Logistics 5

  1. What is the most important issue with transportation?
  2. What is the largest portion of logistics costs?
  3. Pressing Issues of Transportation
    • Capacity: not enough capacity for all of the products being shipped
    • Cost: because of lack of capacity there is a rise in cost
    • Risk: a lot of these are transportation related. Weather and other risks are important because they impede our ability to transport things to where they need to be
  4. Largest mean of transportation
  5. Trucking
    • Has really good access
    • Most accessible mode & very reliable
    • There are weigh stations bc you can only transport so much weight
  6. Truckload (TL)
    • You bought the entire access for the trailer and you fill up to capacity and it goes straight to destination
    • You need shipments large enough
  7. Less than Truckload (LTL)
    • Smaller loads from multiple customers
    • Run by hub and spoke
    • They put your truckload into a hub and transport it to another hub going in your direction
    • More expensive and more operations behind this
  8. Rail
    • Largest ton/mile
    • They have to own and maintain their own right of way (they must own their own tracks)
    • Doesnt work well in EU or South America bc of differing rail guage
  9. What is the largest customers for rail?
    • UPS 
    • Cheaper than trucking
  10. Water
    • Cheap and slow
    • Hugh growth from the growth in Chinese manufacturers
    • Can carry 18,000 twenty foot equivalent, but most containers are 40 feet so they count as 2
  11. Busiest Intermodal Ports in the US
    • Los Angeles, CA
    • Houston is the largest Gulf port
    • Port of Prince Rupert in Canada was used more often to avoid the congestion in LA
  12. Air Transportation
    • Fast, Expensive, Secure
    • High value products or time-sensitive
  13. Pipeline
    • Privately owned
    • Slow but reliable, and secure
    • For fluids like oil and gas
  14. Intermodal
    Combining multiple modes for a single delivery
  15. Weight Factor in Transportation
    • As the shipment increases in weight, there will be in increase in LTL cost.
    • There is an LTL minimum
    • TL operates at a flat rate
    • If shipments are lighter then you will use LTL until the breakeven point
    • Image Upload 1
  16. Capacity Factor
    • LTL will charge as capacity goes up (there is also a minimum for this)
    • TL is still a flat rate 
    • Cubing out is when you fill up the trailer but everything is light
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  17. Distance Factor
    • Small Package (UPS) is zone based: things within a zone are priced the same bc the distance is similar enough
    • Conventional Parcel(USPS) is flat rate
    • TL/LTL is more attractive for shorter distances
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  18. Other Transportation Decision Factors
    • Stowability: can products be stacked
    • Urban or rural: Urban is more expensive
    • Competion: are you shipping somewhere where there is only one carrier
    • Deadhead miles: trailers are traveling empty
  19. FOB Origin
    Buyer takes responsibility at origin
  20. FOB Destination
    Buyer has responsibility until destination
  21. Prepaid
    Seller pays for the carrier
  22. Collect
    Buyer pays
  23. Charged back
    Buyer pays for the transportation
  24. Allowed
    Seller pays for the cost of transportation
  25. Bad Trends in Transportation
    • Driver Shortage
    • Aging Infrastructure
    • Congestion
  26. ELD (Electronic Logging Device)
    Record hours and miles driven bc you cannot exceed a certain amount for safety reasons
  27. Autonomous Braking
    If a truck gets too close to something then the truck will correct
  28. Platooning
    Creating a caravan of trucks; the trucks would align and sync
  29. Hours of Service (HOS) Regulations
    • Rules regulated by the government to increase safety of drivers
    • Bad for productivity
  30. Compliance, Safety, Accountability (CSA)
    • Created a database where you can see if a company/trucker gets into an accident
    • Companies can be suspended for being unfit or called marginal if unsafe
    • They also consider driver fitness
  31. Critera for selecting transportation
    • Select mode first and then a specific carrier
    • Performance Criteria (good service)
    • Relational Criteria (trustworthy)
    • Stability (financially stable)
  32. Weighted Factor Modeling
    Each category has a weight based on what is most important then they add up the weighted score
  33. Logistics Costs Tradeoffs
    • Image Upload 4
    • The lowest point in logistics is not the same as the lowest transportation cost. This means that when you look at the different carriers you might pay more for transportation for the lowest total cost
  34. How is Amazon cutting down on logistics costs?
    • Building distribution points to get closer to the customers, It cuts down on transportation costs 
    • However, sales eventually go up because you have smaller packages so you're not shipping enough items to be efficient
  35. Transportation Management System (TMS)
    • Technology helps you make decisions
    • Provide carrier compliance reports (shipments late/damaged)
    • Build loads
    • Optimize the differnt transportations
  36. Collaborative Transportation Management (CTM)
    • Managing transportation in a collaborative way with other companies
    • Bringing parties together to take away inefficiencies
    • Extension of CPFR
  37. CTM: Collaborative Continuous Move
    • 3 random companies come together to continuously move items to reduce deadhead
    • They would make a tour for the truck
  38. CTM: Co-Loading
    Companies shipping LTL to make a full truckload going to similar destinations
  39. CTM: Collaborative Dedicated Fleet
    • A bunch of different companies with a bunch of different stops
    • This helps the capacity crunch
  40. Benefits of CTM
    • On-time delivery goes up
    • Collaboratively has a higher likelihood of things being on time (not as much deadhead)
    • Drivers like the stability of tours
  41. Risking out
    Some products are vary valuable so they have a hard time finding insurance companies that are willing to cover the entire truck space
Card Set
Logistics 5