Blog

Tedra: Principles of Transportation Essay

Business

Tedra: Principles of Transportation Essay

Introduction

Being a manager of a large footwear company, Tedra, the vice-president of the supply chain, needs to be careful when deciding on the construction of a new distribution centre. A variety of factors should be taken into consideration when building such a centre. First of all, it is necessary to analyze the location of supply sources as well as the markets selling them (Chopra & Meindl, 2013). Secondly, such elements as market demand forecast and transportation costs should be scrutinized. Further, tariffs and taxes should be analyzed. Next, the supply chain vice-president has to pay attention to the costs needed for labour, facilities, and materials (Chopra & Meindl, 2013). Finally, the desired response time has to be evaluated.

Main body

Taking into consideration all of these aspects, a good location would be the one situated close to the labour force and supply materials. Also, an important place in choosing the location would belong to transportation. Apart from that, Chopra and Meindl (2013) outline product availability as a highly significant constituent of a successful choice of location. A high level of product availability is good because it enables the company to attract consumers and enhance the supply chain’s responsiveness. However, it is necessary to be cautious when setting this level too high because it will require substantial inventories (Chopra & Meindl, 2013). As a result, there is a risk of supply chain costs rising. Thus, it is recommended to look for a location that would guarantee a balance between inventory costs and the availability level.

A bad location would be the one to and from which it would be difficult to deliver goods. For instance, constructing the distribution centre in a remote region only because the land is cheaper there would not produce beneficial outcomes. Transportation costs would be higher than the cost of building the centre in an area close to a big city. Also, customers and distributors would find it difficult or even impossible to visit the centre located very far.

Such factors as product type, transportation mode, and geographical location play an important role in choosing the location of the distribution centre. The type of a product is one of the most decisive factors since some goods cannot be stored for a long time. Thus, even if transportation conditions are favourable, and products can be delivered to and from the centre without any difficulty, they still cannot stay there for a long time lest they should become spoiled. In the case of a footwear company, the factor concerned with product type should not present any difficulties. Shoes can be stored for a long time in the relevant humidity and in other appropriate conditions.

The transportation mode and geographical location present more difficulties than the product type does. These two issues are closely related, and it seems that their combination would have the largest impact on Tedra’s decision. In their research, Tuan and Hien (2017) outline several criteria influencing the choice of the distribution centre location:

  • the availability of material;
  • the proximity to the demand market;
  • the possibility of the expansion;
  • costs of investments;
  • human resources;
  • the availability of transportation.

As can be seen, even with a favourable location, transportation facilities can pose a threat to arranging a successful connection between the production centre and the distribution one. This opinion is reiterated and analyzed by other scholars who emphasize the significance of organizing transportation channels for the successful operation of the distribution centre. Tate, Ellram, Schoenherr, and Petersen (2014) note that in the changing environment of markets and the growing rivalry between producers, it is complicated for supply chain managers to ensure the best total value conditions. Scholars note that the previously favoured static manner of selecting locations is not acceptable in modern markets (Tate et al., 2014). Nowadays, it is necessary to consider the growth of fuel costs and alterations in customers’ demand. Analyzing transportation modes, according to Tate et al. (2014), will enable manufacturers to ensure the cost-effectiveness of their production and distribution processes. Therefore, it seems that transportation modes would have the greatest impact on the decision made by the company’s supply chain vice-president.

A variety of models and algorithms aimed at helping supply chain managers to choose the best distribution centre location are offered in scholarly literature. Ji, Yang, Zhang, and Zhong (2013) suggest the Fuzzy C Means algorithm to solve the optimization model of the distribution centre location. Ji et al. (2013) note that location plays a crucial role in any product type. Tuan and Hien (2017) propose a fuzzy TOPSIS approach as a means of making the choice of the location easier. The method offered by Tuan and Hien (2017) involves the representation of criteria by generalized triangular fuzzy numbers. Further, these numbers help to establish the applicability and benefits of the distribution centre location.

Conclusion

The firefly algorithm suggested by Hu, Hou, Tian, and Li (2015) has the potential for enhancing the efficiency of operations. Latha Shankar, Basavarajappa, Chen, and Kadadevaramath (2013) propose the Multi-objective Hybrid Particle Swarm Optimization (MOHPSO) algorithm to approach the problem of the location choice. Therefore, there is a variety of approaches from which Tedra could choose. The important thing to remember is that the distribution center should be constructed in an area in which transportation modes could be easily arranged.

References

Chopra, S., & Meindl, P. (2013). Supply chain management: Strategy, planning, operation (5th ed.). Upper Saddle River, NJ: Pearson.

Hu, W., Hou, Y., Tian, L., & Li, Y. (2015). Selection of logistics distribution center location for SDN enterprises. Journal of Management Analytics, 2(3), 202-215.

Ji, Y., Yang, H., Zhang, Y., & Zhong, W. (2013). Location optimization model of regional express distribution center. Procedia – Social and Behavioral Sciences, 96, 1008-1013.

Latha Shankar, B., Basavarajappa, S., Chen, J. C. H., & Kadadevaramath, R. S. (2013). Location and allocation decisions for multi-echelon supply chain network – A multi-objective evolutionary approach. Expert Systems with Applications, 40(2), 551-562.

Tate, W. L., Ellram, L. M., Schoenherr, T., & Petersen, K. J. (2014). Global competitive conditions driving the manufacturing location decision. Business Horizons, 57(3), 381-390.

Tuan, N. A., & Hien, H. T. (2017). Distribution center location selection using an extension of fuzzy TOPSIS approach. International Journal of Supply Chain Management, 6(4), 83-89.