TRANSPORTATION MANAGEMENTEIN 5346 Logistics Engineering, Spring 2010

Alejandro Leon

Arjit Joshi

Poonam Ranka

Bader Alwoimi

PROJECT FLOW

Legalities

Documentation

Modal Selection

Making and Receiving Shipments

Transportation Management Systems

WHY THINK ABOUT LEGALITIES?

Many agencies/ departments affect trade The number of regulating bodies multiplies

when you move into international trade The governing body becomes even more

nebulous when several bodies compete for control

DOMESTIC TRADE

US Constitution Art. 1, Sec.8: Congress shall have the power “To

Regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes”

Art. 1 Sec. 9: “No Tax or Duty shall be laid on Articles exported from any State.” and “No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another; nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.”

DOMESTIC REGULATING AGENCIES U.S. Department of Transportation

Federal Aviation Administration (FAA) Federal Highway Administration (FHWA) Federal Motor Carrier Safety Administration (FMSCA) National Highway Traffic Safety Administration (NHTSA) Federal Railroad Administration (FRA) Pipeline and Hazardous Materials Safety Administration

(PHMSA) Maritime Administration (MARAD) Surface Transportation Board (STB)

Florida Department of Transportation Department of Highway safety and Motor Vehicles Seaport Office Office Motor Carriers Compliance Office of Forms and Procedures

DOMESTIC REGULATING AGENCIES (CONT.) National Transportation Safety Board

Charged with determining the cause of transportation accidents and regulate what can be done to make transportation safer.

Includes vehicular and conveyance transportation Department of Commerce

Regulates what can be traded to/with foreign countries.

Department of Homeland Security Houses Customs and Border Protection

Environmental Protection Agency (EPA) Regulates the impact companies can have on the

environment and public lands Federal Trade Commission

Regulates against monopolies, anti-competitiveness, and deceptive business practices

National Labor Relations Board Regulates Labor unions and employer/ employee

relations

NON-GOVERNMENTAL “REGULATORS”

Not affiliated with the government but make recommendations that government often use when making regulation or negotiate on behalf of labor groups. National Fire Protection Agency (NFPA) Insurance Institute of Highway Safety Labor Unions

Teamsters Transport workers Union

NATIONAL FIRE PROTECTION AGENCY HAZARD DIAMOND

DOMESTIC AGENCIES DEALING WITH INTERNATIONAL TRADE

United States International Trade Commission A whistle blower on when the US is being

harassed with unfair trade arrangements Office of the United States Trade

Representative Enforcer of international trade agreements

INTERNATIONAL TRADE AGREEMENTS

•US has Free Trade Agreements with 17 nations

China?? India?? Japan?? Korea??

MAJOR US TRADE AGREEMENTS

North American Free Trade Agreement Bilateral Investment Treaties

Protect Private investment to promote US exports

Major Agreements still in the works Korea Free Trade Agreement Trans-Pacific Partnership Agreement

WORLD TRADE ORGANIZATION

International body that deals with rules and guidelines of international Trade 153 nations are members A forum where members can discuss trade

issues Brings countries together to lower tariffs and

promote free trade Works against protectionism within countries Assistance and Protection for developing

countries

DOCUMENTATION TO COMPLY WITH LAWS AND REGULATIONS Many times you need to keep/ produce many

documents to comply with regulation Truck Driver’s Log

Made to insure that a truck driver is not driving more hours than allowed

Bill of Landing A receipt of Delivery

Freight Bill An invoice submitted by a carrier requesting to be paid

Freight Claims Documentation produced to return freight when

wrong/defective deliveries are made. Customs Declaration

Form produced to inform governments of delivery contents when transporting internationally

CUSTOMS DECLARATIONFOR APOLLO 11FLIGHT

Modes of Transportation primary modes of transportation

• truck• rail• air• water• pipeline• intermodal transportation

Modes of TransportationMotor Carriers

widely used mode of transportation in the domestic supply chain

economic structure of the motor carrier industry contributes to the vast number of carriers in the industry

comprised of for-hire and private fleet operations Truckload carriers. Less-than-truckload (LTL) Small package carriers

Low fixed cost, high variableRailroads

Activity levels have been achieved despite a lack of direct accessibility to all parts of the supply chain

Railroads are “natural monopolies”

Two carrier types: Line haul Shoreline carriers

High fixed, low variable

Modes of TransportationWater

Major facilitator of international trade High variable and low fixed cost Two primary carrier types

Liner Charter

Options include Container ships Bulk carriers Tankers General cargo ships Roll-on, roll-off (RO–RO) vessels

Air Carriers 491 air cargo carriers

Combination carriers Air cargo carriers Integrated carriers Nonintegrated carriers

Domestic market is dominated by 14 major carriers High variable and low fixed cost

Pipeline Unique mode of transportation as the equipment is

fixed in place and the product moves through it in high volume

174 operators of hazardous liquid pipelines that primarily carry crude oil and petroleum products

Three primary types Gathering lines Trunk lines Refined product pipelines

High fixed versus low variable

Modal Selection Accessibility

• Accessibility advantage: Motor carriage• Accessibility disadvantage: Air, rail, and water

Transit Time• Transit time advantage: Air and motor carriage• Transit time disadvantage: Rail, water, and

pipeline

Reliability• Reliability advantage: Motor carriers and air

carriers• Reliability disadvantage: Water carriers and rail

carriers

Modal SelectionProduct Safety

• Safety advantage: Air transportation and motor carriage

• Safety disadvantage: Rail and waterCost

• Cost advantage: The cost of transportation service varies greatly between and within the modes

• Cost disadvantage: Motor carriage and air transportation

Carrier Selection selecting the individual transportation service providers

within the mode

major difference between modal and carrier selection is the number of options

difference is the frequency of the decision

type of service provided within a mode impacts carrier selection

most carriers have the capabilities to provide a similar level of service

Core carrier• limited number of carriers• leverage its purchasing dollars

MAKING AND RECEIVING

SHIPMENTS

This refers to tactical planning and control of shipments along

with supervision of freight loading and unloading.

Consolidating small Shipments:

Defined as those that weigh more than 150 pounds and less than

500 pounds.

PIC FROM SCANNER

SMALLER SHIPMENTS ARE PROBLEMATIC

Carrier Perspective: - Require a high degree of manual labor.

- Increasing labor costs.

- Lose money on small shipments because the revenues from them don’t sufficiently reflect cost considerations.

- Transportation Manager Perspective:- - Large number of small shipments means that there needs to be an

information system capable of keeping track of each shipments statues.

- -It’s easier to keep track of one shipment of 10 units than to keep track of 10 shipments of one unit.

- - Accumulate 10 units would increased the time then, could result in poorer service to the final customer.

SOLUTIONS ( EXAMPLE 10 UNITS)

1- Consolidation across Time: - Accomplished through volume guidelines ( minimum shipment of 8 units

which would mean a shipment on the fourth day) or time guidelines (ship every third day in which case the shipment volume would be 6 units).

2- Consolidation across Place: The transportation manager looks to build volume with shipments going to a

similar destination or similar destinations and this often involves looking outside one’s firm.

Transportation specialist such as freight forwarders, shippers’ associations, and transportation brokers can be helpful in achieving consolidation across place.

Demurrage: Is a penalty payment made by the shipper or consignee to a railroad for

keeping a railcar beyond the time when it should be released back to the carrier.

Detention: Is basically the same concept as demurrage, except that it usually refers to

the trucking industry.

Diversion: Occurs when the shipper notifies the carrier prior to the shipments arrival in

the destination city, of a change destination.

Reconsignment: Is similar to diversion , but it occurs after the shipment has arrived in the

destination city.

HOW TO TRACK YOUR SHIPMENT USING

http://www.youtube.com/watch?v=hWa3J-zv1EE

http://www.ups.com/tracking/tracking.html

http://www.youtube.com/watch?v=fCrqy5S-H_A&feature=related

WHY TMS?

Efficiency and productivity in daily operations Enable companies to centralize the logistics function, providing

support across their entire organization. Adhering to and enforcing business rules and processes to ensure

proper execution. Order processing is automated through the point of load costing,

carrier selection, tendering, carrier acceptance and shipment visibility.

TMS systems improve carrier communications through EDI, Internet portals, and the use of email.

Access to data through standard reports and additional report writers for customized reporting and tracking of data such as Freight accruals, fuel surcharge, and accessorial charges.  

Automated electronic reconciliation improves the speed and accuracy of freight bill audit and payment.

Reduced costs through carrier selection compliance and optimization Improved customer service levels through consistent and expected

delivery.

.

TYPES OF LICENSING ARRANGEMENTS

1. On-Premise Licensing (traditional purchased license)

2. Hosted (remote)3. On-Premise Hosted Licensing (a blend

of 1 & 2)

TMS - MANAGE THREE KEY PROCESSES OF TRANSPORTATION MANAGEMENT:

1. Planing and Decision Making TMS will define the most efficient transport schemes according to given parameters, which have a lower or higher importance according to the user policy: transport cost, shorter lead-time, fewer stops possible to insure quality, flows regrouping coefficient…

2. Transport follow-upTMS will allow following any physical or administrative

operation regarding transportation: traceability of transport event by event (shipping from A, arrival at B, customs clearance…), editing of reception, custom clearance, invoicing and booking documents, sending of transport alerts (delay, accident, non-forecast stops…)

TMS - MANAGE THREE KEY PROCESSES OF TRANSPORTATION MANAGEMENT:

3. Measurement TMS have or need to have a Logistics KPI reporting

function for transport. Various functions of a TMS:

Planning and optimizing of terrestrial transport rounds Transportation mode and carrier selection Management of air and maritime transport Real time vehicles tracking Service quality control Vehicle Load and Route optimization Transport costs and scheme simulation Shipment batching of orders

Cost control, KPI (Key performance indicators) reporting and statistics Typical KPIs include but not limited to:

 % of On Time Pick Up or Delivery Performance relative to requested

Cost Per Metric - mile; km; Weight; Cube; Pallet

INTER-RELATIONSHIPS OF TMS WITH ERP AND WMS

WMS

ERPCustomer or StoresTMS

Inbound deliveries to Warehouse

Outbound deliveries to Stores

Transportation Visibility Tool for Shipment Tracking

TYPICAL GLOBAL SUPPLY CHAIN FOR TODAY’S RETAILERS

38

EXAMPLE: TRANSPORTATION VISIBILITY FLOW

FreightForwarders

PoloRetail Operations

PoloCustoms Compliance

PoloTransportation

PoloVendor Compliance

Key Polo System Users

EDI 850PO Creation

&Updates

Customs Entry&

Clearance

Domestic Arrival & Transload Updates

Polo Inbound Supply Chain Visibility System (Freightek eFocus)

POFreighTek receives a feed of POs sent electronically from Polo's internal systems.ASNFreighTek loads carbon copies of EDI shipping ASNs sent from Polo Factories, Vendors and Licensees to Polo’s internal systems.Non - EDI capable Factories, Vendors and Licensees access FreighTek system directly via the web, and manually create ASNs and labels.Freight ForwardersOcean/Air Forwarders send FreighTek, Transloader and Customs Broker, an EDI status update to shipments/ASNs received from Polo Factories, Vendors and Licensees.Customs BrokerFreighTek interfaces with Customs Broker system to receive Entry and Clearance updates.TransloaderFreighTek uploads Polo Transloader ASN into the FreighTek system; consolidating Freight Forwarder ASN information, with ASN sent outbound to the DC or Store.Domestic CarriersDomestic Carriers provide EDI domestic carrier updates to shipments picked up from Transloaders and Vendors.

Via FreighTek

ERP/OrderMgmt systems.

Factories,Vendors,Licensees

EDI 315/ASAOcean/Air

Arrivals&

Departures

Brokers

EDI 856Advance Shipment

Notifications

Port Of EntryTransloaders

Domestic MotorCarriers

DC

Domestic MotorCarrier Updates

to Final DestinationFinal Destination

PoloDistribution

End to EndVisibility:

Event Tracking,Exception Alerts,

PerformanceMeasurements,

PO StatusReporting

PoloProduction

Data Sources

THANK YOU.QUESTIONS?