Description
Transportation and Logistics
Assignment 1 – Supplier Selection
Value (%)
This assignment is worth 15% of your course grade.
Course Learning Outcomes (CLOs)
By completing this assessment, you will be able to:
● CLO 2: Determine the information and documentation as well as appropriate tools
required to facilitate the flow of material, goods and/or services within a supply chain
● CLO 3: Identify and assess the relevant costs involved in transportation decision-making
● CLO 7: Apply a working knowledge of the documentation required for international
transportation, customs and import/export processes, and current international
commercial terms (INCOTERMS) to facilitate the international movement/distribution of
goods
Task
Read the case in Appendix A and answer the questions included. Student must provide a
spreadsheet showing their work for questions 1,2 and 3.
How to Complete This Assessment
1. Assignment shall be completed individually.
2. The use of generative AI programs like ChatGPT, or paraphrasing websites like Spinbot are
not permitted. You can succeed (and you will learn more) without relying on these tools.
3. I encourage you to use the course textbook and materials to inform your work. No
external research is required to complete this assignment.
Grading Criteria
Proficient
(2 points)
Emerging
(1 point)
Incorrect, not
included, or needs
development
(0 points)
Grade
Question 1 The answer is correct;
a spreadsheet is
provided to show work.
Minor mistakes in the
calculation or no
spreadsheet is
provided to show
work.
The question is not
answered;
Major mistakes in the
calculation
Question 2 The answer is correct;
a spreadsheet is
provided to show work.
Minor mistakes in the
calculation or no
spreadsheet is
provided to show
work.
The question is not
answered;
Major mistakes in the
calculation
Question 3 The answer is correct;
a spreadsheet is
provided to show work.
Minor mistakes in the
calculation or no
spreadsheet is
provided to show
work.
The question is not
answered;
Major mistakes in the
calculation
Question 4 The response is welldeveloped, answers
the question directly,
and provides evidence
of critical thought and
application of course
materials.
The questions is
partially answered;
the answer is brief, or
the answer requires
more development
The answer is extremely
brief, does not answer
the question, or is
skipped entirely.
Question 5 The response is welldeveloped, answers
the question directly,
and provides evidence
of critical thought and
application of course
materials.
The questions is
partially answered;
the answer is brief, or
the answer requires
more development
The answer is extremely
brief, does not answer
the question, or is
skipped entirely.
Completed selfassessment.
Max. 1 point
Self-assessment
completed in a
thoughtful way
(1 point)
Self-assessment is
partially completed,
or answers require
more development
(0.5 points)
Self-assessment not
completed
(0 points)
Total Points /11
Total % %
How to Submit Your Assessment
1. Complete the Assignment 1 Self-Assessment
2. Submit your answers to questions 1-5 in the dropbox in Moodle. Include a spreadsheet to
show calculations for questions 1, 2, and 3. Questions 4 and 5 can be included in the
same file or a separate document.
Due Dates:
January 24, 2024 at 11:59pm.
If you are short on time (for whatever reason), request an extension rather than commit
academic dishonesty (examples of academic dishonesty include: asking a friend to share their
work, using ChatGPT, or spinbots, copying from the internet, etc.).
You may request an extension via email prior to the original due date. Requests received after
grading has been completed will not be considered. Keep your request simple: include which
assignment and the requested new due date. You do not need to reveal the details of your
private life in order to be granted an extension. All reasonable requests within the course term
shall be granted (the last possible submission date for all assignments is Feb 21, 2024).
Appendix A:
The Widget Company (TWC) is a retailer of widgets located in Sudbury, Ontario. The yearly
demand for widgets is 48,000 units.
TWC has a contract with a third-party logistics company, which includes the rates in Table 1
below. TWC only pays these if the costs are not included in the supplier’s quoted price.
INCOTERMS provided in the suppliers’ proposals (Table 2) will determine what is included in
their price. If insurance is not included in the suppliers’ price (as per Table 2), TWC will pay the
Third-Party logistics company for insuring the goods (as per rates in Table 1). All widgets are
containerized for shipment. Up to 4,000 widgets can be loaded into a 20ft container, and up to
8,000 widgets can be loaded into a 40ft container.
TWC has received proposals from 3 suppliers to supply widgets. You are tasked with making the
supplier selections and order quantity decisions for the rest of the year. Table 2 contains a
summary of the 3 proposals.
Table 1 – Third-Party Logistics Company Rates
20ft container price 40ft container price
Export Packaging $500 per container $1,000 per container
Loading Charges (at Origin) $200 per container $300 per container
Delivery to Port (at Origin) $400 per container $600 per container
Export Duties, Taxes &
Customs Clearance
From Mexico: none
From China or Nigeria: 5.5% of
the value of the merchandise
From Mexico: none
From China or Nigeria: 5.5%
of the value of the
merchandise
Origin Terminal Handling
Charges
$100 per container $150 per container
Loading on Carriage $100 per container $150 per container
Freight Charges (Port to Port
Delivery)
From Mexico: $3,400 per
container
From China: $7,000 per
container
From Nigeria: $5,000 per
container
From Mexico: $4,600 per
container
From China: $13,000 per
container
From Nigeria: $10,000 per
container
Insurance 1% of the value of the
merchandise
1% of the value of the
merchandise
Destination Terminal
Handling Charges
$250 per container $350 per container
Delivery to Destination (from
Port)
$800 per container $1,200 per container
Unloading at Destination $150 per container $200 per container
Import Duty, Taxes, and
Customs Clearance
From Mexico: none
From China or Nigeria: 7% of
the value of the merchandise
From Mexico: none
From China or Nigeria: 7% of
the value of the
merchandise
Table 2 – Supplier Proposals
Supplier 1: Supplier 2: Supplier 3:
Price per unit: $23.05 $21.55 $24.05
INCOTERM: EXW FCA CPT
Minimum Order
Quantity:
15,000 12,000 2,000
Supplier Location: Guanajuato, Mexico Qingdao, China Lagos, Nigeria
Lead time (days): 12 35 24
Widgets are insured in
transit by the supplier:
No Yes Yes
All amounts are in Canadian Dollars.
Questions
1. What is the landed price per widget for Supplier 1 if ordering the minimum order quantity?
Provide your answer in a spreadsheet showing your calculations. Remember to use the
most economical container size if you are using the Third-Party Logistics company rates.
2. What is the landed price per widget for Supplier 2 if ordering the minimum order quantity?
Provide your answer in a spreadsheet showing your calculations. Remember to use the
most economical container size if you are using the Third-Party Logistics company rates.
3. What is the landed price per widget for Supplier 3 if ordering the minimum order quantity?
Provide your answer in a spreadsheet showing your calculations. Remember to use the
most economical container size if you are using the Third-Party Logistics company rates.
4. Which supplier proposal carries the least amount of risk for TWC? Why?
5. Which supplier would you recommend and why? List any other issues and transportation
costs that may influence the decision.
Unformatted Attachment Preview
Transportation: A
Global Supply Chain
Perspective, 10e
Chapter 2: Transportation
And The Economy
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1
Discussion Outline
• Economics of transportation
• Transport measurement
units
• Significance of
transportation from a
historical, environmental,
social, and political
perspective
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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2
Economics of Transportation
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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3
Economics of Transportation (1 of 2)
• Transportation demand = a request to move a given weight or amount
of cargo a specific distance between two specific points
• Demand for transportation
• Transportation helps to bridge the supply and demand gap inherent
to mass-production
• Goods need to be transported nationally and globally
• Measured in ton-miles
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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4
Economics of Transportation (2 of 2)
• Passenger demand
• Transportation bridges the supply and demand gap for people
between locations
• People need to be mobile for work, recreation, shopping, and to
access services
• Measured in passenger-miles
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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5
Economic Significance: Freight
Transportation
• A geographical area specializes in the mass production of particular
goods and/or services
• Transportation bridges the supply and demand gap inherent in the
mass production–oriented approach
• Transportation lowers “landed cost” of production factors
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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6
Economic Significance: Passenger
Transportation
• Workforce mobility
• Growth of suburban areas
• Increased land and property values
• Tourism
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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7
Transportation Measurement
Units
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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8
Measurement Units
Table 2-2 Passenger Miles: 2017–2020 (millions)
2017
2018
2019
2020
Air
685,472
722,415
754,450
304,253
Rail
32,618
32,252
32,766
16,802
Bus
364,357
387,181
380,337
319,548
Light Duty Vehicles
4,816,223
4,849,254
4,894,385
4,304,298
Source: U.S. Department of Transportation, Bureau of Transportation Statistics, 2021, Washington, D.C.
Table 2-3 U.S. Tons of Freight (Millions), 2019–2050
Year
2019
2020
2022
2050
Air
14
12
13
25
Truck
12,206
11,902
12,152
17,987
Rail
1,363
1,241
1,266
1,583
Water
1,198
989
1,054
1,328
Pipeline
3,681
3,377
3,595
4,976
Source: U.S. Department of Transportation, Bureau of Transportation Statistics and Federal Highway
Administration, Freight Analysis Framework, version 5.3, 2022, https://www.bts.gov/faf.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
9
Demand Elasticity
The Sensitivity of Customers to Changes in Price
• Aggregate demand for transportation is price inelastic. Freight rate
reductions will not proportionally increase the aggregate demand for
freight transportation
• Demand for specific modes of transportation or specific carriers is
generally price elastic and service elastic
• Reductions in rates charged usually result in greater than proportional
increased demand. Decreasing service levels similarly result in greater
than proportional decreased demand
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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10
Derived Demand for Freight Transportation
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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11
Value of Transportation Service
The Impact of Transportation Costs and Services on
the Demand for the Product
• Landed cost determines the extent of the market
• Landed costs at buyer facility = Production cost of overseas supplier
+ Overseas warehouse & transport costs
+ Export tariffs
+ International freight transportation costs
+ Import duties
+ Buyer warehouse & transport costs
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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12
Landed Cost Determines the Extent of the
Market (and Equation)
LC(P) = LC(20)
Production Cost (P) + Transportation
Cost (P) = Production Cost (S) +
Transportation Cost (S)
$50 + $0.60(x) = $50 + $0.50(200 − x)
$0.60(x) + $0.50(x) = $50 + $100 −
$50
$1.10(x) = $100
x = 90.9 miles from P
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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13
Problem: Extent of the Market
• Company A and Company B are competitors which produce the
same product. Company A is 500 km away from Company B.
Calculate the extent of the market of Company A.
Company A
Company B
Production Costs
$46/unit
$49/unit
Transportation Costs
$0.45/unit/km
$0.25/unit/km
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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14
Service Components of Freight Demand
Table 2-4 Service Components of Freight Demand
Service Component
User Implication
Transit Time
Inventory, Stock Out Costs
Reliability
Inventory, Stock Out Costs
Accessibility
Transit Time, Transportation Cost
Capability
Meets Products’ Unique Physical and Marketing
Requirements
Security
Inventory, Stock Out Costs
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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16
Value of Goods
• Place utility
• Time utility
• Quantity utility
• Cost utility
• Land values
Source: Adapted from Edward Morlok, Introduction to Transportation,
Engineering, and Planning, New York: McGraw-Hill, 1978, p. 33.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
17
Place Utility: Law of Squares (or
Lardner’s Law)
Reductions in transportation costs permit
market areas to purchase products from
more distant suppliers
In Figure 2-5
If transportation costs are cut in half, the
supplier can now transport goods for twice the
distance.
Small circle = initiate transportation costs
Big circle = transportation costs cut in half
The big circle shows that the relevant market
area has increased four times when the radius
doubles from 100 to 200 miles.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
18
Significance of
Transportation
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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21
Transportation Importance to GDP
Table 2-6 Average Household Expenditures, 2020
Category
Percent of Household Expenditures
Housing
34.9%
Transportation
16.0%
Personal Insurance and Pensions
11.8%
Food
11.9%
Health Care
8.4%
Entertainment
4.7%
Apparel and Services
2.3%
Other
10.0%
Source: U.S. Department of Transportation, Bureau of Transportation Statistics, U.S. Bureau of Labor Statistics.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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22
Beyond Economic Significance
Environmental (social cost)
Social
Political
• Pollution: Air, noise, water
• Health & welfare
• National unity
• Sustainability
• Education delivery
system
• National defense
• Safety: Injury, loss of life,
hazards accidents (e.g., oil
spills, gaseous explosion)
• Social interaction
• Humanitarian aid
• Energy: Fossil fuels
• Lifestyle
• Government intervention:
Governance, system
maintenance & development
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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23
Go to Menti.com
4 questions – slides 8-12
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
24
Summary
• Transportation expenditures are an important part of the history and
gross domestic product of the United States.
• Transportation is needed for transportation of goods and people.
• Transportation contributes to the value of goods by providing various
utilities that enhance the possibility of scale economies and increased
market areas.
• While transportation provides many benefits, including social and
political significance, it creates social costs due to the impacts on the
environment.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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25
Podcast: CBC Front
Burner
• Electric vehicles and an Ontario mining
conundrum
• August 19, 2022
• https://www.cbc.ca/listen/cbcpodcasts/209-frontburner/episode/15931671-electricvehicles-and-an-ontario-miningconundrum
• Sample from 2:28 to 11:50
15:40 to 22:35
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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26
Video – What
Samsung’s Return to
U.S. Chip Manufacturing
Means For the Economy
| WSJ
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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27
6.53
Week
1
Role and importance of transportation in
supply chain management
Learning Outcomes and Objectives
Learning Outcome
Explain the role and importance of
transportation in supply chain
management
Learning Objectives
Discuss the importance of
transportation in a global market and
how it contributes to the effective flow
of business
Discuss the role of efficient
transportation systems in the growth
and development of specific
geographical regions and countries
Explore the challenges associated with
transportation of goods and materials
in a global environment
Consider the impact of geographical
constraints in the transportation of
goods and materials
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Resources
Chapter 1 – Global Supply Chains: The Role
and Importance of Transportation
Chapter 2 – Transportation and the
Economy
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
Transportation: A
Global Supply Chain
Perspective, 10e
Chapter 1: Global Supply
Chains: The Role and
Importance of Transportation
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4
Chapter Objectives (1 of 3)
By the end of this chapter, you should be able to:
• Appreciate why efficient transportation systems are so critical to
advance the growth and development of regions and countries, and
how they contribute to social and political systems as well as national
defense
• Discuss the importance of transportation to globalization and how it
contributes to the effective flow of commerce among close and distant
regions
• Understand how global supply chains can contribute to the competitive
position of countries and allow them to penetrate global markets
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5
Chapter Objectives (2 of 3)
• Appreciate the dynamic nature of the global economy, which can
impact and change the competitive position of a region or country in a
relatively short period of time
• Explain the underlying economic basis for international exchange of
goods and services for the overall benefit of two or more countries or
regions and gain some perspective on the volume and overall
importance of the more advanced countries of the world
• Discuss the size and age distribution of the population and the growth
rate of the major countries of the world and understand how the size
of the population can impact a country positively or negatively
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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6
Chapter Objectives (3 of 3)
• Understand the challenges and opportunities associated with the
world-wide growth in urbanization and why there has been such a
major shift from rural to urban areas
• Appreciate the importance and impact of land and resources to the
economic advancement and development of the various countries of
the world and how they can be exploited to their advantage
• Explain why technology has become such an important ingredient for
the economic progress of companies and countries in today’s global
economy and understand the need for and types of technology
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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7
Discussion Outline
• Global Supply Chain Flows
• The Economic Basis and Logic of Improved
Global Trade
• Contributing Factors for Global Flows and
Trade
• Urbanization
• Land and Resources
• Technology and Information
• Globalization
• Supply Chain Concepts
Global Supply Chain Flows
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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9
Export-Trade Flows of Merchandise
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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10
Import-Trade Flows of Merchandise
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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11
The Growth in the Volume of Global Trade
• Trade agreements among countries
• A reduction in tariffs
• Greater acceptance of importing
finished products (vs. raw materials)
Source: World Trade Organization.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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12
The Economic Basis and Logic
of Improved Global Trade
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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13
Absolute and Comparative Advantage
• Absolute advantage
• Trade is beneficial if cost of production for the same product differs
between countries
• Comparative advantage
• Trade is also beneficial even if one country has lower cost of
production for multiple products than another country
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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14
Contributing Factors for
Global Flows and Trade
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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15
Contributing Factors for Global Flows and
Trade
•
Population size and age distribution
•
Urbanization
•
Land and resources
•
Technology and information
•
Labor mobility
•
Faster communication
•
Globalization
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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16
Population = Labor and Consumption
Table 1-4 Top 10 Countries with the Highest Population
COUNTRY
2000 POPULATION
2010 POPULATION
2017 POPULATION
2050 EXPECTED POPULATION
1
China
1,268,301,605
1,330,141,295
1,388,232,693
1,301,627,048
2
India
1,006,300,297
1,173,108,018
1,342,512,706
1,656,553,632
3
United States
282,162,411
310,232,863
326,474,013
398,328,349
4
Indonesia
214,090,575
242,968,342
263,510,146
300,183,166
5
Brazil
174,315,386
201,103,330
211,243,220
232,304,177
6
Pakistan
152,429,036
184,404,791
196,744,376
290,847,790
7
Nigeria
123,945,463
152,217,341
191,835,936
391,296,754
8
Bangladesh
128,734,672
156,118,464
164,827,718
193,092,763
9
Russia
147,053,966
139,390,205
143,375,006
129,908,086
10
Mexico
99,775,434
118,600,000
130,222,815
150,567,503
Top Ten
3,597,108,845
4,008,284,649
4,176,380,247
4,950,140,178
Rest of the world
2,487,798,751
2,829,120,878
3,005,478,372
4,329,774,957
Total
6,084,484,918
6,837,405,527
7,181,858,619
9,374,484,225
Source: World Bank, United States Census Bureau, United Nations, Department of Economic and Social Affairs
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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17
“Aging” in Developed Countries (1 of 2)
Source: United Nations, Department of Economic and Social Affairs, Population Division
(2019), World Population Prospects 2019.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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18
“Aging” in Developing Countries (2 of 2)
Source: United Nations, Department of Economic and Social Affairs,
Population Division (2019), World Population Prospects 2019.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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19
Go to Menti.com
2 questions – slides 1-3
Urbanization
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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21
Urbanization
• In 2000, 47% of the world’s population lived in urban areas.
• Increased to 56.1% in 2020
• Megacity (more than ten million people)
• Asia will have 18 megacities
• Change most rapid in underdeveloped countries – Urban infrastructure
and sustainability challenges
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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22
Land and Resources
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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23
Land and Resources
• The availability of land and critical resources such as energy, food, and
water are of paramount importance for economic viability and future
development.
• Critical role of technology in:
• Mitigating resource scarcity
• Desalinization of ocean water
• Fracking for increased oil and gas production
• Biotechnology for improving crop yield and food production
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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24
Technology and Information
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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25
Technology and Information (1 of 2)
• Technology as an “internal” change agent
• Enhanced efficiency, effectiveness, and competitiveness of an
organization
• Technology as an “external” driver of change
• New forms of competition or new business models
• Technology and transportation services have been major factors
supporting these changes.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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26
Technology and Information (2 of 2)
• Technological
• The Internet
• Industrial robotics
• Digitization of manufacturing – Additive manufacturing or 3D
printing
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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27
Globalization
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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28
Globalization (1 of 2)
• Economic integration and reduction of trade barriers lead to increased
global flows of goods and services (comparative advantage), which
leads to global interdependence.
• Benefits of global interdependence (Macro-level view)
• Lower prices
• Wider availability of goods and services
• Land and resource development
• New employment opportunities
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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29
Globalization (2 of 2)
• Challenges of global interdependence (Micro-level view)
• Increased level of complexity and competition
• Shorter product life cycles
• New forms of competition
• New business models
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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30
Supply Chain Concept
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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31
Development of Supply Chain Concept
(1 of 2)
• 1960s: Physical Distribution
• Focus on system costs and trade-off among transportation,
inventory levels, warehousing, protective packaging, materials
handling, and customer service
• 1980s: Business Logistics/ Integrated Logistics
• Focus on coordination between the outbound and inbound sides of
logistics. Analyzing trade-offs for the lowest total cost and the value
of demand aspects of customer service effectiveness
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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32
Development of Supply Chain Concept
(2 of 2)
• 1990s: Supply Chain Management
• The extended enterprise or boundary spanning perspective, focusing
on a system of connected networks between the original vendor and
the ultimate final consumer
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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33
Physical Distribution
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34
Logistics Network
Source: Center for Supply Chain Research, Penn State University, 2004.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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35
Integrated Supply Chain
• Supply chain management (SCM) is the art and science of integrating
the flows of products, information, and financials through the entire
supply pipeline from the supplier’s supplier to the customer’s customer.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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36
Product/Service Flows
• Product flow is directly dependent on effective transportation for
timely, reliable, and damage-free product delivery to customers.
• Importance of reverse logistics systems for returning products
• Different network designs (location, size, and layout of facilities)
• Growing number of specialized reverse logistics and transportation
service providers
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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38
Information Flows (1 of 2)
• Traditionally, demand or sales data triggered replenishment and served
as a basis for forecasting future demand for all members of the supply
chain.
• Lengthy time intervals between orders created demand uncertainty,
resulting in higher inventory (safety stock) or stock out costs.
• This contributed to the “bullwhip effect” in the supply chain as the
magnitude of uncertainty increased with the “distance” from the
market or customer.
• Supply chain management mitigates the bullwhip effect by reducing
the level of uncertainty
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39
Information Flows (2 of 2)
• Timely, two-way flows of accurate information help mitigate the
bullwhip effect.
• Bar codes and RFID
• Reduce uncertainty (thus safety stock)
• Forms of forward information – advanced shipment notices (ASNs),
order status information, and inventory availability information
• Transportation plays an important role in supply chain efficiency
(including level of inventory) and effectiveness.
• Service reliability
• Transit time
• Efficiency through consolidation and merging-in-transit strategies
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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40
Go to Menti.com
4 questions – slides 4-7
Financial (Cash) Flows
• Cash flows involve backward flows of payment for goods, services, and
orders received.
• Shortened order and replenishment cycles mean faster cash-to-cash
or order-to-cash cycle.
• Faster cash flow reduces working capital requirements for financing
operations and contributes to improved profitability.
• Transportation service quality contributes to improved customer
service and faster cash flow.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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42
Video – Why Making
Apple iPhones in
America Is So Hard |
WSJ
Summary
Globalization through economic integration and elimination of trade
barriers increased global trade flows and interdependence.
Global trade flows continue to expand, motivated by:
− Population growth and age distribution
− Urbanization
− Land and natural resource use
− IT and non-IT technologies
Increased global trade flows are dependent on integrated flows of
products/services, information, and finances (cash).
Increased flow of products/services elevated transportation to a more
strategic role in many organizational supply chains.
Novack, Gibson, Suzuki, and Coyle, Transportation: A Global Supply Chain Perspective, Tenth Edition. © 2024 Cengage. All
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44
Transportation: A
Gl
