Transportation Ppt

Transportation in the Supply Chain

Akash Bhasin

Supply Chain

• All facilities, functions, activities, associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flows

Transportation

• Transportation is jointing between stages in the supply chain.

• It is a way to move product from manufacturing to the final consumers.

• Transportation within a supply chain Example – Amazon sells products on the

internet and uses FedEx to deliver products to customers.

Kinds of Transportation costs

• Inbound costs – costs that includes for bringing materials in to the facility.

• Outbound costs – cost of sending material out of a facility

Supply Chain for Denim Jeans

Transportation• Rail

– low-value, high-density, bulk products, raw materials, intermodal containers

– not as economical for small loads, slower, less flexible than trucking

• Trucking– main mode of freight

transport in India– small loads, point-to-point

service, flexible– More reliable, less damage

than rails; more expensive than rails for long distance

Truckload (TL)

• Low fixed cost – carriers do not own or maintain roads

• Door-to-door convenience• Good speed and frequency (small dispatch lots)• Cannot carry large loads• Major Issues– Utilization– Consistent service

•Air–most expensive and fastest,

mode of freight transport–lightweight, small packages –high-value, perishable and

critical goods–less theft

•Package Delivery–small packages–fast and reliable–increased with e-Business–primary shipping mode for

Internet companies

•Water–low-cost shipping mode–primary means of

international shipping–slowest shipping mode

•Intermodal–combines several modes of

shipping-truck, water and rail–key component is

containers•Pipeline–transport oil and products

in liquid form–high capital cost,

economical use–long life and low operating

cost

Transportation Costs• 63% of total logistics expenditures• Fixed Costs

– road/railway acquisition and maintenance, terminal facilities, transport equipment, carrier administration

• Variable Costs

– fuel, labour, equipment maintenance, handling, pickup and delivery

Internet Transportation Exchanges

• Bring together shippers and carriers• Initial contact, negotiations, auctions

• Examples– www.nte.com– www.freightquote.com

There are two keys players in any transportation that takes place within a

supply chain

• Shipper - party that requires the movement of the product between two points in the supply chain

• Carrier - party that moves or transports the product

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Transportation Network Designs

Suppliers Retailer Stores

Direct Supplier Network

Suppliers Retailer Stores

Direct Shipping

Suppliers Retailer Stores

All Shipment via DC

DC

Risk Management in Transportation

• Three main risks to be considered in transportation are:

– Risk that the shipment is delayed– Risk of disruptions– Risk of hazardous material

Risk mitigation strategies

– Decrease the probability of disruptions– Alternative routings– In case of hazardous materials the use of modified

containers, low-risk transportation models, modification of physical and chemical properties can prove to be effective

Choice of Transportation Mode

• A manager must account for inventory costs when selecting a mode of transportation

• A mode with higher transportation costs can be justified if it results in significantly lower inventories

Walmart Transportation system

• Fast and responsive transportation system.

• Distribution centers serviced by more than 3500 company owned trucks.

Cross-docking• To make its distribution process more

efficient, Wal-Mart makes use of a logistics technique called “cross-docking

• In this system, the finished goods are directly picked up from the manufacturing plant, sorted out and then directly supplied to the customers.

• The system reduced the handling and storage of finished goods, virtually eliminating the role of the distribution centers and stores.

• The manufacturer directly forwarded the goods to a place called the “staging area.”

• The goods were packed here according to the orders received from different stores and then directly sent to the respective customers.

Video

• http://www.youtube.com/watch?v=ViLjw7b_0_U

Thank You