The Use of different Modes of Transport in Global Supply Chain

Project by:• Nabeel Sarosh• Anand P. Waindeshkar

Guidance by:• Prof. Dr. Bernd Herrler

Agenda1. Objectives

2. Introduction

3. Modes of transportation

4. Roles of transportation in Global Supply Chain

5. Factors (and Parties) Affecting Transportation Decisions

6. Making Transportation Decisions in Practice

7. Challenges

8. Case Study

9. Conclusion

10. Bibliography

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Summary of Learning Objectives:

• What are the different Modes of Transportation in Global Supply Chain?

• What is the role of transportation in a supply chain?

• What are the different network design options & risk involve with it?

• What are roles of IT in transportation & how to make decisions for choosing right mode/s of transportation in global supply chain?

Introduction

What is Global Supply Chain?

• A system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer

• The primary objective of SCM is to fulfill customer demands through the most efficient use of resources, including distribution capacity, inventory, and labor.

Introduction

What is Transportation?

• Transport or transportation is a process which engages in movement of people, animals and goods from one location to another

• Any device used to move an item from one location to another

• Transport is important because it enables trade between people, which is essential for the development of civilizations

Modes of Transportation - Global Supply Chain

• Road (Trucks – Truck Load & Less than Truck Load)

• Rail

• Air

• Package Carriers

• Water

• Pipeline

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Road – TL & TTLRoad transport can be the most flexible option for your international business, especially within the EU. The motorway network is good and crossing national borders is usually quick and efficient.

• Advantages:▫ relatively low cost▫ extensive road networks▫ Schedule & track ▫ consignments can be secure and private

• Disadvantages:▫ Long distances overland can take more time▫ Traffic delays and breakdowns▫ Risk of goods being damaged▫ Toll charges are high in some countries▫ Different road and traffic regulations

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Road – TL & TTLYou can either use your own vehicles, or a carrier. If you operate your own vehicles, you will need to consider licenses, fuel costs, regulations, driver training and tax.

• Truckload shipping:

▫ large amounts of homogeneous cargo▫ Fill an entire semi-trailer or intermodal container.▫ A truckload carrier is a trucking company that generally

contracts an entire trailer-load to a single customer

• Less than truckload (LTL) shipping:

▫ The transportation of relatively small freight. ▫ The alternatives to LTL carriers are parcel carriers or

full truckload carriers. ▫ Parcel carriers usually handle small packages and freight

that can be broken down into units less than 150 pounds (68 kg)

• Different types of carrier, include:

▫ Couriers▫ Hauliers▫ Freight forwarders

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RailsRail transport is a cost-effective and efficient way to move your goods.• Advantages:

1) Fuel Efficiency2) Manpower

efficiency3) Land-use

efficiency4) Speed5) Safety• Disadvantages:1) Cost & Maintenance2) Inconvenience 3) Inflexible4) Expensive than road transport5) Mechanical failure or Industrial an disrupt

services6) Adding to costs and affecting delivery

schedules

These are the conditions under which rail transport is undertaken, including:

Classification of dangerous goods

Dangerous goods lists and any special provisions or exemptions

Testing and use of packaging, intermediate bulk containers, large packaging and tanks

Procedures relating to the consignment

Conditions concerning the conditions of carriage, loading, unloading and handling

Rails

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AirAir transport offers numerous advantages for international trade, depending on the requirements of the organization.

• Advantages:▫ Speed and Frequency▫ Less Packing Required▫ High levels of security for sensitive items▫ Wide range of goods

• Disadvantages:▫ Air transport can involve higher costs than

other options, and is not suitable for all goods

▫ Flights are subject to delay or cancellation ▫ Pay Taxes at each airport you use▫ Fuel and currency surcharges will be added

to freight costs▫ Further transportation may be needed

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WaterIf your business needs to transport large quantities but there is no pressure to deliver quickly, shipping by sea may be suitable.

• Advantages:▫ Ship can carry large volumes at low costs▫ Shipping containers can also be used for

further transportation by road or rail▫ Dominant in global trade (autos, grain,

apparel, etc.)

• Disadvantages:▫ Limited to certain geographic areas▫ Routes and timetables are usually inflexible▫ Tracking your goods’ progress is difficult▫ To pay port duties and taxes▫ Further transportation overland▫ Basic freight rates are subject to fuel and

currency surcharges

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Intermodal• 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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PipelinePipeline transport is the transportation of goods through a pipe. Liquids and gases are transported in pipelines and any chemically stable substance can be sent through a pipeline. • Advantages:

▫ They are ideally suited to transport the liquids and gases.

▫ Pipelines can be laid through difficult terrains as well as under water.

▫ It involves very low energy consumption.▫ It needs very little maintenance.▫ Pipelines arc safe, accident-free and environmental

friendly.

• Disadvantages:▫ It is not flexible, i.e., it can be used only for a few

fixed points.▫ Its capacity cannot be increased once it is laid.▫ It is difficult to make security arrangements for

pipelines.▫ Underground pipelines cannot be easily repaired

and detection of leakage is also difficult.

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Pipeline•Uses of Pipeline:

▫ Sewage, slurry, water▫ Beer pipelines ▫ Transporting crude petroleum and

refined petroleum product including fuels

▫ Oil, natural gas, and biofuels▫ Pneumatic tubes using compressed

air can be used to transport solid capsules

•Types of Pipeline:▫ Gathering pipelines ▫ Transportation pipelines▫ Distribution pipelines

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Package Carriers

• 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)

• International trade is becoming a bigger part of the world's economic activity.

• Any supply chains success is closely linked to the appropriate use of transportation.

• Supply chain also use responsive transportation to centralize inventories and operate with fewer facilities

Roles of transportation - Global Supply Chain

• What do you want to distribute? ▫ Size and weight will affect the cost.

• How quickly does the product need to reach its destination? ▫ This will affect which type of delivery

service you use and the cost - sending goods by air is quicker but significantly more expensive than by sea.

• Where do the goods need to go?▫ For example, Europe has a large rail and

inland waterway network, but you may encounter problems if the destination is especially remote.

•  

Factors (and Parties) Affecting Transportation Decisions

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Design Options for a Transportation Network

• Direct shipping network

• Direct shipping with milk runs

• All shipments via central DC

• Shipping via DC using milk runs

• Tailored network

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Making Transportation Decisions in Practice

• Align transportation strategy with competitive strategy

• Consider both in-house and outsourced transportation

• Design a transportation network that can handle e-commerce

• Use technology to improve transportation performance

• Design flexibility into the transportation network

Challenges

• Demographic trends

• Economic circumstances

• Connectivity of existing networks

• Environmental issues

• Existing transport infrastructure capacity

• Environmental issues

• Travel patterns and trip rates

• Air quality and noise pollution

• Socio-economic profile

Case Study

http://youtu.be/mhGaz_qGizA

Please follow the link

• A manager must account for inventory costs when selecting a mode of transportation

• A mode with higher transportation costs can be justified if it results in significantly lower inventories

• Must be future ready & Innovative

• Work on the Challenges & keep upgrading the transportation standards

Bibliography• Supply Chain Management – Strategy, Planning & Operation (5th

Edition), Authors: Sunil Chopra & Peter Meindl• U.S. Department of Transportation Federal Highway

Administration• Center for Freight & Infrastructure Research &

Education• ^ Perez, Hernan David. Supply Chain Roadmap: aligning supply

chain with business strategy• ^ Oliver, R. K.; Webber, M. D. (1992) [1982]. "Supply-chain

management: logistics catches up with strategy“• Blanchard, David (2010). Supply Chain Management Best

Practices (2nd ed.). John Wiley & Sons• http://viktorwong-logistics.blogspot.de/2010/02/advantages-of-air-

freight.html

THANK YOU!!