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What are some effects of Transport Disruptions?
– Inventory (safety stock) increases
– Decreases in asset turnover
– Lower operating performance levels
– Stock price declines of nearly 9%
What is Transportation risk?
Future freight movement event with a probability of occurrence and the potential for impacting supply chain performance
What are some examples of Risk Management?
- - Proactive planning a route to avoid likely delays
- - Developing a planned response for replacement inventory in event of an accident
What is BCP?
- (Business Continuity Planning)
- –The processes and procedures an organization puts in place to ensure that essential functions can continue during and after a disruption or disaster
- –Includes advance planning to develop readiness plans in event of a disruption
For Risk Management and BCP to be effective, what is required from Top Management?
Commitment of Time, Expertise, Financial resources, Frequent revision, & Continuous improvement
What are the 4 steps of the Risk Management process?
- – Risk identification
- – Risk assessment - evaluate impact and place priorities on identified risks
- – Risk mgmt. strategies: Create plans for cost effective
- mitigation and management of risks
- – Risk review, monitoring, and updating
What are some techniques for the Risk Identification step in RM?
- - Brainstorming
- - Individual Interviews / Surveys
- - Historical Data
What are some of the Broad Risk categories?
- - Product loss
- - Delivery delay
- - Product damage
- - Supply chain interruption
- - Contamination
- - Security breach
What are some characteristics of RM strategies?
- –Should be consistent with overall supply chain and corporate strategies
- –Must focus on high priority risks
- –Should be cost-effective and time-effective
What did the Maritime Trans. Security Act of 2002 do?
- - Protect U.S. ports and waterways from terrorists attack
- -Required Tankers and vessels to have security plans that are updated every 5 years
- - Vessel Tracking
- - All at risk ports must have security plans
What is CSI?
- (Container Security Initiative)
- - Addresses terrorist threat to use maritime containers for delivering weapons
What is C-TPAT?
Improve international supply chain and U.S. border security through voluntary govornment / business cooperative relationships
Who is the Largest Trading partner?
- The U.S
- (Exports $1.3 trillion, Imports $2.1 trillion)
What is the differtence between Bi-Lateral agreements and Regional Trade agreements?
- Bi-Lateral: agreement between 2 countries
- Regional: agreement between 3 or more nations
What is NAFTA?
- -Regional Trade agreement between U.S, Mexico, & Canada
- - Enhanced cross-border movement of goods/services
What is the significance of Terms of Trade?
- - Define where responsibilities transfer from exporter to importer
- - Govern decision making authority for movement of the product
- - Establish when and where ownership and title of goods pass from exporter to importer
- - Clarifies which organization incurs delivery-related costs
When is it appropriate to transfer your risk via insurance?
- - If goods shipped are susceptible to damage
- - Carriers commonly deliver damaged or lost freight
- - If damaged shipments greatly impact the frieght owner
What is a Letter of Credit (LC)?
- - Ensures exporter is paid and importer receives goods as
What are the 4 different types of Freight Documents?
- - Invoices
- - Transportation
- - Import
What are some Carrier Slection Strategies?
- – Leverage transportation dollars by using a limited number of carriers
- – Build relationships with service providers
- – Monitor carrier performance, rates, and financial stability
- – Have contingency plan with back-up carriers
Explain Direct Service in Global frieght
- - Direct origin-destination (one country to another country shipment), no interim stops-offs
- - Typically between bordering countries
- - Single mode of transport, typically motor carrier
Explain Indirect Service in Global freight
- - Typically, shipment requires multiple modes, i.e. intermodal transportation
- - Multiple interim stops required to transfer freight between carriers or modes
What is Intermodal Transportation?
- - Two or more modes used to move shipment from origin to destination
What are the most common Intermodal combinations?
- Pick Up: Truck => Truck or Rail => Truck
- Linehaul: Air => Ocean => Rail
- Delivery: Truck => Truck or rail => Truck
What are the primary frieght types?
- - Containerized: freight loaded into containers
- - Transload: handled individually (Ocean, Rail, Pipeline)
What is a Land Bridge?
- Movement from one seaport to another substituting rail for portion of ocean trip
What are some potential in-transit problems to protect against?
- –Excess weight
What is the Air Cargo Tariff (TACT)
- – Provides general guidelines for rate setting
- – Carriers not required to use guidelines, major carriers do not
- - Includes three types of rates: General cargo rates, class rates, commodity rates
What is Outsourcing?
Substituting external specialists for in-house capabilities
Define a 3PL
- (Third Party Logistic)
- - An external supplier that performs all or a part of a company’s logistics functions
- - Services: Inverntory management, warehousing, financial, transportation
What are the foundation services for 3PL's?
What are some advantages of a company using a 3PL service?
- - 3PL maintains direct control over shipper’s freight
- - 3PL has ready access to capacity
- - Fewer organizations to work through to resolve problems
What are the 4 principle Transportation services of 3PL's
- - Freight Movement
- - Frieght Management
- - Intermediary Services
- - Specialty Services
What is Pool Distribution?
- –Large quantity of freight moved as one shipment in bulk to central distribution point
- -Competes with LTL services
- - Faster transit time, Less handling, Lower rates
What are the 6 steps to forming a 3PL relationship?
- 1. Perform Strategic Assesment
- 2. Descision to form Relationship
- 3. Evaluate alternatives
- 4. Select Partners
- 5. Structure Operating Model
- 6. Implementation and improvement
What is Private Air Travel primarily used for?
- - Used to transport people
- - Emergency freight shipments
What are Private Water Transports used for?
- Used to move large volumes of low value products
Most Oil Pipelines are private transport carriers ( T / F )
Why would a company use Private trucking? (What are some risks)
- - Potential for improved service
- - Greater control
- (Risks: Ties up capitol, Seller bears risk, maintenance responsibilities increased)
Congestion in transportation ___________ Supply Chain costs
Due to congestion, the demand of what 2 types of services has increased?
- - Trailer on Flatcar (TOFC)
- - Container on Flatcar (COFC)
What is a "Carbon Footprint"?
The amount of Carbon Dioxide emmision you release
What is the sensitivity to fuel cost of the major transportation modes?
- - Motor Carriers: Very fuel intensive
- - Air Carriers: The Most fuel sensitive amongst all
- - Water Carriers: Relatively fuel efficient
- - Rail Carriers: Relatively fuel efficient
- - Pipeline carriers: Relatively fuel efficient