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Transportation in Supply Flow Networks: The Critical Process Federal Highway Administration’s Freight Discussion Series – December 2000. William DeWitt, Ph. D. Teaching Professor University of Maryland, College Park. Transportation and Supply Flow Networks. - PowerPoint PPT Presentation
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Transportation in Supply Flow Networks:The Critical Process
Federal Highway Administration’s Freight Discussion Series – December 2000
William DeWitt, Ph. D.
Teaching Professor
University of Maryland, College Park
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Transportation and Supply Flow Networks
• Supply Flow Networks (SFN) Defined and Discussed
• Transportation’s Critical Roles in SFN
• Summary
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Supply Flow Networks
• Flow – to move with a continual change of place among the parts
• Supply – to make available a quantity• Networks – an interconnected or interrelated
chain, group, or system
• Complements of Webster’s Third New International Dictionary
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Distribution
Semi-Processed
ManufacturingFinal Product
orParts/Components
Warehousing
Consumer
Retail
RecycleReturnRepair
Assembly
TransportationFromthe Earth-
Plantsor
Minerals
Personal Auto
Transportation
Transportation
Transportation
$
Industry/Business
Supply Flow Networks"Earth to Earth Flows
With Value-Added Processes"(c) William DeWitt, Ph.D. - November 2000
"From the Earth" - Mining or Harvesting; Limitedoptions; Few ubiquitous"Semi-Processed" - Generally near mining orharvesting; Conversion to usable form or structure"Manufacturing" - Final Product or Parts &Components; Driven by weight, labor, capital andfinal markets"Assembly" - Final Product; Growing high flexibilitywith IT and postponement; generally nearconsumption"Warehousing" - Move to staging and cross-dockfrom storage
TraditionalLogistics
Supply FlowNetwork Options
KEY
Distribution
Distribution
Transportation
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Significance of Supply Flow Networks
• Raw Materials sourcing is fixed and limited in scope for most materials; Related weight/bulk shedding semi-processing is similarly limited
• Manufacturing, Assembly and Warehousing are value-added exercises; CAD/CAM and postponement making them more variable in the flow
• As Channels of Distribution change, i.e., wholesalers, jobbers, distributors, retailers, driven by ecommerce, transportation requirements change dramatically
• Consumption is relatively fixed
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Freight Transportation Importance
• Major Cost of Logistics – 40 to 60%
• Integral and Essential Link for Global Supply Chains
• Dynamic Inventory Will Rival Static Inventory
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Transportation as a Major Cost Component of Logistics
Source Transportation Costs($ Billions)
Transportation % of Logistics
Costs
Transportation % of Sales
Delaney
1998
499(Approx. 6% GNP)
58
Davis & Drumm 1997
45 4.08
Morreale & Prichard
1996
43.4 3.13
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Transportation Essential Linkage for International Supply Chains (Sine Qua
Non)
• Logistics now viewed as part of supply chains or supply flow networks (CLM 1998)
• Global information and communication systems (Netcentricity) enhance development of international supply flow networks
• Telegraph and Railroads 100-years ago > Web and Multimodal Transportation today
• Supply Flow Networks are spatial and cannot exist without transportations time and place utilities
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Increased Sourcing and Market Distance Mean Increased Transportation
• Sourcing around the world
• Marketing internationally
• Customers indifferent to space, sensitive to time
• Global Supply Flow Networks mean increased distance and transportation
• Global means increased reliance on multimodal transportation
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Increased Speed of Transportation Systems
• Customers want process speed
• Achieved through:
• Variance Reduction
• Smoother Connections/Handoffs
• Technology Improvements– RoadRailer
– FastShip
– 747-400F
– 8,000 ++ TEU's
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Growing Transportation Complexity/Options and Trade-offs
(Customization and Multimodal)• Optimal Combination of
– Modes
– Equipment
– Information
– Service
• To meet– Speed
– Complexity
– Precision
– Capacity
– Profitability
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Transportation and Urban Congestion
• Linehaul capacity (point to point) is significant issue
• Critical issue is the urban congestive failure
• Population growth
• Changes in Supply Flow Network patterns to residences
December 2000 FHWAWilliam J. DeWitt, Ph.D.
In-transit (Dynamic) Inventory Will Rival Storage (Static) Inventory
• Production from mass/push to customized/pull
• Large production lots required large inventories
• Erratic transportation of today/past required safety stocks
• Inventory visible and measured in ERP worlds
• Mass customization makes lot size a unit of “one”
• Inventory is expensive (materials/parts, labor, capital = cash)
• Only want inventory stopped long enough to restage or transfer, not stopped for storage
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Increased Information and Communications Systems for
Transportation • Netcentricity
– Information
– Communication
• Operational– Control – Capacity and Variance Reduction
– Tracking/Tracing – Future need?
• Market– Forecast
– Adjustments to flow/Stochastics
December 2000 FHWAWilliam J. DeWitt, Ph.D.
Wrap-up: Transportation and Supply Flow Networks
• Supply Flow Networks Make Transportation the Focus– Fixed/Limited Sourcing and Consumption
– Ecommerce and channel changes will significantly change transportation requirements
• Transportation and Supply Flow Networks– Major Cost of Logistics – 40 to 60%
– Integral and Essential Link for Global Supply Chains
– Dynamic Inventory Will Rival Static Inventory