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

1. Transportation
in a supply chain
PART-B
UNIT-6
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2. The role of transportation in the supply chain
Factors affecting transportation decisions
Modes of transportation and their performance characteristics
Design options for a transportation network
Trade-offs in transportation design
Tailored transportation
Routing and scheduling in transportation
Making transportation decisions in practice
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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.
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4. 4/2/2013
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5. Shipper (party that Carrier (party that
requires the moves or transports
movement of the the product)
product between two • Vehicle-related cost
points in the SC)
• Fixed operating
• Transportation cost cost
• Inventory cost • Trip-related cost
• Facility cost
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6. Air
Package carrier
Truck
Rail
Water
Pipeline
Intermodal
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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
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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)
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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
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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
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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
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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.)
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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.
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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
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