TRANSPORTATION MANAGEMENT

AN OVERVIEW
SEQUENCE OF PRESENTATION
 Transportation and Role of Transportation
in Supply Chain
 Transport Functionality
 Principles of Transportation
 Participants in Transportation Decision
 Modes of Transportation
 Containerization
 Multimodal Transportation
 TRANSPORTATION AND ROLE OF
TRANSPORTATION IN SUPPLY CHAIN
 “Transportation refers to the physical movement
of a product from one location to another as it
makes its way from the beginning of a supply
chain to the customer. It is the total process of
delivering both Agriculture and Industrial goods
to the end customer in most efficient manner.”
 Supply chain driver
 Connects Production to the Consumption centres
 Cost component of SCM overall cost
 Weakest link in SCM
• “Physical Distribution is today’s frontier

Business”
Peter Drucker
 Essence of Transportation
Total Delivery System
 Right Quality

 Right Quantity

 Right Time

 Right Place / Point

 Right Price ( Least Cost )

 Reliability
 Transportation Link in
Supply Chain Management

Component/RM
Manufacturer
Supplier

Wholesaler/
Retailer Distibutor

Customer
Supply Chain Process Cycle
Customer

Customer Order
Cycle
Retailer

Replenishment
Cycle
Distributor/
Wholesaler
Manufacturing
Cycle

Manufacturer
Procurement
Cycle

Supplier
 Transport Functionality
 Product Movement & Product Storage
 Product Movement
A primary transportation function is product
movement up and down the value chain
Utilization of Resources during Transportation
- Temporal Resources
- Financial Resources
- Environmental Resources
 Product Storage
Temporary Storage
- Costly
- Warehouse constraints
 Transportation- Objectives
“The major objectives of transportation is to move
product from an original location to a prescribed
destination while minimizing the temporal, financial,
and environmental resource costs. Loss and damage
expenses must also be minimized. At the same time,
movement must take place in a manner that meets
customer demands regarding delivery performance
and shipment information availability”
Principles of Transportation
Economy of scale
“The transportation cost per unit of weight decreases
when the size of the shipment increases”
“ Larger capacity transportation vehicles are less
expensive per unit of weight than smaller capacity
vehicles”
Fixed expenses spreads over the load’s weight
Fixed Expenses –
 Administrative expenses of taking the transportation
Order
 Time to position the vehicle for loading and
unloading
 Invoicing
 Equipment cost
 Principles of Transportation
Economy of Distance
“The transportation cost per unit of distance decreases as
distance increases.”
 Fixed expenses spreads over the variable expenses
per unit of distance.
Fixed Expenses –
 Administrative expenses of taking the transportation
Order
 Expenses to load and unload the vehicle spread
over variable expenses per unit of distance
 Invoicing and Equipment cost
 Participants in
Transportation Decisions
Public
Goods Flow Information Flow

Government

Shipper Carrier Consignee

Modes of Transportation
Road Surface Transport

Rail
Air
Water/Maritime
Ocean – International and Coastal
 Inland – River and Backwater
Pipeline
 Containerization
“An innovative way of transporting goods, introduced in 20th
Centuary which has revotionlized the Global movement of
Cargo and in turn global trade itself. It is the technique of
practice of stowing freight in reusable containers of uniform
size and shape for transportation. The freight may sometime
be oddly shaped and in different quantities, but when stowed
and shipped in containers, it can be handled as a single piece
thus making it a lot easier to transport. This reduces the time
and costs involved. Containerization also enables intermodal
transport, i.e the total movement from the origin to the
destination, using different modes enroute such as roadways,
railways, shipping, and airlines.”
 Multimodal Transportation

“The multimodal transport system offers the “ single

window” approach unifying more than one mode of
transporation offering “door to door pick up and
delivery of cargo” freeing the customer from al
hassles”
THANK YOU
 Supply Chain Management
Total Logistics Cost

TDC (Total Distribution Cost) =

Transportation Cost + Facilities Cost +
Communication Cost + Inventory Cost +
Protective Packaging Cost + Distribution
Cost