tailieunhanh - Lecture Purchasing and supply chain management (3/e): Chapter 15 - W. C. Benton

Chapter 15 - Purchasing transportation services. Chapter 15 provides an in-depth analysis of transportation costs. With JIT systems transportation costs are magnified. Some of the transportation costs include such activities as selecting the mode of transportation to be used in moving a particular shipment. | 1 Chapter 15: Purchasing Transportation Services Purchasing and Supply Chain Management 3rd edition, Copyright 2013 W. C. Benton Jr., All rights reserved Content Major activities related to purchasing transportation Mode selection Carrier selection Rate determination Third-party outsourcing Shipping documentation and terminology 2 Transportation Activity Transportation is one of the most expensive components of most manufacturing firms In 2009, transportation revenues were approximately $ trillion More than 50,000 private trucking fleets in the United States Factors associated with cost: Frequency Product type Volume of shipments 3 Inbound Freight Usually a component of materials costs ., . delivered Freight buying is complex because of the many alternative modes Modes: Rail Air Truck Ocean cargo Inter-modal transportation (ocean, rail, truck) 4 2012 Transportation and Purchasing Management Purchasing’s role in transportation: Facilitates the movements of raw materials and | 1 Chapter 15: Purchasing Transportation Services Purchasing and Supply Chain Management 3rd edition, Copyright 2013 W. C. Benton Jr., All rights reserved Content Major activities related to purchasing transportation Mode selection Carrier selection Rate determination Third-party outsourcing Shipping documentation and terminology 2 Transportation Activity Transportation is one of the most expensive components of most manufacturing firms In 2009, transportation revenues were approximately $ trillion More than 50,000 private trucking fleets in the United States Factors associated with cost: Frequency Product type Volume of shipments 3 Inbound Freight Usually a component of materials costs ., . delivered Freight buying is complex because of the many alternative modes Modes: Rail Air Truck Ocean cargo Inter-modal transportation (ocean, rail, truck) 4 2012 Transportation and Purchasing Management Purchasing’s role in transportation: Facilitates the movements of raw materials and component parts from suppliers through the firm’s manufacturing process to the ultimate customers Often the most costly and time-consuming activity Requires extensive planning to meet delivery schedules Requires knowledge of basic transportation decision making activities 5 Mode Selection Each of the modes has specific operating and cost characteristics ., cost, reliability, and speed The buying professional must evaluate the trade off between characteristics and select the most appropriate transportation mode Typical decisions: When speed is critical, high cost modes are selected Under normal operating conditions, on-time deliveries and service quality modes are preferred 6 Characteristics of Rail Cost structure is characterized by high fixed costs Majority of the fixed costs are unrelated to volume Theoretical pricing advantages: Has the largest share of the ton-miles in the United States Most bulk commodities are initially shipped by rail and later shifted to motor carriers .