Supply Chains: Transportation & Movement - Unit 5

Unit 5 Transportation and Movement in Supply Chains

• Deals with transportation and movement in supply chains.

Unit Goals

• Cognitive goals include loading, maneuvering, and handling area, procedures related to the carriage of goods and associated accidents, and international shipping (methods, procedures, and terminology).
• Performance goals include examining shipping and delivery documents, and using multimodal transport.

Unit Objectives

• Remembering objectives include identifying the different modes of transportation, and key elements in international shipping.
• Understanding objectives include explaining the importance of transportation within a supply chain, and describing the various modes of transportation
• Applying objectives include demonstrating the ability to select an appropriate model of transportation based on the type of goods and the needs of the organization, and demonstrating the ability to identify appropriate types of documentation for each cargo.
• Analyzing objectives include analyzing the main differences between different modes of transportation and selection considerations.
• Evaluating objectives include determining the appropriate type/mode of transportation depending on the type of goods and scope of operations.
• Creating objectives include generating ideas about main challenges facing organizations in transportation and movement within a supply chain and how to tackle these challenges.

Lesson 1: Concept and Types of Transport Networks

• Covers supply chain and logistics

Introduction to Supply Chain and Logistics

• Supply Chain Management (SCM) comprises the integrated management of the flow of goods, services, and information from raw material suppliers through factories and warehouses to the end consumer.
• SCM involves the planning and management of all activities related to sourcing, procurement, conversion, and logistics management activities.
• SCM includes crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers and integrates supply and demand management within and across companies.

Definition of Logistics

• Logistics is a key component of SCM
• Logistics involves strategically managing the procurement, movement, and storage of materials, parts, and finished inventory, including related information flows through the organization and its marketing channels.
• The goal of logistics in SCM is to maximize current and future profitability through the cost-effective fulfillment of orders

Importance of Supply Chain and Logistics

• Economic Impact: Supply chain and logistics activities contribute greatly to the global economy as efficient supply chains enable businesses to lower costs and improve competitiveness.
• Customer Satisfaction: Well-managed supply chains ensure that products are delivered to customers in a timely and cost-effective manner, which enhances customer satisfaction and loyalty.
• Globalization: Supply chains play a vital role in connecting markets and manufacturers in different countries, making the efficient movement of goods across borders essential for globalization.
• Innovation and Improvement: Supply chains are adopting innovative technologies such as IoT, AI, and blockchain to improve efficiency, traceability, and sustainability.

Objectives of Supply Chain Management

• Cost Reduction: Decrease the expense of manufacturing and distributing products without sacrificing quality or customer satisfaction through supply chain management.
• Efficiency Enhancement: Improvement of operations and reduction of cycle times, accelerating product flow can be achieved by SCM
• Flexibility and Responsiveness: Enhance the ability of the supply chain to respond to market changes and customer demands, enabling companies to adapt quickly to new opportunities and challenges via SCM implementation
• Quality Improvement: Maintain the quality of products throughout the supply chain, from raw materials to finished goods, improving the end-user's experience through SCM processes.
• Sustainability: SCM development of environmentally sustainable practices, reducing waste and carbon footprint, and ensuring ethical sourcing and labor practices
• Risk Management: SCM indentifies, assesses, and mitigates risks throughout the supply chain to ensure continuity of supply and protect against unforeseen disruptions

Core components in Supply Chain and Logistics

• Core components play a crucial role in the efficient movement of goods from production to the consumer.

Suppliers

• Defined as those who provide the raw materials, components, or services necessary to produce goods. They represent the starting point of the supply chain.
• Key role is to ensure quality materials are delivered on time and at a competitive cost, and are also responsible for innovation in materials and processes that can lead to better quality and cost reductions.
• Primary challenges include managing relationships, ensuring quality, and maintaining supply chain continuity.

Manufacturers

• Defined as entities that transform raw materials or components into finished products or goods through various processes, including machining, assembly, and quality control.
• The main role of manufacturers is to produce high-quality products efficiently and cost-effectively, which means managing production schedules, labor, and machinery to meet market demand.
• Challenges include optimizing production processes, reducing waste, managing inventory, and adapting to changes in consumer demand and market conditions.

Distributors and Wholesalers

• Distributors and wholesalers buy products in bulk from manufacturers and then sell them in smaller quantities to retailers or sometimes directly to consumers.
• Act as intermediaries in the supply chain to bridge the gap between manufacturers and retailers by providing storage, transportation, and logistics services and take on the risk of holding inventory.
• Key challenges include managing inventory levels, forecasting demand accurately, and logistics coordination to ensure timely delivery.

Retailers

• Defined as the final link in the supply chain that sells products directly to the end consumer via physical stores, online platforms, or a combination of both.
• Roles include presenting the product to the consumer in an accessible way through marketing, sales support, and customer service, and play a crucial role in understanding consumer preferences and market trends.
• Challenges include inventory management, pricing strategies, competition, and adapting to changing consumer behaviors and technological advancements.

Logistics and Transportation

• Defined as that which encompasses the planning, implementation, and control of the movement and storage of goods, services, and information from the point of origin to the point of consumption.
• Roles include ensuring that the right products reach the right place at the right time and in the right condition, including warehousing, inventory management, transportation, and order fulfillment processes.
• Challenges include optimizing routes, reducing transportation costs, managing fleet operations, ensuring timely delivery despite external factors, and adapting to new technologies to improve efficiency and reduce environmental impact.
• Effectiveness directly impacts the overall success of the supply chain strategy. Efficiently managing these elements enhances a company's competitive advantage, reduces costs, and improves customer satisfaction.

Introduction to transportation network

• In supply chain management, transportation networks are vital for ensuring the smooth and efficient flow of goods from suppliers to customers; a detailed understanding of transportation networks is crucial for understanding how supply chains operate and how they can be optimized.

Definition of Transportation Networks

• Comprise complex systems of various transport modes (road, rail, air, and sea), infrastructure (terminals, warehouses, distribution centers), and regulatory frameworks that enable the movement of goods from origin to destination.
• Networks facilitate the efficient and effective transfer of goods, considering factors like cost, distance, time, and environmental impact.
• Functionality includes the planning, execution, and management of transportation operations, such as route optimization, load planning, and delivery scheduling, ensuring goods are delivered in a timely, cost-effective, and secure manner.

Importance of Transportation Networks

• Economic Efficiency: They are vital for reducing logistical costs and improving efficiency
• Market Expansion: Efficient transportation networks allows businesses to expand their markets beyond local regions to national and international customers
• Customer Satisfaction: Affects the ability to deliver products on time and in good condition, enhancing the overall customer experience and loyalty
• Supply Chain Flexibility and Responsiveness: Critical in today's market environment, transportation networks enable companies to respond quickly to changes in demand, supply disruptions, or market conditions.
• Inventory Management: Links with inventory management strategies leading to lower storage costs and risk of obsolescence.
• Sustainability: Incorporates sustainable practices and reduces carbon emissions for sustainability awareness.
• Integration of Advanced Technologies: Enhanced visibility, efficiency, and security are achieved in transportation networks..

Types of transportation network in supply chain

• Vary in terms of operational characteristics, cost implications, speed, capacity, and environmental impact
• Understanding the definitions, advantages, and disadvantages of each mode is critical for making informed decisions in logistics management.

Road Transport

• Involves the movement of goods by motor vehicles over roads and is one of the most flexible and widely used modes of transportation, connecting factories, warehouses, and retail outlets.
• Offers door-to-door service for convenience.
• Ideal for short-to-medium distances with faster loading and unloading times.
• Can reach remote areas not accessible by other modes.
• Disadvantages include high expenses, limitations by vehicle size & road regulations, and contribution to traffic congestion & high carbon emissions.

Rail Transport

• Rail transport utilizes trains running on railway tracks to move goods over long distances. It is suitable for large volumes of heavy goods.
• Includes cost efficiency for bulk shipments over long distances.
• Offers high capacity as trains can carry large volumes of goods, which reduces the cost per unit.
• Reliable and less affected by weather conditions and traffic congestion.
• Inflexibility due to being limited to areas with rail infrastructure contributes to its disadvantages. Requiring additional road transport for door-to-door delivery
• Generally slower than road transport for short distances and subject to fixed schedules.

Air Transport

• The fastest mode of transport, ideal for high-value, time-sensitive goods through cargo planes.
• Unmatched for long-distance delivery, significantly reducing transit times.
• Advantages include inventory cost reduction and global reach.
• Cost and capacity limitations are its disadvantages.

Maritime Transport

• The primary mode for international trade, especially for bulk goods and moving goods across seas and oceans
• Ships can carry large volumes of cargo, including bulk and oversized shipments.
• Includes cost-effectiveness, and lower carbon emissions per ton of cargo compared to road and air transport.
• Speed and accessibility is a disadvantage, in addition to weather sensitivity.

Pipeline Transport

• Involves the movement of goods through pipes, mainly used for liquids and gases, such as oil, natural gas, and water.
• Offers continuous flow, is ideal for liquid and gas commodities, and provides a secure mode of transport.
• Once constructed, pipelines offer a low-cost option.
• Disadvantages include high initial investment, inflexibility due to fixed routes, and environmental risks.

Intermodal Transport

• Involves using two or more modes of transportation to move goods from origin to destination, using standardized containers that can be easily transferred between ships, trains, and trucks.
• Combines different modes to optimize cost, speed, and environmental impact, facilitates international trade with seamless transitions between modes, and decreases the risk of damage and loss, as goods are not handled when changing modes.
• Complex coordination among different transportation modes and operators is a disadvantage, in addition to infrastructure dependency and initial costs.

Lesson 2: Choosing the Mode of Transport

• Explains how that influence the choice of transportation mode in logistics and how these decisions impact the efficiency, cost, and environmental footprint of the supply chain.

Factors influencing transportation mode choices

• Cost is a primary consideration, including direct costs (fuel, labor, maintenance) and indirect costs (insurance, tolls, and taxes). Choosing rail transport instead of air freight for bulk shipments can significantly reduce costs.
• Urgency of delivery influences mode selection as air transport is fastest for time-sensitive shipments; whereas maritime is slower but cost-effective for non-urgent, bulk goods. Emergency medical supplies might be sent via air to ensure rapid delivery, while clothing for the next fashion season can be shipped by sea well in advance.
• Size and weight of shipments play a crucial role as heavy and bulky items are more economically shipped by rail or sea and small parcels are ideally suited for road or air transport.
• Distance affects the choice. Long distances often warrants the use of air or sea transport, while short-to-medium distances are efficiently covered by road or rail and intercontinental shipments are typically moved by air for speed or by sea for cost efficiency, whereas domestic shipments might use road or rail.
• Goods characteristics influence mode selection as perishable goods require fast, reliable transport, while bulky or hazardous materials might have specific requirements as fresh produce may be flown to maintain freshness, and hazardous chemicals require specialized handling available.
• Predictability and dependability of delivery times are crucial for supply chain efficiency where modes with high reliability reduce the need for large safety stocks, rail transport offers reliable schedule adherence.
• Environmental considerations are increasingly influencing transportation decisions
• It is more common for modes with lower carbon footprints are preferred for environmental impact.
• Maritime transport is often chosen for its lower per-unit emission compared to air transport, aligning with sustainability goals.

Decision Making Process

• Involves evaluating various factors to determine the most efficient, cost-effective, and sustainable option.
• The process is complex and requires a systematic approach to ensure the selected mode aligns with the overall logistics and business objectives.

Identify Transportation Needs

• Begin by assessing the nature, volume, and requirements of the goods to be transported (size, weight, value, and any special handling needs like refrigeration or secure transport for high-value items)
• Determine delivery timeframes, reliability standards, and any customer-specific delivery requirements

Evaluate Transportation Options

• Requires that you conduct a thorough analysis of each transportation mode’s characteristics (cost, speed, capacity, reliability, and environmental impact), and consider the geographic reach of each mode and its suitability for the goods in question.
• Perform a cost-benefit analysis for each mode, considering both direct and indirect costs against the service benefits
• Consider any regulatory constraints or requirements related to the transportation of goods
• Look at custom regulations for international shipments or specific regulations for hazardous materials
• Assess current market conditions that might affect transportation options

Decision Criteria Weighting

• Prioritize the factors most critical to the decision based on the business and logistics objectives.
• Use the Multi-Criteria Decision Analysis (MCDA) techniques to systematically evaluate and rank the transportation options based on the weighted criteria to provide a structured framework for complex decisions with multiple, often conflicting, criteria.

Selection and Implementation

• Choose the mode that bests meets the needs and objectives via the analysis.
• Develop a detailed implementation plan for the chosen transportation mode
• The plan should include necessary arrangements with transport providers, scheduling, and coordination with other supply chain functions.

Continuous Evaluation and Adjustment

• Continuously monitor the performance of the selected transportation mode as it is against the goals set out at the established criteria and objectives.
• Keep flexibility to adjust or reconsider as business needs, market conditions, or external factors change over time.

Lesson 3: Transportation economics and direct unit transportation cost

• Provides foundational understanding of how transportation systems influence economic activities, the selection of transportation modes, and the structure of transportation costs.

Basics of Transportation Economics

• Includes the selection of transportation modes, and the structure of transportation costs.

Supply and Demand for Transportation Services

• The demand for transportation services is driven by the need to move goods and people influenced by economic activity, population trends, and consumer behavior.
• The supply depends on the accessibility of infrastructure (roads, railways, airports, ports), vehicles (trucks, trains, planes, ships), and operational capabilities.
• Changes in supply and demand can affect transportation costs, availability, and efficiency and an increase in online shopping can increase the demand for freight, potentially leading to higher transportation costs.

Economic Development and Transportation Infrastructure

• There's a strong relationship between economic development and the availability of quality transportation infrastructure, as efficient transportation systems enable better access to markets, resources, and labor, facilitating trade and investment.
• Investments in transportation infrastructure can lead to economic growth, improve productivity, reduce costs, and opening new markets, which in turn hinders economic development.

The Role of Government in Transportation

• Governments play a critical role through policy making, regulation, and investment in infrastructure, including setting transportation policies, funding infrastructure projects (roads, bridges, ports), and regulating transportation safety and environmental standards.
• Government actions can significantly influence the efficiency and cost impacting regulatory policies and innovation and also sustainability in transportation.

Transportation Modes and Costs

• Road Transport provides flexibility and door-to-door service and is the most common mode for short-to-medium distances as its costs include fuel, maintenance, tolls, and labor.
• Road transport costs can vary significantly based on fuel prices, vehicle efficiency, and road conditions.
• Rail Transport is suitable for large volumes of goods over long distances and more fuel-efficient and reliable than road transport for bulk freight.
• Its major costs include track maintenance, fuel, and rolling stock investment & offers cost savings for bulk shipments due to its high capacity and fuel efficiency.
• Air transport is the fastest mode for long-distance shipments and ideal for high-value, time-sensitive goods, but its high fuel and operational make it the most expensive mode.
• Air transport costs are influenced by oil prices, air traffic control fees, and airport charges.
• Maritime transport is the dominant mode for international trade and is capable of moving large quantities of goods at the lowest unit cost; Its costs include port fees, fuel, and vessel operation.
• Maritime transport is cost-effective for bulk commodities and is impacted by global shipping rates and fuel prices.
• Pipeline Transport is used for transporting liquids and gases and provides a continuous flow and is highly reliable, but consists of high initial investment in infrastructure, but operational costs are low once the pipeline is operational.
• Pipeline operational costs are influenced by construction, maintenance, and energy to pump the materials.

Direct Unit Transportation Cost

• Is a critical metric that measures the cost associated with transporting a single product from one location to another used in logistics and supply chain decisions. Direct unit transportation cost = Total transportation cost / total units transported
• If a company spends $2,000 to transport 500 units of product, the direct unit transportation cost would be $4 per unit.
• Factors affecting direct unit: Distance, weight/volume of goods, mode of transportation, and fuel efficiency

Implications of Direct Unit Costs

• Understanding direct unit costs is vital for informed logistics decisions and business making.
• Understanding the budget and cost control aspects helps businesses budget more effectively and identify opportunities for cost savings to achieve better freight rates.
• Environmental unit cost calculations can also inform decisions aimed at reducing environmental impact and choosing a more fuel-efficient transportation mode can lower costs and reduce carbon emissions
• Global supply chain strategy makes unit transportation costs are crucial for businesses that balance cost, speed, and environmental factors when choosing between multiple sourcing and distribution options.

Impact on Business and Economy

• Understanding the impact of transportation economics, and transportation costs is crucial to grasp the broader implications on business and the economy.

Business Decisions

• Strategic Sourcing and Production Decisions are influenced by transportation costs.
• Lower direct unit transportation costs can make distant sourcing or offshoring economically viable, allowing businesses to take advantage of lower labor or material costs in other regions.
• Pricing Strategy sees that direct costs accounts for product settings to ensure profitability (COGS) and a company may need to adjust its product pricing to remain profitable
• Just-In-Time Inventory sees reduced storage, but relies on transportation costs to ensure their benefits is not offset by high cost.
• Customer Satisfaction creates a Competitive Advantage that significantly improves companies by balancing transport cost, speed, and reliability

Economic Impact

• Influencing trade and market by lowering expense and expanding markets.
• Economic growth by being critical to efficient cost-effective growth and facilitates trade.
• Environment Sustainability with decisions to low carbon to reduce transportation.

Lesson 4: Choosing of Shipment Routes

• Considers the most effective path for transporting goods from their origin to their destination, selecting the optimal combination of transportation modes, intermediary stops, and final delivery points.

Objectives of Shipment Routing

• To reduce costs to help business lower expenses, by reducing costs in direct expenses such as fuel and labor, and indirect expenses such as toll and insurance.
• To accelerate shipments.
• To have trust in deliveries.
• Maximize capacity for transportation.
• Flexibility allow you to adapt to challenge.
• Meet regulations.

Support Sustainability Goals

• Transportation activity should be limited to better have less emissions.

Factors that influence selecting shipment routs

• Physical geography of route affect which route select through natural obstacles and distance, and infrastructure.
• Economic factors encompass costs such as labor and tariffs.
• Companies have to see how trade-offs work with modes.
• Government has an influence from trading and restrictions to consider where its stable.
• You need to consider how many things are capable of being shipped.

Technology and Data Analysis

• Advances that transformed route selection GPS, data, and modeling to understand how to work more efficient for time.
• Adaptability leads to improvements in costs.

Lesson 5 Examples of operation carried out within land transport companies

• Gives an overview of land transport, types, importance and service offered.

Definition of Land Transport Companies

• Businesses that specializes in people and goods of moving across the land.

Types of Land Transport Companies

• The trucking businesses is the type of company that transport goods over long distances.
• Rail operators business will help manages passengers and goods to travel.
• Bus businesses offers regional travel.
• Couriers is to deliver quickly with transport modes, including bikes.

Land Transport Companies

• To facility trades in between retailers, producers, and consumers.
• To connect communities for accessibility.
• Offer services to meet need for customers: planning logistics and suppliers.

Types of Services of Transport

• Offers travel options for all.
• Provides specialized transport

Trends of Land Transport

• To create technological advancement can benefit and offer new opportunities.

Fleet Management

• Manage fleets by overseeing and coordinating what to do and their job.
• Regular maintenance is important

Routing Optimization and Planning

• Software determine pathways and delivers more efficiency.

Key Things About This Concept

• Save time for faster deliveries.
• Fuel consumption savings.
• Provides higher service for consumers.

Logistics Cargo Handling

• The system is the management of what to do in shipping for delivering on day.
• It is important for logistics and cargo to be delivered to the customers.

Safety Measures

• Offer more care to for more safe travels.
• To ensure safety is important.
• Is more important to create a company for loyalty.

Lesson 6: Examples of operations carried out within air carrier

• Gives an introduction to fascinating aspects to air carriers.

What Are Air Carriers?

• A business that provide air travels for people and freight to travels from long journeys categorized and what they do with service:

Types of Air Carriers

• Commercial Airlines- is passenger cargo air.
• Cargo- Air is specialized for goods.
• Characterized Air- Does trips for groups or does flights to a part of service.

Air Services

• Have changed travelling with business and time and also contributes to the global.

Types of Contributions

• They make to trades by moving efficiently well across.
• Make things and travelling is accessible for tourism.
• Creates more work.

Things to note about Air Services

• Management in air: ensure safety and is reliable
• Piloting: Executing things that includes schedule, flight, and safety.
• Supports services for people , complaints as the help.

Challenges

• Are change, fluctuates when change is happening

Fleet Management:

• Focuses several task of aircrafts that help selecting different crafts, sell the aircraft, buying crafts.

Important of Aspect

• Craft: leasing and financial plans that needs to be planned.
• Provide the best knowledge to ensure the safety of planes.

What Happens on and Flight

• Consist all tasks to airplane and schedules traffic.

Measures of Safety

• Pilots have regular pilots.
• Regulations is held with safety measure and is operation on ground.
• Safety plan is to deal with emergency.

Lesson 7: Shipping Services

• Have made a lot to our live every day; trades that helps us have access a lot of resources.

Shipping Companies?

• Focused in specialized business to cross oceans.

International Trades; Roles

• They support the world by trades and having access to the things is to use every day.

Types of Contributions that Ship Help with

• Trade impact- support trades for creating sectors with relates jobs.
• Support connectivity to easily sell product internationally.

Types of Shipping Business:

• Transports good with the uses with the boats.

Important Things

• Management with companies make it better.
• The plans and financial with funding with them.
• Regulations for safety
• Offer people knowledge on ship.