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William DeWitt, Ph. D. Teaching Professor University of Maryland, College Park

Transportation in Supply Flow Networks: The Critical Process Federal Highway Administration’s Freight Discussion Series – December 2000. William DeWitt, Ph. D. Teaching Professor University of Maryland, College Park. Transportation and Supply Flow Networks.

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William DeWitt, Ph. D. Teaching Professor University of Maryland, College Park

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  1. Transportation in Supply Flow Networks:The Critical ProcessFederal Highway Administration’s Freight Discussion Series – December 2000 William DeWitt, Ph. D. Teaching Professor University of Maryland, College Park

  2. Transportation and Supply Flow Networks • Supply Flow Networks (SFN) Defined and Discussed • Transportation’s Critical Roles in SFN • Summary FHWA William J. DeWitt, Ph.D.

  3. Supply Flow Networks • Flow – to move with a continual change of place among the parts • Supply – to make available a quantity • Networks – an interconnected or interrelated chain, group, or system • Complements of Webster’s Third New International Dictionary FHWA William J. DeWitt, Ph.D.

  4. FHWA William J. DeWitt, Ph.D.

  5. Significance of Supply Flow Networks • Raw Materials sourcing is fixed and limited in scope for most materials; Related weight/bulk shedding semi-processing is similarly limited • Manufacturing, Assembly and Warehousing are value-added exercises; CAD/CAM and postponement making them more variable in the flow • As Channels of Distribution change, i.e., wholesalers, jobbers, distributors, retailers, driven by ecommerce, transportation requirements change dramatically • Consumption is relatively fixed FHWA William J. DeWitt, Ph.D.

  6. Freight Transportation Importance • Major Cost of Logistics – 40 to 60% • Integral and Essential Link for Global Supply Chains • Dynamic Inventory Will Rival Static Inventory FHWA William J. DeWitt, Ph.D.

  7. Transportation as a Major Cost Component of Logistics FHWA William J. DeWitt, Ph.D.

  8. Transportation Essential Linkage for International Supply Chains (Sine Qua Non) • Logistics now viewed as part of supply chains or supply flow networks (CLM 1998) • Global information and communication systems (Netcentricity) enhance development of international supply flow networks • Telegraph and Railroads 100-years ago > Web and Multimodal Transportation today • Supply Flow Networks are spatial and cannot exist without transportations time and place utilities FHWA William J. DeWitt, Ph.D.

  9. Increased Sourcing and Market Distance Mean Increased Transportation • Sourcing around the world • Marketing internationally • Customers indifferent to space, sensitive to time • Global Supply Flow Networks mean increased distance and transportation • Global means increased reliance on multimodal transportation FHWA William J. DeWitt, Ph.D.

  10. Increased Speed of Transportation Systems • Customers want process speed • Achieved through: • Variance Reduction • Smoother Connections/Handoffs • Technology Improvements • RoadRailer • FastShip • 747-400F • 8,000 ++ TEU's FHWA William J. DeWitt, Ph.D.

  11. Growing Transportation Complexity/Options and Trade-offs (Customization and Multimodal) • Optimal Combination of • Modes • Equipment • Information • Service • To meet • Speed • Complexity • Precision • Capacity • Profitability FHWA William J. DeWitt, Ph.D.

  12. Transportation and Urban Congestion • Linehaul capacity (point to point) is significant issue • Critical issue is the urban congestive failure • Population growth • Changes in Supply Flow Network patterns to residences FHWA William J. DeWitt, Ph.D.

  13. In-transit (Dynamic) Inventory Will Rival Storage (Static) Inventory • Production from mass/push to customized/pull • Large production lots required large inventories • Erratic transportation of today/past required safety stocks • Inventory visible and measured in ERP worlds • Mass customization makes lot size a unit of “one” • Inventory is expensive (materials/parts, labor, capital = cash) • Only want inventory stopped long enough to restage or transfer, not stopped for storage FHWA William J. DeWitt, Ph.D.

  14. Increased Information and Communications Systems for Transportation • Netcentricity • Information • Communication • Operational • Control – Capacity and Variance Reduction • Tracking/Tracing – Future need? • Market • Forecast • Adjustments to flow/Stochastics FHWA William J. DeWitt, Ph.D.

  15. Wrap-up: Transportation and Supply Flow Networks • Supply Flow Networks Make Transportation the Focus • Fixed/Limited Sourcing and Consumption • Ecommerce and channel changes will significantly change transportation requirements • Transportation and Supply Flow Networks • Major Cost of Logistics – 40 to 60% • Integral and Essential Link for Global Supply Chains • Dynamic Inventory Will Rival Static Inventory FHWA William J. DeWitt, Ph.D.

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