Here’s a detailed explanation of slides 1-5 from the presentation on Transportation Networks in simple
words and paras, with examples for clarity:
Slide 1: Overview of Transportation in a Supply Chain
Transportation refers to moving products from one place to another and is a crucial part of a supply
chain. Products are rarely consumed where they are made, so efficient transportation is essential to
connect producers with consumers. It also makes up a significant portion of supply chain costs, so
managing it effectively is vital for reducing expenses.
Example: Think of a car manufacturer that needs to transport car parts from factories to assembly plants
worldwide. Without a proper transportation network, this process would be delayed and more
expensive.
Slide 2: Importance of Transportation
The slide emphasizes how transportation supports global trade. With international trade growing rapidly,
the demand for transportation has increased significantly, requiring multiple modes like air, sea, and rail
to move goods effectively.
Example: Companies like Amazon rely on a combination of trucks, planes, and delivery vans to ensure
that products reach customers quickly and cost-effectively.
Slide 3: Logistics Defined
Logistics is the planning, management, and execution of the movement of goods, services, and
information. Its goal is to ensure that products are delivered to the right place, at the right time, in the
right condition, and at the right cost. In a supply chain, logistics ensures smooth operations, reducing
delays and ensuring customer satisfaction.
Examples in the Pakistani Context:
1. Metro Cash and Carry: Metro stores in Pakistan rely heavily on logistics to manage the
transportation of a wide range of goods. They use refrigerated trucks to transport fresh produce,
dairy products, and frozen foods from suppliers to their stores across the country. By maintaining
the quality of perishable items during transit, Metro ensures that customers find fresh products
when they shop.
2. Pak Suzuki Motor Company: Pak Suzuki uses logistics to manage the transportation of car parts
from suppliers in different countries to its manufacturing plant in Pakistan. The company has a
robust logistics system that ensures timely deliveries of parts to avoid production delays,
enabling them to meet the demand for new cars in the local market.
3. Unilever Pakistan: Unilever has an extensive logistics network in Pakistan, moving its products
(like soap, detergents, and food items) from factories to retailers nationwide. The company relies
on a combination of road, rail, and air transportation to ensure its products reach consumers in
remote areas, helping them maintain brand presence across the country.
Slide 4: Purpose of Logistics
The primary purpose of logistics is to strike a balance between cost and efficiency. It ensures that
products are stored properly, delivered on time, and meet customer expectations, all while minimizing
costs and maximizing efficiency.
Examples in the Pakistani Context:
1. Daraz Pakistan: Daraz, Pakistan’s largest e-commerce platform, uses advanced logistics systems
to handle the delivery of products across the country. They offer real-time tracking for
customers, allowing them to know exactly when their order will arrive. This reliable and efficient
logistics system helps Daraz manage its costs and customer expectations, even during high-
demand periods like sales events.
2. Engro Foods: Engro Foods, known for its dairy products like Olper’s milk, uses logistics to ensure
that its products are delivered to retailers across Pakistan in a timely manner. During the
summer months, when demand for fresh milk and dairy products increases, Engro's logistics
system is crucial in managing the supply chain effectively to prevent stockouts and maintain
product quality.
3. TCS (Pakistani Courier Service): TCS, one of the largest courier companies in Pakistan, utilizes
logistics to track and deliver parcels efficiently across the country. They have a robust network
that ensures deliveries are made on time, even during peak times, like the Ramadan season,
while optimizing their costs through a combination of road, rail, and air transport.
In each example, logistics plays a key role in ensuring that products are moved efficiently, costs are
controlled, and customer expectations are met. Effective logistics systems are crucial for managing both
operational efficiency and customer satisfaction in Pakistan’s diverse and challenging market.
Slide 5: Modes of Transportation
This slide introduces the different ways goods are transported, each with its own strengths and
weaknesses. The modes include:
Air Transportation:
Fixed Costs: Airlines have high fixed costs because they need expensive infrastructure (airports,
hangars) and equipment (planes).
Variable Costs: The cost of running an aircraft (fuel, crew salaries) is relatively low compared to
the fixed costs.
Speed & Expense: Air transportation is the fastest mode but also the most expensive because of
the high costs of equipment and maintenance.
Key Issues: Airlines must consider the location of their hubs (airports), the number of planes in
their fleet, their routes, the maintenance schedule, and crew management. Pricing can also be
complex due to fluctuating demand and limited capacity.
Example: If you’re shipping perishable items like fresh seafood from Karachi to Lahore, air freight is often
the best option despite its high cost because it ensures the goods arrive quickly and in good condition.
Package Carrier:
Multiple Modes: Package carriers, like FedEx or DHL, use a mix of transport methods (air,
ground, sea) to deliver packages efficiently.
Expensive Service: They are more expensive compared to other delivery methods, especially for
smaller or less urgent deliveries.
Services Offered: They provide services like order tracking, door-to-door pickup and delivery,
overnight shipping, and even packing services.
Consolidation: Package carriers combine multiple shipments into one to maximize the efficiency
of transport and reduce costs.
Key Issues: They face challenges with the location and capacity of transfer points (like sorting
centers), and managing information systems to track packages and provide updates to
customers.
Example: A customer in Karachi orders a laptop from an online store in Lahore. FedEx uses air transport
to quickly deliver the package, offering tracking services and ensuring the package arrives at the
customer’s door by the next day.
Truck Transportation:
Cost Comparison: Trucking is less expensive than air but more costly than rail or sea
transportation.
Advantages: Trucks offer the benefit of door-to-door service, meaning goods are picked up and
delivered directly without needing additional handling. Delivery times are shorter than other
modes like sea or rail.
Low Fixed Costs: You can start a trucking business with just a few trucks, making it more
accessible than starting an airline or shipping company.
Economies of Scale (TL): Full Truck Load (TL) shipments allow for cost savings by filling the truck
with as much cargo as possible, reducing per-unit costs.
Less-than-Truckload (LTL): For smaller shipments, LTL is used, which involves consolidating goods
from multiple customers into one truck, increasing efficiency but requiring careful scheduling
and routing.
Key Issues: Trucking companies need to manage the location of consolidation points (places
where goods are gathered before shipping), the efficient assignment of loads to trucks, and
routing and scheduling to optimize deliveries.
Example: A retailer in Lahore needs to send products to multiple smaller stores in Karachi. Rather than
using air freight, they opt for trucking to keep costs lower. They consolidate goods from different stores
into one truck (LTL), which will make stops along the way, optimizing the delivery process and reducing
the overall cost.
Intermodal Transportation: Intermodal transportation refers to using more than one type of transport
mode (e.g., truck, train, ship, or plane) to move goods from one place to another. For instance, a product
might be shipped from a factory to a port by truck, then transported by ship, and finally delivered to a
warehouse via a train. The cost of intermodal transportation can vary depending on which modes are
used and the type of product being transported. For example, transporting heavy machinery might
require specialized containers and equipment, making it more expensive. This method became popular
because many companies aren't located near major ports or transport hubs, making it more cost-
effective to use multiple modes. The cost can also be reduced by consolidating shipments or using
efficient modes of transport. A major challenge in intermodal transportation is the need for good
communication and information sharing to make sure goods are transferred smoothly between different
transport modes.
Pipeline Transportation: Pipeline transportation is mainly used for transporting liquids like gas, crude oil,
and refined petroleum products. Pipelines are expensive to set up because of the infrastructure needed,
including pumps, valves, and control systems. However, once built, the ongoing costs are relatively low.
For example, once a gas pipeline is in place, the cost of moving gas through it is minimal. The biggest
challenge for pipelines is ensuring a regular supply of the product, as they depend on consistent demand
to be cost-effective. The ownership of pipelines can vary depending on size and location. Large pipelines
might be managed by public entities (like the government) if they serve national or international needs,
while smaller pipelines could be privately owned. Governments often own critical infrastructure like
railways, seaports, and airports to avoid monopolies and ensure fair access to transport services.
Transportation Infrastructure and Policies: Transportation infrastructure (like roads, railways, ports, and
airports) is essential for a well-functioning supply chain. It is the responsibility of the government to
provide and maintain these infrastructures to ensure goods are moved efficiently. For example, the
government might invest in expanding highways to improve road transport for goods, or modernize
ports to handle larger ships. If there’s a risk of monopolies (where one company controls the entire
transport system), the government often steps in to manage or regulate these services. A good design
for transportation networks can lead to lower costs and faster delivery of goods. For example, a logistics
company might design a supply chain network that uses centralized warehouses close to major highways
and ports, reducing travel time and shipping costs.
Design of Transportation Network: The design of a transportation network plays a crucial role in the
performance of a supply chain. A well-planned network allows for economies of scale (lower costs due to
higher volume) and faster, more responsive service. For example, Amazon has strategically located
fulfillment centers and optimized delivery routes, which helps them offer fast shipping at lower costs.
Poor network design, on the other hand, can result in delays, higher costs, and missed opportunities.
Hence, businesses need to carefully design their transportation networks to balance cost efficiency and
service quality.
Direct Shipment Network
Description: In a direct shipment network, products are shipped directly from the supplier or
manufacturer to the customer or store without any intermediate stops, such as a central distribution
center (DC). This means that the goods travel directly from point A to point B.
Example: A company like Apple might ship a batch of iPhones directly from its factory in China to retail
stores in various countries without passing through a warehouse in between. This is direct shipping
because there are no intermediaries involved.
Advantages:
Faster delivery times because there are no extra stops.
Reduced storage costs since products don't have to wait in a warehouse.
Disadvantages:
Higher transportation costs, especially if shipments are small and frequent.
Less flexibility in handling changes in demand or stock.
2. Direct Shipment with Milk Runs
Description: In this system, a truck picks up goods from multiple suppliers or locations and then delivers
them directly to customers or stores. The truck makes several stops on its route, similar to a "milk run"
where the truck collects milk from different farms and delivers it to multiple locations.
Example: A delivery truck picks up small orders from several suppliers, such as a bakery, a dairy farm,
and a produce supplier. The truck then makes deliveries to different stores along the way, rather than
each supplier sending separate shipments.
Advantages:
More cost-effective than direct shipments, as multiple orders are consolidated into one trip.
Flexibility in meeting varying demand from different locations.
Disadvantages:
It might take longer to deliver to the final destination since the truck makes several stops.
The truck needs to be carefully planned to avoid inefficient routes.
3. All Shipments via Central Distribution Center (DC)
Description: In this system, all products are first shipped to a central distribution center (DC), where they
are sorted and then sent out to customers or stores. This model is common in large supply chains where
centralized control helps manage inventory and reduce costs.
Example: A company like Walmart might receive products from multiple suppliers in bulk at its central
warehouse (DC). The products are then sorted and sent to individual stores from there, rather than
shipping directly to each store from the supplier.
Advantages:
Greater control over inventory management and distribution.
Can take advantage of bulk shipments, reducing transportation costs.
Disadvantages:
The time to reach the end customer might be longer because products are handled in the central
DC before being distributed.
Higher warehousing and handling costs due to the need for a central DC.
4. Shipping via DC Using Milk Runs
Description: This system combines the idea of a central distribution center (DC) with the milk run
method. Products are shipped to a central DC, but instead of sending products directly from the DC to
customers in large batches, smaller trucks make multiple stops to deliver products to various locations.
Example: A company might receive bulk shipments of products at its central DC. From there, small trucks
are dispatched to deliver smaller orders to local stores or customers in a "milk run" fashion, picking up
goods for multiple destinations along the way.
Advantages:
Reduces costs compared to sending products directly from the DC to each store.
More flexible delivery, especially for regions with frequent or small orders.
Disadvantages:
Can still result in longer delivery times compared to direct shipments.
Planning routes efficiently becomes crucial to avoid unnecessary delays.
Summary:
Direct Shipment Network: Goods go directly from the supplier to the customer.
Direct Shipment with Milk Runs: Multiple suppliers’ goods are picked up and delivered in one
trip to various destinations.
All Shipments via DC: Goods are first sent to a central warehouse and then distributed to
customers from there.
Shipping via DC Using Milk Runs: Goods are sent to a central DC and then delivered to multiple
locations via smaller trucks, similar to a milk run.
Each method has its own advantages, depending on factors like cost, delivery speed, and inventory
management needs.
In Summary
Transportation connects producers and consumers in a supply chain.
Logistics ensures the efficient flow of goods and services.
Different transportation modes are chosen based on cost, speed, and suitability for the product
being moved.
These concepts are crucial for businesses to operate smoothly and stay competitive in global
markets. Let me know if you’d like further details on any of the topics!
