Logistics in SCM

An Insight
 Supply Chain
Material Handling
Networks Customer
Manufacture Warehouse
Customer
Supplier Materials
Assembly
Customer
Manufacture Components Warehouse
Inter-facility
Customer
Supplier Transport Assembly Finished Goods
Customer
Manufacture Warehouse
Customer
Transportation
Transportation Networks
Networks
Supply Chain is the collection of all components and functions
associated with the creation and ultimate delivery of a product or service
Logistics

 Logistics is the collection of activities associated with

acquiring, moving, storing and delivering supply chain
commodities

 It encompasses the business functions of transportation,

distribution, warehousing, material handling, and inventory
management and interfaces closely with manufacturing &
marketing.
Business Segments and
Government Functions

Service
Service Public
Public
Manufacturing
Manufacturing Companies
Companies Transportation
Transportation

RetailingFirms
Firms Petroleum
Petroleum
Retailing Pipelines
Pipelines
Logistics
Logistics
FoodProducers
Food Producers
&Distributors
Distributors Utilities
Utilities
&

Transportation
Transportation Postal
Postal
Military
Military Carriers
Carriers Delivery
Delivery
Significance of Logistics

 High costs involved in operating a Supply-Chain

 Estimated total logistics costs in USA is 797 Billion $ in 1996 of

which 451 Billion $ was on Transport. Roughly 11% of US GDP.

USSpending

900
Billion USD

800
700
600
500
400
300
200
100
0
Social H ealth Defense Logistics
Security Services
Areaof Spending
 Significance of Logistics - Contd...

Costs as % of Transport Warehouse/Depot Inventory Administration Overall

Sales turnover Cost Cost Investment/Holding Cost Distribution
Cost Cost

Main company
business % % % % %
Office Equipment 3.2 10.7 .87 14.77
Health supplies 1.36 9.77 .66 .19 11.98
Soft Drinks 2.53 2.71 .44 5.68
Beer 8.16 2.82 .56 2.19 13.74
Spirits Distribution .37 .27 .07 .1 .81
Cement 25.2 9.1 7.1 4.6 46.00
Automotive parts 2.07 6.35 1.53 9.96
Gas Supply 9.41 2.45 .02 11.98
Computer .45 .1 .29 .05 .88
Maintenance
Computer Supply .65 .78 .09 1.52
Healthcare .96 1.08 1.21 3.25
Specialist 7.23 1.95 .2 .49 9.87
Chemicals
Fashion .38 1.31 .33 2.02
Food Packaging 3.14 3.73 .85 7.72
Logistics - Other Influencing Factors

 Deregulation - Shift towards a free market industry

 Global Markets - Business marketplace is getting global in scope

 Customer Service - Above factors aid for better customer service

 Environment - Current and future environmental regulations have

significant implications on logistics

 Technology - Accelerating advances in technology significantly change

and improve logistics operations.
Logistics Modeling
 Key Questions faced in SCM
Where to produce & Where to store finished goods?
assemble goods? Where to store spare parts?
How much to produce? How much to store?
When to produce? How to retrieve from storage?
Customer

Manufacture Warehouse

Customer
What markets to serve?
Supplier What level of service?
What level of service cost?
Customer
Where to acquire
materials &
Manufacture Warehouse
components?

Customer
What fleet size?
What vehicle routes? How much to ship?
What shipment routes? When to ship?
What modes of transportation?
 Five Fundamental Characteristics

 Multiple business functions are impacted

- Like Product Costing, Budgets, Inventory Etc.

 Tradeoffs among conflicting objectives

- Logistics dept. holds the key in deciding where to compromise.

 Impacts are difficult to precisely evaluate

- A system/process should be in place to evaluate the impact

 Business issues unique to each logistics system

 Quantitative analysis is essential for intelligent decisions

- Use of technology/decision support tools
 Elements of Modeling

Linear/Integer Client/Server
Rationalization Programming Simulation Architecture
Algorithms

Logistics Human
Strategy Judgement

Movement
Object-Oriented Requirement Database
Data Models Spreadsheets Software
Data

Transportation Supply Chain Strategic, Tactical

Heuristics Asset Infrastructure & Operational
Data Data Models
Visual
Graphical User Activity-Based
Interfaces Costing
Geographic Data
Modeling Evaluation Aggregation &
& Information
Languages Systems Hierarchical
Benchmarking Models

Each of these concepts or tools contribute to the logistics analysis

process.
 Logistics Strategies

 Provide a framework for the type and scope of specific logistics decisions
 Choosing the right strategy is more significant (from a financial or customer service standpoint) than
optimizing specific lower-level decisions

Ship to a customer from a single warehouse?

Specify Logistics Strategy
Ship to a customer from multiple warehouses?

Answer specific logistics questions Which warehouse should supply a

customer?

At one level companies must choose smart logistics strategies, implying

specific logistics questions to answer.
Logistics Strategies - Details...

Logistics Strategies includes the business goals, requirements,

allowable decisions, tactics, and vision for designing and
operating a logistics system.

Vehicle Routing
Shipment Planning
& Scheduling

Supply Chain
Planning

Transportation Warehousing
Systems Planning

General classes of applications in logistics

modeling
 Logistic Strategies Details.. (contd..)

General scope and properties of strategic, tactical, and operational model views.

•Supply chain design

•Resource acquisition
Strategic •Broad scope, highly aggregated data
•Long-term planning horizons (1 year +)

•Production/distribution planning
Tactical •Resource allocation
•Medium-term planning horizons (monthly, quarterly)

•Shipment routing & scheduling

Operational •Resource routing & scheduling
•Narrow scope, detailed data
•Short-term planning horizons (daily, real-time)
Logistic Strategies Details.. (contd..)

Supply
Chain Transportation Shipment Vehicle
Planning Planning Planning Routing Warehousing
Warehouse
Strategic Site Location Site Location Outsourcing Fleet Sizing Layout
Material
Capacity Handling
Sizing Fleet Sizing Bid Analysis Design

Sourcing Fleet Sizing

Production Routing Consolidation Routing Storage

Tactical Planning Strategy Strategy Strategy Allocation

Network Mode Zone Order Picking

Alignment Strategy Alignment Strategies

MRP, DRP, Shipment Vehicle

Operational ERP Load Matching Dispatching Dispatching Order Picking

Logistics application areas by modeling views

Possible Strategies

 Just-in-Time
 Freight Consolidation
 Integration of Inbound & Distribution
 Fixed & Variable Routes
 DC Consolidation & Decentralizing DCs
 Hired Fleet & Private Fleet
 Fleet/Carrier Routing
 Material Sourcing
Just-in-Time Logistics

Inventory Costs JIT Transportation & Service Costs

• leaner supply chain • smaller and more frequent shipments
• reduced inventory levels • increased transportation costs
• reduced inventory costs • much greater service required from
suppliers and the transportation system

E.g.: Made to order Cars, Boilers, Power Plants (Rolls Royce, Alsthom, Wartsila Diesel…)

“JIT is a shift in thinking from inventory levels to inventory

velocity or “turns.” For a specified time period, the turn
rate for a product is calculated by dividing total throughput
by the average inventory level.”
 Freight Consolidation - Routing

Shipments in the logistics system can be routed and scheduled

independently of each other or can be combined to try and achieve
transportation economies-of-scale.

Shipments Vehicle Routes

Vehicle routing: Individual shipments can be combined to share a

transportation asset making pickup or delivery stops at different facilities.
This type of consolidation is called multi-stop vehicle routing

E.g.: Courier collection (DHL, FedEx...)

Freight Consolidation - Pooling & Scheduling

Pooling: Individual shipments can be brought to a central location

or pooled, creating large shipments suitable for economy-of-scale
transportation modes such as truckload or rail carload
E.g.: Home Delivery of Pizza, Consumable or Provisions

Individual Shipments Pooled Shipments

Scheduling: Sometimes shipment schedules can be adjusted forward

or backward in time so they can be combined with other shipments.

E.g.: Courier collection (UPS, FedEx…)

(Present Wipro Chennai Bus routes)
Integration of Inbound & Distribution
Logistics

D D
D P D P

P P

D D

Integrating separate pickup and delivery routes into combined

routes.

E.g.: Bulk movement of Cargo/Parcels in Ships/Flights (Maersk, UPS..)

Fixed/Master Routes & Variable/Dynamic
Routes

Fixed/Variable
Service & Control Costs Routes Transportation costs
• Regular routes are easier • Increased utilization of
to manage transportation assets.
• Drivers develop familiarity
with customers and territories E.g.: Courier/Food Delivery ( UPS,
Pizza Corner)
E.g.: Collection & Distribution of
Govt. diary supply. (Aavin)
Distribution Center Consolidation Vs.
Decentralization
Customers can be served from smaller, regional distribution centers or from
larger, centralized distribution centers.

Decentralized Consolidated

Inventory & Facility Costs DC Transportation & Service Costs

• Reduced facility costs Consolidation • Lower volume outbound lanes
• It may be possible to reduce • Increased transportation costs
inventory while maintaining • Products further from customers
equivalent customer service • Increased service costs

E.g.: Retail consumer goods. (HLL, E.g.: Oil Producers (ADNOC)

Palmolive)
Private Fleet Vs. For-Hire Fleet

•More control over costs & service. But

Private Fleet •Increased maintenance costs & labor charges
E.g.: Baskin & Robbins, USPost...

•Better service
For-Hire Fleet •Lesser overheads
•Can negotiate/offer discounts
E.g.: Hyundai, Ford, L&T etc….
Continuos Move Routing

Deadhead

Truckload Shipments Continuous move route

Continuous Move Routing:

Combine separate trips to increase vehicle utilization

Trucking companies offer discounts
Drivers and tractors are highly utilized
E.g.: Domestic LTL carriers
 Single & Split Sourcing

Product A Product A
Warehouse #1
Warehouse #1

Customer Customer
Product B
Product A

Warehouse #2 Warehouse #2

Split sourcing - same product Split sourcing - multiple products

Single Sourcing is satisfying all product demand at a location from one supplier.
E.g.: Exclusive Showrooms like Nike, Sony….

Split Sourcing refers to shipping the same product or multiple products from different
origins. E.g.: Super Market Chains (Walmart, Sainsbury...)
 Transportation Mode Selection

 Overnight Package
 Parcel
 Less-than-Truckload (LTL)
 Truckload (TL)
 Railcar Load (CL)

Each mode offers different cost and service advantages and disadvantages
Transportation Mode Selection - Contd..

Larger Shipments Shipment Size Smaller Shipments

Slower Faster
Speed

Ship Intermodal Rail Truckload LTL Parcel Air Premium

Less Expensive More Expensive
Transportation Cost

Slower Faster
Service Cost

More Expensive Less Expensive

Inventory Cost

Transportation mode impacts the inventory in three different ways.

Impacts of Transportation of Mode

 Slower modes create more in-transit or pipeline inventory.

 Larger shipment sizes may create order quantity inventory, which

arises if the batch shipment size is more than the amount of current
demand.

 Slower transportation modes may raise safety stock inventories

needed to protect uncertainties in supply and demand.

Smaller shipments via faster modes reduces all three type of inventories,
but associated transportation costs increase
Mode/Carrier selection decision
process….
Problem recognition Search Process
Customerrequirements,
Customer requirements, Transportationexecutives
executivesscan
scan
Transportation
dissatisfactionwith
dissatisfaction with varioussources
various sourcestotoaid
aid
existingmode/carrier,
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decision making.
changesinindistribution
changes distribution Sourcesare
Sources areexperience,
experience,
pattersofofthe
thefirm
firm carrierrecords,
carrier records,customers
customers
patters

Post Choice Evaluation

Choice process

Evaluateperformance
Evaluate performancelevel
level choosingthethebest
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throughcost
coststudies,
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audit, choosing
through optionwhich
option whichsatisfy
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Evaluating Alternatives

 Process of simulating a model and analyzing the

attractiveness of that supply chain configuration.

 Its an iterative process.

 It is composed of Evaluate, Benchmark, and Rationalize

steps each geared towards answering particular
analysis questions.
 Evaluating Alternatives contd...

What is a logical configuration of the

Does this alternative make sense
upply chain & transportation infrastructure?
Are there opportunities to improv
What are the potential movement requirements?

Generate
Generate Rationalize
Rationalize
Alternative
Alternative Alternative
Alternative
Existing
Existing
Logistics
Logistics
System
System

Evaluate
Evaluate Benchmark
Benchmark
Alternative
Alternative Alternative
Alternative

How does the supply chain operate? How does the supply chain performan
What are the service measures and costs? compare to industry standards
or to a theoretical optimum?
Evaluating Alternatives - Costing
Purchase $ + Transit $ + Manufacture $ + Assembly $ + Transit $ + Inventory $ + Transit $ +
Inventory $ Inventory $ Inventory $ Inventory $ Handling $ Inventory $ = Landed $
Handling $ Handling $

Customer
Manufacture Warehouse
Customer

Supplier
Assemble
Customer

Manufacture Warehouse
Customer

The cost to deliver a unit of product to the customer is the landed customer cost.
The cost to get a product to two different customers is almost always different. E.g.:
Automobile (Hyundai Cars)

10-20% of the product price is the transportation cost.

Benchmarking & Rationalization
 Benchmarking is comparing the performance of a
logistics supply chain to organizational or industry
standards or to some theoretical ‘ideal’.

 The Rationalize step is the interpretation of the

Evaluation and Benchmark results, and the
justification of the logistics supply chain configuration.
 Generating Alternatives

This phase includes any change to the logistics strategy, supply chain
infrastructure, transportation infrastructure, movement requirements, or the
relevant operating parameters.

The 4 fundamental ways to generate alternatives:

 Existing system: If logistics supply chain already exists, then the first alternative
analyzed is the current system, and the analysis proceeds directly to the
Evaluating Alternatives phase.

 Specified: Specific strategic plan that the organization’s management had

specified and would like to evaluate.

 Automatic: Computer Generated Automatic Alternative using mathematical

optimization, heuristics, rules, etc.

 Interactive: The alternative could be generated interactively, in an exploratory or

“what-if” style.
Evolution of Decision Support Tools

Logistics Modeling Languages,

Visual object-oriented interfaces,
Client/Server Architecture
PCs, Spreadsheets,
Interactive graphical optimization
Large scale Mainframe
‘black-box’ models
Introduction of High
Level languages
Development of
Network optimization
Development of
Operations Research

1940’s 1950’s 1960’s 1970’s 1980’s 1990’s

The evolution of logistics decision support tools and architecture over
the past fifty years.
Logistics Objects
- For a Object Oriented Computerized Model

Basic Families:

 Supply Chain Infrastructure (Includes physical sites like

suppliers, plants, DCs etc…)

 Movement Requirements (includes information like what,

when and how to move)

 Transportation Network (includes physical components of

the transportation network)
 Class Hierarchies

Hierarchical organization of logistics objects of a manufacturing firm

Logistics
Supply Chain

Supply Movement Transportatio

Chain Requirement n
Infrastructur s Network
e
Inboun
Distributio Transportatio Transportatio
d
n n n
Networ
Network Assets Infrastructure
k

Vendor Plant DC Customer Product Equipmen Driver Road Depot

s s s s s t s s s

Higher-level views of a logistics system are found at the top of the

hierarchy - one can “drill down” through the hierarchy for more focused
views.
Logistics Decision Support System - 1

 Why?
 The scope and complexity of logistics systems/models
necessitate the use of computer based decision support systems

 Types?
 Custom Built for unique situations and Off-the-Shelf systems for
more generic use
Logistics Decision Support System - 2

Can be tailored to unique Does not fit to the unique logistics issues
situations Readily available and
Takes long time to built Easy to implement
Expensive Less Expensive
Difficult to change later
Custom-Built
Custom-Built Off-the-Shelf
Off-the-Shelf

E.g. Nike E.g.Manhattan Associates, i2, Etc….

Custom&
Custom &Off-the-Shelf
Off-the-Shelf
Combined
Combined
Successful approach
Flexible
Cost-effective
High productivity
Logistics Modeling - Summary

Logistics modeling is an ongoing process and should iterate

between planning and operations.

Planning Implementation

Logistics
Modeling
Monitoring Operations

 Suitable for Logistics Business decisions spanning a range from

planning to operations.
 Planning includes all of the analysis, and design.
 Operations refer to the actual management and execution of logistics
supply-chain.
Distribution: Tactical & Operational Techniques

The Management of People

The Management of Assets

The Management of Money

Management of People - 1

Recruitment or Contracting

Training

Compensation & Incentives

 Management of People - 2
 Driver training
- Safety
- Technology - Computer, communication devices
- Maintenance - preventive - annual/routine
- Government rules & regulations (traffics/law etc)

 Driver Benefits
- ATM
- Cab CARD - Email from drivers cab unit- messaging - payroll access
- Prepaid phone card - family touch
- Cash advances
Best
Driv
er
 Driver efficiency tracking
- Fuel consumption
- Accident frequency
- Timely delivery
- Use of computers- analysis based on historical drivers data
- Real time feedback to drivers online
- retaining good drivers
Management of People - 3

 Investigate the temporary staff agencies - (Need not be just the cheap-set)
 Check with other companies about the best agencies and why
 Key points to be clarified from the agencies are

How are drivers selected?

How often are the licenses checked?

Are the drivers examined for their understanding of legislation?

Are Drivers’ employment histories and references checked?

Are drivers’ full-time employees of the agency

Training provided for their employees?

 Ensure the rates of payment are agreed for a given period

Management of Assets

Management
Management
FleetUtilization
Fleet Utilization ofAssets
Assets VehicleCapacity
Vehicle Capacity
of

VehicleUtilization
Vehicle Utilization
Vehicle Utilization

 For calculating Vehicle Utilization & Performance, the

following fixed cost is included:-
- Depreciation
- Insurance
- Licenses (Vehicle excise duty & operator’s license)
 Vehicle Capacity

 Products carried in most situations are constrained by either volume or

weight.

 When the goods are heavy….

-
Unladen weight should be reduced as much as possible
-
Available payload should be increased to the maximum within the legal
permissible limits.

 When the goods are huge (by volume)….

-
Weight or payload doesn’t carry any importance
-
Visual measurement by loaders is expressed as percentage
-
Despite difficulties with this visual approach some measure of capacity
utilization should be attempted
Fleet Utilization

 Fleet Utilization

- Load Utilization

- Time Utilization
Fleet Utilization - Load

 Evaluate continuously the carrying capacity, for

significant over/under use of capacity on a regular basis,
by plotting on a straight line graph.

Load Utilization

200
150
Tonnes

Actual

100 Payload

50 Available

Payload
0
10-Jan-

12-Jan-

14-Jan-

16-Jan-

18-Jan-

20-Jan-

22-Jan-

24-Jan-

Date 26-Jan-
 Fleet Utilization - Time

Time Utilization:-
Actuals Hours 44Hrs 13 mins =80%
Available Hours 55 Hrs
Time Utilization

60
50
Actual Hours

45.4
40 44.13 40.59
42.5 40 43.4
30
20
12.45
10
0
1 2 3 4 5 6 7
Fleet
Vehicle Maintenance

Preventive Condition
Condition
Preventive
Maintenance
MAERSK Monitoring
Monitoring
Maintenance

Breakdown
Breakdown
Maintenance
Maintenance
Condition Monitoring

 Exhaust Emission

 Trip meter / Fuel Consumption

 Noise / Heat levels

 Engine Condition

 Braking Systems
MAERSK
Preventive Maintenance

 Overhauling
- Lubrication
- Changing of worn-out spares
- Refilling Brake and Engine oils
 Tyre Pressure
Breakdown Maintenance

 Damage Assessment

 Replacing of damaged spares

 Trial Run
Maintenance Management

 Service History (E.g..: When & What service was done?)

 Maintenance Schedule Reports (E.g..: When & What part to maintain?)
 Spares Stock Inquiry / Reports (E.g..: How many axles?)
 Supplier Info & PO Generation (E.g..: Where is XY Supplier, Buy 2 Tires?)
 Vehicle License Renewal (E.g..: Truck TR34 license to be renewed today)
 Insurance lapse reports, etc. (E.g..: TR12 Insurance elapsed by 12 days)
 Vehicle Cost Analysis / Driver Cost Analysis
 Reports to Govt.
 Fleet costs
Money Management

 Zero Based Budgets

Normal budgets are just an incremental increase of the previous
year’s budgets. But Zero-based budgets are prepared as if it never
existed before and is being planned for the first time (hence the name
zero).

Useful when cost effectiveness is in question

Each element of the operating budget must be analyzed

It highlights areas of improvement

Operations need a fresh look
 Money Management - Costing
 Why?
- The yearly financial (Profit & Loss) statement is too late for the management to act
upon the increasing operational costs.
E.g.: Sudden increase in fuel consumption or vehicle pay-load being unutilized to its
fullest capacity.
- The yearly statement doesn’t detail upon the financial health of each and every
operation which could be vital for controlling costs.
- Helps in pricing the product or service (by including the transportation cost)

 The 3 important aspects of an efficient costing system:

- To know, very quickly, that something is wrong;

- To be able to identify where the problem lies;

- To be able to take some form of remedial action and solve the problem;
 Costing - Types
 Aspects of Costing:
- The recording of actual costs and performance in order to monitor and control the transport
operation.
- The measuring of costs to identify the amount to allow to cover costs and to budget for a job.

 Types of transport resources that need to be considered are:-

- Men
- Machinery
- Materials
- Money, and
- Minutes
 Costing - Common Terminology
 Cost Unit E.g.: Cost per mile run, Cost per carton delivered

 Cost Center E.g.: A lorry, A driver, A depot

 Direct Costs E.g.: Fuel, Road License, Insurance

 Indirect Costs E.g.: Office staff wages, Telephone charges, advertising

 Fixed Costs E.g.: Cost of the vehicle, Vehicle excise duty, Vehicle Insurance

 Variable Costs E.g.: Fuel, Oil

 Costing - Vehicle Standing Costs
 Vehicle Standing Costs includes
- the cost of the vehicle i.e. by calculating depreciation
- Vehicle excise duty
- Operator’s License
- Driver’s License
- Vehicle Insurance (though varying, this is considered as part of
the vehicle standing costs)
Cost
Cost
($’000)
($’000)

15 15
Maintenance
10 10

5 5 Depreciation

1 2 3 4 5 Time 1 2 3 4 5 Time
Depreciation - Straight Line Method (Years) Depreciation - Reducing Balance Method (Years)
 Costing - Vehicle Running Costs
 Variable costs vary with the level of activity or output.

 Vehicle Running Costs includes

- Fuel
- Oil & Lubricants
- Tyre wear
- Driver’s overtime, subsistence & other expenses
- Repairs and Maintenance (Labor, Spare parts, Garage, Workshop)
 Costing - Overhead Costs
 Overhead costs are the indirect costs which do not directly relate to a particular
vehicle, but to the whole fleet of vehicles.

 Overhead Costs includes

- Fleet Overheads
(E.g.: Maintenance Labors, Spare trucks, Backup Drivers etc..)
These are apportioned by taking the total cost over a period of time (eg. A year) and then
dividing by the number of vehicles in the fleet.

- Business Overheads
(E.g.: Salaries and wages of Managers & Schedulers, Cars, telephone, fax, rent etc..)
Company administrative overheads are those costs that are central to the
running of business. It has to be apportioned between all the different company
departments.
 Costing - Whole Life Costing
 Whole Life Costing is assessing the cost of owning and operating an asset. This
type of costing is widely used nowadays in identifying the true cost of vehicle.

 Major cost element includes

- Initial purchase price of Vehicle
PLUS
- the total operating costs incurred during its life time
LESS
- the achieved/guaranteed residual value of the vehicle.

Useful when companies replace vehicles frequently. Helps in comparing between different
makes of truck’s performance and how different engine configurations and drive-train perform.
 Costing - Vehicle Cost Comparisons
 The relative importance of different elements of vehicle costs is
considered vital.
 It is also important that these comparative relationships may change
according to the type and size of vehicle.
E.g.: The following is the comparison between a large articulated (38 Ton)
and a smaller 7.5 ton vehicle.

7.5 Ton V ehicle3 8 Ton V ehicle

Deprec iation 15% 10%
Driver 40% 25%
Running 20% 35%
- Fuel, O il, Ty res
- Repairs and M aintenanc e
Lic ens e / Ins uranc e }
O verheads } 25% 30%
 Costing - An example
 Costing the operation is done by calculating fixed costs (no. of vehicles used) and variable costs (mileage
traveled by the fleet).

Vehicle costs (Calculated on a daily basis):

2 rigid vehicles @ $75 per day $150
634KMs @ 20 cents per KM $127

3 articulated vehicles @ $146 per day $438

662KMs @ 31 cents per KM $205

Total cost per day $920

Annual Cost ($920 * 240days) $220,800

Cost per case delivered ($920/9863 cases) 9.3 cents / case

Cost per kilometer ($920/1296KMs) 71.0 cents / km

Vehicle Utilization:
Time Utilization actual hrs / available hrs 44hrs 13min / 55 hrs 80%

Load Utilization actual cases / max cases 9863 cases / 11200 cases 88%
Transportation Regulation
Transportation Regulation - Categories
 Since transportation has a major impact on both domestic and international
commerce, Govts. have often taken special interest in both controlling and promoting
transportation activities.

 Categories of Transportation Regulation:

- Economic Regulation of Business Practices, and
- Safety and Social Regulation

Social Re
gu lation
tion
Economic Regula

Safety Reg
u lation
 Economic Regulation

Economic
Economic
Regulation
Regulation

Entry
Entry Rate
Rate Service
Service
Regulation
Regulation Regulation
Regulation Regulation
Regulation

Social Re
gu lation
tion
Economic Regula

Safety Reg
u lation
 Economic Regulation Contd..
 Entry Regulation
- Controls the Carrier entry and also the markets served by the carriers.
- Dictates the region and origin-destination combinations served by each
carrier.
- Attempts to reduce the cutthroat competitive characteristics in larger markets
while safeguarding the service levels of smaller markets.
- Its counterparts are exit limitations i.e. a carrier’s ability to leave a market if it
would result in a substantial reduction in service.

Smaller Markets
 Economic Regulation Contd..

 Rate Regulation (US Specific)

- Focuses on rate related practices
- Specific considerations include rate making, rate changes,rate subsidies and
actual rates
- Before deregulation, any rate changes, discounts were to be justified before
the Interstate commerce commission.
- Rate subsidies assist one segment of carrier operation by allowing higher
rates on a different segment.
 Economic Regulation Contd..

 Service Regulation regulates

- Loading and Unloading
- Loss & Damage liability
- Shipment status & Invoicing

 Not much of regulation in this area now as the industry is

becoming more and more open.
 Safety & Social Regulation

 Regulates
- Transport & Handling of Hazardous material
- Labor work hours & Wages
- Vehicle Safety
- Pollution and Environmental issues raising due to vehicular traffic.
- Projecting and abnormal Loads
- Noise emissions
- Speed Limits

Overtime?
Brainstorming Session
  What is ‘Reverse Logistics’?
- Its mainly the handling of returned goods from the customer
- Packaging material, scrap are also handled now which are also recycled,
easing the environmental pollution.
- Efficient Management of reverse logistics impacts a company’s bottom
line as well as its customer relations.
- Refurbishing, Reuse and transportation play a major role.
- Ebay sells returned goods over the net in an auction format.
(Saleable & non-saleable segregation, use of barcode for mass returns…)

Returned
Goods
Goods
Manufacturer / DC Customer
 How is the price of some consumer goods (Toiletries) maintained constant irrespective of their
distance from manufacturing location?
 Some benefits of J-I-T Logistics?
 Rate the a) time efficiency, b) fuel-efficiency and c) service
efficiency in the following 3 plans. Scale: Best, Good, Bad
D
D D P
D P

P
P
D
D D
D P

D
 If your fleet’s running(utilized) time was 48hrs against the actual (available time) 60hrs? What
was the percent of utilization of that particular fleet?
 Major difference between TL & LTL…..
 The two most common modes in multi-modal shipments...
Thank you