Module 1 : Supply Chain

Supply

The Customer expects that there will be supply of Products / Services whenever the need arises.

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• Definition of Supply [APICS Dictionary 11^th edition]

1] The quantity of goods available for use

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2] The actual or planned replenishment of product or component. The replenishment quantities are created in response to demand for the product or component or in anticipation of such a demand.

Supply Chain

• The buying process begins with customer order and ends when the satisfied customer pays for the product / service. It has the following typical entities / stages:
• Customers, Retailers, Wholesalers / Distributors, Transporters, Manufacturers / Producers Component, Raw material Suppliers
• These entities are connected to each other along a chain. Hence the name Supply Chain system.
• Christopher (1992 a) defines a Supply Chain as the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer.

What is a Supply Chain?

Customer wants

detergent and goes

to Jewel

Jewel

Supermarket

Jewel or third

party DC

P&G or other

manufacturer

Plastic

Producer

Chemical

manufacturer

(e.g. Oil Company)

Tenneco

Packaging

Paper

Manufacturer

Timber

Industry

Chemical

manufacturer

(e.g. Oil Company)

What is a Supply Chain?

A supply chain is the system of organizations, people, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform raw materials and components into a finished product that is delivered to the end customer.

Supply Chain BasicSupply Chain Model

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• Flow of physical materials and services from suppliers through intermediate entities to customers
• Flow of Cash from customer through intermediate entities to supplier
• Reverse flow of products returned for replacement, repairs, recycling, or disposal
• Flow of Information back and forth along the chain

Supplier

Producer

Customer

Primary MaterialFlow

Primary Product Flow

Primary Cash Flow

Information Flow

Return of Product

Supplier – Producer – Customer are connected by Material / Product, Information & Payment Flows

Return of Product

Supply Chain Management

The design, planning, execution, control and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging world wide logistics, synchronizing supply with demand and measuring performance globally.

[APICS dictionary 11^th edition]

Supply Chain Management

• Definition:

Supply Chain Management is primarily concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time, and so as to minimize total system cost subject to satisfying customer service requirements.

• Notice:
• Who is involved
• Cost and Service Level
• It is all about integration

Some more definitions of SCM

Oliver and Webber (1982) – SCM covers the flow of goods from supplier through manufacturing and distribution channels to end user.

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Jones and Riley (1987) – SCM techniques deal with the planning and control of total materials flow from suppliers to through end users.

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Ellram (1991) – An integrative approach to dealing with the planning and control of the materials flow from suppliers to end users.

Ayers (2000) – SCM is the design, maintenance and operation of supply chain processes for satisfaction of end users.

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Sunil Chopra and Peter Meindl (2001) – SCM involves the management of flows between and among stages in a supply chain to maximize total profitability.

Generic Supply Chain

Supply Chain for an e-Commerce Company

The Significance of Supply Chain Management

Boost Customer Service

• Customers expect the correct product assortment and quantity to be delivered.
• Customers expect products to be available at the right location
• Right Delivery Time – Customers expect products to be delivered on time
• Right After Sale Support – Customers expect products to be serviced quickly.

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• Reduce Operating Costs
• Decreases Purchasing Cost - Retailers depend on supply chains to quickly deliver expensive products to avoid holding costly inventories in stores any longer than necessary.
• Decreases Production Cost – Manufacturers depend on supply chains to reliably deliver materials to assembly plants to avoid material shortages that would shutdown production
• Decreases Total Supply Chain Cost – Manufacturers and retailers depend on supply chain managers to design networks that meet customer service goals at the least total cost. Efficient supply chains enable a firm to be more competitive in the market place.

Improve Financial Position

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• Increases Profit Leverage – Firms value supply chain managers because they help control and reduce supply chain costs. This can result in dramatic increases in firm profits.
• Decreases Fixed Assets – Firms value supply chain managers because they decrease the use of large fixed assets such as plants, warehouses and transportation vehicles in the supply chain.
• Increases Cash Flow – Firms value supply chain managers because they speed up product flows to customers.

Key Challenges

1. Material scarcity
2. Increasing freight prices
3. Difficult demand forecasting
4. Port congestion
5. Changing consumer attitudes
6. Digital transformation
7. Restructuring
8. Inflation

Scope of Supply Chain Management

Historical perspective

• the term ‘supply chain’ is attributed to newspaper ‘The Independent’ in 1905
• The first example of production with a ‘truly global supply network’ was most likely rum. The supply chain in this case started with slaves who were moved from Africa to the Caribbean to grow the sugarcane, which came from India, and it ended in distilleries in the US.
• In the late 1920s, the introduction of mass production along assembly lines laid the foundations for supply chain management.

• First successfully implemented by Ford, the idea of producing consistent products on a large scale with increased efficiency changed trade and supply chains irreversibly.
• Containerization, or container shipping, not only increased the quantity of available space for goods, but also increased the speed of the freight movement while decreasing the cost
• The improvement of this transport process including loading and unloading goods—also known as transshipment—heralded a new era of globalized trade.
• Barcoding was another game changer for the industry, finally being used in a commercial context in in the 1970s 

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• Once the barcode was adapted to become an internationally used standard, it could be used from for ‘monitoring of the supply chain both globally and internationally’.
• The innovation of the personal computer in the 1980s was the catalyst for more new tech that impacted supply chain management immensely, such as spreadsheets, optimization models and algorithms that could predict logistics issues for a supply chain.
• These solved problems with planning, resource management and forecasting

• Faster and stronger computers were closely followed by the development of systems such as Enterprise Resource Planning systems, or ERPs
• ERPs enabled businesses to use software to manage all its activities, which included automating business functions, centralizing information, managing finances and tracking performance.
• In the last 15 years, the uptake of social media and big data have shone a light on poor practices along parts of the supply chain that had been previously hidden to the world

Essential features

• Management Of Inventory
• Supply chain management focuses on maintaining an optimum inventory always in organisation. It keeps records and tracks supply of raw materials, spare parts and finished goods. Management of supply chain ensures that all inventories are available in right quantity at right time. It frames proper strategies for procuring and maintaining all inventories as per requirements. Supply chain management avoids any situations like understocking or overstocking.

• Processing Customer Requirements
• Supply chain management accelerates the production processes of organisation. It monitors all activities starting from purchase of raw materials for producing goods till final delivery. It ensures that all sales order are timely completed and handed to logistic team for delivering them on time. All this is done by creating and tracking orders of purchase, scheduling of suppliers deliveries, and also developing product and price configurations.

• Forecasting Of Demand
• Anticipation of customer demands is necessary for every business. It can help them in fulfilling customers need efficiently and timely. All production activities are initiated in accordance with demand which helps in avoiding wastages. Through proper anticipation, business does not need to invest money in unnecessary raw materials and hold on excess finished goods. All goods are produced in accordance with requirements of customers thereby improving their confidence.

• Supplier Relationship Management
• Maintaining of better relations with suppliers is crucial for uninterrupted continuity of business. Supply chain management helps in properly managing all interactions with suppliers. It develops a proper network between suppliers and business through which they can easily interact. Proper supply chain enables timely procurement of all required raw materials from suppliers. Supply chain management solutions provides self-service portal through which suppliers can contact company in case of any issues or problems.

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• Managing Logistics And Shipping
• Supply chain management helps in enhancing the delivery performance of business. It ensures that products are delivered faster and timely to all customers. It coordinates well with all transportation channels and warehouses. By supply chain management, companies can faster their delivery process and provide on-time delivery. This will help in improving the satisfaction of customers. 

• Return Management
• Proper handling and inspection of damaged or defective goods is another important function of supply chain management. It accelerates the return mechanism through automated process on both buy and sell side of business. Businesses are able to faster initiate the process of refund or claims with distributors, suppliers and insurance companies.

Decision Phases of a Supply Chain

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• Supply chain strategy or design
• Supply chain planning
• Supply chain operation

Supply Chain Strategy or Design

• Decisions about the structure of the supply chain and what processes each stage will perform
• Strategic supply chain decisions
• Locations and capacities of facilities
• Products to be made or stored at various locations
• Modes of transportation
• Information systems
• Supply chain design must support strategic objectives
• Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty

Supply Chain Planning

• Definition of a set of policies that govern short-term operations
• Fixed by the supply configuration from previous phase
• Starts with a forecast of demand in the coming year

Supply Chain Planning

• Planning decisions:
• Which markets will be supplied from which locations
• Planned buildup of inventories
• Subcontracting, backup locations
• Inventory policies
• Timing and size of market promotions
• Must consider in planning decisions demand uncertainty, exchange rates, competition over the time horizon

Supply Chain Operation

• Time horizon is weekly or daily
• Decisions regarding individual customer orders
• Supply chain configuration is fixed and operating policies are determined
• Goal is to implement the operating policies as effectively as possible
• Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders

Process View of Supply Chain Management

SC is a sequence of processes and flows that take place within and between different SC stages and combine to fulfil a customer need for a product / service. These processes are divided into a series of cycles (cyclic view), each performed at the interface between two successive stages / entities of SC.

Cyclic View

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Customer Order

Cycle

Replenishment

Cycle

Manufacturing

Cycle

Procurement

Cycle

Customer Arrival

Customer Order Receiving

Customer Order Fulfilment

Customer Order Entry

Retail Order Trigger

Retail Order Receiving

Retail Order Fulfilment

Retail Order Entry

Order Arrival from D/R/C

Receiving by D/R/C

Manufacturing & Shipping

Production Scheduling

Order from Manufacturer

Receiving at Manufacturer

RM / Comp. Mfg & Shipping

Supplier Prodn Scheduling

Cycles Stage/Entity

Customer

Retailer

Distributor

Manufacturer

Supplier

Logistics

• Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements.

Types of logistics

• Logistics has three types:
• Inbound logistics
• Outbound logistics
• Reverse logistics.

Inbound logistics

• As the name suggests, inbound logistics is concerned with activities related to the incoming flow of resources needed to make a product or a service. Inbound logistics processes may include managing suppliers, costs, inventory, and transportation to ensure the right components or subassemblies arrive in your factory on time. Inbound logistics is generally complex because hundreds of parts are coming in to manufacture one final product, therefore, it tends to be more intricate than outbound flow.
• Procurement is the major element in inbound logistics as it deals with sourcing and transporting raw materials from the supplier to buyer’s factory.
• The size and nature of procurement affects inbound logistics in many ways. For example, a company who purchase simple items such as office supplies does not require much resources to manage its inbound logistics. While a firm who buys machineries or perishable goods from overseas would have a complex inbound logistics as products need to be handled, stored, and transported according to required handling, packaging, or temperature.

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Outbound logistics

• Outbound logistics refers to activities in delivering the right product at the right time to customers at a minimum cost. Customer satisfaction is the primary objective of outbound logistics, that is why many organizations especially e-commerce companies are competing for last-mile or same-day delivery to their customers. Companies bring out their value proposition to their customers and back it up with their outbound logistics capability. 
• Distribution system plays a critical role in outbound logistics. The distribution channels and transportation system should support the value the company is trying to provide to customers (e.g. quick response to the customer, customer service level, etc.). The prevalence of e-commerce in the retail industry intensifies the need for an optimized outbound logistics flow. Retail e-commerce sector operates heavily in outbound logistics than any other industries. Look at Amazon, Walmart, and Lazada, they take bold steps innovating technologies and building facilities to accelerate their logistics performance.

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Reverse logistics�

• Reverse logistics is the process of moving products from end-user back to the origin to recover value or for proper disposal. The value is recaptured from products recovered from customers through rework, refurbishment, reuse, scrap recycling, or government incentives for recyclable products.
• A refurbished iPhone is a good example of reverse logistics. If an iPhone sold to the customer is found defective within the warranty period, the customer returns it to the carrier network and then send it back to the Apple factory for refurbishing. Apple inspects the iPhone to determine the issue and replace it with new parts or software. A new iPhone is then labeled with a new serial or model number for reselling. A refurbished iPhone is re-sold to the customer, thus, creating value to Apple.

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Innovations in supply chain

• The traditional supply chain is rapidly transforming into a more advanced, more functional process driven by digital technology.
• Last-mile delivery
• Self-service/do-it-yourself logistics
• On-demand warehousing
• Collaborative mobile robots
• Truck platooning
• Blockchain
• Tagging, sensors and geolocation technologies
• Big data and AI

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ABC analysis

• ABC analysis of inventory (aka Pareto’s law) is one of the most important and widely used inventory control technique.
• The process involves breaking down the stock items into three major classes according to their cost usage, so the company can focus on items with preeminent cost value since they account for a compelling percentage of the abc inventory costs.

ABC Analysis in inventory management works by dividing items into 3 categories

• Class A– items are goods with annual consumption value the highest i.e the top 80% of the annual consumption value of the company but account for only 20% of the total inventory items.
• Class B -items are the interclass items with a medium consumption value; that 15 % of annual consumption value typically accounting for 30% of the total inventory items.
• Class C -items are, on the contrary, items with the lowest consumption value; the lower 5% of the annual consumption value typically accounting for 50% of the total inventory items.

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We’re going to use Sam’s Stationery business as the example:

• Use the formula ‘annual number of units sold x cost per unit’ to calculate the annual consumption value of each item

Annual number of units sold (per item) x cost per unit

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List your products in descending order, based on their annual consumption value

• Total up the number of units sold and the annual consumption value

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• Calculate the cumulative percentage of items sold and cumulative percentage of the annual consumption values

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• Determine the thresholds for splitting the data into A, B and C categories. The threshold for determining the ABC split will be unique to your company and your product mix, but typically it’s close to 80% / 15% / 5%.

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� � �RECENT ISSUES IN SUPPLY CHAIN MANAGEMENT

ISSUES

• INFORMATION TECHNOLOGY
• BENCHMARKING
• OUTSOURCING
• CRM

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ROLE OF IT/COMPUTER IN SCM

Introduction

• A well managed supply chain links the suppliers, manufacturers, distributers and customers by a suitable information system for controlling across border in order to achieve optimum productivity, overall satisfaction and joyful relation at cheaper cost.

• Quick and effective information system helps manager to understand the customer response, their demands,
• Inventory in the stock, how much to be produced and where to deliver and when?
• Here comes the role of internet, which is considered as a cheapest inter-organizational information system,
• Internet helps in aligning the interdependent strategies to achieve cooperative rather than competitive role of SCM partners.

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NEED OF IT

Information technology offers many opportunities for companies to cut cost and improve responsiveness to customer’s needs. Some of the positive points of IT enabled services are:

• IT is comparatively less capital intensive.
• It is environmental friendly and clean.
• It is not location specific and can be undertaken from anywhere.
• It does not require expensive infrastructure facilities.

VARIOUS IT SOLUTIONS

1. Communications
2. Electronic mail (e-mail)
3. Electronic data interchange (EDI)
4. Enterprise resource planning (ERP)

RESULTS OF IT SOLUTION

Its been observed that the Indian automobile industry is booming and internet is being utilized in automobile industry in a big way.

Internet trying to interlink suppliers, manufacturers , wholesalers and retailers to have :

• Better control on inventory at various levels of supply chain.
• Better utilization of manpower.
• It keeping track of inventory.

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CONTIND……

• But it is fact that internet has influenced the whole business strategy whether it is policy or it is physical implementation.
• Some of the areas where’s greater effect felt are given below:
• Communication
• Selection of vendors or partners
• Cost saving
• Reduction of lead times
• Improves product promotional activities

CONTIND………

1. Communication
1. 24 hours communication throughout the year all over the world. because of internet communication there are saving in manpower, stationary, postage and journey fare.
2. Quick exchange of ideas and expertise, customers’ feedback collection becomes easier
2. Selection of vendors or partners
1. Suitable vendor selection from many vendors from any part of the world
2. Since whole world is connected through internet, it becomes easier to select business partners for the joint ventures

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CONTIND….

c) Cost saving

• Reduce cost of preparing letters and sending letters, saves postage cost
• Achieving order and placing order become less costly

d) Reduction of lead times

• Reduce lead time of material supply
• Reduce retrieval time of documented information

e) Improves product promotional activities

• Reduce the expenditure for market expansion and also reduce market mediation
• Improve relation with customer and helps in promotion of products in the form of advertisement

LIMITATION

• There are also some limitation recorded:
• Lack of manager awareness with the system and lack of management’s full commitments.
• Development of electronic data interchange is a costly affair
• Problems of security and privacy
• Since no face to face contact is there hence, lack of trust
• Customers also need awareness for effective utilization of internet in the business

BENCHMARKING

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Benchmarking is the practice of being humble enough to admit that someone else is better at something, and being wise enough to learn how to match them and even surpass them at it.

OTHER DEFINITIONS-

• Benchmarking is the process of comparing the cost, cycle time, productivity or quality of specific process or method to another that is widely considered to be an industry standard or best practice.
• It is the process for improving performance by constantly identifying, understanding and adapting best practices and processes followed inside and outside the company and implementing the results.

THE CORE OF THE CURRENT INTERPRETATION OF BENCHMARKING IS:

Measurement

Comparison

Learning

Improvement

CONTIND….

1. Measurement- In the benchmarking, we measure the performance level of own and the benchmarking partner, both for comparison and for registering improvements.
2. Comparison- We compare the performance levels, processes, practices etc.
3. Learning- We can learn from the benchmarking partners to introduce improvements in your own organization.
4. Improvements- It is the ultimate objective of any benchmarking study.

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BENCHMARKING MODEL

• There are a number of models describing the different steps that constitute a benchmarking study.
• One such model is the so-called benchmarking wheel( Andersen, 1995)

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WHY THE BENCHMARKING IS REQUIRED IN THE BUSINESS-

• Benchmarking helps in identifying the factors that are critical for success.
• It also portrays the factors that are less important and thus need a smaller share of resources.
• Since the business environment is changing rapidly, there is a need for continuously setting new benchmarks.
• The need for benchmarking arises when a company wishes to improve its operations or supply chain
• wants to bring about organizational changes
• Enter into some mergers and acquisitions

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TYPES OF BENCHMARKING

Internal

Competitive

Generic

Industry

CONTIND….

• Internal benchmarking- If one analyses the existing process and practices within various departments of an organization, it is known as internal benchmarking.
• the benefit of this benchmarking is that it enables an organization to focus on specific functions and processes in order to learn from its own best practices
• This is often called the first step in the benchmarking process and is the easiest kind of benchmarking to organize.

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• 2. Competitive benchmarking- If a company analyses how its competitors are performing then its known as competitive benchmarking.
• It is also done for comparing the processes.
• The benefit is that it helps organization in strategic decision making by giving them a view of the strengths and weaknesses of its competitors.
• .

3. Industry benchmarking- if one analyses the trends and best practices that are prevalent in the industry and tries to imitate them in one’s organization then it is called industry benchmarking

4.Generic benchmarking- if one makes comparison between processes and operations with industries from other fields then it is called generic benchmarking.

BENCHMARKING METHDOLOGY

• Benchmarking involves the following steps:
• Scope and definition
• Choose benchmark partners
• Determine measurement method
• Data collection
• Analysis of discrepancies
• Presenting results, discussing improvement areas and making improvement plans
• Monitoring progress and planning ongoing benchmarking

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WALTERS MODEL (2003) OF BENCHMARKING

1. Identify- process to benchmark

2. a) Find- a better performer

b) Collect- data on its operations

3. a) Compare- process

b) Find- performance gap

4. a) Reason- performance gap

b) look- ways to look overcome

5. a) Redesign- process

b) Establish- new performance goals

6. a)Implement- plans

b) Monitor- progress

OUTSOURCING IN SCM

• In order to understand the concept of outsourcing, there is a good example of “Nike”
• It is a fact that Nike is a virtual corporation
• The actual manufacturing is done by Nike sub contractors working out of Taiwan, Hong Kong.
• The actual manufacturing plants are located in Indonesia, China and Vietnam.
• The logistics, which involves transportation and storage, is handled by third party companies.
• And the stores that sell the final products are franchisee outlets.

CONTIND….

• Nike is a virtual corporation that has outsourced almost all activities, it has retained two processes in-house “designing and brand management”.
• Amazon.com is an online bookstore, it delivered and brokered bookstore services without a physical retail store presence
• Flipkart.com

CONCEPT

• The decision of a firm to perform its activities internally or get those activities done from an independent firm is known as make vs. buy decisions.

This involves the following key decisions:

1. What activities should be carried out by the firm and what activities should be outsourced?
2. How to select the entities/ partners to carry out outsourced activities and what should be the nature of the relationship with those partners?
3. Should the relationship be transactional in nature or should it be a long term partnership?

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DECISIONS IN OUTSOURCING�

1. Make vs. Buy decisions
2. Identifying the core process

i) The business process route

ii) The product architecture route

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WHAT IS CRM?�

• CRM stands for Customer Relationship Management. It is a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. Good customer relationships are at the heart of business success.

• There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake.
• The more useful way to think about CRM is as a strategic process that will help you better understand your customers’ needs and how you can meet those needs and enhance your bottom line at the same time.
• This strategy depends on bringing together lots of pieces of information about customers and market trends so you can sell and market your products and services more effectively.

CRM (CUSTOMER RELATIONSHIP MANAGEMENT)

• �CRM is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.

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• For example, an enterprise might build a database about its customers that described relationships in sufficient detail so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased

• According to one industry view, CRM consists of:
• Helping an enterprise to enable its marketing departments to identify and target their best customers, manage marketing campaigns and generate quality leads for the sales team.
• Assisting the organization to improve telesales, account, and sales management by optimizing information shared by multiple employees, and streamlining existing processes (for example, taking orders using mobile devices)

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• Allowing the formation of individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them the highest level of service.
• Providing employees with the information and processes necessary to know their customers, understand and identify customer needs and effectively build relationships between the company, its customer base, and distribution partners.

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• Many organizations turn to CRM software to help them manage their customer relationships.

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• CRM technology is offered on-premise, on-demand or through Software as a Service.

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• Recently, mobile CRM and the open source CRM software model have also become more popular.

CRM VS. SCM

• SCM-CRM integration is getting closer to becoming an everyday business imperative.
• “The reason for this is simple: company survival”
• SCM has been around considerably longer than CRM.
• As a result, the two disciplines have matured independently.
• Examples- Dell company, Herman Miller a furniture manufacture.

CONCLUSION

• CRM-SCM integration strives to satisfy and promptly deliver products to customers, ensuring availability of the product and maintaining profitability of the manufacture.
• Ensure better customer service is offered
• Implement technology
• Extend the connection from the customer to the supplier( build to build)

Value addition in SCM- Concept of Demand management

• 1. The Supply chain
• 2. The Demand chain
• 3.Demand and Supply chain process: The value chain

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THANKYOU

TRANSPORTATION IN LOGISTICS

Factors affecting Transportation Costs

• Transportation costs can impact crucial areas of business. They can affect the pricing of products as well as the competitiveness of an organization in the market. Let’s take a look at different factors affecting transportation costs.

Factors affecting Transportation Costs

1. Handling 
2. Delivery Area 
3. Inefficient Routes
4. Inefficient Schedules 
5. Urgency 
6. Vehicle Capacity
7. Distance 

Handling 

• Damaging goods and products in transport can result in unnecessary costs to an organization.
• Sensitive or perishable products require more shipping costs as they need to be

handled and packed carefully.

Delivery Area

• The cost of transportation is dependent on the delivery area covered by an organization. A local delivery service can be cost-effective by covering short distances with larger volumes. Whereas a nationwide delivery system will require a lot of strategic planning and resources to be cost-effective.

Inefficient Routes

• Setting up a cost-effective route is the core of any transportation strategy. An inefficient route can affect the cost of transportation. Nowadays, organizations are using digital tools like vehicle route optimization software to automate the process of route planning cost-effectively.

Inefficient Schedules

• Inefficient schedules can lead to more time on the road resulting in extra fuel and toll costs. This can be a real bottleneck during pick-ups and disrupt both the supply chain and last-mile delivery.

Urgency

• Urgency of delivery will always hike up the transportation cost. Usually, organizations try to cover some extent of the cost of urgency by the customers.

Vehicle Capacity

• Vehicle capacity can affect the cost of transportation. It determines the number of pick-up stops to complete a delivery consignment. The increased number of trips will result in additional fuel as well as labor costs.

Distance

• Distance is the main reason behind a higher transportation cost. A good way to control this factor is the optimization of routes adopted by the transportation system and reducing the distance between various pick-up and drop-off points.