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Transportation in supply chain

  1. Transportation in supply chain Presented by- Raksha sharma Mpharm+MBA (QA) 1
  2. CONTENT Introduction Role of transport Modes of transport Transport infrastructure and policies Design options for a transportation network Case study 2
  3. 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. 3
  4. 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
  5. 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
  6. Modes of Transportation Truck Air Rail Water Pipeline Intermodal 6
  7. 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 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
  8. Trucking Advantages- Lower costs  good Accessibility Small, frequent shipments Good speed. Disadvantages- costly Capacity Range 8
  9. 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
  10. 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
  11. 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
  12. 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
  13. 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
  14. 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
  15. WATER Advantages • Large volumes • Long distances Disadvantages • Slower than all the modes • Limited access 15
  16. 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
  17. 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
  18. 3) Container Ships • These cargo ships carry intermodal containers that can be carried by land. Containers vary from 20 to 40 feet in length. 18
  19. Unloading Container Ships • Port cargo cranes are used to unload containers from cargo vessels 19
  20. 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
  21. 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
  22. 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
  24. 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
  25. 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
  26. 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
  27. 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. 27
  28. • 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
  29. 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
  30. 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
  31. 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
  32. pros and cons of different transportation network 32
  33. Tailored network Here the transportation is used in the combination of the cross-docking ,milkruns, TL and LTL carriers along with package carriers. 33
  34. Mumbai dabbawalas case study 34
  35. (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
  36. 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
  37. 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
  38. 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
  39. 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
  42. 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
  43. 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. 43
  44. Some Achievements • World record in best time management. • Name in “GUINESS BOOK of World Records”. • Registered with Ripley's “ believe it or not”. 44
  45. 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
  46. •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
  48. • 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
  49. • 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
  50. • 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
  51. • 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
  52. RETURN JOURNEY: • 2:00 – 2:30 pm • The group members meet for the segregation as per the destination suburb. 52
  53. • 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
  54. • 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
  55. 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
  56. 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
  57. 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,, 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
  58. 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. 58
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