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Transportation in a supply chain management

key issues that need to be considered for increase in GDP.

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Transportation in a supply chain management

  1. 1. Transportationin a supply chain PART-B UNIT-6 4/2/2013 1
  2. 2. The role of transportation in the supply chainFactors affecting transportation decisionsModes of transportation and their performance characteristicsDesign options for a transportation networkTrade-offs in transportation designTailored transportationRouting and scheduling in transportationMaking transportation decisions in practice 4/2/2013 2
  3. 3.  Transportation refers to the movement of product from one location to another. Transportationplays a major role in increasing gross domestic product (GDP). Seven-Eleven Japan used transportation to achieve its strategic goals. 4/2/2013 3
  4. 4. 4/2/2013 4
  5. 5. Shipper (party that Carrier (party thatrequires the moves or transportsmovement of the the product)product between two • Vehicle-related costpoints in the SC) • Fixed operating• Transportation cost cost• Inventory cost • Trip-related cost• Facility cost 4/2/2013 5
  6. 6. AirPackage carrier Truck Rail Water Pipeline Intermodal 4/2/2013 6
  7. 7.  Airlines have three cost components:I. Cost of infrastructure and equipment.II. Cost of labor and fuel.III. Variable cost that depends on passengers or cargo carried. Key issues:I. Identifying location and number of hubs.II. No of planes/route.III. Setting maintenance schedule for planes.IV. Scheduling crew.V. Managing prices and availability at different prices 4/2/2013 7
  8. 8.  Companies like FedEx, UPS, USPS, that carry small packages ranging from letters to shipments of about 150 pounds. Expensive. Rapid and reliable delivery. Small and time-sensitive shipments Preferred mode for e-businesses (e.g., Amazon, Dell, McMaster-Carr) Consolidation of shipments (especially important for package carriers that use air as a primary method of transport) 4/2/2013 8
  9. 9.  Average revenue per ton mile (1996) = 9.13 cents. Average haul = 274 miles Average Capacity = 42,000 - 50,000 lb. Low fixed and variable costs Major Issues • Utilization • Consistent service • Backhauls 4/2/2013 9
  10. 10.  Average revenue per ton-mile (1996) = 25.08 cents Average haul = 646 miles Higher fixed costs (terminals) and low variable costs Major issues: • Location of consolidation facilities • Utilization • Vehicle routing • Customer service 4/2/2013 10
  11. 11.  Average revenue / ton-mile (1996) = 2.5 cents Average haul = 720 miles Average load = 80 tons Key issues: • Scheduling to minimize delays / improve service • Off-track delays (at pickup and delivery end) • Yard operations • Variability of delivery times 4/2/2013 11
  12. 12.  Major global ocean carriers include Maersk, Evergreen Group, Hanjin shipping Co. Limited to certain geographic areas. Ocean, inland waterway system, coastal waters. Very large loads at very low cost. Slowest. Dominant in global trade (autos, grain, apparel, etc.) 4/2/2013 12
  13. 13.  High fixed cost Primarily for crude petroleum, refined petroleum products, natural gas etc. Best for large and predictable demand It has two components:1. Fixed component related to shipper’s peak usage.2. Charge related to the actual quantity transported. 4/2/2013 13
  14. 14.  Use of more than one mode of transportation to move a shipment to its destination Most common example: rail/truck Also water/rail/truck or water/truck Grown considerably with increased use of containers Increased global trade has also increased use of intermodal transportation More convenient for shippers (one entity provides the complete service) Key issue involves the exchange of information to facilitate transfer between different transport modes 4/2/2013 14

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