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Wk 3_Role of Transportation in the supply chain.pptx

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Wk 3_Role of Transportation in the supply chain.pptx

  1. 1. Transportation in Supply Chain Management
  2. 2. Introduction of Transportation • Transportation is an indicator which measures the economic, social and commercial progress of a country • This is the most visible part of Logistics Operation • It shares significant portion of the total supply chain cost
  3. 3. Why transportation • Transportation is backbone of logistics • effective transport is vital for: • achieving economic and social objectives • direct benefits to people • direct benefits businesses • the economy overall • support innovation • help people access jobs, and • attract new firms • Having more control over transport reduce uncertainty • ensuring integration of transport, economic development and infrastructure.
  4. 4. Evolution Of Transportation System • Various Modes of Transportation from the early civilization but capacity and speed were the constraints of that mode • With advent of Industrial Revolution, resultant in development of four main modes of transportation • Road • Rail • Air • Sea (Water)
  5. 5. Transportation Infrastructure • Serves two purpose- one is product movement and other is In-transit product storage • Movement is subjected to availability and accessibility to infrastructure • The guiding principle for choosing the transportation mode is the least cost per unit weight / volume of the product moved over the unit distance
  6. 6. Transportation Infrastructure Road • One of the promising mean • Suitable for short and medium distances where other means are unable to reach • It provides door to door service which is not possible with others • Connects trade and commerce of rural areas with urban markets
  7. 7. Transportation Infrastructure Railways • Main source of supplying essential commodities, transporting them through length and breadth of the country Sea • The shipping industry is divided into several parts such Liner Service, Tramp Shipping, Industrial Services and Tanker Operations • The shipping fleet across the world comprises tankers, dry bulk carrier, container ships and special vessels Air • Compared to all other modes, air transport is less hazardous in nature • Air transportation is a costly affair and used for highly perishable commodities & items whose life is short and value is high
  8. 8. Transportation Infrastructure Inland Water Transportation (IWT) • IWT is an eco-friendly transportation system comprising rivers, lake and channel • IWT offers flexibility and cost effective mode of transportation • It is less vulnerable and fuel economical Pipelines • Pipeline as a mode of transportation was first developed in 1870 by Samuel for transporting petroleum • The basic advantage of pipeline is, it reduces operational cost but initial investment is high • It is also an eco-friendly transportation mode Ropeways • This type of mode is used for hilly areas • Also bulk material can be moved quickly over short distances
  9. 9. Freight Management • The selection of transportation mode depends on the product characteristics and customer service requirements • Cost, speed and reliability are the most important factors to select from the available transportation options Speed And Availability Of Services • Time taken to move products from one facility to another and finally to the customers • In some cases, speed is a major constraint in speedy delivery where necessitates the usage of Inter-modal transportation system
  10. 10. Inter-modal transportation system
  11. 11. Freight Management Reliability • The ability of the carrier to deliver the shipment in good condition in stipulated time manner Capability • It is defined as the ability of a carrier to accommodate the cargo in size, weight and quantity for transportation • In such movements, special arrangements are required to handle the products Frequency • Refers to the number of schedule movements of the carrier between pairs of location
  12. 12. Factors Influencing Freight Cost • The objective is to achieve reduction in freight cost. Freight cost is influenced by the following factors Volume • With the economy of scale, the cost of operations is distributed over large volumes resulting into lower per unit cargo movement • Emphasis of using Full Truck Load (for the same cost) Distance • The variable cost is directly proportional to the distance covered by the vehicle irrespective of the load carried
  13. 13. Factors Influencing Freight Cost Product Density • The freight cost depends on the weight per unit volume of product Product Shape • The size and shape of the product pose difficulty in handling and also affect the speed of its movement • For such heavy payloads, trailer are deployed along vehicle and costs heavy Product Handling • For managing cargo of odd shapes, require special arrangements that increase overall transportation cost Product Type • Perishable items, pharmacy products and temperature sensitive products required especial transportation arrangement • Such Products attract additional transportation charges Besides, the factors above, Market Dynamics plays a pivotal role in deciding the cost
  14. 14. Transportation Networks Point to Point Networks • Quite common for long distance • Point of Origin and Destination is fixed Multiple Delivery Networks • This type of operations is used for round trip with multiple pick-ups and drop points Trans-Shipment Networks • Trans-shipment points are two local are networks having a common point where loading and unloading takes place for freight consolidation or break- bulk. Example is Distribution Center
  15. 15. Transportation Networks Nodal Networks • These types of networks are used for multi-modal transportation system and include multi-stops trans-shipment pickup and delivery Hub And Spoke Networks • Hub and spoke network arrangement is like a hub and spoke of the wheel • The Hub acts like a central feeder points to the distribution centers
  16. 16. Route Planning • For conservation of fuel and time resources, route planning exercise is of utmost importance • Route planning may be Advisory or Statutory • Advisory routes are those with less operational problems. They are connected to the markets. They offer immense return freight business • Statutory routes are those which legally prohibit the truckers to use the routes other than designated routes. They are made for specific material movement • The general plan is to make the transportation at the lowest possible cost without compromising speed and reliability
  17. 17. Logistics Solutions • There are some organizations from the transportation segment offering timely freight services across the length of the country • The other segment is warehouse service providers • The clearing and forwarding agents are expert in Import / Export Cargo operations • All segments have expertise in their domain ; however, lacks holistic solution • The task of integrating various segments to provide a comprehensive service from a single window is known as Logistics Solutions
  18. 18. 10 tips on to reduce logistics costs 1. Understand the true costs of sourcing overseas 2. Focus on eliminating the variability from transit times 3. Tariff engineering 4. Consolidate 5. Informed decision-making 6. Sometimes insurance doesn’t pay 7. Automate complianceprocesses 8. Control your express shipping costs 9. Planes, trains and automobiles 10. Be aware of non-tariff trade barriers
  19. 19. Understanding the impact of transportation
  20. 20. Key points 01 Introduction 02 Transportation role as a supply chain driver 02 Components of Transportation decisions
  21. 21. Introduction • Transportation strategy in tune with the overall supply chain strategy. • Facility, inventory, and transportation are inter-related decisions. • It provides opportunity for growth in the competitive environment. • Moves the product between stages in the supply chain. • Impact on responsiveness and efficiency • Creating time and place utility
  22. 22. Transportation role as a supply chain driver Supply Chain Driver Responsiveness Efficiency Transportation Frequent shipments Fast and flexible mode Few large shipments Slower and cheaper modes
  23. 23. Components of Transportation decisions • Design of transportation network • Choice of transportation mode
  24. 24. Reference: • Principles of Supply Chain Management- A balanced approach( J.D. Wisner, G.K Leong, Keah-Choon Tan). • Strategy, Planning, and Operations (7th Edition, Sunil Chopra)
  25. 25. Role of Transportation in supply chain Legal forms of transportation
  26. 26. Legal Forms of Transportation- Transportation service companies are classified legally as either common, contract, exempt, or private carriers. • Common carriers • Contract carriers • Exempt carriers • Private carrier 26
  27. 27. Common carriers Common carriers- offer transportation services to all shippers at published rates between designated locations without discrimination. 27
  28. 28. Contract carriers Contract carriers- not bound to serve the general public. Contract carriers serve specific customers under contractual agreements. 28
  29. 29. Exempt carriers Exempt carriers- exempt from regulation of services & rates & if they transport certain exempt products like produce, livestock, coal, or newspapers. 29
  30. 30. Private carrier Private carrier- not subject to economic regulation & typically transports goods for the company owning the carrier. 30
  31. 31. Concept of LTL & FTL
  32. 32. Key points 01 Introduction of mode of shipping 02 LTL Shipping – Pros and Cons 03 FTL Shipping – Pros and Cons
  33. 33. Introduction • The mode of shipping that is best for you depends on: • the size of your shipment, • the budget, • the sensitivity of the freight, • and the time frame for delivery.
  34. 34. Less Than truck Load Shipping PROS CONS You don’t have to pay for an entire truck when you can share the cost of one with other shippers LTL freight may not cover all routes within the country as volumes may not be available LTL shipping may suit you whether you are a conglomerate or a mom-and-pop store It may not be the best choice for handling sensitive cargo due to possible multiple handling along the route, as the freight is being transported from and to multiple terminals Shipping is possible to various locations around USA and Canada, and cross-border, with hundreds of carriers offering this service It may not be the best choice for guaranteed time-sensitive cargo as your freight might have to wait a while for carriers to consolidate cargo on that particular route Your freight can be secured and safely transported using pallets or skids Rates may not be the best for cargo of more than 6-8 pallets, which may be more cost-effective if shipped as an FTL It’s a cost-effective transportation option for any cargo less than 6 pallets Not all carriers offering this service have their own hubs and they may depend on 3 rd party hubs, which could increase the shipment costs
  35. 35. Full Truck Load Shipping PROS CONS It’s the best option to handle high value cargo as you will have a dedicated truck to yourself Shipments could cost considerably more than LTL freight It’s the most suitable option for handling sensitive cargo due to the reduced handling of the goods at transit points LTL carriers can usually offer better rates than FTL carriers because of economies of scale and various partnerships they have with other carriers It’s a better option if you require guaranteed timely delivery – you get a dedicated truck which doesn’t need to wait for consolidation of cargo FTL carriers may not provide value added services such as handling services at pickup or delivery points It’s a cost-effective method of transportation if you have more than 6-8 pallets to ship FTL carriers may be restricted in terms flexibility of cargo movement – e.g. if a truck breaks down and the goods are stranded You can get quicker and more accurate rate quotes from carriers as they may have set rates based on your FTL weight and locations FTL shipping does not offer the opportunity for E- Commerce type of shipments where the volumes may be smaller and specific to the cargo or business
  36. 36. Reference: • https://www.freightera.com/blog/ltl-vs-ftl/
  37. 37. Role of Transportation in supply chain Role of containerization in transportation
  38. 38. Intermodal container • An intermodal container is a large standardized shipping container, designed and built for intermodal freight transport, meaning these containers can be used across different modes of transport – from ship to rail to truck – without unloading and reloading their cargo.
  39. 39. Intermodal container (Cont.) • Intermodal containers are primarily used to store and transport materials and products efficiently and securely in the global containerized intermodal freight transport system, but smaller numbers are in regional use as well. • These containers are known under a number of names, such as simply container, cargo or freight container, ISO container, shipping, sea or ocean container, container van or(Conex) box
  40. 40. Containers Specifications
  41. 41. ULDs - Containers
  42. 42. Role of Transportation in supply chain Tracking and Tracing
  43. 43. Tracking and Tracing • Ability of a supply chain at any given time, to see where something is, how long it might take to reach a particular destination, and also how fast it’s traveling is called tracking and tracing. • Cargo monitoring in real-time to collect reliable data an to improve visibility 1. Improved Fleet Management. 2. Increased Driver Safety and Performance. 3. Better Security. 4. Enhanced Operational Efficiency. 5. Boosted Customer Service. 6. More Detailed Cost Analysis. 7. Ultimate Transparency. 43
  44. 44. Tracking and tracing 44