driven primarily by cost reduction.

This can be achieved in the following ways: – Promoting the use of recycled raw materials for
packaging – Ensuring an efficient production process to minimize the production process, supply
chain, and carbon footprint – Enabling reusability by developing a circular economy related to
packaging and extending packaging use. For example, a company manufacturing oral hygiene
products in India has introduced recyclable toothpaste tubes. It is committed to transitioning from
manufacturing toothpaste to recyclable tubes in the next few years.

Digitalization:
Issues that Digital Supply Chain Planning Can Resolve in FMCG Industry

 Lesser stockouts - A lack of collaboration between various links in the supply chain, is
causing poor insights into SKU levels leading to over/under stocks
 Better demand fulfillment
 Less wastage due to expiry cost
 Ability to deal with uncertain scenarios using what-if scenario analysis
 Better forecast accuracy
 Providing end–to–end visibility on supply chain status, capacity and constraints
 We have Silo-ed, Sequential Planning across Distribution, Production, Procurement
Operations
 Managing unique seasonality and SKU variances across my areas are challenging –
different SKUs have different velocity
 Improvement in planner productivity
 Reduction in backorders

Storage & Distribution:

For FMCG products, the outbound distribution cost accounts for nearly about 30 percent of the cost
of producing and selling them.

It is very important to have a distribution network that is both efficient and responsive at the same
time as these are low-value, high-demand items and have a limited shelf life.

The following can be the factors that need to be considered while designing the distribution network

>Response time

>Product variety

>Product availability

>Customer experience

>Order visibility

>Time to market

>Returnability

Key Factors when designing and constructing a temp-controlled facility:

 Location: Ambient weather can help reduce energy consumption.

 Insulation of roof and walls from heat
 Reflective paint
 Refrigeration capacity
 For uninterrupted electric supply – generators are a must
 Plug-in points for refrigerated trucks
It is very important to use multi-modal transportation to make the supply chain resilient. For
example, Kellogg’s shifted to railways from trucks during COVID-19 to make sure they are still able to
supply their products, hence making their supply chain more resilient from the disruptions.