Transportation Management

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Transportation Management

• What are your critical transportation factors?
• How do these factors impact your business and
  the business of your competition?
• How might this change minute to minute or year
  to year?
• What are the comparative cost of cargo movement?
• Relationships

2
Transportation Factors

• Shippers
• Carriers
• Pricing
• Infrastructure
• Environment
• Intermediaries
• Security
• Safety
• Which are most important to your system?
• And why???

3
Shippers

• Wish to decrease cost while increasing service
• Shippers desire for service, what is it worth?
• tariffmarketsecondary market

4
Carrier Partner Traits

• Ability
• Reliability
• Stability
• Honesty
• Consistency
• Health
• Flexibility

5
Carrier issues impact you and your customer!

• impact
• Transportation cost landed cost, SCA
• Transit time inventory, variability issues
• Reliability inventory
• Accessibility transit time, freight cost
• Capabilities- level of meet your needs
• Security Safety inventory

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What is the power of the carrier over your
business and how do you protect yourself?
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• Understand your carrier and their business
• Who are their competitors?
• Where do they stand within their industry?
• What are the key drivers in their decisions?
• What type of market do they operate in?
• What are their cost of operations?
• What is their future?

8

• Communicate and share information with your
  carrier(s), remember they are part of your Supply
  Chain system! They can improve your return.
• How much to share?

9
Carrier Services

• Transportation is more than just moving product,
  what other services can they provide?
• Expand your knowledge of other functional areas
  within your business as well as the business of
  your transportation partner

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Services Provided

• Reconsignment
• Diversion
• Stopping in Transit
• Transit Privilege
• Documentation
• Information

• Consolidation
• Vehicle services
• Loading Unloading
• Weighing
• Tracing/Expediting

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Pricing Transportation

• Point of negotiation or tariff item?
• Dont be afraid to ask!
• Will be different between and within modes

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Price Negotiation

• TERMS TERMS TERMS!!!
• What is included in the price
• Know the cost involved
• Lower rates vs. service
• Know the impact of your decision!!!
• When in doubt, ask!!

13
The Carriers View

• When to say NO!
• Must know cost!
• Shippers power as well as other stakeholders
• Industry trends
• Business mix trends
• Know your customers

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Logistics Relationships

• Working together with your supply chain partners
• Vendor/client Strategic alliance
• Be a good partnershare information!!!!

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To build or not to build?Vendor /Client or
Alliance

• Logistical audit
• S.W.O.T., Look at current system
• Goals and objectives, where you want to go
• Measures, needs, gaps
• Industry analysis
• Management support
• What does it tell you?
• Decision to form a relationship
• Why? Why? Why? Why? Why?
• Benefits for you and your partner
• Drivers- Reasons to partner SCA?
• Facilitators- factors that enhance growth

Customers view
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• Evaluate the alternatives
• Select a partner(s), if one is found
• Implementation
• Continuous improvement
• A collaborative relationship
• Keep people involved up and down the chain!
• Never stop working to improve your system and
  eliminate the sins of waste

17
Logistical Intermediaries

• What is your corporate and logistics strategy?
• What expertise do you have in your own
  organization?
• Country specific knowledge
• Partner or service provider?
• They help you get it there!

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Types of Intermediaries

• Freight Forwarder
• NVOCCs
• Agent(s)
• Export Management Companies
• Export Trading Companies
• Customs Broker
• Export Packer
• Third party logistics providers (3PLs)

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Trade-offs

• What degree of control do you wish along the
  chain?
• Centralized vs. Decentralized
• Or a Combination

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Value and Service Maximization
Centralization planning and coordination of
logistical activities
Decentralization characteristics specific to
each market
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Degree of Transportation Responsibility

• Are you selling Ex-works (EXW)
• Free on Board (FOB)
• Cost, Insurance and Freight (CIF)
• Delivered Duty Paid (DDP)?
• INCO Terms

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Inbound

• Multimodal coordination
• Coordination between the links
• Knowing what needs to happen
• Knowing what might happen
• Issue anticipation
• Getting the job done!!

23
Forecasting

• The purpose of forecasting is help us reduce
  uncertainty
• We forecast to help ourselves anticipate and
  manage change, which is inevitable
• What factors are you looking at in your project
• Forecasting of what?

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Determinants of Change

• Demographics
• Income
• Tastes/needs
• Mergers
• Acquisitions
• Global economic conditions
• Environmental concerns
• Others

• Technology
• Politics
• Law
• War and/or threat
• Strikes
• Nature
• Depletion
• Discovery
• Disaster

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Supply Forecasting

• Availability
• Quantity, capacity
• Lead time changes
• Supply chains
• Suppliers
• Material requirements
• Technology
• Life Cycle issues
• Industry consolidation
• Others?

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Forecasting, looking for change that will impact
you

• Trends
• In your own industry as well as others
• In the transportation industry
• In the political arena
• Transportation industry

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The Environment of GL

• International trade law
• Political stability and instability
• Cultural diversity
• Currency fluctuations
• Lengthening of the supply chain

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The impact of culture

• People are different, not better not worse just
  different
• What are the key drivers for your customer?
• Always respect the culture of your market and
  your channel

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A Complex Logistics Channel
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What is the Logistics System?

• How does it fit with and support the overall
  corporate strategy?
• Do what you do best!
• Asking the right questions!!

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System Design or Redesign,Why Change?

• Seeking the Competitive Advantage and earn
  greater returns!!!
• Add value and better serve your customer base
• Markets Change
• Competitive Pressures
• Cost Management
• Continual Improvement
• Trade-offs vs. Customer Service

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Key Logistical System Features

• Excellent Customer Service
• Cycle Time / Lead Time
• Consistency of Cycles
• Order Accuracy
• Consolidation
• Problem Notification/Resolution
• Customer Satisfaction/Feedback
• Flexibility / Responsiveness
• Cost
• Benchmarking

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Long Term Objectives

• What are they?
• Quantitative
• Measurable
• Realistic
• Understandable
• Specific Results!

34
What are the goals of your system?

• Perfect Order Fulfillment
• Minimum Supply Chain Cost
• Minimum cash-to-cash cycle
• Customer service beyond expectation
• Organizational differentiation
• The search for a SCA!!!

35
Traits of the system

• Positioning
• IntegrationInternal and external
• Agility
• Measurement
• Be careful what you ask!!!!!!
• Respond to your feedback
• P.279, Gourdin

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What is your Corporate Strategy?
Differentiation
Low Cost
Focus
Michael Porter
How can you as a manager of logistics add value?
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Logistics Strategies

• Strategy Foundations
• Mission
• Vision
• Strategies
• Performance Measures
• Corporate and Logistics Strategies
• What is a Strategy?
• Long-Term Action Plan
• Entrepreneurial
• Intent is to Create Competitive Advantage
• What are Logistics Strategies?

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Logistics Strategies

• Uninterrupted Supply of Inbound Material
• Supplier Selection
• Inbound Transportation
• Forecasting of Supply
• Information Sharing
• Facility Numbers and Locations
• Local Warehouses
• Distribution Centers
• Inventory Quantities, type and Locations
• Timely Distribution of Necessary Materials
• Forecasting of Demand
• Outbound Transportation

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Logistics Strategies

• Time-Based
• cash-to-cash cycle
• Time compression, cross-docking
• Asset Productivity
• Inventory reduction, facility and equipment
  utilization
• keep it moving
• Technology-Based
• Relationship-Based
• CollaborationHow can we help each other do it
  better?

40
Strategic Logistics Management
Science
Art
FormulateImplementEvaluateRevise
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• What is your overall corporate strategy?
• How will your logistics strategy support it?

42

• What elements will you integrate and how will
  you integrate them in order to achieve a
  competitive advantage?
• The weakest link

43
System Design (Start with the customer)

• Design a system that efficiently moves product
  while adding value and best serving the customer

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System Design

• Define the design process
• Why are you doing it and how does it support the
  corporate strategies?
• What are your objectives?
• World-class excellence???
• What does this mean to your customers, their
  customers, other stakeholders and you?

45
Where is the logistical responsibility within the
firm?Where should it be?
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How is the logistical function viewed within the
organization?

• Profit center?
• Just part of doing business?
• Useful tool?
• Strategic Activity?
• How might this change?

47
System Design

• Perform a logistics audit, gather information
• Customer-environment, internal and external
• where are the disconnects
• What are their needs?
• Logistical Corporate S.W.O.T.
• environmental scanning, stakeholders
• Includes internal and external audit
• Cost breakout
• Benchmarking

overhead
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Logistics S.W.O.T.

• What do you have to work with?
• What areas need worked on?
• What opportunities are before you?
• What threats are in your way?
• What factors can we influence?

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How complex is your Environment?How do you deal
with it?
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Porters Five Forces
Potential development of substitute products
Bargaining power of suppliers
Rivalry among Competing firms
Bargaining power of consumers
Potential entry of new competitors
The nature of competitiveness
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System Design

• Examine the network alternatives
• Look at the what ifs
• Snapshot, a place to start, remember things will
  change
• Modeling, what information do you need?
• Demand Data, volumes and customer locations
• Supply Data, volumes and supplier locations
• Comparative freight rates
• Comparatives facilities cost
• Comparative labor cost
• Other

52
System Design

• Conduct a facility location analysis
• Site selection
• Quantitative and Qualitative
• Transportation Pricing
• Customer Service
• Potential for growth

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System Design

• Facility location cont.
• Labor quality and availability
• Labor/Management relations
• Utilities
• Transportation services
• Taxes, local laws and incentives
• Community services

54
System Design

• Logistics Facility planning
• Facility Requirements
• Modes, heights, space, docks doors, Automation?,
• Transportation economics
• Number of facilities
• Locations
• Future Requirements
• Build/Own or Lease

55
System Design

• Make decisions regarding network and facility
  location
• Develop an implementation plan
• Implement it
• Evaluate it and improve it!!!

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Roadblocks to improvement

• Not looking through the customers eyes
• Incorrect data
• Not taking a systems approach
• Inability to change the culture
• Lack of support
• The challenges of the future

57
Customer Service Cycle

• Order Placement
• Order Processing
• Pull-Pack-Ship
• Order cycle Time and Variability
• Dependability
• Damage
• Accuracy
• Communication
• Easy to deal with

58
Customer Service Measures

• On Time Delivery
• Exact day, exact time
• Damage free
• Lead Time
• Flexibility
• Accuracy

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Reverse logistics

• Scrap, Surplus, Obsolete
• Returned Goods
• Used Packaging
• Containers
• Waste chemicals

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Critical Logistical Issues

• Timely Service
• On Time, Consistent
• Technology Infrastructure
• Information Availability and Information Accuracy
• Efficient Use of Logistics Assets
• Transportation Assets
• Facilities
• Inventories
• Cost Effective Services
• Entire Logistics System
• Integration
• Of Organizational Activities
• Of Supply Chains
• Of Modes

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Supply Chain Management

• Linking Functions
• Purchasing
• Inbound Transportation
• Warehousing and Inventory Control
• Production Planning and Control
• Outbound Transportation
• Distribution
• Linking Firms
• Suppliers
• Manufacturers
• Wholesalers
• Retailers
• Consumers

62
Supply Chain Management

• Time
• Quality
• Productivity
• Reverse Logistics
• Customer Satisfaction
• Product Delivery
• Parts Availability
• Service Support
• Competitive Advantage

63
Supply Chain Management

• Managing Three Flows
• Information
• Materials
• Funds
• All Three Flows Must Be Managed in Both Directions

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Performance MeasuresSMART

• Specific
• Measurable
• Attainable
• Realistic
• Tangible

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• Remember its a system, take a
• systems approach