Transportation decisions impact both the responsiveness and efficiency of a supply chain. Faster transportation allows for greater responsiveness but reduces efficiency by increasing costs. A firm must choose transportation modes and design networks to balance these factors. Key metrics for evaluating transportation performance include transportation costs, shipment sizes, and the fraction of goods transported by each mode. The fundamental tradeoff is between the responsiveness provided by faster transportation and the higher efficiency of slower, cheaper options.

1. TRANSPORTATION
SUPPLY CHAIN DRIVERS AND
METRICS

2. Role in Supply
Chain
• Faster transportation allows a supply chain to be
more responsive but reduces its efficiency.
• The type of transportation a company uses also
affects the inventory and facility locations in the
supply chain.

3. ROLE IN
COMPETIETIVE
STRATEGY
• Transportation allows a firm to adjust the location
of its facilities and inventory to find the right
balance between responsiveness and efficiency.
• A firm selling high-value items use rapid
transportation to be responsive while centralizing
its facilities and inventory to lower cost.
• use rapid transportation to be responsive while
centralizing its facilities and inventory to lower cost.

4. COMPONENTS OF
TRANSPORTATION DECISIONS
• DESIGN OF TRANSPORTATION NETWORK:-The transportation
network is the collection of transportation modes, locations,
and routes along which product can be shipped. A company
must decide whether transportation from a supply source will
be direct to the demand point or will go through intermediate
consolidation points.
• CHOICE OF TRANSPORTATION MODE:-Companies can choose
among air, truck, rail, sea, and pipeline as modes of transport
for products. Today, information goods can also be sent via the
Internet.

5. TRANSPORTATION-
RELATED METRICS
• . A manager should track the following
transportation-related metrics that influence
supply chain performance:
Average inbound transportation cost:- This
measures the cost of bringing a product into a
facility as a percentage of sales or cost of goods
sold (COGS).
Average incoming shipment size:- It measures
the average number of units or dollars in each
incoming shipment at a facility.
Average inbound transportation cost per
shipment:- measures the average transportation
cost of each incoming delivery. Along with the
incoming shipment size, this metric identifies
opportunities for greater economies of scale in
inbound transportation.

6. TRANSPORTATION-RELATED
METRICS
• Average outbound transportation cost:- This measures the cost of
sending a product out of a facility to the customer. Ideally, this cost
should be measured per unit shipped, but it is often measured as a
percentage of sales.
• Average outbound shipment size:- This measures the average
number of units or dollars on each outbound shipment at a facility.
• Average outbound transportation cost per shipment:- This
measures the average transportation cost of each outgoing delivery.
• Fraction transported by mode:- It measures the fraction of
transportation (in units or dollars) using each mode of
transportation.

7. OVERALL TRADE-OFF:
RESPONSIVENESS VERSUS EFFICIENCY
• The fundamental trade-off for transportation is
between the cost of transporting a given product
(efficiency) and the speed with which that
product is transported (responsiveness).
• Using fast modes of transport raises
responsiveness and transportation cost but
lowers the inventory holding cost.