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TRANSPORTATIONIN SUPPLY CHAIN
Transportation is another key driver in the supply chain
which has significant impact on efficiency as well as
responsiveness.
Shippers provide movement of large
Products rarely produced and consumed in the same
location
Movement of product from one location to another
location
Carriers is the party that moves relatively smaller
volumes of products
Transportation is a significant of cost component
COST COMPONENT OF AIR LINES
Fixed cost Cost of labor and fuel Variable cost
TRUCK
Trucking is more expansive than rail but offers the advantage
of door -to -door shipment and a shorter delivery time.
Water transport is ideally suited for carrying large
loads at low cost.
In global trade, water transport is the dominant
mode for shipping all kinds of products.
WATER
Pipeline is used primarily for the transport of crude
petroleum, refined petroleum products and natural gas.
PIPELINE
 Package carriers are Transportation companies such as
FedEx, UPS and the U.S...
 Package carriers use air, truck and rail to transport.
PACKAGE CARRIERS
Intermodal transportation is the use of more than one
mode of transport to move a shipment to its destination.
INTERMODAL
RAILWAY
Rail carriers incure a high
fixed cost in term of track,
locomotives, cars and yards.
A major goal for railroad is
to keep locomotives and well
utilized.
Roads, seaports, airports, rail and
canals are some of the major
infrastructural elements that exist
along nodes and links of a
transportation network.
TRANSPORTATION INFRACTURES
AND POLICIES
In the 20th century, as the modes of
transport changed , there was a need
fir higher quality roads. A network of
national toll free highways was built,
largely using gasoline taxes as source
of finding.
TRANSPORTATION INFRACTURES
AND POLICIES
It seems reasonable that the
government has to either own or
regulate a monopolistic
transportation infrastructure asset.
TRANSPORTATION INFRACTURES
AND POLICIES
The direct shipment network to a single destination option, the
buyer structures the transportation network so that all shipment
come directly from each supplier to each buyer.
DIRECT SHIPMENT NETWORK TO
SINGLE DESTINATION
A milk run is a route on which a truck either delivers
product from a single supplier to multiple retailers or
goes from multiple supplier to a single buyer location.
DIRECT SHIPMENT WITH MILK
RUNS
SHIPMENT VIA DC USING MILK
RUNS
Milk runs can be used
from a DC if lot sizes to
be deliverd to each buyer
location are small.
Combination of above methods
Low volume products to low volume retail
outlets are consolidated to and from the DC
High volume products to high volume retail
outlets may be shipped directly
Complexity is very high
TAILORED NETWORK
Naim Miya
ID: BBA-15035
Mumbai Dabbawalas: A Highly
responsive distribution network
Mumbai Dabbawala have
Successfully run a highly
responsive distribution system
for more than a century- while
charging customer about $ 7 for
this service.
MUMBAI DABBAWALAS
MUMBAI DABBAWALAS
Types of service: Carring Lunch
Started time: around 9 a.m.
No of Dabbawalas: about 5000
Collect Dabbas: 30 Each
Total delivery: 1,50,000 Lunch boxes
Each dabbawala deliver: about 40 dabbas
Rail arrive at Destination: 11:30
Completed time: Before 1 p.m.
Return Empty Dabbas: By 5 p.m.
Bicycle
Handicarts
Railway
MODE OF TRANSPORTATION OF
MUMBAI DABBAWALA
Factors
Low uncertainty of demand
Temporal Aggregation of demand
Use of transportation resources when they are
underutilized
FACTORS TO FACILITATE SUCCESS
Transportation and inventory cost trade-off
 Choice of transportation mode
 Inventory aggregation
Transportation cost and responsiveness trade-off
TRADE-OFFS IN TRANSPORTATION
DESIGN
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
THE COICE OF TRANSPORTATION
MODE
INVENTORYAGGREGATION
As a result of physical aggregation
 Inventory costs decrease
 Inbound transportation cost decreases
 Outbound transportation cost increases
Inventory aggregation decreases supply chain costs if
the product has a high value to weight ratio, high
demand uncertainty, or customer orders are large
Inventory aggregation may increase supply chain costs
if the product has a low value to weight ratio, low
demand uncertainty, or customer orders are small
INVENTORYAGGREGATION
TRADE OFF BETWEEN
TRANSPORTATION COST AND
CUSTOMER RESPONSIVENESS
Temporal aggregation
is the process of
combining orders
across time
Temporal aggregation
reduces
transportation cost
because it results in
larger shipments and
reduces variation in
shipment sizes
However, temporal
aggregation reduces
customer
responsiveness
.
The use of different
transportation networks and
modes based on Customer and
product characteristics.
TAILORED TRANSPORTATION
Factors
Size of customer
Customer density and distance
Product demand and value
FACTORS AFACTING TAILORING
Firms must consider customer size and
location when designing transportation
networks
Large customers can be supplied using a
TL carrier
Smaller customers will require an LTL
carrier
TAILORED TRANSPORTATION BY
SIZE OF CUSTOMER
The degree of inventory aggregation
and the modes of transportation used in
a supply chain network should vary
with the demand and value of a
product.
TAILORED TRANSPORTATION BY
PRODUCT DEMAND AND VALUE
TAILORED TRANSPORTATION BY
CUSTOMER DENSITY AND DISTANCE
Firms must consider customer density and
distance from warehouse when designing
transportation networks.
It determines the use of software for transportation routes
and it has been the most common in IT application in
transportation by taking the location of customer, shipment
size and desired delivery times.
DETERMINING ROUTES
IT also comes into play in the use of global
positioning system (GPSs) for tracking real time
location of vehicles and electronic notification
of impending arrivals.
GPS TRACKING
Synchronization between packing and
routing software is important because it
determines how much is packed on truck
affect the routing and the routing
obviously affects what is packed on a
truck.
PACKAGING AND ROUTING
SYNCHRONIZATION
The Internet has also been used by companies to help
match shipper loads with available carrier capacity in
trucking industry.
MATCHING SHIPMENT LOADS
MANAGEMENT IN
TRANSPORTATION RISK
The risk of hazardous material.
The risk that the shipment is delayed
The risk that the shipment does not reach its
destination be because intermediate nodes or
links are disrupted by external forces
In each case, it is important to identified to important the
sources of risk and their consequence and plan suitable
mitigation strategies. Delay arises either because of congestion
along links such as roads or nodes such ports and airports.
Disruption at transportation links or nodes may occur be
because of nature events such as hurricanes or human-made
events such as terrorism.
MANAGEMENT IN
TRANSPORTATION RISK
Hazardous material can be harmful when people and the
environment are exposed. The goal of risk mitigation here is
to minimize the probability of exposure, and in the event of
exposure to minimize the impact.
MANAGEMENT IN
TRANSPORTATION RISK
In automotive industry, with an annual
production of more than 3.7 million
units, as of 2010, is one the largest and
fastest growing in the world.
INDIAN AUTOMOTIVE INDUSTRY
MODE OF TRANSPORTATION
Ports
Roads
Airports
INFRASTRUCTURE IN
TRANSPORTATION
Transportation cost
Inventory Cost
Operating cost
CONSIDER WHEN DESIGNIMG A
TRANSPORTATION NETWORK
Transportation in supply chain

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Transportation in supply chain

  • 1.
  • 3. Transportation is another key driver in the supply chain which has significant impact on efficiency as well as responsiveness.
  • 4. Shippers provide movement of large Products rarely produced and consumed in the same location Movement of product from one location to another location Carriers is the party that moves relatively smaller volumes of products Transportation is a significant of cost component
  • 5. COST COMPONENT OF AIR LINES Fixed cost Cost of labor and fuel Variable cost
  • 6. TRUCK Trucking is more expansive than rail but offers the advantage of door -to -door shipment and a shorter delivery time.
  • 7. Water transport is ideally suited for carrying large loads at low cost. In global trade, water transport is the dominant mode for shipping all kinds of products. WATER
  • 8. Pipeline is used primarily for the transport of crude petroleum, refined petroleum products and natural gas. PIPELINE
  • 9.  Package carriers are Transportation companies such as FedEx, UPS and the U.S...  Package carriers use air, truck and rail to transport. PACKAGE CARRIERS
  • 10. Intermodal transportation is the use of more than one mode of transport to move a shipment to its destination. INTERMODAL
  • 11. RAILWAY Rail carriers incure a high fixed cost in term of track, locomotives, cars and yards. A major goal for railroad is to keep locomotives and well utilized.
  • 12. Roads, seaports, airports, rail and canals are some of the major infrastructural elements that exist along nodes and links of a transportation network. TRANSPORTATION INFRACTURES AND POLICIES
  • 13. In the 20th century, as the modes of transport changed , there was a need fir higher quality roads. A network of national toll free highways was built, largely using gasoline taxes as source of finding. TRANSPORTATION INFRACTURES AND POLICIES
  • 14. It seems reasonable that the government has to either own or regulate a monopolistic transportation infrastructure asset. TRANSPORTATION INFRACTURES AND POLICIES
  • 15. The direct shipment network to a single destination option, the buyer structures the transportation network so that all shipment come directly from each supplier to each buyer. DIRECT SHIPMENT NETWORK TO SINGLE DESTINATION
  • 16. A milk run is a route on which a truck either delivers product from a single supplier to multiple retailers or goes from multiple supplier to a single buyer location. DIRECT SHIPMENT WITH MILK RUNS
  • 17. SHIPMENT VIA DC USING MILK RUNS Milk runs can be used from a DC if lot sizes to be deliverd to each buyer location are small.
  • 18. Combination of above methods Low volume products to low volume retail outlets are consolidated to and from the DC High volume products to high volume retail outlets may be shipped directly Complexity is very high TAILORED NETWORK
  • 19. Naim Miya ID: BBA-15035 Mumbai Dabbawalas: A Highly responsive distribution network
  • 20. Mumbai Dabbawala have Successfully run a highly responsive distribution system for more than a century- while charging customer about $ 7 for this service. MUMBAI DABBAWALAS
  • 21. MUMBAI DABBAWALAS Types of service: Carring Lunch Started time: around 9 a.m. No of Dabbawalas: about 5000 Collect Dabbas: 30 Each Total delivery: 1,50,000 Lunch boxes Each dabbawala deliver: about 40 dabbas Rail arrive at Destination: 11:30 Completed time: Before 1 p.m. Return Empty Dabbas: By 5 p.m.
  • 23. Factors Low uncertainty of demand Temporal Aggregation of demand Use of transportation resources when they are underutilized FACTORS TO FACILITATE SUCCESS
  • 24. Transportation and inventory cost trade-off  Choice of transportation mode  Inventory aggregation Transportation cost and responsiveness trade-off TRADE-OFFS IN TRANSPORTATION DESIGN
  • 25. 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 THE COICE OF TRANSPORTATION MODE
  • 26. INVENTORYAGGREGATION As a result of physical aggregation  Inventory costs decrease  Inbound transportation cost decreases  Outbound transportation cost increases
  • 27. Inventory aggregation decreases supply chain costs if the product has a high value to weight ratio, high demand uncertainty, or customer orders are large Inventory aggregation may increase supply chain costs if the product has a low value to weight ratio, low demand uncertainty, or customer orders are small INVENTORYAGGREGATION
  • 28. TRADE OFF BETWEEN TRANSPORTATION COST AND CUSTOMER RESPONSIVENESS Temporal aggregation is the process of combining orders across time Temporal aggregation reduces transportation cost because it results in larger shipments and reduces variation in shipment sizes However, temporal aggregation reduces customer responsiveness
  • 29. . The use of different transportation networks and modes based on Customer and product characteristics. TAILORED TRANSPORTATION
  • 30. Factors Size of customer Customer density and distance Product demand and value FACTORS AFACTING TAILORING
  • 31. Firms must consider customer size and location when designing transportation networks Large customers can be supplied using a TL carrier Smaller customers will require an LTL carrier TAILORED TRANSPORTATION BY SIZE OF CUSTOMER
  • 32. The degree of inventory aggregation and the modes of transportation used in a supply chain network should vary with the demand and value of a product. TAILORED TRANSPORTATION BY PRODUCT DEMAND AND VALUE
  • 33. TAILORED TRANSPORTATION BY CUSTOMER DENSITY AND DISTANCE Firms must consider customer density and distance from warehouse when designing transportation networks.
  • 34. It determines the use of software for transportation routes and it has been the most common in IT application in transportation by taking the location of customer, shipment size and desired delivery times. DETERMINING ROUTES
  • 35. IT also comes into play in the use of global positioning system (GPSs) for tracking real time location of vehicles and electronic notification of impending arrivals. GPS TRACKING
  • 36. Synchronization between packing and routing software is important because it determines how much is packed on truck affect the routing and the routing obviously affects what is packed on a truck. PACKAGING AND ROUTING SYNCHRONIZATION
  • 37. The Internet has also been used by companies to help match shipper loads with available carrier capacity in trucking industry. MATCHING SHIPMENT LOADS
  • 38. MANAGEMENT IN TRANSPORTATION RISK The risk of hazardous material. The risk that the shipment is delayed The risk that the shipment does not reach its destination be because intermediate nodes or links are disrupted by external forces
  • 39. In each case, it is important to identified to important the sources of risk and their consequence and plan suitable mitigation strategies. Delay arises either because of congestion along links such as roads or nodes such ports and airports. Disruption at transportation links or nodes may occur be because of nature events such as hurricanes or human-made events such as terrorism. MANAGEMENT IN TRANSPORTATION RISK
  • 40. Hazardous material can be harmful when people and the environment are exposed. The goal of risk mitigation here is to minimize the probability of exposure, and in the event of exposure to minimize the impact. MANAGEMENT IN TRANSPORTATION RISK
  • 41. In automotive industry, with an annual production of more than 3.7 million units, as of 2010, is one the largest and fastest growing in the world. INDIAN AUTOMOTIVE INDUSTRY
  • 44. Transportation cost Inventory Cost Operating cost CONSIDER WHEN DESIGNIMG A TRANSPORTATION NETWORK