This power point is about the introduction to supply chain, different modes of transport of goods also the selection of the best networking design like milk run, direct transport, distribution center, cross docking

1. BY:
Kavya Sood 112051
Abhishek Gupta 112003
Amarendra Kumar 112011
Arun Samadhiya 112024
Arpit Saraf 112023

2. It encompasses all activities involved in the
transformation of goods from the raw material stage to the
final stage, when the goods and services reach the end
customer.
SUPPLIER CUSTOMER

3. Supplier Manufacturer Distributor Retailer Customers

4. Supply chain mainly includes:
 Material flow
 Information flow
 Financial flow
Supply chain management is mainly facilitated by:
 Processes
 Structure
 Technology

5.  High logistics cost.
 Poor condition of roads.
 Poor state of logistics infrastructure.
 Complex taxation structures.
 Complex distribution setups.

6. Mumbai Dabbawallas:
• Deliver the home made food to middle class officers using
an effective coding system, less reliability on technology
and following a six-sigma approach.
Amul:
• An effective supply chain started for milk supply( a
perishable product) by creation of village co-operatives &
district unions which would take it to company processing
plant .Further it is marketed to the customers.

7. Consumer Expectations -Power lies with the consumer
Competition
Government Regulations – Trade barriers
Environment Issues – Waste minimization
Technology

8. Transportation refers to the movement of product from one
location to another as it makes its way from beginning of a
supply chain to the customer. It is a significant link between
various stages of in the supply chain. Transportation related
decisions significantly affect the cost as well as
responsiveness of the supply chain. For e.g. Faster
transportation allows greater responsiveness but lower
efficiency.

9. The key transportation decisions made by a firm are :
 Selection of transportation strategy- making plans to
make the product reach to geographically dispersed
markets in a cost effective way.
 Choice of transportation mode – Selecting feasible mode
of transport.

10. The major drivers of transportation decisions are :
 Transportation cost structure
 Impact of product and Demand characteristics on system
cost:
 Value Density
 Demand Characteristics

11.  Transportation cost is function of distance and the quantity of goods
shipped.
 With increasing distance the rate of increase of costs will go down, as
the utilization of vehicle is higher. This is known as economies of
distance in transportation.
 Therefore truck operators always prefer full truck load (FTL) .
 In case of low capacity utilization different orders can be compiled but
this can increase transaction costs.
 A higher load will allow the transport operator to use a bigger vehicle,
which results in reduction of costs per ton of shipment

12.  Value Density- It captures the ratio of rupee value of the product to its
weight. It shows the importance of transportation cost in the overall
product cost.
 For products with higher value density company can use faster and
expensive mode of transport, as transportation cost is relatively small
fraction of product cost.
 For a low density product company has to use a slower mode of transport
mode of transport because a small increase in transportation – related
cost can affect the profitability of the product in a significant way.
 For a few bulky products transportation cost is captured by physical
volume. For e.g. cycles and water tank.

13.  It captures the volume of demand for the product and nature of
uncertainty associated with the product demand.
 Higher the volumes of demand, bigger is the batch sizes to be transferred
from plant to market.
 Higher demand uncertainty affects the amount of safety stock carried by
a firm.
 For longer lead times and slower mode of transport, firms end up with
high amount of safety stocks for products with high demand uncertainty.
 For high uncertainty products company has to use faster mode of
transport and use slower mode of transport for products that have stable
demand

14. The supply chain typically uses a combination of the following
five modes of transportation:
1 . RAIL
2 . ROAD
3 . WATER
4 . AIR
5 . PIPELINE

15.  Ideal mode of transportation for:
I. Low value density products
II. Products not sensitive to time
 Suffers from long and unreliable lead time.
 In India, the share of railways in freight has been
gradually declining over the last 30 years.

16.  Trucks are dominant mode of transport in India.
More expensive than rail but it offers the advantage of
door to door shipment and shorter delivery time.
 Truck freight rates in India are among the lowest in
the world.

17.  Cheapest mode of transport.
 Slowest mode of transport.
 Considerable delays at ports.
 Used extensively for international cargo.

18.  Fairly fast but expensive.
 Effective option only for time sensitive and high value
density goods.

19.  Goods specific- used for bulk transportation of
predicable volumes of specialized products like
petroleum products and natural gas.

20. Performance of 4 major modes of transport can be compared
according to the given figure:

22. Plant 1
Plant 2
Plant 3
Market 1
Market 2
Market 3

23.  In this method the good is directly transported from
producing company to the on market selling company
(involves 9 trips).
 Work well if each product line has high volume and less
demand uncertainty.
 To get economy of scale in transport, each trip involves
FTL shipment, resulting in high cycle stock at the
warehouses.
 Cheapest networking mode for transporting goods.
 Example: polymer industries.

24. Plant 1
Plant 2
Plant 3
Market 1
Market 2
Market 3

25.  It is a method followed for distribution on the basis of
demand. It involves only 3 trips.
 Generally done for perishable product i.e. that have
generally less shelf life and cannot be stored for long time.
 Initially run with FTL then further run on HTL.
 The method involves highest transportation cost.
Example:
 Transportation of loose milk by mother dairy.

26. Plant 1
Plant 2
Plant 3
Market 1
Market 2
Market 3
Distribut
ion
Centre

27.  The mode of shipping in which the good is directly transported
to the distribution centre and then further good are transported to
the market. It involves 6 trips.
 The firm is able to aggregate its stock at a particular depots.
 Similarly for the depot, instead of dealing with the three supplier
one has to deal with 1 supplier.
 Transportation cost is in-between Direct shipping and Milk run
model.
 Example:
Mobile phone transported by Nokia from Delhi to Chennai.

28.  Cross docking involves coordinating the six trips in such a
way that goods unloaded from incoming vehicles at the DC
are straightaway loaded on to the trucks that originate from
DC.
 Firm need not to have inventory stock at the warehouses.
 This is possible only if a firm is working in an environment
of predictable volume. And lower uncertainty in transit time.

29. • DIRECT SHIPPING
• MILK RUN FROM EACH PLANT
• DISTRIBUTION NETWORKING DESIGN

30. 120
100
80
60
40
20
0
X-Values
0 50 100 150 200 250
Y-Values
B
C
X
Y
Z
A
O
DISTANCE (Km)

31. company (X,Y) Coordinate Trip Distance(Km)
A (0,100) AX, BY, CZ 200
B (0,50) AZ,CX 223.6
C (0,0) AY,BX,BZ,CY 206.15
X (200,100) XY,YZ 50
Y (200,50) AO,CO,OX,OZ 111.8
Z (200,0) BO,OY 100
O (100,50)

32. To calculate the annual shipping cost we need to calculate total distance
travelled:
 Distance travelled per cycle=(2XA+2AY+2AZ)x3
=(200x2+206.15x2+223.6x2)x3
=3778.5 Km
 Travel cost per cycle= 3778.5x5
 =Rs 18,892.5/-
 Frequency of transport= 1,and holding cost=0
 So, TAT cost=Rs18,892.5/-
 Annual inventory carrying cost= Rs3,000/-
Annual total cost =Rs21,892.5/-

33.  To calculate the annual shipping cost we need to calculate total
distance travelled:
 Distance travelled per cycle=(AX+XY+YZ+AZ)x3
=(200+100+223.6)x3
=1570.8 Km
 Frequency of transport= 3 and holding cost=0
 Travel cost per cycle=1570.8x3x5
 TAT cost =23,562/-
 Annual Inventory carrying cost=1,000/-
Total cost= 24,562/-

34.  To calculate the annual shipping cost we need to calculate total
distance travelled:
 Distance travelled per cycle =(AO+OX+AX)x3
 =1,270.8 Km
 Frequency of transport=3 and holding cost=Rs 2,000
 Travel cost per cycle=(1270.8x3x5)+2000
 TAT cost =Rs 21,062/-
 Annual Inventory carrying cost=Rs 1,000/-
Total cost=Rs 22,062/-