Modes of Transportation in Supply Chain

Trey Lynn Brigham Young University BusM 361 Professor S. Tom Foster

Agenda
Transportation defined Brainstorming Modes of transportation Strengths and weaknesses of each mode Pricing UPS example Exercise Summary

Transportation
means of conveyance or travel (of goods and services) from one place to another

Brainstorming
What types of products require transportation in your organization? How far are these products required to travel? How important is the speed of delivery for these products?

Modes of Transportation
Motor Air Rail Water Pipeline Intermodal

Motor (Trucking)
1970s economic deregulation of interstate traffic Lower costs Accessibility Small, frequent shipments

Trucking
Disadvantages
Speed Capacity Range

Air
Premium transportation Speed delivery Range

Air
Disadvantages
Price Non-direct points Add-on charges Necessary?

Rail
Lowest overall cost per unit weight Consistent time schedule Recommended with most commodity types Weather

Rail
Disadvantages
Inflexibility Potential damage of goods Ineffective with small shipments

Water (Ships)
Large volumes Long distances Slower than air travel Limited access

Pipeline
Transport of homogeneous materials Lower transportation costs than other modes Higher initial costs Unable to transport a variety of materials

Intermodal
Use of various transportation modes Containers More popular due to globalization

Pricing
Handling characteristics Distance freight is moved Weight of freight Costs inversely related to speed of service

United Parcel Service

Small package shipper Business built around transportation Effective intermodal transportation

UPS - Methods
Trucks
Small, frequent shipments Deliver directly to homes and businesses

Air
Time sensitive shipments Small packages (long distances)

UPS - Methods
Rail
Transcontinental distances Used primarily in intermodal transport

Sea
Door to door ocean shipping Weekly departures between major ports

UPS
Provides expertise as a resource to businesses http://www.ups-scs.com/transportation/

Exercise
Take ideas from brainstorming and decide which modes of transportation would be best for your company. List circumstances which would require using alternate modes of transportation and consequences your company would encounter.

Summary
Each mode of transportation has its own strengths and weaknesses The effectiveness of each mode depends on several factors including distance, price, and timeliness Services exist to help choose the best modes of transportation

Bibliography
Cavinato, Joseph L, Ralph G Kauffman. The Purchasing Handbook. The McGraw-Hill Companies, 2002, New York, NY. Copacino, William C. and James F. Robeson. The Logistics Handbook. The Free Press, 1994, New York, NY. Taylor, David. Global Cases in Logistics and Supply Chain Management. International Thomson Business Press, 1997, London, UK. http://www.ups-scs.com/transportation/