LM 002 – Transportation
Management Course Outline
Part I Introduction
✓ Chapter 1 – Introduction to Transportation
Management
✓ Chapter 2 – Basic Concepts of Transportation
✓ Chapter 3 – Modes of Transport
Part II Cost and Pricing
✓ Chapter 4 – Rate Profiles
✓ Chapter 5 – International Transport
✓ Chapter 6 – Private Carrier Costing / Documentation
✓ Chapter 7 – Transport Decisions
Part III Routing
✓ Chapter 8 – Vehicle Routing
✓ Chapter 9 – Sweep and Savings Method
✓ Chapter 10 – Transportation Method
Chapter 1
Introduction to Transportation
Management
Chapter Objectives
• Be aware of concepts that affect the
transportation requirement of the organization.
• Be aware of the financial significance of
transportation in relation to logistics.
• Know the effect of competitive advantage to the
present business environment and how
transportation can create opportunities for the
organization
Concepts with Major Impact on
Transportation
The Customer of Today
• Today’s customer is not just satisfied with
quality products.
• He / She demands for
•Quality Products and Services
•Increased Value
Competitive Advantage
When a company succeeds in
creating more value for customers
than its competitors
Michael Porter
Jack Welch
Business Review
During the last 2 decades of the 20th century, almost
every major Fortune 500 company went through
some form of restructuring in an effort to increase
productivity and reduce cost.
Change is Inevitable
Many organizations prefer to stick to their old
practices allowing more flexible competitors to gain
advantage and their performance inevitably
declines.
4 Elements of the Supply Chain
Logistics Distribution
Production Consumption
Indicators of Supply Chain
Inefficiency
• Low sales and falling market share
• Many customer complaints
• Reliance on a few customers
• Old fashioned attitudes and operations
• Poor industrial relations
• Poor communications w/in the organization &
partners
• Too rigid top management
• Inward looking managers who are out-of-touch
with operations and customers
Basic Facts About Transportation
• Transportation usually represents the most
important single element in logistics cost for most
firms.
• Freight movement has been observed to absorb
between 1/3 to 2/3’s of total logistics cost
Total Product Aggregate Cost
(TPAC)
% to Total
Cost Components % to Total Logistics
Cost
Cost of Stock 60 %
Transportation Cost 13 % 50 %
Warehousing Cost 8% 30 % Logistics
Cost
Packaging Cost 3% 12 % Elements
Processing Cost 2% 8%
Overhead 12 %
Other Cost 2%
Total Aggregate Cost 100 %
Contrast Between Economies of
Developed and Developing Countries
• It is typical in developing nations that
production and consumption take place in
close proximity i.e. much of the labor force is
engaged in agricultural production and a low
proportion of the total population lives in urban
areas.
Contrast Between Economies of
Developed and Developing Countries
• With the advent of inexpensive and readily
available transportation services, the entire
structure of the economy changes toward that
of developed nations i.e.
• Large cities result from the migration of the
population to urban centers
• Geographical areas limit production to a
narrow range of products
• Economic standard of living for the average
citizen usually rises.
Contribution of Transportation
to the Economy
•More specifically, an efficient and
inexpensive transportation system
contributes to greater competition in the
marketplace, greater economies of scale in
production and reduced prices for goods.
Your Future Role
Inventory Strategy
• Forecasting
• Inventory decisions
• Purchasing & Supply scheduling
decisions Transport Strategy
• Storage Fundamentals • Transport Fundamentals
Customer Service • Transport DecisionsP
• Storage Decisions
Goals
• The Product L
• Logistics Service A
• Order processing &
information systems
N
Location Strategy
• Location Decisions
• Network Planning process
Your Future Role - PLANNING
What You Will Be Planning About
Inventory Strategy
•Forecasting
•Inventory decisions
•Purchasing & Supply scheduling
decisions Transport Strategy
•Storage Fundamentals •Transport Fundamentals
Customer Service •Transport Decisions P
•Storage Decisions
Goals
•The Product L
•Logistics Service A
•Order processing &
information systems
N
Location Strategy
•Location Decisions
•Network Planning process
Your Future Role - ORGANIZING
Who are the Members of
Your Team
Your Future Role - LEADING
Lead The Way
Your Future Role - CONTROLLING
Gap Analysis
Return on Assets
Desirable
Ideal
Target performance
situation
Current Actual
performance
situation
End Of Presentation
Your life is not a
coincidence. It will always
be a reflection of what you
put in it.
