Transcript
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LOGISTICS AND SUPPLY CHAIN
MANGEMENT
TRANSPORTATION MODES AND SELECTION
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Logistics is:
The process of planning, implementing, and controlling the efficient,effective flow and storage of goods, services, and related informationfrom point of origin to point of consumption for the purpose ofconforming to customer requirements.
Logistics is necessary to: Move goods from suppliers to buyers
Move finished goods to the customer
Products have little value to the customer until they are moved to thecustomers point of consumption
Time utility-products are delivered at the right time. Place utility-products are delivered to the desired location.
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Transportation
Means of conveyance or travel (of goods and services) from one place
to another
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Legal Forms of Transportation
Transportation service companies are classified legally as either common,
contract, exempt, or private carriers.
Common carriers- offer transportation services to all shippers atpublished rates between designated locations without
discrimination.
Contract carriers- not bound to serve the general public. Contract
carriers serve specific customers under contractual agreements.
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Exempt carriers-exempt from regulation of services & rates & if
they transport certain exempt products like produce, livestock, coal,
or newspapers.
Private carrier- not subject to economic regulation & typically
transports goods for the company owning the carrier.
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MODES OF TRANSPORTATION
Motor
Air
Rail Water
Pipeline
Intermodal
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Motor (Trucking)
ADVANTAGES:
1970s economic deregulation ofinterstate traffic
Lower costs
Accessibility
Small, frequent shipments
DISADVANTAGES
Speed
Capacity
Range
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Air
ADVANTAGES
Premium transportation
Speed delivery
Range
DISADVANTAGES
Price
Non-direct points
Add-on charges
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Rail
ADVANTAGES
Lowest overall cost per unit weight
Consistent time schedule
Recommended with most commodity types Weather
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DISADVANTAGES
Inflexibility
Potential damage of goods
Ineffective with small shipments
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Water (Ships)
Large volumes
Long distances
Slower than air travel
Limited access
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Pipeline
Transport of homogeneous materials
Lower transportation costs than other modes
Higher initial costs
Unable to transport a variety of materials
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Intermodal
Use of various transportation modes
Containers
More popular due to globalization
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Third-Party Logistics Services- intermediaries facilitate use of thetransportation alternatives.
Freight forwarders- consolidate shipments to fill trucks or rail cars.
Transportation brokers- handle transportation requirements ofshippers. legally authorized to act as agents on shippers behalf.
Shippers Associations- non-profit orgs that move members cargo.Consolidate members shipments to get volume discounts.
Intermodal marketing companies(IMCs) act as intermediarie
s between intermodal rail carriers & shippers.
Integrated logistics service providers provide services for a fee.
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Pricing
Handling characteristics
Distance freight is moved
Weight of freight
Costs inversely related to speed of service
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Cost-of-service pricing- vary based on fixed & variable costs. As volumeincreases, the fixed costs portion goes down.
Value-of-Service Pricing-services priced at market bearing competitivelevels. A profit maximizing pricing approach.
Terms of Sale-price includes transportation FOB destinationfree onboardto the shipments destination.
Pricing Negotiation-Since the deregulation, negotiating prices is morecommon.
Rate Categories-rates can be classified a number of different ways.Classified as class rates, exception rates, commodity rates, &miscellaneous rates.
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United Parcel Service
Small package shipper
Business built around transportation
Effective intermodal transportation
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UPS - Methods
Trucks
Small, frequent shipments
Deliver directly to homes and businesses
Air Time sensitive shipments
Small packages (long distances)
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Rail
Transcontinental distances
Used primarily in intermodal transport
Sea Door to door ocean shipping
Weekly departures between major ports
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Conclusion
Each mode of transportation has its own strengths and weaknesses
The effectiveness of each mode depends on several factors including
distance, price, and timeliness
Services exist to help choose the best modes of transportation
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