Coursera course :

Supply chain logistic:

Week 1:
Welcome and introduction to logistic:
Video 1:The importance of logistic.
You buy Italian loafers that were made in Milan, two days later they get delivered
to your front door. You order red snapper for dinner, it was caught this morning a
1,000 miles away, supply chain logistics makes all of this happen. It makes it
affordable for consumers, profitable for companies in a global economy. I'm Rudy
Leuschner with Rutgers Business School, and I'm excited to teach you about
logistics. Logistics! 
[LAUGH] I'm actually a Professor of Supply Chain Management, and we're
talking about logistics, so what are you doing here? Every modern company, from
Apple to Zappos, lives, thrives, or dies by their ability to match supply with
demand. If you're considering a career in supply chain management, are already
working in the field, are simply fascinated by how goods move around the globe,
this course is for you.

Video 2: Moving Freight over the Road

Moving Freight on the Road. About a third of all strawberries in the United States
come from one area, Watsonville, California. When you think about it, it's really
far away from New Jersey, over 3000 miles.Start transcript at 20 seconds0:20Yet,
when I walk down to my local grocery store, and I look at the strawberries, what
do I see? Yeah, Watsonville, it says Watsonville right here, and this is over 3,000
miles away from here. How do they get there? Well, a lot of it has to do with
trucks, lotsand lots of trucks.Start transcript at 42 seconds0:42And strawberries
have to be refrigerated so they'd better move fast. That is what we're going to talk
abouttoday. Motor freight and why it is so important.Start transcript at 53
seconds0:53When we consider motor freight, it has several advantages. Speed, it's
very fast. Reliability, trucks rarely break down, and if they do, it's only for a very
short amount of time. Three, items do not get damaged very often. And fourth,
trucks can pretty much get anywhere.Start transcript at 1 minute 14
seconds1:14There's a road, a truck can drive on it. And when we talk about the
other modes of transportation, I want you to keep in mind these advantages that
trucking has. 
Motor freight is also very efficient in a financial sense. Because the roadways are
paid for by the government and ultimately the taxpayers, it's a subsidized industry. 
Most of the cost is in fuel, wages, maintenance, equipment, and user charges. Not
all trucks are the same. We need city trucks, usually smaller vehicles that can make
it inside of a congested city without a trailer. We load stuff in the back. Then we
have line haul-vehicles, and they come in different sizes. The most common ones
are 40 foot containers that are used often for international shipments and
intermodal. 
The other one is 53 foot containers which are very popular in the United States and
Canada. In addition, we have specialty vehicles, such as refrigerator, our
strawberries have to come on those, livestock containers, automobile carriers, and
tankers. When we use different trucks, we connect them with terminals.
Start transcript at 2 minutes 26 seconds2:26Terminals are taking products from one
truck, sorting them, and then moving them out on a different truck.Start transcript
at 2 minutes 36 seconds2:36 We're not storing the items in these terminals, even
though often they look like warehouses. There are three types of terminals.
Start transcript at 2 minutes 45 seconds2:45 We have pickup and delivery
terminals where we go from a city truck to a line-hall vehicle. Then we have cross
docks where we connect networks of transportation together. And finally, we have
relay terminals, where we just switch out the cab and put a trailer on a new cab, so
we have a fresh driver and we move away.

Moving Freight over the Road

Lecture Objectives:
1. Why companies choose to move freight on the road.

2. Cost structure is majority fuel and driver wages

3. Infrastructure is made up of vehicles and terminal

Lecture Summary:

Service Characteristics

 Accessibility

 Speed

 Reliability

 Flexibility

Types of Vehicles

 City trucks

 Line-Haul (40 foot and 53 foot trailers)

 Special vehicles

Motor Freight Terminals

 Pickup and delivery

 Cross-dock terminals

 Break-bulk terminals

 Relay terminals

Cost Structure

 fuel 39%

 driver salary 26%

 cab and trailer 17%

 maintenance 12%

 insurance and fees 5%

Motor Carriers

Lecture Objectives:
1. Understand how motor carriers operate

2. How motor carriers compete

3. Look into the future of the industry

Lecture Summary:

Motor Carrier Industry Structure

According to the American Trucking Association (ATA):

 Trucks moved roughly 67% of the nation's freight by weight

 About 3 million class 8 trucks used for business purposes

 About 6 million commercial trailers registered

According to US Department of Transportation (in 2010):

 1.3 million total trucking companies

 408,782 for-hire carriers

 662,544 private carriers

 168,680 other interstate motor carriers

Most trucking companies are small businesses:

 90.2% operate 6 or fewer trucks

 97.2% operate fewer than 20 trucks

Trucking is a vital industry for the economy:

 About 7 million people employed throughout the economy in jobs that

relate to trucking activity

 About 3 million truck drivers employed

Basic Operations
Truckload (TL)

 Moved directly from shipper to consignee

 Average 242 miles

 Many small carriers

 Weight 20,000 to 50,000 lbs.

Less-than-Truckload (LTL)

 Picked up, moved to a terminal, reloaded for line-haul, delivered to

terminal, locally delivered

 Average distance about 550 miles

 Requires national or regional network

 Weight 50 to 10,000 lbs.

 About 150 carriers

Parcel

 Home/business pickup, consolidated, moved to sortation facility,

trucked/flown/railed to distribution center and home/business delivered

 Weight 1 to 150 lbs.

 Fast (good for time-sensitive goods)

 Very expensive

Competition

There are few ways in which firms can differentiate themselves, the main area of competition is
price.

 Cost structure: high variable costs (70-90%), low fixed costs (10-30%)

 Government support of highway structure

 Terminals not too capital intensive

 Operating cost in the United States are currently between$1.20 - $1.80 per
mile

 Carriers use fuel surcharges to recover some of cost

Flying Freight

Lecture Objectives:
1. What makes air freight attractive to shippers?

2. Cost structure is majority fuel and equipment

3. What kind of equipment is used?

Lecture Summary:
Air Freight Service Characteristics

When importance of speed outweighs cost, then air is attractive for freight!

 Emergency shipments

 Typical commodities include mail, communications products, racehorses,

etc.

Speed of service considerations

 Speed, travel time advantage can be off-set by flight frequency and timing

 Smaller communities have experienced reduced frequencies

 In-direct routing due to hub and spoke networks

Cost Structure

The industry operates at: high variable costs (70-90%), low fixed (10-30%)

 Government support of highway structure

 Terminals not too capital intensive

High variable costs (about 60% of total, but can be as high as 80%)

 About 30% attributable to flight operations

 About 12% for maintenance

 About 17% for aircraft and traffic servicing

How to deal with fuel costs:

 Increases have major impact on operating costs

 More fuel efficient aircraft and smaller planes on low-density routes

Types of Equipment

We need different planes for different purposes.

All cargo

 Extra-large planes

 Wide body

 Narrow body

Belly cargo

 Existing airliners

 Smaller loads – maybe a few containers

Air Carriers

Lecture objectives:
1. Understand how air carriers operate

2. How air carriers compete

3. Look into the future of the industry

Lecture Summary

Operations

 All-cargo airlines are operating similar to TL - you rent the entire plane.

 Commercial airlines are able to carry smaller quantities as belly cargo -

similar to LTL.

 Parcel carriers are also using planes for small shipments - but they are
often very expensive.

Rates

The rates in air transportation are often a mystery to many. While the rate is quoted by weight, the
actual rate charged corresponds to that weight if the package has a certain density. This is also
known as the volumetric density.

So what happens when it is not the 'right' density?

 If it is less dense, then you get charged for the volume translated to the
corresponding weight

 If it is heavier then you pay for the actual weight

Competition

 Fuel costs: who can best manage the largest expense and hedge against
future price increases

 Who can manage the delays put on by security concerns. Technology is

starting to help alleviate these issues.
Containers on a Train
Lecture objectives
1. What is intermodal?

2. Why use different modes together?

3. What makes it work?

Lecture Summary

What is intermodal?

Most products have the ability to trade time versus cost. As a basic rule - if the cargo comes in full
containers then it is a good candidate for intermodal. The key to intermodal is the use of containers
and its seamless transfer from one mode to another. Think about it this way – if we can easily move
freight from one truck to another then we can simply substitute another mode of transportation that is
more efficient on that part of the lane - the cargo in the container stays untouched.

Advantages:

 On long distances rail transportation has a significant advantage over

truck in terms of fuel efficiency – which translates into a large cost
advantage.

 On long distances (over 500 miles) rail is not much slower than truck

 Accessibility: by combining the advantages of rail and truck, the freight

can reach any spot a regular truck could reach

Express Delivery

Lecture Objectives
1. How do express delivery firms integrate different modes?

2. Cost structure is majority fuel and driver wages

3. Infrastructure is made up of vehicles and terminals

Lecture Summary

Express delivery firms use several modes to the best of their advantage:

1. Rail is the cheapest and reasonably fast over long distances

2. Motor is fast for short distances and can pickup and deliver everywhere

3. Air is fastest and cost is justified for certain items.

The general purpose of these terminals is fourfold:

1. To receive shipments from across their network

2. To send individual packages to customer

3. To collect individual packagers from shippers

4. To route packages to their destinations

Top 10: Shipping Companies

Top 10 express delivery company:

10.) Japan Post Service

Headquarters: Tokyo, Japan

As part of state-owned superpower Japan Post Holdings, a company that was

ranked No. 6 in the Fortune Global 500 in 2010, the Japan Post Service is one
of four main divisions that helped generate over $200 billion in 2009.
Previously part of a government-owned mail monopoly, the Japan Post
shipping company has plans to go fully private in the future.

9.) Royal Mail

Headquarters: London England
Founded in 1516, Royal Mail is to the United Kingdom what the USPS is to
the United States: a state-owned postal service responsible for universal mail
collection. After posting several trade deficits last decade, Royal Mail bounced
back in the 2008-2009 fiscal year, reportedly posting a full-year profit for the
first time in two decades.

8.) Parcelforce Worldwide

Headquarters: Milton Keynes, UK
The United Kingdom’s largest private shipping service delivers more than one
millions parcels a day across 34 European countries, and is a direct
competitor of other worldwide delivery brands like DHL, FedEx and UPS.
Parcelforce Worldwide’s hub in the UK is one of the country’s largest
buildings, covering 43 acres.

7.) YRC Worldwide

Headquarters: Overland Park, Kansas, USA
YRC Worldwide is one of the largest transportation service providers in the
country, and offers supply chain solutions for heavyweight shipments, where
they ship industrial, commercial and retail goods. The Kansas-based company
nearly filed for bankruptcy in late 2009, but has been approaching a net-
positive balance sheet since then. YRC Woldwide employs about 50,000
people.

6.) TNT N.V.

Headquarters: Hoofddorp, Netherlands
The Netherlands’ TNT N.V. operates postal services in eight different
European countries, including the UK, Germany, Italy and Belgium, and is one
of Europe’s largest shipping companies. After selling off its logistics unit in
2006, TNT N.V. has been focusing its efforts on express delivery and mail
services.

5.) Schenker AG
Headquarters: Berlin, Germany
Unfortunately, having over 91,000 employees with 2,400 offices around the
globe only places you fifth on this list and second overall in Germany. Thanks,
DHL. But Schenker AG isn’t a shipping company to be laughed at, as the
company once claimed to be the No. 1 in European land transport and No. 2
in the world in air transport.

4.) United States Postal Service

Headquarters: Washington, D.C., US

Despite being limited to serving only the US, the United State Postal Service
(or USPS) is the second-largest civilian employer in the United States after
Wal-Mart, and owns the largest civilian vehicle fleet in the world. The USPS
shipping company posted a 2010 revenue of $67.05 billion, and employs
close to 600,000 people.

3.) FedEx Corporation

Headquarters: Memphis, Tennessee, US
Only Delta Air Lines owns a larger civil aircraft fleet in the world, helping make
FedEx Corporation a top-three shipping company worldwide. Founded in
1971, Memphis-based FedEx has a number of colorfully inspired commercials
and has naming rights to the Washington Redskin’s American football
stadium, coined FedEx Field.

2.) DHL Express

Headquarters: Bonn, Germany
When co-founders Larry Hillblom, Adrian Dalsey and Robert Lynn created
DHL as a courier service between San Francisco and Honolulu in 1969, we
doubt they even dreamed they’d one day be one of the top shipping
companies in the world. But that’s exactly what they are, as DHL express
employs about 500,000 people worldwide.

1.) United Parcel Service, Inc.

Headquarters: Sandy Springs, Georgia, US
An awesome line of commercials featuring “the Whiteboard” helped make the
United Parcel Service a pop culture hit. It helped that the ads were incredibly
easy to produce, requiring only creator Andy Azula, a whiteboard and a brown
marker.

UPS reportedly delivers more than 15 million packages a day to 6.1 million
customers in more than 220 countries and territories worldwide. With a large
fleet of its trademark brown trucks and a fleet of over 200 aircraft, UPS
certainly has the goods to deliver your shipment on time.
Perhaps more importantly, the shipping company performed quite well in
a recent study published by Popular Mechanics. UPS went up against rivals
USPS and FedEx, with the study showing that your package gets flipped the
least while in transit with UPS. Parcels were also dropped less with UPS than
with FedEx, according to the study.

Speed
Truck: approximately 50 miles (or 80 kilometers) per hour over the highway for up to 500 miles (800
kilometers)

Train: approximately 30 miles (or 50 kilometers) per hour over almost any distance.

Air: upwards of 200 miles (or 320 kilometers) per hour for distances of more than 500 miles (800
kilometers), including ground operations.

Distance
Truck: up to 500 miles (800 kilometers) is the ideal distance, but there are still advantages over the
other modes up to 750 miles (1200 kilometers).

Train: for distances of more than 750 miles intermodal has some speed advantages, but the average
distance for intermodal is somewhere around 1,700 miles.

Air: at least 500 miles (800 kilometers) but typically more than 2000 miles.

Cost
Truck: current rates are highly variable, but $1.50 per mile is a reasonable starting value for a TL
shipment

Rail: intermodal freight shipments are typically much cheaper than TL and a common rule of thumb
is about 60-80% of the price of a TL shipment.

Air: typically we consider air freight to be about 6 to 8 times more expensive than truck.