Transportation Is a Critical Link in Overall Supply Chain

Transportation is a critical link in overall supply chain

Operation of transportation regulates the movement of the products. The momentum in techniques and management principles enhances the moving load, speed of delivery, quality level of service, operation costs, and facility usage and energy saving. Transportation takes a decisive part in handling of logistics in supply chain management (SCM).Supply chains are discussed as three or more organizational product handlers; where products can be information, services or goods (Cooper et al.1997; Ballou,2007).Going through the current mechanism, stable system of transportation needs a well-integrated. Logistics frame and proper transport techniques that can be implemented to connect the procedures produced.

Selection of suppliers and inbound transport are the main players in the design of supply chain, and performance evaluation. (Aicha Aguezzoul, 2015)

This essay talks about how transportation is a critical link in the overall supply chain and how transportation behaves as glue to hold the links in supply chain. It also gives a reflection about the key prospect of transportation by understanding the notions of logistics and its applications and relationships between transportation and supply chain. Through analyzing various practically performed cases and articles, the aim would be achieved. The essay talks about how the logistics and transport related sectors are performing keeping historical perspective in mind. Afterwards it talks about the co relation between the logistics and transportation. It will convey the benefits of transportation in supply chain management and vice versa. For Illustration, if the efficiency of the transportation also bestead to release load of traffic in the urban areas. Furthermore, this essay also talks about the relationship of transportation with various other components in supply chain management (SCM).

1. Historical Perspective

Since Logistics progressed in 19th Century, there were countless researches which were done in this area focusing on distinctive applications. The global economy is growing due to the integrated services, manufacturing, retailing, finance and most importantly transportation. (Liechtenstein 2006, quoted by Hesse et al. 2006).For industries Logistics helps in maximizing the present distribution process and also production process, with the help of the existing resources through management techniques for nurturing the competitiveness and efficiency of the company or processes. The most important element in the value chain of logistics is its Transportation system, which connects the activities separated. Transportation hold one third of the amount of the overall logistics Cost and this transportation system effects the overall performance of the logistics system tremendously. Transportation is demanded in the whole value chain of the system, from manufacturing of the product till the delivery, after that to the final consumer and then returning to the company again. In this case communication done well is the best solution to maximize the efficiency and profit numbers.

Initially logistic and transportation was used for military officers to move to the forefront in the battlefield, but now it is an important part of the process of production at modern times. The main story of the development starts from the recession that took place in 1950’s in America, which allowed the industrial sector to focus on goods distribution and circulation. During 1950’s to 1960’s the transportation was not considered as important as was called “A necessary Evil” at that time (Evangelia D. Fassoula, 2007). During the era of 1970’s more and more applications and researches took place for transportation as the important aspect in supply chain. Also due to the prices of petroleum in 1973, the efficiency of the transport system in supply chain grew. High stagflation pressure, lowest market growth, and competition of the third world over the services and products all contributed to the increase in the significance of Transportation in Supply Chain in business at that time.

2.0 Introduction:

Transport system makes good and services mobiles and provides parochial efficacy to build up value under the least cost principle. Transportation affects the results of the other supply chain costs including logistics costs for the enterprise, which ends up influencing the sales activities and production. For the products with less volume, high value and low weight, the transportation costs are very low and amounts to a very small share in costs and is usually less regarded. Also for heavy, big and low value products, transportation contains a very big share in sales and therefore is more regarded.

Transportation creates time and also price profitability and it is considered as the key factor in the overall Supply chain strategy. Transportation plays an important in linking the manufacturers and the final consumers across regions. As a result the selection of modes of transportation is linked with not only the logistics cost but also with customer satisfaction, efficiency in supply chain, financial cash flows and eventually competitive advantage. In support of this, Chopra and Miendl, (2010) states that selecting the right transportation mode is strategically an important decision in overall Supply Chain Management globally.

3.0 Co relation between Logistics and Transportation 

Transportation is the most valuable economic component in supply chain Management (SCM), almost one third to two third of the company’s logistics cost are spent on transportation. Ocean and Air are the most valuable options in the global Supply chain. Through Air goods can be transported much faster than Ocean transport but with higher freight costs. Due to the weight and quantity restrictions, only high value, high time priority and decent weight goods are transported through air freight. On the other hand, Ocean Trade is low cost but comparatively slow alternative for the transportation of goods. With a lot of capacity to hold and transit time is not the priority with less cost, ocean transportation is considered to be a better option for transit (Stock and Lambert, 2000, quoted in Bowersox et.al. 2013)

Air and express delivery service industry in United States, providing many exporters belonging to middle class and lower class exporting services alone is an industry of $82 Billion. Freight rail industry in United Stated provides services for the travelling of heavy cargo within United States. Each day this service of 140,000 miles transports 50 million tons of services and goods to different industries. It can be retail, manufacturing, whole selling etc. Another sub sector includes Meri time which consists of seaports, labor and terminals involved in movement of passengers as well as cargo by water. This mode of transportation has a valid share in United States International Merchandise Trade which includes 76 percent of United States exports by tonnage.