Transportation in Supply Chain

Management

Muhammad Haikal Bin Ab Rahim
MH132024
Content
Supply Chain defined
Transportation defined
Modes of transportation
Strengths and weaknesses of each mode
Pricing
Role of IT in transportation
Making Transportation Decision
Summary
Supply Chain
All facilities, functions, activities,
associated with flow and
transformation of goods and services
from raw materials to customer, as
well as the associated information
flows.

An integrated group of processes to
source, make, and deliver
products.
Transportation
Transportation involves the physical movement of
goods between origin and destination points (of
goods and services) from one place to another
Transportation is necessary to:
a)Move purchased goods from suppliers to buyers
b)Move finished goods to the customer.



Transportation is what creates the efficient flow
of goods between supply chain partners.

Supply
Chain for
Denim
Jeans
Time utility- products are delivered at the right
time.
Place utility- products are delivered to the
desired location.

Transportation & storage, getting through customs,
delivering to foreign locations.

Firms are often use outside agents or third-party
transportation services to work in foreign locations.

The Objective of Transportation- Satisfying
customers while minimizing costs & making a profit
contribution.


Poor transportation management can
bring a supply chain to its knees!!
Impact of Transportation on Supply Chain
Management
Modes of Transportation
Trucks
Air
Rail
Water
Pipeline
Package Carriers
Trucks
Less-than-truckload (LTL) carriers or truck-load (TL)
carriers. LTL carriers move small shipments & fees are
higher.
Specialized carriers transport liquid petroleum,
household goods, building materials, & other specialized
items.
Accessibility trucks are able to access many more
locations than planes or railroads.
Regional truck lines are excellent for small, frequent
shipments that require follow-up or expediting. They are
most effective over short distances.
Lower costs
Accessibility (flexible)
Small, frequent shipments


Air Carrier
Air is considered a premium mode of
transportation because of the speed of delivery
and the low impact on the cargo (items are less
likely to be broken than those shipped by rail or
truck)
Airplanes are also able to cover much longer
distances in a short time
Savings resulting in speed of delivery (time) but
outweigh extra costs
-Premium transportation
-Speed delivery
-Range


Rail Carrier
Lowest overall cost per
unit weight
Consistent time
schedule
Recommended with
most commodity types
Weather



Railroads cost much less than other modes when
shipping large quantities or bulky goods over long
distances. Trains also run on a more consistent time
schedule than trucks or airlines.

Trains are often able to travel in weather that would
slow or stop trucks and airplanes.

Rail
Disadvantages
Inflexibility limited as far as areas in which they can
travel (tracks must be present) (rail station-loading point)
Potential damage of goods (rail condition)
Ineffective with small shipments
Water (Ships) Carrier
Ships are one of the oldest methods of
transporting goods and they are virtually the only
way to transport large volumes of good over-
seas.
Although this method is slower than shipping by
air, a ship can carry much more cargo than an
airplane. Costs are reduced significantly by
choosing ships over air transport.
-Large volumes
-Long distances
-Slower than air travel (time)
-Limited access (port)
Pipeline
Transport of homogeneous
materials
Lower transportation costs
than other modes
Higher initial costs
Unable to transport a variety
of materials

Pipelines are ideal for materials such as water, oil, and
gas. Pipelines have high initial costs since they must
be built but once they are constructed transportation
costs are much lower than other modes.

Package Carrier
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)
Consolidation of shipments
Pricing
Handling characteristics
Distance freight is moved
Weight of freight
Costs inversely related to speed of service
Role of IT in Transportation
The complexity of transportation decisions
demands to use of IT systems
IT software can assist in:
Identification of optimal routes by minimizing costs
subject to delivery constraints
Optimal fleet utilization
GPS applications
Making Transportation
Decisions in Practice
Align transportation strategy with competitive
strategy
Consider both in-house and outsourced
transportation
Design a transportation network that can handle
e-commerce (deal with international market)
Use technology to improve transportation
performance (eg. Drone)
Design flexibility into the transportation network
Summary
Each mode of transportation has its own
strengths and weaknesses
The effectiveness of each mode depends on
several factors including distance, price, and
timeliness