1. What do you understand by tailored transportation? Discuss the factors that tailored transportation depends upon.
My understanding of tailored transportation is that as a customer my shipment can go on various modes of transportation depending on the size, shape, weight, value and amount shipped and can go through various transportation networks to the final location. Tailored transportation as described by Chopra & Meindl, (2016) is the use of different transportation modes and networks based on product and customer characteristics. The factors that tailored transportation depends on include customer density and distance, size of customer, and product demand and value. Customer density and distances must be considered when designing the transportation network based on the location of the distribution center to the density of the customers served. As Chopra and Meindl (2016) stated, the service of high density of customers close to the DC, the organization may want to have its own fleet to service the customer directly by utilizing milk runs, as well if the density is high and the distance is far, the organization may choose to utilize a public carrier with large trucks to haul the shipments to a cross-dock facility where the product is loaded on smaller trucks and milk runs made to the customer. As the density of customers decreases, the use of LTL carriers, or third party to do milk runs is more economical because of aggregate shipments across multiple organizations (Chopra & Meindl, 2016).
The customer size and location dictate whether a supplier should use a truckload (TL) or less than load (LTL) carrier or milk runs. Large customer can be supplied using a TL carrier, whereas smaller customers can use LTL carriers or milk runs (Chopra & Meindl, 2016) Additionally, shippers can partition customers into groups based on demand such as small, medium, and large, and combine shipments based on the demand structure in order to achieve responsiveness and cost targets (Chopra & Meindl, 2016). Product demand and value determine whether aggregation strategies will benefit the supply chain. High-value products with high demand are disaggregated to save on transportation costs. High demand products with low value, inventory is disaggregated and held close to customers to reduce transportation costs.
2. What kind of network is most suited for a big box retailer like Target? Discuss why?
Due to its large size, the network most suited for a big box retailer like Target is a combination of intermediate distribution center with storage and intermediate transit points with cross-docking capability. Target has a significant volume of imported merchandise from countries around the world that is consolidated and shipped to the United States. From the port of entry, containers are shipped to a network of seven 3PL de-consolidators or they are sent directly to Targets four import warehouses and multiple regional distribution centers (MWPVL International, 2016). Domestically, product flow is direct to the regional DC in full truckload volume. Cross-docking at intermediate transit points is used for the smaller shipments of LTL, which allows Target to maximize inbound TL to regional DC’s. Utilizing both intermediate DC with storage, and cross-docking facilities, Target minimizes inbound transportation expense to the regional DC by ensuring all transfers to the cross-docking facility are full truckloads (MWPVL International, 2016). As mentioned in the text, having a DC allows Target to achieve economies of scale for inbound transportation to a point close to the final destination, and outbound cost are minimized, and the cross-docking allows full loads of products for several locations to be broken down and consolidated to a full load to one location from several suppliers and allows for faster flow of product and lower handling cost and both inbound and outbound achieve economies of scale (Chopra ; Meindl, 2016)