Pgbarranca's Blog

March 21, 2010

Multimodality

Filed under: Uncategorized — by pgbarranca @ 4:23 pm

Multi-modality

“Multi-modal simulation” describes the ability to simulate more than one type of traffic. All these types can interact mutually. In VISSIM the following types of traffic can be simulated

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Multimodal transport (also referred to as combined transport) is the transportation of goods under a single contract but performed with at least two different means of transport. I.e. the carrier (in a legal sense) is liable for the entire carriage even though it is performed with several different means of transport (e.g. rail, sea and road). The carrier, however, does not have to be in the possession of all of the means of transport and in practice usually is not. The carriage is often performed by using sub-carriers, in legal language often referred to as actual carriers. The carrier that is responsible for the entire carriage is referred to as a multimodal transport operator (MTO).

The U.N. Multimodal Convention (which has not entered into force and most likely never will) defines in article 1.1. multimodal transport as follows: “‘International multimodal transport’ means the carriage of goods by at least two different modes of transport on the basis of a multimodal transport contract from a place in one country at which the goods are taken in charge by the multimodal transport operator to a place designated for delivery situated in a different country.”

Overview

In practice freight forwarders have become important MTOs as they have moved away from their traditional role as mere agents for the sender and accepting a much wider liability as carriers. Also large sea-carriers have evolved into MTOs as they provide their customers with so-called door-to-door services, i.e. the sea carrier offers transport from the sender’s premises (situated somewhere inland) all the way to the receiver’s premises (also often situated somewhere inlands) instead of just offering more traditional tackle-to-tackle services or pier-to-pier services. MTOs that are not in the possession of a sea vessel (even though the transport includes a sea-leg), are in common law countries, in the United States especially, referred to as Non Vessel Operating Carriers (NVOC).

Historically multimodal transport developed in connection with the so called container revolution during the 1960s and ‘70s and today containerized transports are by far the most important multimodal consignments. One must however always bear in mind that multimodal transport is not equivalent to container transport and multimodal transport is just as feasible without any form of containers.

Legal impact of multimodal transport

From a legal point of view multimodal transport create several difficult problems. Currently unimodal transports are governed by different, often mandatory, international conventions. These conventions stipulate different basis for liability and different limitations of the liability for the carrier. Currently the solution to this problem has been the so called network principle. According to this the different conventions exists unchanged side by side and the carrier’s liability is defined according to where the breach of contract has occurred (e.g. where the goods have been damaged during the transport). However, problems tend to arise if the breach of contract is unlocalized.

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What is multimodal transport?

The most authoritative definition of the term “international multimodal transport” is provided in article 1 of the United Nations Convention on International Multimodal Transport of Goods 1980:

“ ‘International multimodal transport’ means the carriage of goods by at least two different modes of transport on the basis of a multimodal transport contract from a place in one country at which the goods are taken in charge by the multimodal transport operator to a place designated for delivery situated in a different country…”

This definition should be read in conjunction with the definition of the term “multimodal transport operator” (MTO) provided in article 1 of the MT Convention:

“ ‘Multimodal transport operator’ means any person who on his own behalf or through another person acting on his behalf concludes a multimodal transport contract and who acts as a principal, not as an agent or on behalf of the consignor or of the carriers participating in the multimodal transport operations, and who assumes responsibility for the performance of the contract.”

Thus, the main features of a multimodal transport are: the carriage of goods by two or more modes of transport, under one contract, one document and one responsible party (MTO) for the entire carriage, who might subcontract the performance of some, or all modes, of the carriage to other carriers. The terms “combined transport” and “intermodal transport” are often used interchageably to describe the carriage of goods by two or more modes of transport.

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Multimodal transport

Definition. Multimodal Transport is commonly known as referring to a transport operation that is carried out using different modes of transport and organised by a single operator. Multimodal Transport is also a legal concept strictly defined in the United Nations Convention on the International Transport of Goods and other international instruments, where the specified liability regime of the operator differs from those applicable in modal operations.

Overview. Whether seen from a legal point of view or from an operational perspective, Multimodal Transport is generally considered as the most efficient way of handling an international door to door transport operation. This is so because Multimodal Transport allows to combine in one voyage the specific advantages of each mode, such as the flexibility of road haulage, the larger capacity of railways and the lower costs of water transport in the best possible fashion. Multimodal Transport also offers the shipper the possibility to rely on a single counterpart, the multimodal transport operator who is the architect of the entire journey and only responsible party from pickup to delivery, rather than having to deal with each and every modal specialist of the transport chain.

While Multimodal Transport seems to offer only benefits to all parties, shippers and service providers, it is also very difficult to achieve. Multimodal Transport requires a thorough control over all the steps involved in international transport, including multiple storage and handling stages; this means extensive use of information technologies and carriers networks and regulatory frameworks that can provide freedom to plan and operate to carriers and reliable liablity regimes to customers. On top of that Multimodal transport needs to be competitive in markets where unimodal operations not only have been there for a long time but also are simpler to handle and, most of time, more cost effective.

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As a complementary matter:

Intermodal freight transport involves the transportation of freight in an intermodal container or vehicle, using multiple modes of transportation (railship, and truck), without any handling of the freight itself when changing modes. The method reduces cargo handling, and so improves security, reduces damages and losses, and allows freight to be transported faster. Reduced costs versus over road trucking is the key benefit for intracontinental use. The negative, is that it takes longer then normal truck delivery would.

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March 17, 2010

Just in time

Filed under: Uncategorized — by pgbarranca @ 5:16 pm

JUST IN TIME

Just-in-time (JIT) in its simplest form refers to a method of inventory control with a focus on waste elimination. The visible performance improvements of some firms adopting JIT led to a great deal of excitement. Implementing JIT at the operational level and creating competitive advantage through JIT became topics of widespread interest. Yet despite its popularity, clinical analysis of JIT at the organizational level has been sparse. One can ask, for example, exactly how and to what degree does JIT impact the organizational design of the logistics function, the management of logistics, and the performance of the firm.

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IN BOUND LOGISTICS

Just In Time (JIT): An inventory control system that controls material flow into assembly and manufacturing plants by coordinating demand and supply to the point where desired materials arrive just in time for use.  An inventory reduction strategy that feeds production lines with products delivered just in time. Developed by the auto industry, it refers to shipping goods in smaller, more frequent lots.

Just in Time II (JIT II): Vendor-managed operations taking place within a customer’s facility.  JIT II was popularized by the Bose Corporation.  The supplier reps, called “inplants,” place orders to their own companies, relieving the customer’s buyers from this task.  Many also become involved at a deeper level such as participating in new product development projects and manufacturing planning (concurrent planning).

Just-in-Time Logistics (or Quick Response): The process of minimizing the times required to source, handle, produce, transport, and deliver products in order to meet customer requirements.

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“Just-in-time” and its Logistic

This figure illustrates a relatively recent concept in the domain of industrial manufacturing; “just in time”. This new notion amplifies the role of freight transport, particularly trucking and containers when global supply chains are concerned. It involves the delivery of a component just before the assembly line requires it. Consequently, freight forwarders must respect tighter delivery schedules and must plan their operations accordingly in order to avoid strict delay penalties. The production unit (the factory) assumes a lower level of warehousing. As a result, the trucks (vehicles) themselves assume the task of moving storage units, thus the inventory is constantly in circulation.

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March 1, 2010

Price, value and cost

Filed under: Uncategorized — by pgbarranca @ 8:56 pm

PRICE

Price is typically defined as the sum of the costs plus overhead plus profit or the quantity of payment or compensation for something.

Price is also defined as the amount of money expected, required or given in payment for something.

Economists view price as an exchange ratio between goods that are exchanged for each other. This however has not been used consistently, so that old confusion regarding value frequently reappears. The value of something is a quantity counted in common units of value called numeraire, which may even be an imaginary good. This is done to compare different goods. The unit of value is frequently confused with price, because market value is calculated as the quantity of some good multiplied by its nominal price.

Confusion between prices and costs of production:

Price is commonly confused with the notion of cost of production as in “I paid a high cost for buying my new plasma television”. Technically, though, these are different concepts. Price is what a buyer pays to acquire products from a seller. Cost of production concerns the seller’s investment (e.g., manufacturing expense) in the product being exchanged with a buyer. For marketing organizations seeking to make a profit the hope is that price will exceed cost of production so the organization can see financial gain from the transaction.

COST

Cost is the amount of money needed to buy, do or make something. It can also be defined as the effort or loss necessary to achieve something.

In business, retail and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In economics, a cost is an alternative that is given up as a result of a decision. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing.

VALUE

Value is the quality (positive or negative) that renders something desirable or valuable. It is the importance or worth of something for someone.

The value of a product is the mental estimation a consumer makes of it. Formally it may be conceptualized as the relationship between the consumer´s perceived benefits in relation to the perceived costs of receiving these benefits. It is often expressed as the equation  :

Value = Benefits / Cost

Value is thus subjective (i.e., a function of consumers’ estimation) and relational (i.e., both benefits and cost must be positive values).

SOME COMMENTS ABOUT PRICE, COST AND VALUE RELATIONSHIP:

Most poorly trained salespeople tend to lower the price when they receive price resistance. The price will always seem high to a customer if the perceived value is low. The key to effectively handling price resistance is to understand this simple concept. People say they want low price, but what they really want is low-cost. What is the difference? Low price is what the customer pays for your product or service now. Low cost is what they pay for it over time. For example, if they buy an inexpensive piece of equipment to save money, and it is in constant need of repair because it breaks down a great deal, they may have saved money initially, but their cost over time will be much higher than if they had invested more in a better piece of equipment. In most cases we get what we pay for. Buy cheap and you get less value or higher cost. Buy expensive, and you get higher value or lower cost over time. What are you selling, high value or low-cost? It is better to sell high-priced product or service than a low-priced one. It is much easier to justify high price if the value is there, than poor quality and constant product/service problems. The key to success in selling is building strong relationships. Poor quality, even though the customer saved money, is not in its best long-term interest. It is better to be remembered by customers for good value at a fair price, than low quality at low price.

This is an extract of something said by Tom Connor.

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