By Ayesha, Farooq, Fateh & Hannah

 Introduction Ms Ayesha
 Importance of Transportation
 Current Transportation Challenges Mr Fateh
 Challenges (Panel Perspective)

Mr Hannan
 Transportation- Best Practices

 Best Practices Panel Perspective) Capt®

Farooq
 Conclusion
 Introduction
 Transportation has been a major component
enabling trade for centuries; involving physical
movement of goods
 The back bone of any sustainable supply change
relies on a performing and reliable transportation
network
 Transportation has a major economic impact on the
financial performance of businesses in Supply
chain
 Transportation service availability is critical to
demand fulfillment in the supply chain
 Transportation efficiency promotes the
competitiveness of a supply chain
 Introduction
 In order to be efficient and economical SC
Managers are focusing on responsive
Transportation with a view to increase
customer satisfaction
 Due to rapid technological changes, manpower
requirements, demand and supply issues the
transportation is facing considerable challenges
in Supply Chain
 Importance of Transportation
 The past decade has witnessed considerable
changes in transportation
 Transportation represents the single largest
logistics cost for most companies
 In 2015, The United-States logistics accounted
for 7.85% of the Gross Domestic Product
(GDP)
 In total, $1.4 trillion was spent on logistics, with
transportation representing 63%
 The figures provide a glimpse of how the
various modes of transport are important to
supply chain
Current Transportation Challenges
 Sharp Fluctuations in fuel pricing
 Driver shortages
 Expansion in 3PL / 4PL providers
 Commoditization of carrier pricing
 Expanding use of technology tools

 Increasing regulations
• These challenges have exponentially increased
the complexity of the transportation environment
Current Transportation Challenges
 Sharp Fluctuations in fuel pricing
o The sharp fluctuation in fuel pricing can be
explained by the constant rise and fall in oil. The
OPEC has often refused to curb production on
the overall market which has resulted in an
abundance of crude oil. This increase caused a
disparity between the demand and supply of
crude with repercussions on fuel prices. The
matter is still to be solved
Current Transportation Challenges
 Driver shortages
 Except for truck industry, there is shortage of
drivers due to demographic factors, low wages,
and unsatisfactory working conditions (taking
into account the dangers & weather conditions)
 Expansion in 3PL / 4PL providers
 Companies at times have to rely on 3PL & 4PL
not only for shipment of goods to the customers
outside their region but to cope with increased
competition on the market
 These service providers charge higher prices for
providing external services to a company’s
logistic operations
Current Transportation Challenges
 Commoditization of carrier pricing
 Commoditization occurs when consumers can buy the
same product or service from different small or large
businesses.
 It has a direct impact on whether a company
dispatches its products or hires a third/fourth party
provider to do so
 The transportation market, being heavily price-driven,
results in consumers having less focus in distinguishing
between companies’ products and services, but will put
more emphasis on buying the cheapest alternative
 Pricing is the only competition which transportation
services rely on
Current Transportation Challenges
 Commoditization of carrier pricing
 In a recent article published in Logistics
Management, Maersk was cited to finding an
innovative way to increase the scope of its
services through an end-to-end approach with a
new trade finance offering to counter
commoditization. IMD insights, in an article
written by Professor Stefan Michel and Michael
Sorell suggested Pricing Excellence as an
effective strategy to contain commoditization.
The main driver is to create more value; a
company needs to understand the core
capabilities that influence organizational pricing
and capture this value in its pricing strategy.
Current Transportation Challenges
 Expanding use of technology tools
 Many companies are still reluctant to adopt new
technologies. Digital technology innovation is
sure to transform the trends of supply chain and
procurement in the future. However, a slow
conversion to technology may give other
companies (digitally equipped), a competitive
advantage
 Increasing regulations
 The transportation industry is impacted by
governmental requirements that affect cost
structures and service capabilities
Current Transportation Challenges
 Increasing regulations
 Regulation is growing in areas where the
transportation industry has the potential to
impact the quality of life, the safety of citizens,
and the growth of commerce
Other Challenges (Panel Perspective)
 Competing goals among supply chain partners

 Changing customer requirements

 Limited information availability

 Synchronizing transportation with other supply

chain activities
 Transportation Best Practices
 Using Transportation and Network Optimization
for Continuous Improvement
 Using transportation optimization, analysts can
baseline existing routing strategies and test new
strategies to predict actual costs and service
levels
 Optimal plans can be created to set inventory
levels, schedule production and to define
distribution routing. Thus
 Efficient routes can be defined
 Landed cost is reduced
 Optimize Mix and Mode
 Transportation Best Practices
 Building a Baseline Model. Before organizations
can select what strategy will have the most impact
on their business, it’s important to first establish a
baseline model to assess the current state
 The baseline model represents how your network
performed last year. It uses the preceding year’s
shipment and cost data and attempt to predict
costs within about a 1-10% range
 Through baseline model, firms identify inefficient
current practices. E.g Supplying a customer from
a factory that is farther than a factory close by, or
discovering that average shipments involve
trucks that are far from full
 Transportation Best Practices
 Consider alternate modes of transportation or
the use of private fleets
 Despite the logistical challenges a vendor is
facing, consumers still need their goods. In order
to meet service levels, organizations can expand
the modes from trucks to air, ocean or rail
 Additionally, companies may also consider right-
sizing inventory in order to meet desired service
levels at the lowest possible cost. This will not only
address the capacity challenges but also result in
significant cost savings. Private fleets can also
serve as a cost-effective alternative
 Today an overseas shipment runs between 35 -
50 days. If we can reduce that by just one day, we
save the cost of carrying that inventory
 Transportation Best Practices
 Use modeling technology to run what-if scenarios
to test various strategies before implementation
 Through baseline model, test the effects of some of
the strategies discussed by running “what-if”
scenarios
 This allows modelers the freedom to assess the
impacts of various strategies prior to implementation
in a risk-free environment separate from real-world
practices
 This allows modelers to accurately analyze potential
network configurations and provide predictions of
performance, making it easy to develop a new
strategy
Best Practices (Panel Perspective)
 Long-term strategies/partnerships to succeed
 By working closely together, companies & their
suppliers can create highly competitive supply chains.
Long term partnerships increases market share,
inventory reductions, improved delivery service,
improved quality & shorter product development cycles
 Failing to collaborate results in the distortion of
information as it moves through a supply chain, which,
in turn, can lead to costly inefficiencies
Best Practices (Panel Perspective)
 Creating value from lean methodologies
A lean supply chain focuses on cutting costs by
producing high volumes of products with low
variability
 Lean Supply chain entails streamlining firms
processes by eliminating waste & non-value added
activities
 Lean is becoming a strategy method for gaining
competitive advantage
Best Practices (Panel Perspective)
 Highly customized services to meet emerging
needs
 Transportation suppliers are increasingly playing a
more prominent role enabling fims to unlock the
value-creation potential of their supply chains
 As Organisations pursue growth opportunities via
segmentation & customer differentiation, suppliers
are offering ever more specialized transportation
solutions & services such as tailored digital
solutions, dedicated fleets and specialized drivers
Best Practices (Panel Perspective)
 Fully leveraging digital technology/analytics
 Firms and transportation suppliers have embraced
digital technology to increase real-time visibility,
optimize operations, and design future ideal
networks and systems
 This shifts value creation from traditionally
transactional information- sharing activities, such as
load tendering or service monitoring, to the
development and execution of sophisticated
transportation operating strategies and anticipation
of losses
 Conclusion
 Research shows firms who have aligned
transportation with their business model have
significantly better performance than those who
have not
 Contextualizing transportation in the overall
strategy of the company is a must for creating
value
 Transportation must be treated as a strategic
element of the business plan and the end-to-end
supply chain in order for companies to maintain
competitive advantage