GLOBAL LOGISTIC MANAGEMENT GLOBAL LOGISTIC MANAGEMENT LECTURE 5: DECISION STRATEGIES IN TRANSPORTATION Agenda Agenda 1 Factors constraining vehicle utilization 2 Reasons for declining density and stack ability road freight 3 Strategies to improve vehicle utilization 4 Summary 1 Factors constraining vehicle 1 Factors constraining vehicle utilization utilization  Demand fluctuation: variability of demand over time is one the main causes of underutilization of vehicle.  Just in time delivery: the replenishment of supplies in smaller quantities more often within a short time tend to depress vehicle load factor  Unreliability of time schedule: where schedules are unreliable, it is hard to arrange backhaul or more complex collection and delivery routes 1 Factors constraining vehicle 1 Factors constraining vehicle utilization utilization  Vehicle size and weight restrictions: for example, some vehicles still have space but already reached maximum weight.  Handling requirements: many company sacrifice vehicle utilization for handling efficiency.  Incompatibility of vehicles and products: some products needs special handling to be transported by vehicle. E.g petrol, gaz 1 Factors constraining vehicle 1 Factors constraining vehicle utilization utilization  Health and safety regulations  Capacity constraints at company premises: often the size of load is constrained by the available storage  Lack of knowledge of back-loading and load consolidation opportunities: many of these opportunities are missed because carriers are simply unaware of them.  Poor coordination of the purchasing, sales and logistics functions: opportunities for back-loading are hardly discussed in trade negotiation between two companies 2 Reasons for declining density and 2 Reasons for declining density and stack ability road freight stack ability road freight  Change in nature of the product e.g product becomes lighter because of new material  Increase in packaging.  Greater use of unitized handling equipment  Declining rigidity  Order picking of palletized loads  Tightening health and safety regulations 3 Strategies to improve vehicle 3 Strategies to improve vehicle utilization utilization Increase return loading  Logistical initiatives  Use of freight procurement services: some agents are more efficient at freight procurement service.  Installation of vehicle tracking systems: advances in IT and telecommunication support the back-loading of truck  Reverse logistics: an increasing proportion of products is travelling back along the supply chain for repair, reuse, recycling or manufacture. 3 Strategies to improve vehicle 3 Strategies to improve vehicle utilization utilization Maximize the available carrying capacity  Maximum vehicle weight: carry items as much as possible, eliminate waste of space in delivery.  Vehicle size and design: size and design must allow maximum carry capacity. Some special products must have specific design vehicle e.g petrol, gas, chemicals 3 Strategies to improve vehicle 3 Strategies to improve vehicle utilization utilization Use more space-efficient handling systems and packaging  Choice of loading method: appropriate loading method for specific product.  Pallet dimensions: eliminate space waste  Stacking height: increase stacking height  Modular loads: packing orders into modules of varying height  Shape and dimensions of product packaging: food cans in square can save more space in round shape 4 Summary 4 Summary  Transport optimization is now being used to describe efforts to maximize vehicle utilization.  Efficient transport optimization can save fuel cost, driver shortages, traffic congestion and environmental impacts  Many factors constraint the vehicle utilization in daily practices  Efficient transport strategies can improve transport utilization by maximizing the available carrying capacity and use of space efficient handling system. . GLOBAL LOGISTIC MANAGEMENT GLOBAL LOGISTIC MANAGEMENT LECTURE 5: DECISION STRATEGIES IN TRANSPORTATION Agenda Agenda 1 Factors constraining vehicle utilization 2