ROLE OF TRANSPORTATION IN THE SUPPLY CHAIN

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ROLE OF TRANSPORTATION IN THE SUPPLY CHAIN

• Back to the Future

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AGENDA

• INTRODUCTION/IMPORTANCE (10.1)
• FACTORS AFFECTING (10.2)
• MODAL CHARACTERISTICS (10.3)
• DESIGN OPTIONS (10.4)

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AGENDA

• TRADE-OFFS (10.5)
• TAILORED DESIGNS (10.6)
• SUMMARY AND CONCLUSIONS (10.8)

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INTRODUCTION

• Significant Part of
• Cost
• Time
• Including
• Direct
• Indirect

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INTRODUCTION

• Increasing Emphasis
• Timeliness
• Responsiveness
• Less Emphasis on Rates
• Becoming
• Asset Management
• Information Management

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INTRODUCTION

• Modal Shifts
• Wholesale to Retail
• E-commerce
• Globalization
• Centralization
• JIT, et. al.

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AGENDA

• FACTORS AFFECTING (10.2)

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FACTORS

• Carrier Decisions
• Vehicle Related
• Fixed
• Common
• Proportional to fleet size

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FACTORS

• Carrier Decisions
• Fixed Operating Cost
• Terminal operations
• Fixed
• Common
• Proportional to operating facilities

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FACTORS

• Carrier Decisions
• Trip-Related
• Primary Costs Are Fuel And Labor
• Variable
• (frequently) Common

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FACTORS

• Carrier Decisions
• Quantity-Related
• Loading And Unloading
• Some Portion Of Fuel
• Variable
• Common and Direct

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FACTORS

• Carrier Decisions
• Overhead
• Planning
• IT/IS
• Other

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FACTORS

• Shipper Decisions
• Transportation Cost
• Rate
• Variable

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FACTORS

• Shipper Decisions
• Inventory
• Types
• In-transit
• Cycle
• Safety
• Fixed in short run
• Variable in long run

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FACTORS

• Shipper Decisions
• Facility Costs
• DC
• Other field warehouses
• Fixed in short run
• Variable in long run

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FACTORS

• Shipper Decisions
• Processing Costs
• Loading and unloading
• Others
• Variable

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FACTORS

• Shipper Decisions
• Service Level Costs
• Lost sales
• Variable

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AGENDA

• MODAL CHARACTERISTICS (10.3)

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MODAL CHARACTERISTICS

• Air
• Small
• Fast
• Reliable
• little LD
• High Rates

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MODAL CHARACTERISTICS

• Small Package Express
• Fast
• Reliable
• Little LD
• Door to door
• High rates

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MODAL CHARACTERISTICS

• Truck
• TL (Relative to LTL)
• Large
• Fast
• Little LD
• Door to door
• Low rates

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MODAL CHARACTERISTICS

• Truck
• LTL (Relative to TL)
• Small
• Slow
• More LD
• Door-to-terminal/terminal-to-terminal/terminal-to-
  door
• High rates

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MODAL CHARACTERISTICS

• Rail
• Bulk/wholesale
• Slower
• Less reliable
• More LD
• Lower rates
• Terminal-to-terminal

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MODAL CHARACTERISTICS

• Water
• Types
• Ocean Going
• Off-shore Domestic
• Intra-costal
• Inter-costal
• River and Canal
• Great Lakes

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MODAL CHARACTERISTICS

• Water
• Bulk

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MODAL CHARACTERISTICS

• Water
• Domestic
• Slow
• Less reliable
• Greater loss and damage
• Terminal-to-terminal
• Very low rates
• Restricted accessibility

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MODAL CHARACTERISTICS

• Water
• International
• Primary means of transport
• Most all cargoes
• Increasingly competitive on time

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MODAL CHARACTERISTICS

• Pipeline
• Restricted commodities
• Very low rates
• Bulk

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MODAL CHARACTERISTICS

• Intermodal
• Containerization
• Globalization

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AGENDA

• DESIGN OPTIONS (10.4)

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DESIGN OPTIONS

• Direct

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DESIGN OPTIONS

• Direct
• Tradeoffs
• Inventory
• Facilities
• Transportation
• Characteristics
• Simple
• Fast

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DESIGN OPTIONS

• Direct With Milk Runs

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DESIGN OPTIONS

• Direct With Milk Runs

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DESIGN OPTIONS

• Direct With Milk Runs
• Characteristics
• Eliminates Consolidation Centers
• Minimizes LTL
• Retain Customer Service

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DESIGN OPTIONS

• Central DC

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DESIGN OPTIONS

• Central DC
• Inbound Only
• Bulk to DC
• Minimize LTL
• Balanced
• Crossdocking
• Lower Rates
• Faster Times

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DESIGN OPTIONS

• Central DC with Milk Runs

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AGENDA

• TRADE-OFFS (10.5)

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Tradeoffs

• Transportation and Inventory

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Tradeoffs

• Transportation and Inventory

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Tradeoffs

• Transportation and Inventory

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Tradeoffs

• Transportation and CSL
• Temporal Aggregation
• Lower Rates
• Lower Service

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AGENDA

• TAILORED DESIGNS (10.6)

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Tailored Transportation

• By Customer Density and Distance

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Tailored Transportation

• By Customer Size
• Large TL
• Small - LTL

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Tailored Transportation

• By Customer Size
• Large TL
• Small - LTL

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Tailored Transportation

• By Product Demand and Value

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SUMMARY AND CONCLUSIONS(10.8)
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Decisions in Practice

• Align with Competitive Strategy
• Consider Private and Outsourcing
• Design System to handle E-commerce
• Use Technology to Enhance Performance
• Design Flexibility into System