Transport Planning and Distribution Systems

Transport Planning for Procurement and Distribution

• Transport processes are essential for supply chains, connecting businesses with suppliers and customers.
• Transport system structure depends on shipment size.
• Large shipments (FTL/FCL) travel directly.
• Medium shipments are consolidated for efficiency.
• Small shipments require a network with transshipment points (TPs) and consolidations by logistics providers (LSPs).
• Consolidation reduces transport costs due to higher vehicle utilization and lower per-unit costs.
• Procurement involves transporting materials from suppliers to production sites.
• Distribution involves transporting products from factories to customers.
• Investment goods are shipped infrequently; materials frequently; consumer goods require consolidation.

Distribution Systems

• Typical distribution systems move goods from factories to many customers.
• Pool distribution consolidates shipments to a distribution centre (DC), then deconsolidates and distributes to individual destinations.
• Direct shipments from factories or DCs to customers are used for large orders.
• Smaller orders are bundled into joint tours from factories or DCs.
• Vendor Managed Inventory (VMI) is a concept where suppliers manage inventory levels in customer warehouses.

Transport Planning

• Transport planning is usually the responsibility of the supplier, but sometimes the manufacturer handles it.
• External logistics service providers (LSPs) can consolidate shipments from multiple suppliers/shippers.
• Appropriate transport cost functions can implicitly include the flows of other shippers into the transport planning system.
• Supply chain logistics concepts apply to different classes of materials (e.g. investment goods, raw materials, consumer goods) and their associated frequency of transport.
• Different strategies like Cyclical procurement or JIT (Just In Time) procurement can be used to vary the transport frequency.

Information Management

• Information management is crucial for transportation control and fulfillment.
• Data needs to be consistent across the supply chain (suppliers, LSPs, and goods departments).
• Transportation processes require support for document generation and data integration, including notifications, bordereaux, and loading plans.
• Transport planning significantly impacts inventory levels.

Transportation and Safety Stocks

• Safety stocks in distribution systems depend on the transport strategy between factories and DCs (Distribution Centres).
• A Push system distributes every production lot immediately to DCs and requires global information on demand and stock.
• A Pull system triggers transports when local stocks reach a reorder point.
• Local safety stock covers uncertainty during transport lead times. Total system safety stock addresses total demand uncertainty during production cycle.

Making and Delivering

• Product design significantly impacts supply chain requirements.
• Effective design considers fewer parts, simple designs, and the use of sub-assemblies.
• Product design strongly influences supply chain configurations.

Production Scheduling

• Production scheduling allocates capacity to production tasks efficiently and profitably.
• High utilization rates involve long production runs and centralized facilities.
• Low inventory levels promote short production runs and just-in-time delivery.
• High customer service often requires high inventory levels.

Facility Management

• Facility location decisions constrain all other facility management decisions.
• Role each facility plays defines the supply chain's logistics capabilities.
• Capacity allocation involves determining the required equipment and labour for a facility.
• Efficient capacity allocation is crucial for supply chain success and profitability - too little can result in missed demand, too much in reduced utilization rates and costs.

Order Management

• Order management handles flow of order information across the supply chain.
• Efficient order handling requires minimizing manual intervention.
• Order status visibility to customers and service agents improves the customer experience.
• Data integrity is maintained through integration with related systems.

Delivery Scheduling

• Delivery scheduling depends on transportation modes.
• Direct deliveries go from one origin to one destination, leveraging the shortest route.
• Milk run deliveries go to multiple destinations/origins, leveraging vehicles' capacity efficiently.

Return Processing

• Returns are a part of all supply chains and are often called "reverse logistics"
• Handling returns efficiently with proper product categorization and consolidation/recycling is important.

Supply Chain Coordination

• Coordinating supply chains involves inter-firm operational coordination and flows, from suppliers to customers.
• Supply chain management (SCM) aims to consolidate plans and objectives across various enterprises in the chain.
• The Bullwhip effect describes amplified fluctuations in demand through the supply chain.
• Factors such as demand forecasting, order batching, product rationing, and pricing influence the effect.
• Effectively coordinating plans to align with actual demand is crucial in managing the supply chain effectively.

Global Data Synchronization Network (GDSN)

• The GDSN allows for easier data sharing and avoids cross-reference tables.
• GDSN connects data pools to provide timely and verifiable product information across supply chains.
• Sharing data reduces errors when tracking products through any part of the process.

Product Classification

• Product classification (e.g., UNSPSC, GS1 Global Product Code) is essential for tracking and managing products.
• Hierarchical classifications (e.g., segment, family, class) are used for analysing expenditures and product usage.
• Consistent classification schemes across supply chain members facilitate data sharing and integration.

Collaborative Planning, Forecasting, and Replenishment (CPFR)

• CPFR improves supply chain coordination by collaborating on plans, forecasts, and replenishment.
• This approach involves agreements on responsibility/communication/data sharing among participating entities.
• Establishing a common sales forecast, creating and resolving exceptions (differences), and creating order forecasts are essential steps to an efficient CPFR process.

Sales and Operations Planning (S&OP)

• S&OP aligns production/marketing/sales/supply chains for aggregate volumes and handling mix issues.
• It links short-term processes to strategic plans for better results.

Supply Chain Innovation for the Real Time Economy

• The present supply chain environment faces high levels of dynamic demands and need for adaptability.
• Supply chains need to incorporate elements, like CPFR, to maintain balance between efficiency and responsiveness.
• Businesses must implement effective collaborations across the supply chain to ensure accuracy and efficiency.

Simulation Game Mechanics (Supply Chains)

• Simulation games allow the evaluation of different supply chain designs/configurations.
• The five key drivers of a supply chain (Production, Inventory, Location, Transportation, and Information) and their importance in effective decision-making are discussed.
• Optimizing these areas contributes directly to efficiency, balance, and cost reduction.

Information Technology in Supply Chains

• Information technology supports both internal and collaborative operations of supply chains.
• Data capture, communication, and storage are critical functions in supply chains supported by advanced technologies.
• Efficient use of technologies like the internet, and XML (extensible markup language), and various others like RFID, BI can support and optimize supply chains.

Inventory Management Systems (IMS)

• IMS supports inventory tracking, balance and cost considerations.
• It aids in evaluating safety inventory levels based on historical/current demand patterns.

Manufacturing Execution Systems (MES)

• MES are focused on factory-floor production optimization.
• MES includes short-term production scheduling, raw materials/resource allocation within a plant.

Transportation Scheduling Systems (TSS)

• TSS provide short-term transportation/delivery schedules.
• TSS is similar to ERP/MES but focuses more on day-to-day operational activities..

Warehouse Management Systems (WMS)

• WMS helps with daily warehouse operations.
• WMS enables efficient processing of receiving, picking, packing, and shipping activities within warehouses.

Technologies supporting/improving supply chains

• RFID, BPM (Business Process Management), BI (Business Intelligence), Simulation Modeling and Cloud Computing are presented as possible technologies and tools that can support and improve supply chains.

Explore the vital role of transport processes in supply chain management, focusing on procurement and distribution strategies. Learn how transport system structure varies based on shipment sizes and the benefits of consolidation in reducing costs. This quiz will enhance your understanding of effective logistics practices.