UNIT-3

Sourcing and Transportation Decision in Supply Chain: Economic uncertainty, fluctuating fuel prices, increased safety and social regulation, escalating customer expectations, globalization, improved technologies, labor and equipment shortages, a changing transportation service industrytodays managers are faced with an array of challenges and opportunities that contrast dramatically with those of a decade ago. It is not surprising, then, that many managers have failed to fully adapt to the changing environment, resulting in performance shortcomings and lost opportunities. Prominent among the list of lost opportunities is fully leveraging the transportation function as a critical strategic element within the supply chain. Transportation plays a central role in seamless supply chain operations, moving inbound materials from supply sites to manufacturing facilities, repositioning inventory among different plants and distribution centers, and delivering finished products to customers. Benefits that should result from world-class operations at the points of supply, production, and customer locations will never be realized without the accompaniment of excellent transportation planning and execution. Having inventory positioned and available for delivery is not enough if it cannot be cost effectively delivered when and where needed. This article addresses the key decision levels that need to be addressed for transportation to make its greatest impact in the integrated supply chain. These levels address long-term decisions, lane operations, choice of mode or carrier, and dock level operations. Long-TermDecisions At the highest strategic decision level, transportation managers must fully understand total supply chain freight flows and have input into network design. At this level, long-term decisions related to the appropriateness and availability of transportation modes for freight movement are be made. Managers need to decide, for example, which primary mode of transportation is appropriate for each general flow (i.e., inbound, interfacility, outbound) by product and/or location, paying careful attention to consolidation opportunities where feasible. Plans should indicate the general nature of product flows, including volume, frequency, seasonality, physical characteristics, and special handling requirements. Strategic mode and carrier-sourcing decisions should be considered part of a long-term network design, identifying core carriers in each relevant mode to enhance service quality commitments and increase bargaining power. Additionally, managers need to make decisions regarding the level of outsourcing desired for each major product flowranging from providing the transportation through the companys own assets (e.g., private fleets) to latch-key turnover of transportation operations to third-party providers. Network and lane design decisions at the strategic level should examine tradeoffs with other operational cost areas such as inventory and distribution center costs. In conducting this analysis, companies should keep in mind that networks need not be fixed or constant. Rather, substantial service improvements and cost reductions can be achieved by critically examining existing networks and associated flows. For instance, it may become apparent that stock locations can be centralized by using contract transportation providers to move volume freight to regional cross-dock facilities for sorting, packaging, and brokering small loads to individual customers. The second level of decision-making regards lane operation decisions. Where network design decisions are concerned with long-term planning, these decisions focus on daily

operational freight transactions. At this level, transportation managers armed with real-time information on product needs at various system nodes must coordinate product movements along inbound, interfacility, and outbound shipping lanes to meet service requirements at lowest total costs. Decision-makers who are adept at managing information can take advantage of consolidation opportunities, while ensuring that products arrive where they are needed in the quantities they are needed just in time to facilitate other value-added activities. At the same time, they are realizing transportation cost savings. The primary opportunities associated with lane operation decisions include inbound/outbound consolidation, temporal consolidation, vehicle consolidation, and carrier consolidation. If managers have access to inbound and outbound freight movement plans, they can identify opportunities to combine freight to build volume shipments. An inbound shipment may arrive from a supplier located in Philadelphia, for example, on the same day that a production order destined for a customer in Wilmington, Del., becomes available for movement. If this information is known to transportation planners far enough in advance, arrangements could be made for the inbound carrier to haul the outbound load back to Wilmington. In many cases the inbound carrier would be willing to negotiate lower roundtrip rates to avoid deadhead miles on the backhaul. This is particularly true if the carrier and/or driver are headquartered in the Philadelphia area. If this happens to be a heavy traffic lane, the firm may consider strategically sourcing a core carrier in this geographic region to capitalize on this opportunity. Similarly, less-than-volume-load (LVL) shipments moving to the same geographic region on consecutive days may be detained until sufficient volumes exists to justify a full load on one carrier with multiple stops (temporal consolidation). By avoiding the LVL terminal system, the detained freight often arrives at the same time or earlier than the original LVL shipmentand at a lower cost. Multiple, small shipments inbound from suppliers or outbound to customers in the same geographic region scheduled for delivery on the same day may also be combined on one vehicle at full-volume rates, paying stop-off charges but saving on multiple LVL rates (vehicle consolidation). Another consolidation opportunity springs from the core carrier concept. Assigning greater shipping volumes to fewer carriers should result in lower per-unit transportation costs and higher priority assigned to the shippers increased freight. In addition to consolidating the carrier base, the shipper can identify reliable carriers in need of backhaul miles. For instance, a plastics distributor identifies carriers that operate a high percentage of deadhead miles in lanes over which the firm regularly moves freight. The firm negotiates advantageous rates with these carriers in exchange for guaranteed backhaul revenue miles. If the plastics firm plans to move significant amounts of product from Texas to Florida, the transportation manager will find a Florida carrier that moves a large volume of product from Florida to Texas. Given sufficient planning information, the transportation manager can use guaranteed volumes on the backhaul to negotiate attractive rates. Choice of Mode and Carrier A third level of transportation decision-making involves the choice of mode and carrier for a particular freight transaction. Due to the blurring of service capabilities among traditional transportation modes, options that in the past would not be considered feasible may now emerge as the preferred choice. For example, rail container service may offer a cost-effective alternative to longhaul motor transport while yielding equivalent service. Similarly, package delivery carriers are competing with traditional LTL operators. Truckload carriers, on the other hand, are increasingly bidding for low-volume shipments as well as for overnight freight movements. For

the shipper seeking 24-hour delivery, truckload carriers may offer an alternative to air carriers at significantly lower ratesand, quite possibly, higher reliability. In an integrated mode/carrier decision-making scenario, each shipment would be evaluated based upon the service criteria that must be met, (for example, delivery date/time or special handling requirements) as well as the movements cost constraints. All core carriers, regardless of mode, that could possibly meet the service and cost criteria would be pulled from the database. Managers would then choose the carrier from this multi-modal set based on availability and existing rates. Dock Level Operations The final set of transportation decisions involves dock level operations, such as load planning, routing, and scheduling. These activities encompass the operational execution of the higher-level planning decisions. While the fundamental purpose of shipping docks may not have changed much over the years, the manner in which work is done certainly has. One obvious change is the common usage of advanced IT and decision support systems. These tools help the dock personnel to make better use of the transportation vehicle space; to identify the most efficient routes; and to better schedule equipment, facilities and drivers on a given day. Transportation departments that avail themselves of better and more timely information can derive significant benefits from more efficient and effective load planning, routing, and scheduling. For example, if a vehicle is being loaded with multiple customer orders, dock-level managers must ensure that the driver is informed of the most efficient route and that loads are placed in the order of the planned stops. Transportation managers, even at the dock level, must develop expertise in using the information tools available to aid in these decisions. Successful managers today require a broad view of transportation managements role and responsibilities in an integrated supply chain. Managers will continue to encounter significant challenges as their firms proceed down the road toward supply chain integration, particularly as external environmental characteristics such as fuel costs and the overall economy wax and wane. Regardless of external conditions, however, managers must encourage their firms to avoid the temptation of making transportation decisions with an eye toward short-term gain. Rather, they need to view the total cost and total value provided by the function not only in relation to operating expenses but also in terms of the impact on customer service and inventory reduction. The influence on total economic value added is significant. Guide Lines for Sourcing of Supply Chain Management: OUTSOURCING SUPPLY CHAIN MANAGEMENT - 3 ISSUES TO GO BEYOND BUYER-SELLER RELATIONSHIPCompanies turn to outsourcing and consulting for many reasons. They look to reduce costs, shorten cycle time, improve shareholder value, decrease inventory, focus on core competencies, gain information technology, increase expertise and more. Likewise transport, warehouse, forwarder and other logistics service providers want to provide outsource services.They want to improve profits, transition from being a commodity service provider, gain volumes and throughput by leveraging existing core logistics service, increase revenues and more.This creates a mutual need between the two parties.Yet despite this common interest, half of the outsourcing relationships end unsatisfactorily within three

years.Half are not able to go beyond a buyer-seller relationship. The responsibility for the failure often resides with both parties.Reasons for the failures run the gamut and include: *Poor project design *Lack of metrics or key performance indicators (KPIs) *Use of improper metrics or KPIs *Not fulfilling expectations of either or both parties *No clear lines of responsibility and accountability *Inability to evolve the relationship from short term to long term and from static to dynamic Some reasons for failure reflect symptoms, not causes.Failures are not unique to outsourcing; but outsourcing is unique.Outsourcing goes beyond transport or warehouse agreements and service.Supply chain management is one of largest costs and has significant service impact to companies.Some contract logistics projects are critical to a company's supply chain and operating success.Therefore outsourcing should be designed not to fail, especially with supply chain management.The impact can be significant to the company doing the outsourcing. Much is discussed about metrics and service level agreements (SLAs) in defining the outsourcing relationship.These should be after-the-fact and matter-of-fact results of the project definition and design. Whether the two parties are trying to develop the contract logistics relationship or are striving to make an existing outsourced program succeed, there are three fundamental issues that must be addressed. Define what is being outsourced.This may seem obvious.However the matter may go much deeper and may obscure the real project and program. Both parties need to fully understand it.At the minimum, discussion should include: Is it transaction or process?Transactions reflect assignment of work; process reflects delegation of responsibility. If the topic is using a forwarder to help with supplier ocean transport or having a warehouse pick and pack products and deliver them, then those are transactions.Supply chain management should be a process.So if the contract logistics need is for transactions, then it must be clear as to what the transactions are, what triggers them, how they must be performed and, more importantly, how they fit into the process. However if the topic is managing the import supply or managing store inventory and replenishment, then those are processes.When supply chain process is being outsourced, then very clear definitions of the process must be developed. What is the condition of the transaction or process?Whether the outsourcing involves transactions or process, it should be assessed.The logistics activity must be understood.Outsource providers need to understand how the activity operates, both as its function and how it fits in the overall supply chain and company operation. They need to assess as to process, technology and people.Assessment should address internal and external gaps and redundancies, interactions, objectives, performance results-both real and perceived-and time requirements and demands.Strengths and weaknesses must be identified.Not knowing whether the process is flawed can contribute to the risk of

failure.Identifying a flawed process up front changes the project dynamics to include reengineering to make it work properly. Mutual question of "why".There is a "why" question.Why does one party want to outsource part of its supply chain responsibility?Why does the other party want to take on that activity and accountability?Each needs to define its motives and more exactly define any hidden reasons.A clear explanation is needed and should go beyond "improve business performance", "improve productivity", "improve delivery" or similar, abstract reasons. Unfulfilled expectations by one or both parties can have dramatic impact on sustaining the program.Each needs to know the desired results and how the outsourcing will achieve the desired result because the answer can directly and indirectly affect the project design and operation. What is the desired outcome?Each party wants something tactical or perhaps strategic.This has to be clearly expressed.Both parties need to be clear to each other.This helps set the implementation plan, timing and direction. At the same time, expectations should be reasonable.Otherwise the seeds of outsourcing failure may be sown. For the company looking to outsource, it can be an attempt to reduce costs or achieve other benefits that it is unable to realize internally.A 15% cost reduction goal may be attainable; while a 40% may be more difficult and require a different approach as to design, implementation and timing. Or the desired outcome could be very different, such as an effort to transform the business.The company may want to create a value proposition and capability for customers that it does not perform now.Or it may be seeking to transition away from one business into another or other business transformation.Outsourcing may present the means to make a significant shift to lean supply chain management.So the intent goes beyond having a third party perform the existing activity.It means creating a new operating model, including change management.The "why" can change the type of outsourcing service provider that the company should be talking with, such as a 4PL instead of a 3PL. The firm wanting to perform the outsource activity may be looking to increase revenues or profits.It could want a certain volume of ocean containers or square feet of warehouse usage for economies of scale.The provider could also be looking to shift into other industries or logistics service niches that have greater growth potential.So the intent goes beyond performing the existing activity.The provider wants to reposition itself as an outsource service company.. Potential for risks can be hidden.These can include: Expectations are not reasonable.The litmus test of reasonableness should be used to identify risks for each party.Expectations must be known as to where they are and why. They must be tangible.The timing of occurrence and impact should reflect transition, ramp up and learning curve.

Potential conflict may exist initially between buyer and seller.This means incompatibility with goal congruence. The basic foundation is between buyer and seller.Moving to mutual beneficial development and direction can be hindered-or not-with this basic issue.

Supply chain management is a process that crosses the company.This can put outsourcing and contract logistics provider in conflict with the traditional organization silos. Corporate culture and other differences may exist between the two parties as to risk aversion which can stifle risk sharing and project success.

Look beyond the initial twelve months. Outsourcing can start well; keeping it going well can be difficult.Today's metrics can become outdated.Mutual interests must stay aligned even as needs and business can change. Otherwise atrophy can set in as the relationship struggles to go from static, doing the same things repetitively, to dynamic, doing it differently. Change is a fact; the rate of change is at issue.How to handle change can be a delineator as to the end of the arrangement or moving beyond buyer-seller to relationship management.The outsourcing must be able to adapt, to be agile. The SLA is not an end; it should be a vehicle for ongoing.It must be flexible for collaboration, connectivity, integrated, time compression, six sigma and other demands. Outsourcing of supply chain management should be designed and developed to succeed. Both parties must take the dialogue deeper.Whether it develops into a partnership depends on mutuality. The three issues frame and drive the relationship, its direction, purpose and its continuity. It should be based on a prudent, rational, open exchange between the firm wanting to outsource and the firm wanting to handle the outsourcing.There should be no rush to judgment and have no artificial deadlines for completion.All this increases the chances for success.Supply chain outsourcing is too important to fail.

SCM shall acquire goods or services and dispose of obsolete goods through open and transparent competitive bidding, tendering and sole/single sourcing procurement processes. In cooperation with University departments, Supply Chain Management shall coordinate all procurement functions related to the acquisition of goods, supplies and services through one the following methodologies: Competitive Price Solicitation: A competitive bid process or methodology shall take place for all purchases greater than $25,000 (not including GST). Based on the purchase amount and complexity of the purchase requirement, Supply Chain Management shall invite competitive bids from suppliers through one of the following methods:

Purchases between $25,000 to $75,000 - Supply Chain Management to solicit a minimum of three (3) supplier price quotations from the marketplace. Goods and service purchase requirements $75,000 or more in total must be advertised on the Alberta Purchasing Connection (APC) electronic tendering website. Construction purchases greater than $200,000 must be advertised on the Alberta Purchasing Connection (APC) electronic tendering website or Calgary Construction Association CoolNET electronic tendering system.

Non-competitive Price Solicitation: A non-competitive procurement process or methodology takes place when the purchase is placed with only the supplier without a competitive bid process being undertaken. Transportation Mode and Selection: A key decision in logistics management is the selection of the transportation mode and carrier to move the firms inbound and outbound freight. Managers typically consider multiple attributes when making this decision, often focusing on cost and transit time as the primary criteria. This is not a trivial decision, however, as the process often involves multiple criteria, some of which are not readily quantified. Additionally, the importance of individual factors often differs from industry to industry, company to company, and even within a company from one facility to the next. Then too, mode and carrier selection is often viewed differently for inbound and outbound shipments, even at the same location. Mode choice and carrier selection are part of the decision-making process in transportation that includes identifying relevant transportation performance variables, selecting mode of transport and carrier, negotiating rates and service levels, and evaluating carrier performance (Monczka et al., 2005). No doubt, these are all important The role of transport is to facilitate the movement of goods. This may be from points of manufacture, storage or pre-positioning, to points of use; or between hubs and distribution points; or hubs to end use; or distribution points to end use; or return from end use back to hub and pre-positioning points or manufacturers. The source and destination may be in the same country, or one may be in a different country requiring international movement. Transport management in emergencies is a complex task depending on the nature of the disaster. How it is structured is very dependent on the state of the infrastructure, security in the area of disaster, demand, nature of product etc. More and more, humanitarian organisations are beginning to tap into the joint transport services when they are offered by the Logistics Cluster during emergencies. The service is based on a collaborative approach and aims to leverage the advantages of centralised coordination and sharing of assets. A transport strategy depends, not only on the needs within the organisation, but varies from organisation to organisation and from situation to situation. Some factors to consider when developing a transport strategy are:

how to identify transport service providers; how to manage the function; i.e. whether to lease, outsource or manage own fleet;

capacity of transport modes available; quantities requiring movement over a period of time; nature of goods/products/supplies to be transported; distances to be covered; environmental issues such as climate, government legislature, infrastructure, taxes etc; number of destinations, hubs and pre-positioning locations; origins and routes; available transport modes & their relative costs; human resources; terrain; funding; security; and circumstances such as Nature of disaster.

The above factors would be valid for both emergency and non-emergency situations. Managing transport providers Occasionally the need arises, or the decision is taken to use external transport providers. In this event there has to be a structured approach to the selection (see contracting) and subsequent monitoring and control of the provider or providers selected. There are a number of important issues to be considered to ensure that a reputable provider, who will provide the required level of service, at an acceptable cost, is sourced. Point to note The selection process adopted for the acquisition of all services is covered by the organisation's approved procurement policy, processes and procedures. Contracting should be done in a competitive manner, on market terms, and negotiations undertaken in an open and transparent fashion, thus ensuring cost effectiveness and equal opportunities for the appropriate commercial entities. 1. Local transport movement Local movements within a specific country will usually involve road transport. This may involve movement of bulk loads from ports, airports and railheads to warehouses and depots, bulk movements between facilities such as warehouses or depots, or delivery of smaller consignments from a local warehouse or depot to end users at a number of destinations in an area.

2. International movement In normal circumstances the local environment will not always be able to provide all the products and services required to fulfil the needs identified in an emergency environment. logisticians therefore become responsible for sourcing externally and organising the

transportation of relief supplies to affected locations. Often the relief supplies come from other countries and have to go through various processes before they are received. To ensure efficiency and to allow the logisticians to focus on their core job, the organisations seek service providers with expertise and capacity to handle certain aspects of the movement. The common service providers are:

freight forwarders; clearing agents; inspection services.

Criteria for selection of above service providers:

licensed by the government to conduct customs clearance formalities and be up-to-date on changes in customs requirements; offer a wide variety of services, so that you do not need to contract many different companies for different services (e.g. sea and air freight, re-packaging of damaged materials, etc.); own or have access to a bonded warehouse to protect and control shipments in transit; own a trucking fleet for inland transport and have access to specialised vehicles when needed such as container trucks, low-bed trailers, tankers, etc; have trained, competent, experienced and trustworthy staff; have a proven record of reliability, accuracy, and timeliness, as verified by references from other groups that have used their services; are flexible in their availability at short notice, also outside of office hours and on public holidays; have an established reputation and have been in business for a number of years; have influence in the transport market, with port authorities, etc; are experienced in successfully handling duty exemption arrangements for humanitarian organisations; have an office in the port area or nearby; are experienced in verifying goods arriving in the port: discharge, storage and loading operations, checking weights and inspecting shipping packages for visible damage; are experienced in hiring porters and stevedores for cargo handling; have at least a country-wide, preferably a multi-country regional network; and use technology effectively, including a good telecommunications system and, preferably, a computerised tracking system that allows visibility of where shipments are at a given time;

Route Planning and Scheduling For effective route planning and scheduling, the transport officers need to be involved in the development of the distribution plan or at least be aware of it and understand it. Vehicle routing and scheduling process needs to fulfil the following objectives:

maximising vehicle payload (by maximising vehicle fill out and back) and maximising vehicle utilisation (by maximising number of loaded journeys per vehicle); minimising distance (e.g. by minimising overlapping deliveries) and minimising time (e.g. by minimising non moving time); and meeting customer requirements, in terms of cost, service and time and meeting legal requirements, in terms of vehicle capacity and driver's hours.

The nature of the movement can be split into two basic types:

primary movements are those that involve typically bulk movements between two specific locations. This may be, for example, between two warehouses in a network or from a port or railhead to a warehouse; and secondary distribution relates to movements that may involve multiple deliveries within a defined area, such as a regional or local warehouse to extended delivery points. In both cases, the emphasis is on achieving full utilisation of the resources used; filling the vehicle to capacity minimising the distance travelled and optimising the hours which the driver is being paid to work.

Mode of Transport: A mode of transport is the means by which goods and material are transferred from one point to another. The basic modes of transport are: 1. 2. 3. 4. Air Sea Road Rail

See below a mode comparison matrix for different modes.

In emergencies, the criteria of speed and reliability must be examined when considering the choice of mode. Different modes have quite different characteristics and will meet the speed/reliability/cost criteria to varying degrees. The appropriate mode must be carefully selected if it is to match all the requirements. Multi-modal solutions may provide the most effective and efficient transport option. Whilst the physical characteristics of certain goods and supplies may determine a specific mode of transport, most goods will be capable of being moved by a variety of modes. Customer requirements and constraints on the organisation providing the transport must be considered. In humanitarian aid situations, it is often environmental factors, such as the destruction of roads and railways that have a significant impact on mode selection. It is important to fully recognise the operational characteristics of the mode or modes that have been selected. It is also necessary to consider the type of vehicle or equipment that will be used within that mode. Prior to making a decision on the mode of transport, it would be useful to create a matrix ranking of influential factors for choosing transport modes. Some factors to consider in the rating:

Mode Selection : Four key criteria:

the speed which the mode exhibits; the reliability that the mode demonstrates in its ability to fulfil service requirements; the flexibility that the mode exhibits; and the comparative unit costs, which the modes incur.

Speed and reliability will have a major impact on the ability to deliver humanitarian aid effectively and efficiently to where it is needed. Other considerations in the selection of a transport mode are:

required delivery date; cost of transport service; reliability and service quality; shipment size; transit time; number of transhipment points; item type; possibility of damage; and range of services.

Matching Operational Factors to the Selection Criteria It is important to use a structured approach to mode selection. It is important to understand the following points :

opportunities and constraints in the choice of mode will be identified from careful analysis of all relevant operational factors; modes that realistically cannot be considered should be ruled out of the decision process immediately; geographical factors should be considered, as they may remove the opportunity to use a particular mode; and lack of appropriate infrastructure may also remove the opportunity to use a particular mode.

Table of contents - Air Tranport (see also Operational Environment) In emergencies, and especially flooding and conflict situations where road access is difficult, air transport is often the alternative.

Air transport can be provided through:

schedules air carriers using world airlines and other global logistics service providers or air charters; where it is possible to charter planes/helicopters or perhaps to have the use of military aircraft to allow a totally dedicated movement to take place. It is possible to move goods without being constrained by commercial timetables and specific airport locations. The charter may be totally ad hoc, that is, a one-off charter to achieve a particular humanitarian objective. Alternatively it may be a regular event, monthly for example, in order to transport routine supplies or perhaps members of staff. Logisticians should all be familiar with their internal guidelines on the use of military assets.

Factors that influence the decision to charter and the nature of the aircraft chartered:

availability of different types of aircraft; the nature, quantity, weight, size and volume of the cargo Institute All Rights Reserved; aircraft equipment available for handling at origin and destination; the distance to be travelled and possible constraints on certain airspace; ability of certain airports to handle particular types of aircraft regarding take off and landing; possible noise restrictions at certain airports; securing landing and over-flight permission.

Sending Goods by Air The air waybill (AWB) is the most important document related to airfreight. Its completion is regulated by IATA definitions. Each AWB has a unique identifying number, the first part of which is the IATA airline code number. The AWB is the carriers receipt by air, evidence of the contract of carriage and is usually non-negotiable. It is made out to a named consignee who is the only party to whom the carrier can deliver. Packaging and labelling for air transport is an important consideration. Transport by all-freight aircraft will usually take place using some form of unit load device, so reducing the need for packaging. However, the method of loading and unloading and onward transit may still require a strong and durable packaging medium. Ultimately it is the nature of the goods being transported that will determine the precise nature of the packaging. Table of contents - Road Transport Use of organisation's own vehicles (own account) If an organisation decides to acquire its own vehicles, there are a number of areas to be considered. The type of vehicle, in terms of the chassis-cab and the body type, needs to be

determined. The nature of the operation may also require that mechanical handling aids need to be incorporated into the overall vehicle specification Advantages The advantages of owning vehicles include:

vehicles can be built specifically to carry a particular product. Special equipment for materials handling can be attached; the driver can be specially trained and will fulfil the 'ambassador' role for the organisation; vehicles can carry the company livery, perhaps the aid organisations logo and, where appropriate, the Red Cross; and management retains total control over the vehicle and its operation.

A major disadvantage Management of the transport function can occupy a great deal of management time, requires specific expertise and significant capital investment. In contrast, third party carriers can often provide more cost-effective transport facilities but careful consideration must be given to the level of service required.

Third party advantages and disadvantages: Even if an organisation owns its vehicles, there may well be occasions when a need arises for additional capacity, to meet peak activity or other short term needs. This can be met by the use of vehicles supplied by a commercial transport provider (third party). The advantages of using third party transport include:

organisations can use commercial providers to meet fluctuating demand requirements; variable loads and journeys can be catered for; the haulier may be able to offer a more cost-effective and a more efficient service; and responsibility for administration of vehicles and drivers is no longer the responsibility of the organisation, allowing staff to concentrate on more productive areas. There is no requirement for capital to be invested in transport.

Disadvantages A measure of control is lost with third party operations. Performance feedback and communication with customers needs to remain a strong feature and be controlled by the contracting organisation.

Selecting vehicle types It is important to be able to select the appropriate vehicle for the purpose required even if, at a later stage, it is necessary to revise this choice to reflect availability in the field. See below a description of the main body types and combinations that are available. Selecting the body type The specification of the vehicle body will vary according to the goods or materials being carried and security. There are many variants of body type available; a description of the main body types is shown below.

Table 2: Selecting the body type. To download the table, 'right click' on it and then choose 'Save Image As' from the menu or go to Annexes and click on 'Selecting Vehicles Types'. Platforms The simplest and cheapest body type is the platform or flat bed. It provides all round access to the load, but offers little security or protection from the weather. Loads also need to be restrained. This will generally involve roping and sheeting, which is a time consuming operation. Van body The van or box body reduces the payload of the vehicle, but provides protection for a perishable product and added security. Construction will depend upon the needs for insulation, waterproofing or strength. Access is usually provided by a rear door. Sometimes a door will be built into one, or both, of the body sides. Curtain sided bodies Curtain sided bodies overcome the disadvantages of access, since the curtains can be pulled back to reveal the full length of the platform. This improves the speed of loading as well as unloading. Advantages of load restraint and weather protection are maintained, while body weight is less than the box body. Other variants will replace the curtains with sliding panels. Tankers Tankers are designed to carry powders or liquids. They require a pumping mechanism and piping to discharge the load.

Bulk carriers Bulk carriers are generally built as box bodies without the roof. They will require a tipping mechanism to allow the load to be discharged. Drawbars A rigid master truck with a drawbar trailer is the usual configuration. The bodies may be of the demountable type. Drawbars offer increased cubic capacity for bulky lighter loads.

Road transport documentation Whether the vehicles being used are owned, hired or are managed by a third party, it is important to ensure that all local laws relating to the licensing, insurance and regulation of vehicles are being adhered to :

normally a licence to operate the vehicle on a public highway is required; for larger trucks there may be an additional licence fee to be paid; vehicles should be insured to at least the minimum required by law; different organisations will have internal policies regarding the extent to which their own vehicles should be insured; and vehicles may also require documentation relating to the maximum permissible weights in terms of gross vehicle weight, axle weight and payload.

- Sea transport Sea transport is convenient for bulky pre-planned consignments. In the early days of emergency situations, sea transport is not used to service immediate needs in rapid on-set disasters but more to pre-position or serve post disaster and longer term needs. The key document used in shipping is the bill of lading (B/L). Logisticians should familiarise themselves with it. Bills of Lading The B/L is the transport waybill for a sea freight consignment. It is usually issued in a set of three originals and several non-negotiable (N/N) copies. The B/L is signed on behalf of the ship owner by the person in command of a ship or the shipping agent, acknowledging the receipt on board the ship of certain specified goods for carriage. It stipulates the payment of freight and the delivery of goods at a designated place to the consignee therein named. The B/L is the major shipping document and has three roles.

It affirms the contract of carriage and sets out the terms thereof. It is evidence of the contract between the consignor and the shipping line, and on the reverse details the conditions of carriage. It is the carriers receipt for the carriage of goods by sea and is signed by the master or another duly authorised person on behalf of the ship owner, acknowledging receipt on board the ship of certain specified goods that he undertakes to deliver at a designated place. Possession of the original B/L gives the title to the goods being carried. It is a negotiable document of title to the goods. The consignor must make sure that at least one original B/L reaches the consignee in good time (since he will receive the goods only against presentation of at least one original B/L). The carrier usually establishes three original B/L, which are sent to the consignee under two separate registered mails (it is also possible to send one by ship's bag).

The B/L states to whom and on what terms the goods are to be delivered at destination. Without an original B/L the goods will not be released. The usual way to get the goods without the presentation of the original B/L is the establishment (by the consignee's bank) of a bank guarantee covering the value of the goods. Such guarantee can only be cancelled by remittance of the original B/L to the bank. It is sometimes possible, at the discretion of the carrier, for the consignee, holding a copy B/L to sign a Letter of Indemnity in return for delivery of cargo. On receipt of the B/L it should be passed to the party responsible for clearing the goods. Once the vessel has docked and the goods have been unloaded, the B/L and appropriate customs documents will be required to obtain release of the goods for onward transport.

Terms of the B/L There are three different entries possible in the box headed CONSIGNEE:

To bearer: this means that any person having possession of the B/L may collect the goods; such person is not required to disclose their identity or to explain how they came into possession of the B/L. The mere fact that they have possession of and present the B/L is sufficient. Issuing B/L "to bearer" is not common practice and carries significant risk. To order: this is the form of B/L used most frequently in commercial transactions. As long as the shipper holding the B/L has not endorsed it, he is entitled to dispose of the goods. By endorsing it, he transfers his rights to the endorsee, that is, the person to whom the B/L is assigned by endorsement. Title to the goods is thereby transferred to the new holder of the B/L who may in turn assign it by endorsement to somebody else. To a named party (straight B/L): in contradiction to a B/L "to order", the straight B/L (one in which it is stated that the goods are consigned to a specified person) does not entitle the shipper to dispose of the goods. That right is vested exclusively in the receiver who alone has the right to collect the goods, upon presentation of the B/L and proof of his identity.

The Straight B/L may be assigned by means of a document instrument in writing, evidencing the assignment, which the assignee must present to the master of the vessel together with the original B/L when he collects the goods. On a straight B/L, the term "to the order of" printed on standard B/L must be crossed out, and the deletion initialled by both the shipper and the Master. A Clean B/L is a B/L, which contains nothing in contradiction to qualify the receipt on board of the ship, the goods in "apparent good order and condition". Goods may sometimes be received alongside, which can result in a delay prior to the physical loading of the goods onto the vessel. An Unclean B/L is a B/L containing notation that goods received by carrier were defective. The Through B/L is issued when a shipper wishes the carrier or shipping line to arrange for transport to a destination beyond the port of discharge. The through B/L, in addition to the agreement to carry goods from port to port, includes a further journey (by sea or land) from the port of ship's destination to a distant place (for instance, a destination inland instead of a port). - Rail transport Rail transport is a safe land transportation system when compared to other forms of transportation. Rail transportation is capable of high levels of passenger and cargo utilization and energy efficiency, but is often less flexible and more capital-intensive than highway transportation is, when lower traffic levels are considered. Rail transport costs less than air or road transport. It is very suitable for the movement of large load sizes over longer distances, but it has the following disadvantages:

it lacks the versatility and flexibility of motor carriers since it operates on fixed track facilities. It provides terminal to terminal, rather than point to point delivery services; though it offers an effective method of bulk haulage, it is slow.

Documentation for movement by rail is controlled through the rail waybill. The rail waybill is a non negotiable document. It contains the instructions to the railway company for handling, dispatching and delivering the consignment. No other document is required expect for international transport across borders, where enquiries should be made locally as to the proper documentation needed. - Other modes of transport Other modes of transport especially valid for emergency situations and remote under-developed areas are: Animal

The goods being moved must be packaged in relation to the weight that the particular animal being used can carry. For information, the table below shows the animals used most frequently in such situations and their approximate work rates. These may vary locally because of climatic or other local conditions. Barges and boats Where road and rail transport is not possible due to lack of infrastructure it may be necessary to transport goods by river. This mode of transport also suits bulk shipments of commodities. This will often be done using motorised barges or similar vessels. Goods can be loaded and unloaded using jetties and quayside facilities. In some cases they may be unloaded from seagoing vessels direct for onward transit. What size and type of barge (self-propelled or dumb) that may be required will be determined by availability. Barges are used frequently in the Rhine/Danube basin, the Mississippi basin and Mekong Delta and the coastal waters of south-east Asia. It provides a relatively cheap and simple means of transport which is not dependent on sophisticated port handling facilities. Barges have been adapted in the United States and Europe so that they form part of a multi-modal transport system where barges are integrated with road and rail movement. Also barges are part of the lighter aboard ship (LASH) / barge system and refers to the practice of loading barges (lighters) aboard a larger vessel for transport. It was developed in response to a need to transport lighters, a type of unpowered barge, between inland waterways separated by open seas. Lighters are typically towed or pushed around harbours, canals or rivers and cannot be relocated under their own power. The carrier ships are known variously as LASH carriers, barge carriers, kangaroo ships or lighter transport ships. Administration - Safety and security of goods to be moved Legislation and regulatory frameworks for transport usually include a specific requirement for vehicle safety. Most humanitarian organisations also lay down safety and security policies that need to be followed. Requirements will include the vehicle weight, the way it is loaded and how the load is distributed. Drivers and operators of vehicles are responsible for using a vehicle on the road with a safe and secure load. Legislation will often state that, in transit, the drivers have full responsibility for the safety of their load, even if they did not load it personally. Even if, in some countries, the legislation is not implemented, respected or followed, every effort must be made to ensure that the organisations drivers are following the legislation that has been laid down. Avoiding in-transit theft A thief intending to steal a loaded vehicle requires:

knowledge of an attractive load; the opportunity to access it; time to steal it and to get away before detection; a market for the goods; and

limited or negligible perception of risk.

Main sources of vehicle theft are from depots, from overnight parking areas and from the roadside. Theft can be committed by:

stealing an unattended vehicle; hi-jacking the vehicle; threatening or bribing drivers.

Drivers are central to prevention of this type of loss, and their integrity is essential. Consequently, careful recruitment and selection of drivers is critical. Training will impress upon them the need for care, and procedures to follow to avoid risk of theft. Driver identification cards can be used for added security and to avoid thieves gaining access to vehicles by misrepresentation when parked on third party premises. However, there is little to prevent deliberate collusion by drivers. Vigilance is essential and attention to any pattern of discrepancies on loads.

Revenue Management in Supply Chain: The Supply Chain is not a business function, it is a network of companies and Supply Chain Management is the implementation of cross-functional relationships with key customers and suppliers in that network. It is a new business model necessary for an organization's success and every function needs to be involved.In todays environment, there is the added pressure to be more socially and environmentally responsible and there are risks which need to be mitigated and managed. Then, there is the complexity created by ever increasing customer requirements and expectations, globalization, the pressure on cost, and the availability and access to resources. On top of this, management is expected to improve profitability, increase revenue growth and capture and protect larger market share. In order to succeed, management must recognize that the ultimate success of an organization depends on the ability to integrate the companys network of business relationships in a mutually beneficial way. The management of this network of relationships is supply chain management. Successful supply chain management requires cross-functional integration within the firm and across the network of firms that comprise the supply chain. It is focused the improvements in performance that result from better management of key relationships. By understanding the supply chain management processes and how they should be implemented, management will better understand the value of more integrated supply chains and how this integration will lead to increased shareholder value and a sustainable competitive advantage. Improving revenue management which includes the management of multi-party trade settlement (sometimes dubbed bifurcated trade management) is an equal opportunity for all supply chains. No matter whether you are in a consumer, high tech, life sciences, or chemical supply chain it is a major source of cost,

waste and frustration. Executives often will ask, Why cant we get this right? I laugh and empathize. What seems so simple is very complex. The revenue management process varies by industry. Each value network shapes demand a bit differently and the contract terms are VERY industry specific. For example, consumer products companies lean heavily on trade promotions, high tech supply chains focus on new product introductions, life sciences on rebates and value-based outcomes and the chemical industry on price. Despite the differences there are commonalities:

Traditional CRM is not the answer. The historic footprint of CRM is sales pipeline management, customer service and call center execution and business development. This footprint lacks the data model for either decision support (Revenue Management Optimization (RMO)) or execution (Revenue Management Execution (RME). This CRM data model is fundamentally flawedfocused on a pipeline data model for sales effectiveness versus a product/services data model that looks at the process workflows of bifurcated trade, the inter-relationships of the demand shaping levers (price, promotion, incentives, buzz from the social web, trade and brand marketing and new product launch) and the visibility of a clear baseline forecast. As a result, the industry is forced to nurture and evolve small, industry-specific providers to augment and redefine front-office functionality. Complex Workflows with Substantial Opportunity. For the corporate fiscal year ending in 2010, the size of the prize is large. The average consumer products company spent 22% of revenue on trade promotion management (source Symphony/IRI and AMR Research/Gartner) and for the average life sciences company, rebates represented 18% of revenues (source IMS). For either industry segment this can quickly add up to over a billion dollars annually. Yet, no company that I have interviewed in either industry (over 150 companies) believes that their processes are under control. Uniformly, companies see revenue management as an opportunity, but do not know how to seize the opportunity. There is no easy answer. To understand why, read on. Industry-specific Workflows. Each industry shapes demand differently, has different contracting processes with their downstream trading partners (buy-side), and uses substantially different language/terminology to describe what they do. (Can you imagine if you substituted the acronym BOGO (Buy one Get one Free) from Consumer Products (CPG) sales cycle for Averaged Managed Price (AMP) for life sciences sales cycle?) These processes are VERY industry specific.

This leads to a problem. When buying a solution, where do companies turn? Who can they trust? There is no perfect solution. Why? Traditional Customer Relationship Management (CRM) technologies are insufficient to solve the problem. In sales cycles, the battle lines in sales cycles quickly form. Information Technology departments want one throat to choke and believe that this type of functionality can be sourced from a CRM or ERP provider. Lines of Business (LOB) leaders believe that they need industry-specific functionality from industry-specific suppliers. They are both right, they are just not good at drawing the battle lines. Companies need traditional CRM functionality for business development and contact management, but industry-specific functionality for predictive analytics, base-line forecasting and bi-furcated trade management. The decision on Business Intelligence needs to be based on the total IT portfolio.

Changing Processes. These are not enterprise, but are inter-enterprise workflows, driven largely by the nature of the relationships in the extended value chain. As a result, they need to be designed from the outside-in not the inside-out. It is not easy. The technologies lack an inter-enterprise system of record and standards. Given the recent shifts in power and the increasing compliance/regulations of these industries, the industry processes are in flux and the need is greater with even more dollars on the table. Opportunity Abounds in both Planning and Execution. While revenue management should be a horizontal process focused on demand orchestration, the applications in the market are largely piecemeal serving organizational silos not end-to-end supply chain processes. There are no complete solutions. The choice is fraught with risk, but I have seen greater success when companies chose industry-specific best of breed providers than try to adapt the data model through custom development that is required with an ERP solution. In short, while people want it there is no effective end-to-end solution for any industry for revenue management.