Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

15.4.3 Transportation to Receiver

Intended learning outcomes: Describe the selection of the mode of transport. Explain the transport chain from supplier to receiver and various kinds of organizing transshipment points. Present routing and scheduling and the optimization of loading space.

Following picking of the goods to be shipped and packing, the next step is planning the transport of the goods to the receiver. Transport itself is often outsourced to a third-party logistics provider. The specific distribution network structure resulting from storage locat­ions planning determines the distances of the routes and the choice of means of transport.

Transport planning and scheduling involve finding solutions in three problem areas: selection of the mode of transport, shipping route planning, and loading space optimization.

Fair and Williams (in [Ross15]) define a number of objectives that should be achiev­ed through transport planning and scheduling. The most important objectives are most conti­nuous flow of goods through the distribu­tion network; optimal, load-specific selection of the mode of transport; minimization of number of vehicles; standardization of loading aids (pal­lets, containers); and maximization of capacity utilization (capital, equipment, personnel).

Figure shows interactions and mutual influences among the three main transport planning and scheduling tasks.

Fig.       Problems of transport planning and scheduling. (Following [Stic04])

The selection of the mode of transport is largely determined by the type of load. Bulk goods loads, that is, unpackaged substances in the form of solids, liquids, or gases, entail other requirements as to the mode of transport than loads that are made up of discrete standard loads like containers, packages, pallets, or sea containers. The specific nature of the goods to be shipped stipulates further requirements: The goods may be perishable, combustible, explosive, sensitive, or prone to shrinkage.

Possible modes of transport away from the company are road motor vehicles, railways, ships, and aircraft. The transport chain may integrate both company-owned vehicles (such as trucks) and public modes of transport. For bulk goods, pipeline systems are possible. Bowersox (in [Ross15]) outlines six criteria that influence the decision on mode of transport: speed, “completeness” (using the least possible number of different modes within one distribution channel), dependability, capability (not all goods can be transported via all modes of transport), transport frequency, and costs.

For the delivery of a transportation order, a combination of transport modes can form a transport chain. A distinction is made among direct course (no interruption from supplier to receiver), “pre” course (from supplier to transshipment point), “post” course (from trans­shipment point to receiver), and main course (from transshipment point to transshipment point). The advantages of individual modes of transport can be utilized for the various legs of the transport. Because of their flexibility, trucks are often used for “pre” and “post” course, whereas for the main course over great distances, the choice falls on air or water trans­port. Figure shows some examples of transport chains.

Fig.       Transport chain from supplier to receiver.

When changing the means of transportation, there is the problem of getting the goods from one modality to another. While the transfer of the goods can be simplified through the use of standardized loading aids like containers or pallets, transferring goods entails special handling equipment (gantry crane, winch, lifting platform, chute, and so on), time and personnel, and asso­ciated costs. The following concepts are gaining in importance:

  • Cross-docking, or direct loading, is the concept of load building on the incoming vehicle so that the packaged goods can be easily carried at the transshipment point to the outgoing vehicle, without being stored in temporary inventory (cf. [APIC16]).
  • The objective of combined transport is to transport goods using two modes of transport in combination, such as rail/road, in the best way possible so as to utilize the advantages of each. This is achieved through the use of intermodal transport units (contai­ner, swap body, or semi-trailer/goods road motor vehicle).
  • Trailer on flat car [TOFC] transport is a synonym for road transport that is in part moved by rail. Semitrailers or entire road trains (drawbar-trailer combinations) are loaded onto trains. The major part of the journey is by rail; the final leg for delivery to the customer is carried out by road.
Routing and scheduling determine the order in which a means of transportation will reach the individual stations (customer, trans­shipment stations, warehouses, and so on).

The objective is to deliver to all customers in a delivery area at minimal cost. Strategic route optimization is required. The return movements of empty road vehicles must also be planned (direct return following delivery, loading of a return load, empty load minimization). Routing and scheduling are complex optimization problems that must be solved, taking account of numerous constraints and restrictions, such as weight and volume constraints, distances, delivery time windows, and more. Planners often implement algorithms from “operations research.” Using so-called “opening heuristics,” an initial tour is scheduled and then optimized through the use of “improving heuristics.” For a detailed description of this procedure, see, for example, [DoSo10].

Optimization of loading space is closely connected to the two problems outlined above. 

Selection of the means of transportation and scheduling of the tour results in the assignment of a definite number of load units to each means of transportation (for example, truck or rail wagon). The next task is to load the goods into the units with optimal utilization of the loading space, leaving the least possible space unused. Planners may again use heuristic methods from the field of “operations research” to achieve optimization of the loading space.

Transport planning and scheduling produces transportation orders, which trigger the physical transportation of goods.

The transportation order stipulates the time and place for pickup of a particular number of load units and the time and place they will be delivered.

This order can contain a single load unit, several load units referring to a unique delivery order, or the optimized, combined transportation of several delivery orders. The transportation order usually sets a delivery time window or a maximum delivery lead time.

Consolidation is a term for packages and lots that move from suppliers to a carrier terminal and are sorted and then combined with similar shipments from other suppliers for travel to their final destination (see [APIC16]).

For the supplier, the advantage of this transshipment is daily deliveries of various goods to various receivers. This is to the customer’s advantage, as well. However, the advantage must be weighed against the costs of trans-shipment. Routing and scheduling with consolidation is usually a job for the transport company, freight forwarder, or third-party logistics provider. Simple cases of consolidation are called milk runs, or regular routes for pickup of mixed loads from several suppliers (see [APIC16]).

Transportation control consists of monitoring the route movements of the transport units, monitoring traffic conditions and delays, and registering and evaluating disturbances.

Transport controlling of external transport systems is usually managed via a control center that controls, monitors, and coordinates transports in dependency on actual conditions and contingencies. Today, drivers can communicate with central control via mobile data terminals, cellular phones, and personal digital assistants. The wireless Internet allows for the use of small handheld devices for interfacing with central control and accessing traffic and weather information. Some vehicles are also equipped with satellite navigation systems, such as global-positioning-system (GPS) receivers, that compute the location of vehicles in real-time and allow tracking by central control.

Whereas the delivery note used to suffice as the supporting document, today the entire goods flow is usually managed electronically. This makes standardization of communication means essential, so that uniform monitoring is possible in intermodal transport chains.

  • Via scanning of the bar code on the goods, the legal “passing of the risk” that occurs at transshipment is documented.
  • EDIFACT (electronic data exchange for administration, com­merce, and transport) is one of the format standards that have been created for information technology support of transport control.
  • RFID or another transponder technique for world­wide self-identification of goods and use electronic product codes (EPCs).
  • Tracking and tracing of package deliveries is now offered by many transport service providers. Using the World Wide Web via the Internet, customers can view information on their shipments (identified by transponders, for example).

Transport planning must also consider outsourcing logistics tasks to specialized distribution companies (self-owned or third-party logistics providers). With their focus on core competency and due to consolidation effects, the result can be a significant reduction in operating costs as well as improved efficiency, service, and flexibility. Companies can put these advantages to good use, for they stand under the growing pressure to lower costs and, at the same time, to meet higher demands from customers regarding service, price, and delivery capability. Courier services and express carriers are becoming more and more a part of logistics chains, in particular to fulfill just-in-time deliveries. For an extensive discussion of distribution tasks, see, for example, [Ross15], [Pfoh18], and [MarA95].

Course section 15.4: Subsections and their intended learning outcomes

  • 15.4 Distribution Control

    Intended learning outcomes: Explain order picking, packaging, load building, and transportation to receiver.

  • 15.4.1 Order Picking

    Intended learning outcomes: Explain discrete order picking and batch picking. Describe sequential picking and zone picking. Differentiate between decentralized goods preparation and centralized goods preparation.

  • 15.4.2 Packaging and Load Building

    Intended learning outcomes: Present a conceptual framework to handle the diverse functions and requirements of packaging. Explain load building. Identify the levels of aggregation in load building.

  • 15.4.3 Transportation to Receiver

    Intended learning outcomes: Describe the selection of the mode of transport. Explain the transport chain from supplier to receiver and various kinds of organizing transshipment points. Present routing and scheduling and the optimization of loading space.

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