Transportation Management in Supply Chain

Transportation
– – – –

Physical Transport Handling (terminals, harbours)

Storage (warehousing)
Information systems

Transportation Strategy  Customer relationship       Timeliness Mode selection Carrier choice Measurement Regulatory Impact Flexibility .

Transportation Modes Motorway 1. 5. 3. Railways Waterways 4. Airways Pipelines . 2.

Modal Characteristics .

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 .

regional. oversize. 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 . containers.Railways   Fixed routing and scheduling Freight  Bulk. intercity.

Waterways     Short and deep sea ships. platforms Fixed routing and scheduling Natural or artificial channels Cargo  Bulk. mostly containers . cargo.

helicopters.Airways      Planes. 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 .

Pipelines    Commonly oil. also drinking water and natural gas Rigid or flexible routing and scheduling Typical uses – Fluids – Material handling in rough terrain  Tunnels  High (concrete. excavated material) rise construction (concrete) constructor (concrete)  Bridge .

logs of wood. Modal Choice – By appearance:    Bulk (dry and wet) Containers Neo-bulk. drums. sacks. ... general cargo (pallets.) – By value density  Low value bulk    High value bulk High value non-bulk Low value non-bulk .

They should complement each other . with respect to: – – – – – Cost Travel time Convenience Flexibility Reliability –  Responsiveness.Modal Choice  A good transportation plan must consider the efficiency & inefficiency of each mode.

S7 2 Sn3 TS3= w1. S2m…w7.S11 +w2.S 7m . S23…w7.Multi-criteria Evaluation of Modal Choice Attributes Weig ht w1 w2 w3 Mode 1 Mode 2 Mode 3 Mode m Cost Reliability Ease of availability S11 S21 S31 S12 S22 S32 S13 S23 S33 S1m S2m S3m Convenience Flexibility Carton size carried Environmenta l impact “n’ th attribute Total score w4 w5 w6 S41 S51 S61 S42 S52 S62 S44 S53 S63 S4m S5m S6m w7 S71 S72 S73 S7m wn Sn1 TS1 =w1.S13+w2.S21 …w7. S22…w7.S12+w2.S71 Sn2 TS2= w1.S7 1 Snm TSm= w1.S1m+w2.

Transportation System Design .

– – . the supply chain manager needs to decide the shipment size and mode of transportation.Alternative Transportation Design 1. Operation and coordination is very simple. Direct Shipment Network – Goods are shipped directly to retailers – Routing of each shipment is known. Eliminate need for intermediate warehouses.

shipping parts from single supplier to its many closely located assembly plants.  .  Replenishment lot size at the retail store may require Less than truck Load (LTL). Also eliminate need for intermediate warehouses. shipments can be consolidated for number of retailers. Lowers the transportation cost. from multiple retailers to single retailer – – – Supply chain manager has to decide the route of each run. but with the use of this method.2. Direct Shipping with Milk Runs – Delivery from single supplier to multiple retailers. Toyota uses this method to implement its Just in time.

. an extra layer between the supplier and the retailer serves two important functions:  to store inventory  – to act as transfer location DC are very useful if inbound supply is in large quantities and manufacturer is far from retailer.3. Through central distribution center – – Shipments routed through a distribution center The retail stores are divided into geographic regions served by a distribution center (DC).  DC can store these materials and ship to retailers whenever they need in smaller quantities.

Reduces handling and storage of inventory – – See lecture on distribution system design .4. Cross Docking – Take a finished good from the manufacturing plant and deliver it directly to the customer with little or no handling in between.

 To help manage above mentioned transportation and storage needs and concentrate more on their core activities companies have started outsourcing logistics. George Loge Mann. It can free resources both in terms of time and finance to focus on mission-critical and core activities. According to the director of outsourcing consulting. outsourcing logistics function can be a smart decision. and outsourcing is $30 bullion to $ 40 billion global industry.   . Outsourcing logistics in short span of time has become a multi-billion dollar industry. And it is growing !! For companies whose core competency is not distribution and neither have the resources to make it one.

and inventory cost tradeoff – – Choice of transportation mode Inventory aggregation  Transportation cost and responsiveness tradeoff .Tradeoffs in Transportation Design  Transportation. facility.

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 .

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