Transportation in
supply chain
Presented by- Raksha sharma
Mpharm+MBA (QA)
1

CONTENT
Introduction
Role of transport
Modes of transport
Transport infrastructure and policies
Design options for a transportation network
Case study
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Logistic And Transportation
 The Council of Supply Chain Management
Professionals (CSCMP) defines logistics as the process
of planning, implementing, and controlling procedures
for the efficient and effective transportation and
storage of goods including services, and related
information from the point of origin to the point of
consumption for the purpose of conforming to
customer requirements.
 Transportation means of conveyance or travel (of
goods and services) from one place to another .
It’s plays a vital role in logistic.
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General information of
transportation
• According to bureau of Transportation Statisticis
(BTS)has 3 Sectors .
- It Contributes a larger share to the gross domestic
product (GDP) than Transportation. due to the
transportation most of the people got the employment
.
HOUSING HEALTHCARE FOOD
4

Role of transportation
• Transportation is the physical link connecting the firm to its
suppliers and customers.
• In a nodes and links scenario, transportation is the link
between fixed facilities (nodes).
• Transportation is an important supply chain driver because
products are really not produced and consumrd at same
location.
• Transportation also adds value to the product by providing
time and place utility for the firm’s goods.
• As firms engage in global competition, transportation costs
are becoming even more significant.
• Outbound transportation was clearly the largest component of
total physical distribution costs.
• Cost trade-offs abound in transportation and are typified by
trading lower inventory costs for higher transportation costs.
5

Modes of Transportation
Truck
Air
Rail
Water
Pipeline
Intermodal
6

Truck
• The trucking industry consist of two major segments-
1) Truck load (TL)
2) Or less than truck load (LTL)
It is more expensive than rail but offers advantage of door to
door shipping and decrease the delivery time. It also has the
advantage if requiring no transfer between picking and
delivery.
It requires lower fixed cost . And owning a few trucks is
sufficient to enter in the bussiness.it is charcterized by
shipments of 10,000 pounds or more than 50,000 carriers offer
TL sevice in US. The challenge in the TL bussiness is that
most market have an imbalance of inbound and outbound
flows.
For eg- newyork has a significantly higher in flow of material
then out flow. 7

Trucking
Advantages-
Lower costs
 good Accessibility
Small, frequent shipments
Good speed.
Disadvantages-
costly
Capacity
Range
8

AIR
• Major air lines in US that carry both passengers and cargo
include American southwest ,United and delta. have three
cost components-
1) A fixed cost of infrastructure and equipment
2) cost of labour and fuel that is independent of the
passengers or cargo on flight but is fixed for the flight.
3) A variable cost that depends upon the passengers or cargo
carried.
Main objective of airline is to incurred the cost when the flight
takes off.
Key issues- the air carrier face include identifying the location
and number of hubs, asinging planes to route, seeting up
maintenance shedule for planes, scheduling crews,and
managing prices and availability of different prices. 9

AIR
Advantages
• Premium transportation mode
• Speed delivery can be done
• High Range of products can transport
• Perishable products
• Urgent deliveries.
Disadvantages
Price
Non-direct points
Add-on charges
10

RAIL
• Rail carriers incur a high fixed cost in term of tracks,
locomotives, cars, and yards.
• The price structure and heavy load capability make
rail an ideal mode for carrying large, heavy , or high
density products over long distances.
• In rails fuel cost is calculated by the distances
travelled and the number of goods transported.
• Major operational issues at railroad are vehicle and
staff scheduling, track and terminal delays, and it is
poor on-time performance
• .for eg- coal is major part of each railroad shipments.
11

RAIL
Advantages
Lowest overall cost per unit weight
Consistent time schedule
Recommended with most commodity types
 can be used in any type of Weather
Large volume if sample can be transported
Disadvantages
Inflexibility
Potential damage of goods
Ineffective with small shipment,
Short distance,time-sensitive. 12

Rail Types of Freight
Services
Bulk Unit Train
Moves very high volumes of a single commodity
Coal, grain, minerals and waste
One way (shipper to receiver)
Mixed Carload
Moves a diverse range of commodities.
Chemicals, food products, forest products, metals, auto
parts, waste and scrap.
One way (shipper to receiver)
Intermodal (container, trailer and automobile)
Moves truck trailers
Almost anything that can be pack in a truck or container
like: finished consumer goods, refrigerated foods, tools and
parts for manufacturing and raw materials.
Two way 13

WATER
• A cargo ship, also known as freighter, is one that carries
cargo, goods and materials from one port to another.
• Major ocean carriers include Maersk, evergreen group,
American President Lines, and Hanjin shipping Co. Water
transport , by its nature, is limited to certian areas.
• Water transport is ideally suited for carrying large loads at
low cost. within the US , water transport is used primarily
for the movement of large bulk commodity shipments and is
the cheapest mode of carrying the loads. It is slowest of all
the mode.
• In global trade, water transport is the dominant mode of
transport can be used for shipping of all types of material.
14

WATER
Advantages
• Large volumes
• Long distances
Disadvantages
• Slower than all the modes
• Limited access
15

Types of Cargo Ships
1) Bulk Carriers
• These ships are designed to transport unpackaged
bulk cargo such as cement, ore, grains and coal.
• 40% of the world’s
• merchant fleets.
16

2) Lake Freighters (Lakers)
• Lakers are bulk carriers that transport goods through
the Great Lakes.
• The number of Lakers in operation has been reduced
due to the Saint Lawrence Seaway, that allows access
of ocean-going vessels to the Great Lakes.
17

3) Container Ships
• These cargo ships carry intermodal containers that
can be carried by land. Containers vary from 20 to 40
feet in length.
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Unloading Container Ships
• Port cargo cranes are used to unload containers from
cargo vessels
19

PIPELINE
• It is used usually for transport of pertroleum, refined
oil, natural gas.
• Significant initated fixed cost is incurred in setting up
the pipeline and realted infrastructure that does not
vary significantly with the daimeter of pipeline.
• Pipeline operations are typically optimized at about
80-90percent of pipeline capacity.
• Given the nature of the cost it is the best suited mode
when realtively stable and large flows are required.
• Pipeline pricing usually consist of two components-
1) A fixed component related to shipper ‘s peak usage
2) charge realting to the actual quantity transported. 20

PIPELINE
Advantages-
• Transport of
homogeneous materials
• Lower transportation
costs than other modes
• Unable to transport a
variety of materials
• Disadvantages-
• Leakage of pipes may
occur
• Wastage of material
• Maintanance is require. 21

INTERMODAL
• In this type more than one mode type of transport is used
for shipment of product to its destination.
• Most coomon mode is truck and rail.
• Intermodal traffic has grown considerably with the
increased use of containers for shipping and the rise of
global trade
• Containers are easy to transport from one mode to another ,
and there use fcailities intermodal transportation.
• Containers can be used .
• Key issues- it involves the exchange of information between
different modes because these transfers are often involve
considreable delays, hurting delivery time perfrormance.
• More popular due to globalization.
• delivery time is less and cost is low.
22

ADVANTAGES AND
DISADVANTAGES
23

Transport Infrastructure
and
Policies• Roads, seaports, airports , rail, and canals are some of the
major infrastructural elements that exist along nodes and
link of a transportation network . In all countries the
government has either taken full responsibilty or played a
vital role in development of transportation and the resulting
growth of trade . The role of railroad and canals in the
economic development of the US is well documented. More
recently the impact of improved road,air,and port
infrastructure on the development in china is very visible.
24

Impact of average and marginal cost on vehicle
flow
Q1 Q0
P1
P0
Priceoftrip
Vehicle flow rate
B
A
Demand curve
Average cost of
time + operation
Marginal cost of time+operation
25

DESIGN OPTIONS FOR A
TRANSPORTATION
NETWORK• A well designed transportation network allows a
supply chain to achieve the desired degree of
responsiveness at a low cost.
• Three basic questions need to be considered while
dwsigning the transportation network between two
stages of a supply chain.
1) Should transportation be direct or through an
intermediate site?
2) Should the intermediate site stock product or only
serve as a cross-docking location?
3) Should each delivery route supply a single
destination or multiple destinations ? 26

Factors Influencing
Distribution Network
Design• At the highest level, performance of a distribution
network should be evaluated along two dimensions:
• 1. Customer needs that are met
• 2. Cost of meeting customer needs
• The customer needs that are met influence the
company's revenues, which along with cost decide the
• profitability of the delivery network.
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• While customer service consists of many components, we will focus on
those measures that are
• influenced by the structure of the distribution network. These include:
 • Response time Response time is the time between when a customer
places an order and receives delivery-
 • Product variety- Product variety is the number of different products /
configurations that a customer desires from the distribution network.
 • Product availability -Availability is the probability of having a product
in stock when a customer order arrives-
 • Customer experience -Customer experience includes the ease with
which the customer can place and receive their order
 • Order visibility - Order visibility is the ability of the customer to track
their order from placement to delivery-
 • Returnability - Returnability is the ease with which a customer can
return unsatisfactory merchandise and the ability of the network to
handle such returns.
28

Direct shipment network to
single destination
In this all shipments come directly from each supplier to each buyer location,
in this the routing and cost of each shipment is specified
29

Direct shipping with milk runs from
multiple buyers to multiple suppliers
location
A milk run is a route on which a truck either delivers product from single supplier to
multiple retailers or goes from multiple suppliers to a single buyer location .in this a
supplier delivers directly to the multiple buyers location on a truck or a truck picks up
deliveries destined for the same buyer location from many suppliers. By this the
manager has to decide the routing of each milk run.
30

Shipping via DC using milk
runs
This is used if lot of size to be delivered to each buyer location are small it reduced
outbound transportation cost cost by consolidating small shipments.
31

pros and cons of different
transportation network
32

Tailored network
Here the transportation is used in the combination of the cross-docking ,milkruns,
TL and LTL carriers along with package carriers.
33

Mumbai dabbawalas
case study
34

(Nutan Mumbai Tiffin Box Suppliers Association)
History : Started in 1880
Charitable trust : Registered in 1956
Avg. Literacy Rate : 8th Grade Schooling
Total area coverage : 60 Kms
Employee Strength : 5000
Number of Tiffin's : 2,00,000 Tiffin Boxes
i.e 4,00,000 transactions every day.
Time taken : 3 hrs
35

Structure
• Three tier structure:
• Executive committee
• Mukadams
• Dabbawalas
• Role of Groups (a profit centre with 8 mukadams)
• Culture similarity of the staff
• Distinct local entity of dabbawalas
• Known for reliability and work ethic
• Helped by commuters
36

APPROACH
DISCIPLINE :
• No Alcohol Drinking during business hours
• Wearing White Cap during business hours
• Carry Identity Cards
WOMEN:
• Mrs. Bhikhubai of Borivali(East)
• Mrs. Anandibai of Andheri(East)
LATEST MARKETING STRATEGY:
Marketing message in the “dabba” 37

How do they do it…?
• Organizational
structure
Executive Committee
(5 members)
Teams of 20-25 headed by a
group leader
Individual Dabbawalla
workload = 30 tiffins
• Operations
• War against Time (10.30 –
1.00)
• The Code
Case Study : TBSA
Tiffin Box Suppliers Association
38

ORGANISATIONAL STRUCTURE
The service is uninterrupted even on the days of extreme weather, such as
Mumbai's characteristic monsoons. The local dabbawalas at the receiving and
the sending ends are known to the customers personally, so that there is no
question of lack of trust. Also, they are well accustomed to the local areas they
cater to, which allows them to access any destination with ease. Occasionally,
people communicate between home and work by putting messages inside the
boxes. However, this was usually before the accessibility of
telecommunications
39

PRESIDENT
VICE PRESIDENT
GENERAL SECRETARY
TREASURER
DIRECTORS(19)
MEMBERS(5000)
MUKADAM
13 MEMBERS
40

PRESIDENT & GENERAL SECRETARY
NUTAN MUMBAI TIFFIN BOX SUPPLIERS ASSOCIATION
41

FINANCIAL DATA OF A
GROUP
1st group –
Rs 125000 Total earnings -20 People
Rs 35000 Maintenance cost
Tiffin luggage basket pass – Rs 180 per person.
Maintenance of cycles – Rs 300 – 2 cycles per month.
Maintenance of wooden boxes – Rs 100 per person .
T.C , police robbery of Tiffin Rs 500 yearly.
Organizational fee Rs 15 per head.
Puja held per station Rs 50 per head. 42

Awards and Felicitation
 Shri.Varkari Prabhodhan Mahasmati Dindi (palkhi) sohala – 4th march
– 2001.
 Invitation from CII for conference held in Bangalore.
Documentaries made by BBC ,UTV, MTV, and ZEE TV
Dabbawalla services are popular with the Indian IT developer
community in Silicon Valley, California, USA
In literature
One of the two protagonists in Salman Rushdie's controversial novel The Satanic
Verses, Gibreel Farishta, was born as Ismail Najmuddin to a dabbawallah. In the
novel, Farishta joins his father, delivering lunches all over Bombay (Mumbai) at
the age of 10, until he is taken off the streets and becomes a movie star.
Dabbawalas feature as an alibi in the Inspector Ghote novel Dead on Time.
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Some Achievements
• World record in best time management.
• Name in “GUINESS BOOK of World Records”.
• Registered with Ripley's “ believe it or not”.
44

LOGISTICS
Logistics is happening 24 hrs a day,7 days a
week and 52 weeks a year.
Logistical competency is achieved by
coordinating the following:
 Network Design
 Information
 Transportation
 Inventory
 Warehousing
45

•Coding
VLP : Vile Parle
(Suburb in Mumbai)
9E12 : Code
for Dabbawallas at
Destination
E : Express Towers
(Bldg. Name)
12 : Floor No.
E : Code for
Dabbawallas at
Residential station.
3 : Code for Destination station
(E.g.. Nariman Point) 46

MR. RAGHUNATH MEDGE
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• 10:34-11:20 am
• This time period is actually the journey
time. The dabbawalas load the wooden
crates filled with tiffins onto the luggage or
goods compartment in the train. Generally,
they choose to occupy the last compartment
of the train.
48

• 11:20 – 12:30 pm
• At this stage, the unloading takes place at the
destination station
• Re-arrangement of tiffins takes place as per
the destination area and destination building
49

• In particular areas with high density of customers, a special
crate is dedicated to the area. This crate carries 150 tiffins
and is driven by 3-4 dabbawalas!
50

• 1:15 – 2:00 pm
• Here on begins the collection process where
the dabbawalas have to pick up the tiffins
from the offices where they had delivered
almost an hour ago.
51

RETURN JOURNEY:
• 2:00 – 2:30 pm
• The group members meet for the segregation as
per the destination suburb.
52

• 2:48 – 3:30 pm
• The return journey by train where the group
finally meets up after the day’s routine of
dispatching and collecting from various
destination offices
• Usually, since it is more of a pleasant journey
compared to the earlier part of the day, the
dabbawalas lighten up the moment with
merry making, joking around and singing.
53

• 3:30 – 4:00 pm
• This is the stage where the final sorting
and dispatch takes place. The group meets
up at origin station and they finally sort
out the tiffins as per the origin area
54

THE ROYAL VISIT:
Recently, the dabbawala’s had royal company at Churchgate
station. The Prince of Wales himself had visited them when he
came down to Mumbai.
• He took keen interest in their way of functioning, expressed
surprise at their efficiency and was struck with awe when he
was told that they didn’t employ any technology.
• The prince was presented a small memento, accompanied with
a garland, a Gandhi topi and a trophy by the dabbawalas.
55

RICHARDBRANSONCHAIRMANVIRGINATLANTICAIRWAYS
MUMBAI
• Sir Richard Branson, Chairman, Virgin Atlantic
Airways, meeting the Mumbai's famed
'Dabbawalas' at their nodal point, the Churchgate
Railway Station in South Mumbai, on April 1,
2005. 56

Order through SMS
Although the service remains essentially low-tech, with the barefoot
delivery boys as the prime movers, the dabbawalas have started to
embrace technology, and now allow booking for delivery through SMS. A
web site, mydabbawala.com, has also been added to allow for on-line
booking, in order to keep up with the times. An on-line poll on the web site
ensures that customer feedback is given pride of place.
The success of the system depends on teamwork and time management
that would be the envy of a modern manager. Such is the dedication and
commitment of the barely literate and barefoot delivery boys (there are
only a few delivery women) who form links in the extensive delivery chain,
that there is no system of documentation at all. A simple colour coding
system doubles as an ID system for the destination and recipient. There
are no elaborate layers of management either — just three layers.
Each dabbawala is also required to contribute a minimum capital in kind,
in the shape of two bicycles, a wooden crate for the tiffins, white cotton
kurta-pyjamas, and the white trademark Gandhi topi (cap). The return on
capital is ensured by monthly division of the earnings of each unit. -
Sales@MyDabbawala.Com
57

References
1) Designing the Distribution Network in a Supply
Chain Sunil Chopra Kellogg School of Management,
Northwestern University 2001 Sheridan Road,
Evanston, IL 60208, U.S.A
2) TRANSPORTATION PROCESS IN GLOBAL
SUPPLY CHAIN by Sebastian Kot, at Czestochowa
University of Technology.
3) Supply chain management strategy, planning and
operation by sunil chopra, peter meindl, dharam vir
kalra ,6th edition perason publication, chapter no 14,
page no- 439-468.
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