TRANSPORTATION

LEARNING OBJECTIVE

 Understand the role of transportation in supply chain

Management.
 Identify various elements of transportation cost.
 Discuss and recognize the relative characteristics of basic
transport modes.
 Identify the emerging role of multi-model transportation.
 Recognize various factors in the selection of transport mode.
 Discuss strategic dimensions design for supply chain
management perspectives.
 Understand transportation management system in the era of
information technology.
 Discuss strategic dimensions pertaining to transportation
system design in supply chain perspectives.
 INTRODUCTION

Transportation makes products available

to the final consumers
It facilitates production by moving
different means of production
It is also considered as a key factor for
planned development
Transport provides ample opportunity for
acceleration of employment and income
 TRANSPORTATION SUPPLY
CHAIN MANAGEMENT

 Transportation plays a significant role in supply

chain processes because products are rarely
produced and consumed in the same location.

 Transportation cost is about 40 per cent of the

total logistical costs
 Functional Requirement
and Transportations

 Transportation has become a key component of any

successful supply chain system due to growing need for
speedier and timely delivery of goods, minimum en-route
handling and documentation to minimize transportation cost
and particularly, total logistical costs.
 Strategic Role Of
Transportation

 It ensures speedier and timely physical movement of

goods from point of inception to point of consumption;
 It creates core competency by preventing stock-out and
customer annoyance;
 It provides protective storage during transit;
 It ensures efficient & better customer service; and
 It fulfils specific service requirements of the corporate
enterprises for improvement of logistical capabilities and
harmonious supply chain relationships.
 ELEMENTS OF
TRANSPORTATION COST

• Transportation cost is one of the major

constitutes of total logistical costs.
•
 Tariff of Transport Mode
 Transit Time Cost
 Obsolescence and Deterioration Costs
 Protective Packaging Costs
 Transit Insurance Cost
 Miscellaneous Costs
 MODES OF TRANSPORT

MODES OF TRANSPORT

AIR WATER SURFACE

INLAND OVERSEAS

ROAD RAIL PIPELINE

 MULTI-MODEL
TRANSPORTATION SYSTEM

 Multi-modal transport is defined as the carriage of

goods by at least two different modes of transport
on the basis of some mutually agreed contract to
move products from one place (commonly from
one country) to another place designated for
delivery.
 Features:
coordination of the different modes of transport;
coordination of documentation; and
coordination of the commercial and physical
aspects of the commercial transaction between
the buyer and the seller.
 Inter-modal
Transportation System
 CONTAINERIZATION

 Containerization refers to the movement of a shipment in a

specially designed metal box (case or a tank, generally called
container) that resembles a trailor without wheels from origin
to destination utilizing two or more different modes of
transportation.
 Features:
 Having permanent character with adequate strength to be
used repeatedly for packaging and transport
 Specially designed to protect goods from breakages and
pilferages during transportation by different modes
 Equipped with fittings provisions for easy handling from
one mode of transport to another.
 CONTAINERIZATION

Advantages:-

 Speedier transportation;
 Lower inventory cost due to reduction of transit time;
 Lower insurance charges due to less chance of
damages, pilferages, and deterioration in physical
attributes during transit;
 Minimum handling cost due to elimination of en-route
handling;
 No protective packaging requirement; and
 Less documentation.
 SELECTION OF
TRANSPORTATION MODE

 Selection of an appropriate transportation mode to

move goods from one place to another is a major
challenge before supply chain managers as such
decision is influenced by a large number of factors.
 Consider the following factors while selecting a
transportation mode:
 The strengths and weaknesses of the firm in terms of
financial resources.
 The prevailing market characteristics, including the
competitive scenario, geographical, and territorial aspect.
 Brand equity of firm’s products in the eyes of customers to
bear with a stock-out situation.
 SELECTION OF
TRANSPORTATION MODE

Product features and suitability to various modes

of transportation such as weight, size, shape,
etc.
Quantity to be transported each time.
Distance to be covered.
Total transportation cost of various modes of
transportation.
Carrier performance in terms of speed,
availability, frequency, reliability, safety, claim
settlement procedure etc
 FLEET MANAGEMENT

 Fleet management refers to improvement

of efficiency of transportation resources and
system as well as enhancement of
customer service quality.

 It includes routing and scheduling of

transport vehicle, appropriate vehicle size
selection, and number of drivers per
vehicle.
 Routing and Scheduling
of Transport Vehicle

 Understanding detailed handling requirements of orders and

unique customer receiving conditions.
 Ability to schedule routes within time framework to meet
customer requirements
 Ability to split loads for the same destination between
vehicles or spread loads over several days
 Ability to schedule both collections and deliveries on a single
journey
 Goods and vehicle safety
 Complex and dynamic route assignments taking into account
detailed traffic and delivery patterns, tracking and tracing
information systems, route bottlenecks, and actual travel
conditions.
 Direct Shipment Network

DESTINATION
SUPPLIER

SUPPLIER 1 Retail Outlet 1

SUPPLIER 2 Retail Outlet 2

SUPPLIER 3 Retail Outlet 3

SUPPLIER 4 Retail Outlet 4

Direct Shipping with Milk Runs
DESTINATION
SUPPLIER

SUPPLIER 1
Retail Outlet 1

SUPPLIER 2
Retail Outlet 2

SUPPLIER 3
Retail Outlet 3

SUPPLIER 4
Retail Outlet 4
 Direct Shipment via Distribution Centre

DESTINATION
SUPPLIER

SUPPLIER 1
Retail Outlet 1

DISTRIBUTION
SUPPLIER 2 CENTRE Retail Outlet 2

SUPPLIER 3
Retail Outlet 3
 Shipping via Distribution
Centre Using Milk Runs

SUPPLIER DESTINATION PORT

SUPPLIER 1
Retail Outlet 1

SUPPLIER 2 DISTRIBUTION
Retail Outlet 2
CENTRE

SUPPLIER 3
Retail Outlet 3

Retail Outlet 4
 Appropriate Vehicle Size Selection
(Small vs. Large)

Larger transport capability contributes in

the minimization of transport cost per unit
The economic rationale for use of large
trucks is largely conditioned to availability
of bulk shipments.
This option is most suitable for those
industries that prefer low value high
volume shipments like steel, cement,
fertilizers, etc.
 Number of Drivers per Vehicle
(Single vs. Double)

Most of the transport companies are using

double drivers per vehicle instead of one.

Transit time is almost double in case of

single driver per vehicle
 TRANSPORTATION MANAGEMENT
SYSTEM

 Transportation management system is a software programme that

automates many key transportation functions, using analytical
capabilities within the software to optimize the best shipping
choices, carrier selection, load building, fleet management,
tracking shipments, scheduling drivers, and determining cost of
shipment between two points.

 Functions of transportation management systems

 Transport planning
 Vehicle routing and scheduling
 Delivery execution and shipment tracking
 Performance management