Transportation Management Transportation Management

TRANSPORTATION REQUIREMENTS & STRATEGY Transportation Strategy Alignment CORPORATE / DIVISION MANAGEMENT SYSTEM BUSINESS UNIT STRATEGIC PLAN SUPPLY CHAIN DESIGN & PERFORMANCE SPECS LOGISTICS (LINKAGE) OPERATING MODEL TRANSPORTATION REQUIREMENTS & STRATEGY Transportation Management

TRANSPORTATION PERFORMANCE EXPECTATIONS = OPERATING BUDGET Integrated Management Framework MISSION core purpose of the enterprise VALUES timeless guiding principles VISION word picture of ideal future business model BUSINESS STRATEGY SBU game plan for success KEY PERFORMANCE INDICATORS presentation of key / critical strategic business objectives BALANCED SCORECARD business performance measures, goals, targets, and initiatives CASCADING MEASURES performance measures common to all functions aligned to business objectives GOALS DEPLOYMENT link balanced scorecard to business processes such as budgeting, reporting, compensation TRANSPORTATION PERFORMANCE EXPECTATIONS = OPERATING BUDGET Transportation Management

Strategic Business Unit Objectives & Goals (Supply Chain Examples) Significantly improve on-time delivery performance GOAL - design and implement carrier performance report card system in 2012; publish carrier targets by mode Significantly reduce the cost of inbound freight per pound GOAL - Consolidate LTL freight across enterprise and negotiate new carrier contracts reducing LTL freight cost / lb. by 5% in 2012 Significantly reduce total number of incidents GOAL - Develop and implement core carrier driver training program in 2012 defining product safety targets and reporting requirements Transportation Management 4 4

Continuous Improvement Cycle 5 Transportation Management 5

21st Century Supply Chain UPSTREAM extraction NODE conversion VALUE ADDED TO PRODUCT OR SERVICE manufacture assembly INFORMATION distribution PRODUCT FLOW retail LOGISTICS LINKAGES consumption DOWNSTREAM Transportation Management 6 6

21st Century Lean / JIT Supply Chain Customer pulls product from producer Triggers producer to replenish purchased items Producer then pulls materials from supplier Triggers supplier to replenish supply items Continue pull process upstream in supply chain Producer (Shipper) Supplier Customer Transportation Management 7 7

Objectives of Logistics Function Inventory Management Customer Service Order Fulfillment Warehousing Transportation Transportation Management 8 8

Transportation Performance Variables Performance Measure Description Cost Total transportation cost including freight rates, buffer inventory warehousing, equipment leasing, assessorial charges, freight forwarder fees, broker’s fees, customs, etc. Speed Time requirements from when the shipment is released at the supplier’s facility to the time of receipt at buyer’s receiving dock Reliability Also know as fill rate; refers to ability to deliver on time; percentage of deliveries made within the specified time window Capability Ability of a carrier to move the material from supplier to buyer as required including special materials, hazardous materials, etc. Accessibility Capability of the carrier to pick up and deliver the shipment door-to-door Transportation Management 9 9

Transportation Network Participants – shippers / carriers / 3PLs Inbound Transportation Outbound Transportation PRODUCER inter / intra plant transportation SUPPLIER CUSTOMER Reverse Logistics Transportation Management 10 10

Logistics Process Management Strategic business unit logistics management options Internal Mgt employees providing leadership & expertise Internal 3PL 3rd party logistics unit provide leadership & expertise External 3PL 3rd party logistics unit providing leadership & expertise Transportation Management 11 11

Carrier Selection Process Aggregation Freight Database Management Report Cards Issued Benchmark Modal Rate Plan Routing Guides Optimization MEASURE PLAN SETTLE DO Freight Audit and Payment Carrier Selection Negotiation Shipment Execution Consolidation Transportation Management 12 12

Benchmarking Process benchmarking provides … company's comparative performance to that of other companies using both objective and subjective criteria strategic positions of competitors for use as reference points in the formation of decisions and objectives performance assessment for a specific activity relative to the methods of a competitor doing the same thing comparative methodology for lowering costs, reducing defects, increasing quality, and / or improving outcomes linked to operational excellence Transportation Management

Transportation Improvement Initiatives Transportation Management 14 14

Transportation Mode Choices Strengths Limitations Primary Role Primary Product Characteristics Example Products Truck Accessible Fast & versatile Customer service Limited capacity High cost Move smaller shipments in local, regional, and national markets High value Finished goods Low volume Food; Clothing; Electronics Furniture Rail High capacity Low cost Accessibility Inconsistent service Damage rates Move large shipments of domestic freight long distances Low value Raw materials High volume Coal/coke Lumber/paper Grain; Chemicals Air Speed Freight protection Flexibility Low capacity Move urgent shipments of domestic freight and smaller shipments of international freight Time sensitive Computers Periodicals Pharmaceuticals B2C deliveries Water International Slow Move large domestic shipments via rivers, canals and large shipments of international freight Bulk commodities Containerized finished goods Crude oil; Ores; Minerals; Farm Products; Clothing; Electronics; Toys Pipeline In-transit storage Efficiency Limited network Move large volumes of domestic freight long distances Liquid commodities Not time sensitive   Crude oil Petroleum Gasoline; Natural gas Transportation Management 15 15

Carrier Negotiating Approach - Ocean Transportation Management 16 16

Enterprise Resource Planning (SAP) Transportation Management 17 17

Transportation Management Software SAP Transportation Management software helps companies to efficiently, quickly and accurately orchestrate the movement of goods. It creates an environment that simplifies, automates and interconnects transportation processes, improves order management, planning and consolidation and optimizing inbound and outbound shipments while taking into account real-world constraints and costs and penalties. Transportation Management 18 18

SAP Transportation Management 19 19

Transportation Management Dashboard 20 20

Logistics Management Salaries Transportation Management 21 21

Emerging Transportation Model ________________ Transportation Management 22 22

SCMN 4780 Transportation Strategy Test 3 Multiple Choice True / False Matching Short-Answer GJP will distribute schedule for final team deliverable submission Transportation Management 23 23