Operational Management: Transportation Management

Transportation Models in Operations Management is a special case of linear programming that deals with the issue of shipping commodities from multiple sources to multiple destinations. It is derive to minimize the shipping cost while satisfying the demand and supply of product. Transportation models help in deciding the transportation of raw materials or finished good from various centers to manufacturing plants or different distribution system. Transportation model are describe in matrix form where the rows representing sources and columns representing destinations. The costs of shipping from sources to destinations are indicated by the entries in the matrix. These models are transfer into linear programing to solve the transportation problem.

To use the transportation model, we need to know the following:

1. The origin points and the capacity or supply per period at each.

2. The destination points and the demand per period at each.

3. The cost of shipping one unit from each origin to each destination

Wal-Mart has been able to achieve respectable leadership in the retail industry because of its focus on supply chain management. Wal-Mart’s highly-automated distribution centers, which operate 24 hours a day and are served by Wal-Mart’s truck fleet, are the foundation of its growth strategy and supply network.  In the United States alone, the company has more than 40 regional distribution centers for import flow and more than 140 distribution centers for domestic flow (Logistics, 2011).  When entering a new geographic arena, the company first determines if the area will be able to contain enough stores to support a distribution center.  Each distribution center supports between 75 to 100 retail stores within a 250-mile area.  The result is a “trickle-down” effect:  trucks do not have to travel as far to retail stores to make deliveries, shorter distances reduce transportation costs and lead time, and shorter lead time means holding less safety inventory.  If shortages do occur, replenishment can be made more quickly because stores receive daily deliveries from distribution centers.

Wal-Mart’s fleet of 6,500 dedicated trucks and over 50,000 trailers are used to pick up goods directly from manufacturers’ warehouses, thus eliminating intermediaries and increasing responsiveness The company hires only experienced drivers who have driven more than 300,000 accident-free miles and whom it believes will be committed to customer service.  Its retail stores are considered important “customers” of the distribution centers. In addition to containing a driver’s code of conduct, the Private Fleet Driver Handbook gives instructions and rules for following pre-planned travel routes and schedules, the responsible unloading of a truck trailer at a retail store, and the safe-guarding of Wal-Mart’s property. By effectively managing every aspect of its transportation operations and treating its drivers fairly, Wal-Mart gets results that are unrivaled in the logistics arena.

References

Alyea , J. (2012, 2 11). Analyzing Wal-Mart's Distribution and Logistics System. Retrieved from http://jimmyalyea.blogspot.com/2012/02/analyzing-wal-marts-distribution-and.html

 Chandran, P. M. (2003).  Wal-Mart’s supply chain management practices. ICFAI Center for Management Research.  Retrieved from www.icmrndia.org

Logistics. (2011). Walmartstores.com.  Retrieved fromhttp://walmartstores.com/AboutUs/7794.aspx.