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22 Guidebook for Understanding Urban Goods Movement Exhibit 3-4. Construction aggregates flowchart. For-Hire Truck Barge Direct Rail regulations, one cement plant required 8 years to move through the permitting process, and the delay imposed great costs. Given that delivery to the construction site of highly perishable concrete is so time-sensitive, supply chain performance is also significantly degraded by local and regional freight bottlenecks, maintenance activities, and general congestion of freight- dependent roadways. Supply Chain Comparisons The supply chains in the 12 case studies (including four in this chapter and the eight in Appen- dix A) represent a cross-section of urban supply chain models. Exhibit 3-5 provides an overview of the key elements of each chain. Across this diverse set of businesses, the chains display contrasts but even more similarities. This section highlights the major points of comparison among them, in the categories of types of goods, facilities and geography, modes, staging and urban delivery, and performance. Types of Goods Manufacturing processes are transformative, turning raw materials or components into dif- ferent, finished products. Distribution functions mainly deliver the same products they take in. Many times they will be packaged or unitized or labeled, but the commodity handled is not sub- stantially changed. For supply chains involving a particular manufacturing process, there may be multiple product types, but all have a comparable form. Supply chains illustrating this include soft drink beverages and pharmaceuticals and biotechnology. Similarly, the supply chains for bulk products, including petroleum, aggregate-based construction materials, and waste, all involve

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Exhibit 3-5. Supply chain comparison. (continued on next page)

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Exhibit 3-5. (Continued).

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26 Guidebook for Understanding Urban Goods Movement the handling of very large quantities of relatively homogenous materials. In contrast, distribu- tion and retail supply chains typically involve a much broader range of products, often number- ing in the hundreds of stock keeping units (SKUs), but most products within a specific supply chain will fit into common or related categories. For example, the food service distribution sup- ply chain includes an extensive list of items, but most can be categorized as either food or gen- eral restaurant supplies. Facilities and Geography The principal facility types are production and distribution operations, although either type may have some features of the other. There are several kinds of production plants, ranging from national petroleum refineries to regional bottling plants to local makers of ready-mix concrete. The regional and local facilities especially share a distribution function for their surrounding territory; in soft drink beverage manufacturing, for example, a significant amount of cross- hauling between facilities is fundamental to the production and distribution process. DCs can be national, but a regional orientation was more common, in part because companies with sub- stantial urban delivery operations are receiving product from the DCs of others upstream in the supply chain. In some cases, regional facilities feed into local facilities within the same company, before final distribution to customers. For transfer of products between very distinct supply chain stages, specialized transition facilities such as container freight stations or tank farms can become necessary. Most supply chains serve urban markets from either local or regional facilities. This reflects the design of the chain and its requirement for reliable and productive service to end-customers. Outbound delivery routes typically are designed to keep truck trips within several hundred miles of these distribution hubs, meaning that most delivery roundtrips can be completed within a day or a single driving shift. In many cases, the regional DC of a supplier is feeding into the regional DC of a distributor; this is a common pattern that exists in some form across a wide range of interrelated industries. For bulk products, such as petroleum and aggregate-based construction materials, a variation on this basic pattern relies on very local distribution facilities to keep final delivery leg distances particularly short (typically no more than 30 to 40 miles). Modes A rich mix of modes is used, spanning pipelines, ocean shipping and barge transport, air, car- load and intermodal rail, as well as a great variety of truck types in a wide selection of fleet con- figurations, for handling full loads, less-than-loads, and packages. Virtually all supply chains become dependent on trucks at some point, particularly as they reach the final delivery miles. Trucking is also the chief mode in the regional transport stage. This includes the commonplace movement of inbound goods to retail DCs from vendor regional DCs. The design features of the supply chain are reflected in this, because both the vendor and the distributor are placing goods within an overnight drive or a same-day turn for a truck, for the sake of ensuring service. Most urban delivery is handled by truck and frequently by private or dedicated fleets. The type of equipment employed varies by product, volume, and delivery types. A 53-foot tractor-trailer may be the favored option for a customer receiving large quantities of goods, and the trailer may even be dropped on site; or a 28-foot pup trailer may be used because it can be doubled into a set for linehaul service and then split up for urban delivery; or side-loaders and step vans may be used because they are faster for offloading case product or for streetside parking. Trucking equip- ment is specified to be efficient for the services it is expected to perform. Individual companies attempt to standardize their fleets for economies in purchasing and maintenance, but will use multiple types if their business and operating environment require it.

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Moving Urban Goods: It's All about Supply Chains 27 Staging and Urban Delivery Effectively, all goods are handled through at least a couple of distinct stages, which may incor- porate production, consolidation, deconsolidation, change of direction or mode, and storage. Sometimes, multiple functions occur within a single location, as in the case of production facil- ities that also serve as regional DCs. At other times, a staging point along the supply chain exists strictly for cross-dock movement, and involves no processing or storage of goods. Overall, stag- ing patterns are organized to provide competitive service levels to the receiving markets, mean- ing that there is a strong service performance feature embedded in all supply chain designs. Typically, a supply chain is more spatially concentrated at its production end and becomes more fragmented as it moves toward the delivery stage. As a result, modes that support consol- idation or high-volume movement, such as barge and rail, are most useful during early phases and become significantly less useful in the later, more dispersed phases of the supply sequence. For many supply chains, a clear modal shift can be traced through the stages of distribution. Delivery Trips For the delivery stage, there are at least three types of standard patterns exhibited by the case studies. In one type, a truck will depart the DC or serving facility with a full load for one specific destination and will return to the facility empty. In another, a truck will set off in a long stem and pocket pattern, making multiple deliveries in a zone at some remove from the DC, and then return an equivalent distance back to the DC empty. In the third pattern, a truck will set out on a long, loaded stem pattern and make deliveries as it works back to the DC. In this case, the final return miles empty will be shorter, but the pattern can only be used if customer dispersion and delivery windows support it. A variant pattern is one that unloads a full truck over a few stan- dard stops, which can be scheduled in efficient sequence. The loaded stem in delivery has some particularly interesting characteristics for the planner. This beginning phase of the trip is typically longer than the distances between subsequent stops, because the truck is traveling crosstown to its first delivery. In this crucial segment, the truck is going the longest continuous distance through the metropolitan area and simultaneously initiat- ing adherence to a set schedule, making this the section of the trip with the highest risk to service. The on-time performance for all subsequent stops depends on how well the first stop is executed. Truck fleets commonly depart DCs very early in the morning to protect this first delivery. Performance A strong commonality across supply chains is the incorporation of service sensitivity in their design. Most supply chains share the ultimate goal of fulfilling end-user needs, with as little inventory investment by all parties as possible. Along any particular chain, each stage has its own set of service expectations. For instance, a DC may require that inbound goods are delivered from vendors within a specific "must-arrive-by date," as illustrated by the big-box retailer example. Customer destinations, such as retailers served by the grocery wholesale functions, often desig- nate a constrained window of time for deliveries. Even in waste removal, the supply chain is sen- sitive to the dual service requirements of timely and thorough collection of all waste materials within a given geographic area. Many companies maintain statistics on how inbound and out- bound stages adhere to performance requirements and will tailor supply chain strategies accord- ingly. Although specific requirements vary along the length of each supply chain, there is rarely a stage that is considerably less sensitive to overall supply chain service needs. This is indicative of a goods movement system that seeks to minimize excess inventory at all stages of the chain. Although service sensitivity is a constant, there is more built-in flexibility for longer than shorter haul transport stages--and distances tend to shrink as goods near final delivery. If a disruption

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28 Guidebook for Understanding Urban Goods Movement arises during a longer haul stage, such as the transport of aggregates to a ready-mix concrete plant, it is relatively easy to make up for lost time and still deliver the materials when needed. However, during a shorter haul stage, such as the delivery of highly perishable ready-mix concrete to a con- struction site, there is less buffer time for handling hurdles like traffic jams. As a result, it is much more challenging to meet stage service requirements during shorter hauls, especially in the dense metropolitan areas that are frequently the environment for final delivery. Not surprisingly, congestion is one of the most common obstacles to supply chain perfor- mance. Given that service deadlines are often geared around customer time-of-day preferences-- such as delivery at the start of the work day, and pick-up at the end--shipment windows tend to fall during peak travel times when the transportation network is most congested. Even though a truck on a multi-stop route may plan an early crosstown stem leg before peak hours, it will start encountering traffic delays as the morning wears on. If the traffic is particularly slow, a truck may fall so far behind schedule that it runs the risk of returning undelivered items to the DC. This is a costly outcome that drivers make every effort to avoid by rescheduling same-day delivery-- and local drivers nurture relationships with their customers to facilitate this option. In addition to compromising service performance, congestion affects supply chain produc- tivity. Not only are trucks at greater risk of not making their deliveries on time, they are also at risk of supplying fewer customers. Within the constraints of customer receiving requirements, fleet schedules are designed to complete as many deliveries in a workday as possible, and this is built into performance metrics and driver incentives. Maintaining high per-truck productivity should also be of particular interest to public planners trying to reduce overall numbers of truck trips. When a single truck can dependably serve a multi-stop territory, companies are less likely to assign multiple trucks for performance assurance on the route. A further challenge to both supply chain service and productivity performance is urban facil- ity access. Without adequate and reliable parking facilities and unloading docks, metropolitan delivery trips are significantly less efficient. Urban deliveries tend to require live unloading, which necessitates time and space to be completed effectively. Facility access can even be a challenge for supply chains that control their own retail networks if stores are in dense urban districts. Access issues arise as well from efforts to work large delivery trucks, such as gasoline tankers, into tight destinations, such as older filling stations, particularly when competing for space with passenger vehicles. The difficulties with urban facility access can be partially mitigated by nighttime or dawn delivery, which many supply chains employ to some degree and some trend toward strongly. Transport regulations, especially those that are inconsistent across jurisdictions, are potential barriers to optimal urban delivery performance; weight limits are a typical example. Finally, sus- tainability is an increasingly important supply chain performance goal.