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Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Copyright 2001 by The McGraw-Hill Companies,Inc.All rights reserved.,McGraw-Hill/Irwin,9-,*,CHAPTER 9,Decision Strategies in Transportation,Areas in the Supply Chain Affected by Transportation,Source:Adapted from,The Emergence of Third Party Logistics,White Paper no.4(Atlanta,GA:PricewaterhouseCoopers,1998),p.5.,Mode/Carrier Selection,Problem recognition,Search process,Choice process,Postchoice evaluation,Cost Factors Often Considered in Mode Carrier Selection,Freight costs,Inventory carrying costs,inventory in pipeline,cycle stock at the receiving location,required safety stock at the receiving location,Investment cost required to produce the inventory to fill the pipeline,a,Service Factors Often Considered in Mode Carrier Selection,Perceived quality of customer service,Shipment tracking and tracing capabilities,Billing/invoicing accuracy,Electronic data interchange(EDI)capabilities,Potential to develop mutually beneficial long-term partnership,Cargo capacity limitations,Ability to provide service that does not damage goods in transit,Customs clearance capabilities for international shipments,Impact on the shippers negotiating position/leverage on other shipping activities,9-4,b,10,Steps in Evaluating Private Carriage Option,1.,Define the problem.,2.Develop transport objectives.,3.Collect pertinent information,4.Determine present cost.,5.Analyze present operations.,9-5,a,10,Steps in Evaluating Private Carriage Option(cont.),6.,Develop alternatives.,7.Determine private fleet costs.,8.Consider indirect factors.,9.Summarize alternatives.,10.Make the decision.,9-5,b,Financial Considerations in the Decision to Private Carriage,Capital Requirements,Annual Cash Inflows,Cost of buying or leasing fleet,Cost of maintenance facilities,Cost of terminal facilities,Savings over using public carriers,Reduction in lost sales,Reduction in inventory carrying costs due to more efficient routing,Total,9-6,a,Financial Considerations in the Decision to Private Carriage(cont.),Annual Cash Outflows,Fuel,Labor-drivers,Labor-maintenance and terminal,Insurance-trucks,-drivers,-maintenance and terminal facilities,License fees,Parts supply,Utilities,Supervision,Administrative-billing,telephone,accounting,Total,Annual cash inflows-Annual cash outflows,9-6,b,Steps in Logistics Alliance Formation,Objectives and,selection criteria,Identify qualified,vendors,Needs determination,and request for bids,Evaluate bidders,and select,Integrate logistics,providers with,own systems,Implement and,manage the,relationship,Measure performance,and analyze deviations,Redefine goals and,objectives,Know your needs and wants,Define criteria,Phase 1 Need awareness,Phase 2 Planning and management,Phase 3 Evaluation,Know the marketplace,Cooperate in management and control,Cooperate in critical review,Logistics IS,Train partners,Revisit needs and provider capability,Identify partners,Articulate needs and wants,DO,ACT,CHECK,PLAN,Continuous Improvement Process,Logistics Alliance Phases,7-7,
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