Supply Chain Management

1. The Use of different Modes of
Transport in Global Supply Chain
Project by:
• Nabeel Sarosh
• Anand P. Waindeshkar
Guidance by:
• Prof. Dr. Bernd Herrler

2. Agenda
1. Objectives
2. Introduction
3. Modes of transportation
4. Roles of transportation in Global Supply Chain
5. Factors (and Parties) Affecting Transportation Decisions
6. Making Transportation Decisions in Practice
7. Challenges
8. Case Study
9. Conclusion
10. Bibliography

3. 14-3
Summary of Learning Objectives:
• What are the different Modes of Transportation in Global Supply
Chain?
• What is the role of transportation in a supply chain?
• What are the different network design options & risk involve with it?
• What are roles of IT in transportation & how to make decisions for
choosing right mode/s of transportation in global supply chain?

4. Introduction
What is Global Supply Chain?
• A system of organizations, people, activities, information, and
resources involved in moving a product or service from supplier to
customer
• The primary objective of SCM is to fulfill customer demands through
the most efficient use of resources, including distribution
capacity, inventory, and labor.

5. Introduction
What is Transportation?
• Transport or transportation is a process which engages in
movement of people, animals and goods from one location to
another
• Any device used to move an item from one location to another
• Transport is important because it enables trade between people,
which is essential for the development of civilizations

6. Modes of Transportation - Global Supply Chain
• Road (Trucks – Truck Load & Less than Truck Load)
• Rail
• Air
• Package Carriers
• Water
• Pipeline

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Road – TL & TTL
Road transport can be the most flexible option for your international business, especially
within the EU. The motorway network is good and crossing national borders is usually quick
and efficient.
• Advantages:
▫ relatively low cost
▫ extensive road networks
▫ Schedule & track
▫ consignments can be secure and private
• Disadvantages:
▫ Long distances overland can take more time
▫ Traffic delays and breakdowns
▫ Risk of goods being damaged
▫ Toll charges are high in some countries
▫ Different road and traffic regulations

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Road – TL & TTL
You can either use your own vehicles, or a carrier. If you operate your own vehicles, you will
need to consider licenses, fuel costs, regulations, driver training and tax.
• Truckload shipping:
▫ large amounts of homogeneous cargo
▫ Fill an entire semi-trailer or intermodal container.
▫ A truckload carrier is a trucking company that generally
contracts an entire trailer-load to a single customer
• Less than truckload (LTL) shipping:
▫ The transportation of relatively small freight.
▫ The alternatives to LTL carriers are parcel carriers or
full truckload carriers.
▫ Parcel carriers usually handle small packages and freight
that can be broken down into units less than 150 pounds
(68 kg)
• Different types of carrier, include:
▫ Couriers
▫ Hauliers
▫ Freight forwarders

9. 14-9 Rails
Rail transport is a cost-effective and efficient way tomove your goods.
• Advantages:
1) Fuel Efficiency
2) Manpower efficiency
3) Land-use efficiency
4) Speed
5) Safety
• Disadvantages:
1) Cost & Maintenance
2) Inconvenience
3) Inflexible
4) Expensive than road transport
5) Mechanical failure or Industrial an disrupt
services
6) Adding to costs and affecting delivery schedules

10. Rails
These are the conditions under which rail transport is undertaken, including:
 Classification of dangerous goods
 Dangerous goods lists and any special provisions or exemptions
 Testing and use of packaging, intermediate bulk containers, large packaging and tanks
 Procedures relating to the consignment
 Conditions concerning the conditions of carriage, loading, unloading and handling

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Air
Air transport offers numerous advantages for international trade, depending on the
requirements of the organization.
• Advantages:
▫ Speed and Frequency
▫ Less Packing Required
▫ High levels of security for sensitive items
▫ Wide range of goods
• Disadvantages:
▫ Air transport can involve higher costs than
other options, and is not suitable for all goods
▫ Flights are subject to delay or cancellation
▫ Pay Taxes at each airport you use
▫ Fuel and currency surcharges will be added to
freight costs
▫ Further transportation may be needed

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Water
If your business needs to transport large quantities but there is no pressure to
deliver quickly, shipping by sea may be suitable.
• Advantages:
▫ Ship can carry large volumes at low costs
▫ Shipping containers can also be used for
further transportation by road or rail
▫ Dominant in global trade (autos, grain,
apparel, etc.)
• Disadvantages:
▫ Limited to certain geographic areas
▫ Routes and timetables are usually inflexible
▫ Tracking your goods’ progress is difficult
▫ To pay port duties and taxes
▫ Further transportation overland
▫ Basic freight rates are subject to fuel and
currency surcharges

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Intermodal
• Use of more than one mode of transportation to
move a shipment to its destination
• Most common example: rail/truck
• Also water/rail/truck or water/truck
• Grown considerably with increased use of containers
• Increased global trade has also increased use of
intermodal transportation
• More convenient for shippers (one entity provides
the complete service)
• Key issue involves the exchange of information to
facilitate transfer between different transport modes

14. 14-14
Pipeline
Pipeline transport is the transportation of goods through a pipe. Liquids and gases are
transported in pipelines and any chemically stable substance can be sent through a pipeline.
• Advantages:
▫ They are ideally suited to transport the liquids and
gases.
▫ Pipelines can be laid through difficult terrains as well
as under water.
▫ It involves very low energy consumption.
▫ It needs very little maintenance.
▫ Pipelines arc safe, accident-free and environmental
friendly.
• Disadvantages:
▫ It is not flexible, i.e., it can be used only for a few fixed
points.
▫ Its capacity cannot be increased once it is laid.
▫ It is difficult to make security arrangements for
pipelines.
▫ Underground pipelines cannot be easily repaired and
detection of leakage is also difficult.

15. 14-15
Pipeline
• Uses of Pipeline:
▫ Sewage, slurry, water
▫ Beer pipelines
▫ Transporting crude petroleum and refined
petroleum product including fuels
▫ Oil, natural gas, and biofuels
▫ Pneumatic tubes using compressed air can
be used to transport solid capsules
• Types of Pipeline:
▫ Gathering pipelines
▫ Transportation pipelines
▫ Distribution pipelines

16. 14-16
Package Carriers
• Companies like FedEx, UPS, USPS, that
carry small packages ranging from letters
to shipments of about 150 pounds
• Expensive
• Rapid and reliable delivery
• Small and time-sensitive shipments
• Preferred mode for e-businesses (e.g.,
Amazon, Dell, McMaster-Carr)
• Consolidation of shipments (especially
important for package carriers that use air
as a primary method of transport)

17. Roles of transportation - Global Supply Chain
• International trade is becoming a bigger
part of the world's economic activity.
• Any supply chains success is closely
linked to the appropriate use of
transportation.
• Supply chain also use responsive
transportation to centralize inventories
and operate with fewer facilities

18. Factors (and Parties) Affecting Transportation Decisions
• What do you want to distribute?
▫ Size and weight will affect the cost.
• How quickly does the product need to reach
its destination?
▫ This will affect which type of delivery service you
use and the cost - sending goods by air is quicker
but significantly more expensive than by sea.
• Where do the goods need to go?
▫ For example, Europe has a large rail and inland
waterway network, but you may encounter
problems if the destination is especially remote.
•

19. 14-19
Design Options for a Transportation Network
• Direct shipping network
• Direct shipping with milk runs
• All shipments via central DC
• Shipping via DC using milk runs
• Tailored network

20. 14-20
Making Transportation Decisions in Practice
• Align transportation strategy with
competitive strategy
• Consider both in-house and outsourced
transportation
• Design a transportation network that can
handle e-commerce
• Use technology to improve transportation
performance
• Design flexibility into the transportation
network

21. Challenges
• Demographic trends
• Economic circumstances
• Connectivity of existing networks
• Environmental issues
• Existing transport infrastructure capacity
• Environmental issues
• Travel patterns and trip rates
• Air quality and noise pollution
• Socio-economic profile

22. Case Study
Please follow the link
http://youtu.be/mhGaz_qGizA

23. • A manager must account for inventory costs when selecting a mode of
transportation
• A mode with higher transportation costs can be justified if it results in
significantly lower inventories
• Must be future ready & Innovative
• Work on the Challenges & keep upgrading the transportation
standards

24. Bibliography
• Supply Chain Management – Strategy, Planning & Operation (5th Edition),
Authors: Sunil Chopra & Peter Meindl
• U.S. Department of Transportation Federal Highway Administration
• Center for Freight & Infrastructure Research & Education
• ^ Perez, Hernan David. Supply Chain Roadmap: aligning supply chain with
business strategy
• ^ Oliver, R. K.; Webber, M. D. (1992) [1982]. "Supply-chain management:
logistics catches up with strategy“
• Blanchard, David (2010). Supply Chain Management Best Practices (2nd
ed.). John Wiley & Sons
• http://viktorwong-logistics.blogspot.de/2010/02/advantages-of-air-freight.
html

25. THANK YOU!!