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OCR for page 18
18 Guidebook for Understanding Urban Goods Movement Exhibit 3-1. Soft drink beverages flowchart. Truck Direct Rail Pipeline while meeting all customer delivery times. Consequently, trucks are sent out completely full only if there is time to deliver the entire load, and a significant percentage of load capacity is not used because of this constraint. (This gives rise to an interest in night deliveries, which allow more efficient use of scheduling time.) To maintain schedule, drivers in difficult downtown locations will judge whether to (1) rely on close-by legal parking spots, (2) hand cart the delivery to the door from a legal spot farther away, or (3) take the risk of a parking fine with an illegal parking spot. (The company pays large amounts annually in parking fines and regards them as a cost of doing business.) When missed windows occur--most often caused by traffic or parking lot congestion--the driver will attempt to arrange redelivery later in the day's route. If the product must be brought back to the distri- bution facility and the delivery re-set, the company's added operating cost for doing so runs approximately $50 per order. Case Illustration 2: Gasoline and Petroleum Fuels Supply Chain Overview Petroleum fuels are derived from crude oil, which originates in a variety of worldwide loca- tions and arrives at U.S. refineries principally by ship, and also by crude oil pipelines from domestic and offshore oil wells. The majority of U.S. refining capacity is concentrated on the Gulf Coast between New Orleans and Houston, and most gasoline is produced and distributed from there, although there are important but smaller clusters of refining facilities in the North-

OCR for page 18
Moving Urban Goods: It's All about Supply Chains 19 east, Midwest, and on the West Coast. Gasoline and other petroleum fuels are carried from refiner- ies to consumption regions mainly by product pipeline or by water in barges or ships; rail is used to land-locked regions with low population densities, and truck occasionally for very short dis- tances. Products are transferred into large holding tanks at storage terminals (commonly called tank farms), which are located at pipeline termini or at waterside; terminals belonging to several producers normally are clustered around a single pipeline or harbor. Ethanol and fuel additives also come into tank farms for blending, the former chiefly by rail from agricultural regions, and the latter by truck from a few national producers. The final transfer of blended product from tank farm to convenience store or gas station is by motor carrier delivering a full truckload in a single stop--a transport stage that is controlled by a highly automated monitoring process to ensure sufficient inventory at the point of consumption. See Exhibit 3-2. Performance The petroleum supply chain is not particularly sensitive to time performance until the final stage of delivery to retail outlets. At that point, a significant degree of precision is needed for efficient replenishment, and the process is largely automated based on usage rates and future forecasts. Most gas station storage tanks have metering, which feeds to a central location and is monitored. The goal is to predict when the tanks at a station can take a full truckload of gasoline, with product orders registering automatically. Producers strive to minimize two undesirable results in delivery performance: (1) retains (i.e., a truck that expected to deliver a full load instead returns to the tank farm with product still aboard) and (2) run-outs (i.e., the station ran out of gasoline). The consequence is that the supply chain at the final stage of urban retail delivery is exceptionally just-in-time, because it attempts to optimize both objectives. Apart from delivery efficiency, vehicular accident, injuries, environmental risk from over- fill (spillage) or leaks, and passenger vehicle access to the loading point area all are common Exhibit 3-2. Petroleum fuels flowchart. Truck Ship/Barge Direct Rail Pipeline