Managing Transportation and Distribution in Supply Chains 1- Typically, various

Question

Managing Transportation and Distribution in Supply Chains

1- Typically, various modes are used to move goods in supply chains. One of such modes is referred to as “Intermodal”. Clearly describe what it entails and explain why a company that intends to move products within its supply chain would prefer to use a company that provides intermodal services.

2- Clearly distinguish between primary transport and secondary transport as they pertain to transportation of goods within supply chains.

3- Using suitable examples, describe 2 roles which warehouses and distribution centers play in supply chains. Also, all things being equal, explain the impact of an increase in the number of warehouses on inbound and outbound transportation costs.

Explanation / Answer

1. Intermodal transportation involves more than one mode of transportation like air, road, rail or ocean. This kind of transportation is used when the route has constraints of geography, cost, time and convenience. For example, a company that transports precious stones from a remote facility located in the heart of Africa to the processing unit in Antwerp, Belgium will have to use a combination of road, rail and air transport to balance the cost, time, safety, convenience and geographical constraints.

Managing many modes of transport within supply chain is neither convenient nor financially viable for a company. This calls for the use of specialists in multimodal transportation which offer integrated supply chain services by providing seamless movement through specialised modes, best suited for the company.

2. Primary transport movements involve high volume movements between the distribution nodes of an organisation’s supply chain. These typically include

(a) Inbound movements from suppliers to warehouse

(b) Movement between warehouses or other internal movement within the supply ecosystem of the company.

(c) Outbound movement from warehouse to the customer locations.

Secondary transport is generally low volume movements from the company's warehouses to various customer locations, either fixed or varying day to day. These modes are used for cost optimization and effective scheduling by using smaller vehicles or combining cargos of multiple deliveries to achieve cost effectiveness and higher service levels.

3. Functions of warehouse are

(a) Storage of goods - It stores the inbound material from suppliers to meet the demand for the next stage of supply chain.It helps to meet regular as well as seasonal and uncertain demand patterns effectively.

(b) Facilitate the movement of goods - It hepls to move the goods from inbound activity, transfer to storage, order selecting and outbound activity.

Higher number of warehouses may increase the cost of inbound transportation where a supplier may have to reach out to more destinations to cover the area.However, it will result in decrease in the outbound transportation cost where less distance will have to be travelled to reach the customers. It will also result in increase in the service level due to proximity to the customer location and less time to reach there.

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