Course: MBA

Subject: Supply Chain Management

Module 4 - Part 1: Transportation

 Transportation

Module 4 - Part 1

• Transportation Infrastructure
• Transport Functionality
• Principles and Participants, Regulations
• Transport Structure, Transport Service
• Transport Operations; Transport Economics and Pricing
• Transportation Administration, Documentation
• Summary
 Transportation

Transportation Infrastructure
The association between advances in transport infrastructure and economic processes is
supported by several factors, including:
• High-quality infrastructure is essential for providing effective transportation services for both
goods and passengers. This, in turn, promotes fundamental economic activities and eliminates
geographical obstacles to competitiveness.
• Efficient logistics systems reduce access costs to global markets and enhance the competitiveness
of local markets.
• Improved connectivity in passenger transport expands the economic capacity by broadening
labour markets, nurturing industrial specialisation, and enabling direct interactions between
businesses and skilled workers in high-value service sectors.
• Infrastructure serves as a valuable policy instrument to address social and territorial disparities by
linking rural and remote regions to major production and consumption hubs, generating economic
prospects for residents and reducing emigration.
 Transportation

Transport Functionality
• Transportation functionality refers to the efficiency and effectiveness of the transportation process
in achieving its intended objectives.
• The main purpose of transportation management is moving items from one point to another.
• The efficiency of transportation may be assessed by the speed at which goods can be moved. It also
functions as temporary storage for items throughout the cycle of mobility.
The two primary functions of transportation are as follows:
1. Movement of the product: The fundamental purpose of transportation is to transfer inventory,
whether in the form of supplies, components, work-in-process, or completed commodities, to
designated locations.
2. Storage of the product: One aspect of transportation that is not as easily seen is the efficiency
of product storage. During transportation, a product is kept in a vehicle.
a. Transport trucks may also serve as storage facilities for products at the shipment origin or
destination; however, they are quite costly.
b. As the primary benefit of transportation is the act of moving, a vehicle that is dedicated to storage
cannot be used for transportation purposes.
 Transportation

Principles and Participants, Regulations

Principles of Transportation
There are two fundamental principles guiding transportation management and operations. They are
discussed as follows:
1. Economy of scale:
• Economy of scale refers to the cost advantage that a company may get when it produces goods or
services on a larger size, resulting in lower average costs per unit.
• Economies of scale in transportation refer to the reduction in cost per unit of weight as the size of a
cargo grows.
2. Economy of distance:
• Economy of distance pertains to the reduction in transportation expenses per unit of weight as the
distance travelled increases.
• For instance, a single cargo covering 800 miles would incur lower costs than two separate
shipments, each weighing the same and travelling a distance of 400 miles.
• Reducing transportation costs as distance increases is often known as the tapering principle.
 Transportation

Participants of Transportation
The organisations within an extended supply chain are categorised as one or more of the four types of
participants found in any supply chain:
1. Shipper: The shipper and consignee have a mutual objective of transporting products from the
starting point to the destination within a specified timeframe and at the most economical price.
2. Agents and Carriers: The carrier, a commercial entity that provides transportation services, aims to
optimise its income by maximising the efficiency of its operations and reducing the expenses
incurred.
3. Government: The government has a significant stake in transportation due to the crucial
significance of dependable service to economic and social welfare.
4. The general population: The public, as the ultimate participant in the transportation system, is
primarily concerned with the accessibility, cost, and efficiency of transportation, as well as the
environmental impact, security measures, and safety standards.
 Transportation

Transportation regulations
There are three primary categories of transportation regulations:
1. Economic regulations:
• The primary effect concerns capital allocation and pricing, specifically with the party responsible for
constructing and maintaining transportation infrastructure and assets.
• It may also include the authorised routes for transport operators, the accessible ports of entry for
international flows, and the different pricing restrictions related to the inputs of the transport sector.
• Additionally, regulations on entrance barriers, ownership limitations, and competition might be
implemented.
2. Operating regulations:
• Primarily affect matters about the functioning of the transportation system, such as speed
restrictions and authorisations. The public sector often has authority over cargo and passenger
security, which is a crucial issue.
3. Environmental regulations:
• These regulations are about protecting and preserving the environment. Primarily affect the exterior
effects of transportation activities, such as noise and the release of pollutants.
• Carbon emissions have become more prominent, with a specific emphasis on reducing carbon
content.
 Transportation

Transport Structure, Transport Service

Transport Structure
The transportation system encompasses the legal access, means of conveyance, and operators that
function within the five fundamental transportation modes.
1. Railways: The Indian railroads are one of the biggest railway systems in the world, managed under
a single administration.
2. Roads: Roads are now the primary means of transportation in India. They transport about 90 per
cent of the nation`s passengers and 65 per cent of its cargo.
3. Ports: India has a total of 12 major ports and 187 small and intermediate ports scattered
throughout its extensive coastline, which spans over 7500 kilometres.
4. Aviation: India has a total of 125 airports, which include of 11 airports that cater to international
flights.
 Transportation

Transport Service
• The provision of transportation services is accomplished by integrating the capabilities of several
modes of transportation. The following section provides an overview of various carrier’s existing array
of services. The explanation also provides illustrations of carriers, each exemplifying a distinct group.
Conventional transportation providers:
• A transportation company that utilises just one of the five fundamental modes of transport is known as
the most elementary carrier type.
Package service:
• In recent decades, there has been a significant issue with transportation accessibility for small
shipments. Common carriers have challenges offering cost-effective small cargo services due to high
overhead expenses.
Intermodal transportation:
• Intermodal transportation refers to the use of several modes of transportation, such as trains, trucks,
and ships, to convey goods or people from one location to another.
Non-operating intermediaries:
• Non-operating intermediates refer to many kinds of businesses within the transportation sector that
do not own or operate equipment. These middlemen, who are not directly involved in operations,
facilitate the exchange of services between other companies.
 Transportation

Transport Operations; Transport Economics and Pricing

• Transport operations
Transportation management is a critical factor in the efficient operation of e-commerce supply
chains.
To provide a more comprehensive understanding, these are the functionalities that a
transportation management system may provide to an e-commerce enterprise:
1. Monitor the Advancement of Freight.
2. Offer transparency into the transportation network.
3. Choose the Optimal Shipping Routes.
4. Monitor the Efficiency of Transportation Service Providers.
Transport Economics and Pricing
• Transportation is crucial for every economy. It enables economic activity and functions as a
significant economic sector, directly and indirectly contributing to the economy.
• Transportation commodities like automobiles and motor gasoline and services like passenger and
freight air transportation are used directly by households, corporations, and the government.
 Transportation

Transportation Administration, Documentation

Transportation Administration
• Transportation management encompasses all of the activities within the supply chain, ranging
from the careful selection of appropriate suppliers to the efficient processing of invoices.
• Logistics businesses strive to optimise these procedures in terms of the cost-effectiveness ratio
meticulously.
Transportation Documentation
• Transport documentation is crucial in supply chain management as it facilitates the seamless
transportation of products between different locations.
1. Legal Obligation
2. Information Transfer
3. Risk Management
4. Record Keeping
 Transportation

Summary
• Transportation in a supply chain encompasses transferring goods from one place to another.
• It starts at the initiation of the supply chain when resources are transported to the warehouse and
extends until the final recipient, with the customer’s purchase being delivered to their doorstep.
• Lack of visibility in the transportation supply chain may result in delays, costs, and potential
bottlenecks. These occurrences can potentially disrupt production plans, leading to unproductive
work or an eventual decline in sales.
• Transportation refers to the act of transferring people, animals, and commodities from one place to
another.
• The many modes of transportation include air, land (namely train and road), water, cable, pipeline,
and space. The field may be categorised into three distinct areas: infrastructure, vehicles, and
operations.
• The fundamental concept of transportation is the effective conveyance and ideal distribution of
goods.
Thank You