ie 8580 module 2: transportation in the supply chain
TRANSCRIPT
IE8580Module2:TransportationintheSupplyChain
Lecture2.2:TransportationDesign,Modes,&Issues
TransportationDecisions- Carriers
• Carrier– partythatmovesortransportstheproduct• Factorsaffectingcarrierdecisions:
– Vehicle-relatedcost• costofowningvehicles
– Fixedoperatingcost• fixedcostsindependentofvehicleusage(terminal/portcosts,laborcosts)
– Trip-relatedcost• functionoftripdurationanddistance(fuelanddrivercosts)
– Quantity-relatedcost• loading/unloading,portionoffuelcost
– Overheadcost• costsassociatedwithplanning,design,andscheduling,aswellasinformationtechnologyoverhead
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TransportationDecisions- Shippers
• Shipper– partythatrequiresthemovementoftheproductbetweentwopointsinthesupplychain
• Factorsaffectingshippersdecisions– Transportationcost
• foroutsourcedtransportation– Inventorycost
• inparticular,costofinventoryinthepipeline– Facilitycost
• costofalllocationsinthesystem;onlyvariableinnetworkdesignphase– Processingcost
• loading/unloadingandprocessingcosts– Servicelevelcost
• costofnotmeetingcustomerrequirements
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TransportationModes
• Trucks– TL– LTL
• Rail• Air• PackageCarriers• Water• Pipeline
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Truckload(TL)/LessThanTruckload(LTL)
• Over75%ofUSfreightbill• Point-to-pointdeliveries,mediumspeed,averagetogoodreliability
• Truckload(TL)vs.less-than-truckload(LTL)– Truckloadpricesarechargedpermilesinceyoueffectivelyreservetheentiretruck’scapacity
– LTLpricesareafunctionofdistanceandloadsize– TruckloadischeaperperunitweightsinceLTLcarriersincurmoredowntimeduetoloadingandunloadingatmultipledropoff points
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LessThanTruckload(LTL)
• TL– Lowfixedandvariablecosts– MajorIssues
• Utilization• Consistentservice,backhauls
• LTL– Higherfixedcosts(terminals)andlowvariablecosts– Majorissues:
• Locationofconsolidationfacilities• Utilization,vehiclerouting,customerservice
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Air
• Fastandexpensive• Small,high-valueitemsandemergencyshipments(limitedloadsize)
• Requirestransporttoandfromairport• Highreliability• Keyissues:
– Location/numberofhubs– Locationoffleetbases/crewbases– Scheduleoptimization– Fleetassignment,crewscheduling,yieldmanagement
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PackageCarriers
• CompanieslikeFedEx,UPS,USPS– Smallpackagesrangingfromletterstoshipmentsof~150pounds
• Expensive• Rapidandreliabledelivery(valueaddedservices)• Smallandtime-sensitiveshipments• Preferredmodefore-businesses• Consolidationofshipments(especiallyimportantforpackagecarriersthatuseairasaprimarymethodoftransport)
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Rail
• Keyissues:– Schedulingtominimizedelays/improveservice– Off-trackdelays(atpickupanddeliveryend)– Yardoperations– Variabilityofdeliverytimes
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WaterandPipeline
• Water– Limitedtocertainareas,highportcosts– Extremelyhighloadcapability,verylowunitcosts– Slowandleastreliableperformance– Dominantmodeinglobaltrade
• Pipeline– Limitedproducts,crudepetroleum,refinedpetroleumproducts,naturalgas
– Bestforlargeandpredictabledemand– Highestpercentageoffixedcosts
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Intermodal
• Useofmorethanonemodeoftransportationtomoveashipmenttoitsdestination
• Mostcommonexample:rail/truck• Alsowater/rail/truckorwater/truck• Grownconsiderablywithincreaseduseofcontainers• Increasedglobaltradehasalsoincreaseduseofintermodaltransportation
• Moreconvenientforshippers(oneentityprovidesthecompleteservice)
• Keyissueinvolvestheexchangeofinformationtofacilitatetransferbetweendifferenttransportmodes
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DesignOptionsforaTransportationNetwork
• Whatarethetransportationoptions?Whichonetoselect?Onwhatbasis?– Directshippingnetwork– Directshippingwithmilkruns– AllshipmentsviacentralDC– ShippingviaDCusingmilkruns– Tailorednetwork
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Waystoexecutedirectshipment
• Directshipmentnetwork• Milkruns• Milkrunsw/aDC
IE8580,[email protected]
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Waystoexecutedirectshipment
• Directshipmentnetwork• Milkruns• Milkrunsw/aDC• Linehaulw/crossdocking
IE8580,[email protected]
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TransportationNetworkDesign
NetworkStructure Pros Cons
DirectShippingNointermediatewarehouseSimpletocoordinate
HighInventory(largelots)Highreceivingexpense
DirectShippingwithMilkRuns
LowertransportationcostwithsmalllotsLowerinventory
Increasedcoordinationcomplexity
CentralDCwithinventory
Lowerinboundtransp.costduetoconsolidation
IncreasedinventorycostIncreasedDChandling
CentralDCwithcrossdocking
LowinventoryLowtransp.costthroughconsolidation
Increasedcoordinationcomplexity
ShippingviaDCwithmilkruns
Loweroutboundtransp.costwithsmalllots
Furtherincreaseincoordinationcomplexity
Tailorednetwork Transportationmeetsindividualproduct/storeneeds Highestcomplexity
Trade-offsinTransportationDesign
• Transportationandinventorycosttrade-off– Choiceoftransportationmode– Inventoryaggregation– Transportationcostandresponsivenesstrade-off
• Transportationmodechoice– Amanagermustaccountforinventorycostswhenselectingamodeoftransportation
– Amodewithhighertransportationcostscanbejustifiedifitresultsinsignificantlylowerinventories
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