Supply Chain Logistics Management Chapter 12 Transportation Management

Supply Chain Logistics Management Chapter 12: Transportation Management Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Integrated Transportation Decisions Total network and lane design decisions Decision Scope Lane operation decisions Mode/carrier selection decisions Rate negotiations Dock level decisions Micro Strategic Decision Flow Macro Operational Inbound Supplier Outbound Manufacturer Customer Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Network Freight Flows (S=supplier, C C CC C S CC P=plant, W=warehouse, C=customer) W C P C C S C CC P S S P W C C S W C C P C C Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Lane Operation Decisions • Analyze lane densities/frequencies to understand what opportunities emerge for: • Inbound/outbound consolidation • Vehicle consolidation • Temporal consolidation • Network consolidation • Carrier consolidation Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Example Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Carrier Consolidation North Carolina TL Van Freight Distribution CARRIER COTTON WARD’S PIQUA SO. BROKE N&P TRANSDYN KBT ITCO WRIGHT TELEDYNE TOP TEN TOTAL 29 CARRIERS WT (k#) 4261. 4 3050. 7 2491. 2 1914. 4 1764. 0 1546. 2 1368. 6 1363. 0 811. 9 727. 2 %OF MARKET 7. 7 6. 4 5. 9 4. 4 3. 7 2. 8 2. 1 1. 9 1. 5 1. 1 37. 5% REMAINING 62. 5% Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Transportation Costs Market related Product related • Competition level • Density • Location of markets • Stowability • Ease/difficulty of • Nature and extent of regulation • Balance of freight traffic handling • Seasonality of product • Liability movements • Domestic vs. International Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Other Transportation Fees • Transit services or “Stop-off charges” • Diversion/Reconsignment fees • Demurrage (rail) or Detention (motor) fees • Accessorial services fees • Surcharges Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Dock Level Decisions • Tactical planning and control activities concerned with making and receiving shipments and loading and unloading freight Order picking Routing & Scheduling Load Planning Receiving Unloading Benefits include: • Greater vehicle utilization • Improved and more responsive customer service • Reduced transportation expenses • Reduced capital investment in equipment Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Dock Level Decisions Tactical planning and control activities concerned with making and receiving shipments and supervision of loading and unloading freight Load Planning • Routing and Scheduling Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Load Planning • Proper packing, marking, blocking, bracing, and stowage of freight • Importance: – Legal/safety implications – Product protection – Cost/service performance Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Routing and Scheduling • Finding best path a vehicle should follow through networks of roads, rail lines, shipping lanes, and air routes • Determining best pattern for stops, multi-vehicle use, driver layovers, time of day restrictions Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Principles for Dock Level Operations • Load trucks with deliveries for customers closest to each other • Stops on individual days arranged together • Start routes with farthest stops first • Circular routes - don’t cross paths • Use largest vehicles first if can be filled • Mix pickups in with deliveries, not at end • If one stop far from other, use another truck • Avoid narrow stop time windows, or handle separately Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Benefits of Good Dock Level Operations • Greater vehicle utilization • Improved and more responsive customer service • Reduced transportation expenses • Reduced capital investment in equipment Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.