Transportation Decisions
Functionally transportation provides two major functions: Product movement and product storage.
(1) Product Movement :
Whether the product is in the form of materials, component, assemblies, work in process or finished goods, transportation is necessary to move it to the next stage of the manufacturing process, or, physically chicer to the ultimate customer. A primary transportation function is product movement up and down the value chain. Since transportation utilizes temporal, financial and environmental requires, it is important that items be moved only when it truly enhances product value.
The product is inaccessible during the transportation process. Such product, Commonly referred to as in-transit inventory, is becoming a significant consideration as a variety of supply chair strategies such as JIT and QR practices reduce manufacturing and distribute center inventory.
(1) Product storage : A less common transportation function is temporary storage. Vehicles make rather expensive storage facilities. However, it the in-transit product requires storage but will be moved again shortly (e.g. in a few day) the cost of unloading and reloading the product in a warehouse may exceed the daily charge of storage in the transportation vehicle.
Transportation Principles :-
Economy of scale refers to the characteristic that transportation cost per unit of weight decreases when the size of the shipment increase. For example, truck load (TL) shipments (i.e., shipments that utilize the entire vehicle capacity) cost has per pound then less-than-truck-load (LTL) shipments.
Economy of distance refers to the characteristic that transportation cost per unit of distance decrease as distance increases. For example, a shipment of 800 miles will cost les than two shipments of 400 miles.
Shipper and Consignees: -
The shipper and consignee have the common objective of moving goods from origin to have destination within a prescribed time at the lowest cost. Services include specified pickup and delivery time, predicate transit time, two low and damage, as well as accrete and timely exchange of information and invoicing.
The five basic transportation modes are rail, highway, water, pipeline and air. The relative importance of each mode can be measured in terms of system mileage, traffic volume, revenue, and the nature of traffic composition.
Fig. Cost Structure for each Mode :-
Ø Rail : High fixed cost in equipment, terminates, tracks etc. Low variable
cost.
Ø Highway: Low fixed cost (Highways in place and provided by public
support). Medium variable cost (full, maintenance, etc.)
Ø Water : Medium fixed cost (ships and equipment). Low variable cost (capability to transport large amount of tonnage).
Ø Pipeline : Highest fixed cost (rights-of-way, construction, requirements for control stations, and pumping capacity). Lowest variable cost (rotate cost of any significance).
Ø Air : Low fixed cost (aircraft and handling and cargo systems). High variable cost (full, labour, maintenance etc.)
(1) Product Movement :
Whether the product is in the form of materials, component, assemblies, work in process or finished goods, transportation is necessary to move it to the next stage of the manufacturing process, or, physically chicer to the ultimate customer. A primary transportation function is product movement up and down the value chain. Since transportation utilizes temporal, financial and environmental requires, it is important that items be moved only when it truly enhances product value.
The product is inaccessible during the transportation process. Such product, Commonly referred to as in-transit inventory, is becoming a significant consideration as a variety of supply chair strategies such as JIT and QR practices reduce manufacturing and distribute center inventory.
(1) Product storage : A less common transportation function is temporary storage. Vehicles make rather expensive storage facilities. However, it the in-transit product requires storage but will be moved again shortly (e.g. in a few day) the cost of unloading and reloading the product in a warehouse may exceed the daily charge of storage in the transportation vehicle.
Transportation Principles :-
Economy of scale refers to the characteristic that transportation cost per unit of weight decreases when the size of the shipment increase. For example, truck load (TL) shipments (i.e., shipments that utilize the entire vehicle capacity) cost has per pound then less-than-truck-load (LTL) shipments.
Economy of distance refers to the characteristic that transportation cost per unit of distance decrease as distance increases. For example, a shipment of 800 miles will cost les than two shipments of 400 miles.
Shipper and Consignees: -
The shipper and consignee have the common objective of moving goods from origin to have destination within a prescribed time at the lowest cost. Services include specified pickup and delivery time, predicate transit time, two low and damage, as well as accrete and timely exchange of information and invoicing.
The five basic transportation modes are rail, highway, water, pipeline and air. The relative importance of each mode can be measured in terms of system mileage, traffic volume, revenue, and the nature of traffic composition.
Fig. Cost Structure for each Mode :-
Ø Rail : High fixed cost in equipment, terminates, tracks etc. Low variable
cost.
Ø Highway: Low fixed cost (Highways in place and provided by public
support). Medium variable cost (full, maintenance, etc.)
Ø Water : Medium fixed cost (ships and equipment). Low variable cost (capability to transport large amount of tonnage).
Ø Pipeline : Highest fixed cost (rights-of-way, construction, requirements for control stations, and pumping capacity). Lowest variable cost (rotate cost of any significance).
Ø Air : Low fixed cost (aircraft and handling and cargo systems). High variable cost (full, labour, maintenance etc.)
