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.
