MT236 Unit 6 Transportation Comparison Example

Ten Pallets to Charlotte by Appointment: A Unit 6 Transportation Comparison of Truckload, LTL and Intermodal Rail

[Student Name]

Purdue University Global

MT236: Introduction to Supply Chain Management

Unit 6 Transportation Comparison

[Instructor Name]

[Date]

Alamo Ridge Pepper Co., the shipment, the carriers' quotes and on-time records and every cost are composite and illustrative; bracketed figures stand where carrier quotes would supply the numbers; the sources cited are real.

The Shipment

The order is [1,200] cases of five-ounce sauce on ten pallets, about [11,500] pounds, for the new Southeast chain's distribution center near Charlotte, roughly 1,250 miles from San Antonio. Its invoice value is about [$36,000]. The chain sets a receiving appointment and charges 3 percent of the invoice, about [$1,080], for a missed one. A late arrival would also miss the first days of a promotion that has been advertised in the chain's flyer, costing Alamo Ridge about [$2,400] in lost margin. The total cost of arriving late is therefore about [$3,480].

The Three Options

Full truckload sends a dedicated truck from Alamo Ridge's dock straight to the distribution center. The quote is about [$3,250]. Transit takes about three days. The carrier's on-time record for appointment deliveries over the past year is about 95 percent. The pallets are loaded once and unloaded once.

Less-than-truckload combines the shipment with other freight and moves it through the carrier's terminals. The volume quote is about [$2,380], the cheapest. Transit takes about six business days, with two terminal transfers along the way. The carrier's on-time record for this lane is about 82 percent. Each transfer means another forklift move, and the carrier's damage claims for glass on this lane run about 1 percent of value.

Intermodal rail trucks a container to a rail ramp in San Antonio, sends it by train to a ramp near Charlotte and trucks it the last miles. The quote is about [$2,690]. Transit takes about five days door to door. The provider's on-time record is about 90 percent, and damage runs about 0.4 percent of value, since the pallets stay sealed in one container.

Expected Total Cost

Comparing freight quotes alone would favor less-than-truckload. Adding the expected cost of late delivery and damage changes the ranking. For full truckload, a 5 percent chance of missing the appointment adds about [$174], and damage is negligible, for an expected total of about [$3,424]. For less-than-truckload, an 18 percent chance of lateness adds about [$626], and damage adds about [$360], for about [$3,366]. For intermodal, a 10 percent chance of lateness adds about [$348] and damage about [$144], for about [$3,182].

On expected cost, intermodal is cheapest, less-than-truckload second and full truckload third, but the gaps are only a few hundred dollars, and the transit times differ by up to three days.

The cheapest quote was the riskiest way to move glass to a fixed appointment.

Time Matters Too

Transit time decides which options are even possible. If the order is released only four business days before the appointment, intermodal and less-than-truckload cannot make it, and full truckload is the only choice. If the order is ready seven or more business days ahead, intermodal can make the appointment with a day to spare.

Coyle et al. (2016) describe the core trade-off in carrier selection as cost against speed and reliability, and they note that shippers of fragile or time-critical freight often accept higher rates for fewer handlings. Glass bottles bound for an appointment fit both conditions. Rodrigue (2020) explains that intermodal rail is most competitive on long hauls like this one, where the rail leg is long enough to offset the costs of moving containers to and from the ramps.

What the Quotes Leave Out

Three costs do not appear on any carrier's quote. The first is the warehouse's time: a full truck loads in about forty minutes at Alamo Ridge's single dock, while less-than-truckload pickups arrive in a two-hour window and sometimes late, holding a forklift driver. The second is the paperwork for a damage claim, which takes the office manager about two hours per claim and often recovers less than the invoice value of the broken cases. The third is the grocery chain's view of its new supplier. A buyer who sees the first two deliveries arrive on time and undamaged forms a different opinion from one who sees a late truck and a pallet of broken glass, and the account is too new to absorb a bad start.

The Decision Rule

Alamo Ridge should use a three-part rule for shipments to the Charlotte distribution center. When the order is ready seven or more business days before the appointment, ship intermodal. When it is ready four to six business days ahead, ship full truckload. Use less-than-truckload only for small replenishment orders without a promotion attached, where a late arrival costs only the 3 percent fee and the shipment is too small to justify a full truck. Chopra and Meindl (2019) note that transportation decisions should be made together with inventory and order timing, and the rule's first condition gives the planners a reason to release orders earlier.

Measures

The company will track on-time appointment delivery and damage by mode for the next six months and revisit the rule if any carrier's record moves by more than five percentage points.

References

Chopra, S., & Meindl, P. (2019). Supply chain management: Strategy, planning, and operation (7th ed.). Pearson.

Coyle, J. J., Novack, R. A., Gibson, B. J., & Langley, C. J., Jr. (2016). Transportation: A global supply chain perspective (8th ed.). Cengage.

Rodrigue, J.-P. (2020). The geography of transport systems (5th ed.). Routledge.