TRANSPORTATION INFRASTRUCTURE l Transport functionality : product movement and product storage. l Product movement, in-transit inventory, material handling:

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Presentation transcript:

TRANSPORTATION INFRASTRUCTURE l Transport functionality : product movement and product storage. l Product movement, in-transit inventory, material handling: moving to the next stage or closer to the ultimate customer, enhance product value/utility (time and place) and minimizing temporal, financial and environmental resources. l Product storage : temporary storage especially when the warehouse space is limited. For example : Astra’s moving car workshop

l Transport Principles : economy of scale and economy of distance. l Economy of scale : transportation cost per unit decreases when the size of the shipment increases. l Economy of distance : transportation cost per unit of distance decreases as the distance increases. l Compare the cost and benefits of each transportation mode. l Considerations to be taken in deciding the most appropriate transportation format (common carriers, contract carriers, private carriers).

TRANSPORTATION MANAGEMENT l Transport economics consist of seven factors to develop rates : distance, volume, density, stowability (space utilization), handling, liability, market factors (back-haul vs deadhead). l Cost structure : variable cost, fixed cost, joint cost, common cost. l Pricing strategy : trade off between the cost of service incurred by carrier and the value of service to shipper. l Cost of service strategy : for low value goods, high competitive situation.

l Value of service strategy : high value goods and limited competitive exist. For example : premium overnight delivery. l Combination strategy : intermediate level between the first and the second strategy. l Net rate pricing : pricing simplifications, reduces administrative costs, generate savings. l Rating is applied specifically to common carriers, while contract carriers utilize similar concepts : class rates, commodity rates, exception rates, special rates. l Transport documentation : bill of lading, freight bill, manifest.

l Important issues : scheduling, integration