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Global Supply Chain > 6.2 Transportation in a SC > Flashcards

6.2 Transportation in a SC Flashcards

1
Q

Role of transportation

A
  • important SC driver
  • to move products from one location to another
  • products are rarely produced and consumed in the same place
  • potential for gaining competitive advantage (producing at lower cost)
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2
Q

Parties involved in transportation (4)

A
  • carrier
  • shipper
  • owners and operators of transportation infrastructure
  • transportation policy makers
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3
Q

Carrier

A
  • moves or transports items
  • make investment decisions regarding equipment
  • goal: not to waste space/send full truckloads or charge high prices to send half a truck
  • maximize return on investment
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4
Q

Shipper

A
  • requires the movement between two points in a supply chain, demand transportation
  • minimises total cost using transportation
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5
Q

Owners and operators of transportation infrastructure

A
  • mostly public
  • maintenance of the existing infrastructure (rails/stations)
  • investment in further capacity (rails/stations)
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6
Q

Transportation policy makers

A
  • prevent abuse of monopoly power
  • fair competition
  • balance environmental, energy, and social concerns
  • governmental
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7
Q

Modes of transportation

A

air, road (truck), rail, water, pipeline
or a combination of these modes: package carriers, intermodal

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8
Q

Air transport

A
  • fast and expensive
  • small, high-value or time-sensitive items
  • goal: maximise the revenue of every flight
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9
Q

Air transport: costs/decisions

A

costs:
- fixed infrastructure and equipment (airports, planes)
- labour and fuel
- variable - passenger/cargo
decisions:
- location/number of hubs
- fleet assignment
- maintenance schedules
- crew scheduling
- prices and availability

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10
Q

Road transport

A
  • significant fraction of good moved by road
  • more expensive than rail but more advantageous through door to door shipping and shorter delivery time
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11
Q

Two segments in trucking industry

A

Truckload (TL):
- low fixed cost
- imbalance between flows: truck returns empty, creates traffic and difficult to manage in large cities
- goal:high revenue while minimising trucks’ idle and empty travel time
Less than truckload (LTL)
- priced to encourage shipments in small lots
- shipments that are too large to be mailed
- take longer than TL because the orders are merged from different companies, more stops needed

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12
Q

Rail transport

A
  • move commodities over large distances
  • high fixed costs in equipment and facilities (big investment)
  • long transport time
  • ideal for heavy, low-value, not time sensitive shipments
  • scheduled to maximise utlliization (if part of the train or rail breaks, take long time to fix)
  • typically not scheduled but “built”: train leaves once there are enough cars to constitute the train
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13
Q

Water transport

A
  • limited to certain geographic areas, ocean, inland waterway system, costal waters
  • ideal for very large loads at very low cost
  • very cost effective but slowest transport
  • dominant in global trade
  • ships are always increasing in size to be cheaper per container
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14
Q

Pipeline transport

A
  • high fixed cost
  • primarily for liquid products
  • best for large and stable flows
  • cheaper for local companies to receive products this way
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15
Q

Package Carriers transportation

A
  • transport compaies such as FedEx, UPs, DHL
  • small and time-sensitive shipments
  • rapid and reliable delivery
  • expensive
  • rich network of customers worldwide, they can combine orders to different cities
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16
Q

Package Carriers: key issues

A
  • location of transfer points: warehouse or stations to merge
  • capacity of transfer points
  • information capability to facilitate and track package flow
  • scheduling and routing of the delivery trucks
17
Q

Intermodal transportation

A
  • use of more than one mode of transport
  • grown considerably with increased use of containers
  • key issue: exchange of information to facilitate transfer between different modes (share info from trucks/trains to port operators)
  • you only move the containers as a whole, not the units inside
18
Q

Design options for a transportation network

A
  • direct shipment network to single destination
  • direct shipping with milk runs
  • all shipments via intermediate distribution center with storage
  • all shipments via intermediate transit point with cross-docking
  • shipping via using milk runs
19
Q

Direct shipment network to single destination

A
  • directly shipping to customer
  • when demand at buyer is large enough
    pros: no routing challenge, elimination of intermediate warehouses, simple operation
    cons: high inventories
20
Q

Direct shipping with milk runs

A
  • full truck that drops smaller quantities in different locations
  • for small quantities and locations hat are close to each other
  • routing can be a challenge
    pros: lower transportation costs, lower inventories
    cons: increase coordination complexity
21
Q

All shipments via intermediate distribution center with storage

A
  • ship items though intermediate point
  • can be used to merge items
  • can be used to store items while waiting for a truck going to the same location
    pros: lower transport cost
    cons: increased inventory cost, increased handling cots at DC
22
Q

All shipments via intermediate transit point with cross docking

A
  • supplier send their shipments to an intermediate point
  • they are cross-docked and sent to buyer location without storing them
  • very good information system needed
    pros: low inventory requirement, lower transport cost
    cons: increased coordination complexity
23
Q

Shipping via DC using milk runs

A

item sent to DC, then truck drops smaller quantities in several locations
pros: lower outbound transportation cost for small lots
cons: further increase in coordination complexity

23
Q

Transportation and inventory cost trade off

A
  • choice of transportation mode: cheaper modes, longer lead time, larger minimum shipment quantity
  • inventory aggregation: save on safety inventory, but higher transportation costs
24
Q

Transportation cost and responsiveness trade off

A
  • transportation cost is highly linked to the degree of responsiveness
  • quick and expensive: responsive
  • slow and cheap: efficient
24
Q

Role of IT in transport

A

IT assists in
- identification of optimal routes by minimising costs subject to delivery constraints
- GPS applications
- issues: routing, maximising utility

25
Q

3 main risks to be considered in transportation

A
  • risk that shipment is delayed
  • risk of disruptions
  • risk of hazardous material
26
Q

Risk mitigation strategies

A
  • decrease the probability of disruptions
  • alternative routings
  • modified containers for hazardous materials
    low risk transport models

Global Supply Chain (9 decks)

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