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Role of Transportation in Supply Chain

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Title: Transportation is a critical link in the overall supply chain

The term transportation is referred to as the movement of product from one to other location as it makes it way from the starting of the supply chain to the customers. In other words transportation is regarded as an essential supply chain driver as products are rarely being manufactured as well as consumed within the similar location. Management of supply chain can be categorized into three major parts. This is comprised of purchasing, manufacturing as well as transpor (Simatupang, Togar and Ramaswami Sridharan, 2005). From the end to end this is comprised of decisions regarding input material that can be used, production quantities, levels of inventory, distribution configuration as well as transportation related to input and finished products(Wilson and  Martha C,2007). Logistics management is regarded as the component of SCM that lay emphasis on how as well as when the raw material, immediate products as well as finished goods can be obtained from the origin to the destination. At present international trade is regarded as the common place as well as enhancement in the market share within emerging market place is desirable. Thus it can be stated that goods are rarely being consumed where they are being produced. Further transportation services are important among all the elements related with supply chain.

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In order to practice effective, cost efficient logistic management, a firm is required to lay foundation for a responsive, economical network of transportation. With the responsive, economical network of transportation the firm is able to make implementation of major strategic alterations for the sake of reducing the costs sand enhancing the level of service of customers with little disruption to the entire supply chain. A responsive transportation network starts with end to end network visibility. Visibility is effective in allowing the firm to centralize the production operations for lowering cost area without affecting the service levels of the customers as any uncertainty in the network can be viewed and suitably managed for the sake of keeping the level of inventory low as possible.  An economical transportation network starts with shift within the attitude. The organisation are being trapped within the traditional view that reflects that transportation is important evil that is inevitable source of the cost as well as risk. Transport is regarded as the largest component associated with the cost structure of the firm's logistics. It has been determined that transport accounts for 30% of the total cost of logistics operations.

It has been examined that global economies are carrying out operations within the environment that is complex and competitive. The condition is exacerbated through the rate of rapid change that is being driven by the external forces which has altered the economic landscape(Meixell, Mary  and Vidyaranya  Gargeya,2005)Businesses and other firms are striving towards becoming more efficient and effective for the sake of surviving in the new environmet (Beske, Philip, Anna Land, and Stefan Seuring,2014). The critical element that assist in attainment of the two objectives is related with supply chain management of firm as well as transportation that is crucial ingredient that assist in overall supply chain performance. This has been argued that transportation is considered as the glue that is holding the supply chain together. The external forces that is driving the change is comprised of globalization, technology, supply chain integration as well as consolidation, government regulation, consumer empowerment as well as policy.

At present the focus of the transportation executives is on driving efficiences in their supply chain. The cost of transportation is accounted for 4.7 percent of the sales in the year 2008. Further the total logistics costs is comprised of carrying costs, warehousing, administration that was 9.3 percent of the sales. One of the most effective measure that assist in reduction of the cost as well as exposure of the supply chain inefficiencies is utilization of the transportation management system (TMS). The process and technology of transportation management system needs to be the foundation for the success of supply chain. Such are being devised on long term saving instead immediate cost avoidance. This kind of inherit features are adding to the stability, reliability as well as transportation process cost controls. The key component that is related with the success of TMS solution is comprised of connectivity, optimization, transparency as well as collaboration. A successful TMS solution is one that is accounting for all the supply chain stakeholders and it makes the decisions on the basis of particular constraints or the desired level of results.

The technological changes within the transportation and information technology segment is ushering  within the period of low cost and higher value of transportation services. However the combined influence of the alteration within the transportation and complementary information technologies are not visible in offering the transportation services that is traditional one with greater speed, reliability as well as lower cost, but also within introduction of the new classes of the services related with transportation. The industry of transportation to a greater extent depends on technology of information at present as it offers greater opportunity to the customers in maintaining very low level of inventory to further minimize the costs. The role of transportation is significant within the supply chain towards making distribution of the goods from one place to other that is to the customers in an effective manner. Transportation offers greater opportunity to the business to continuously make creation of operational efficiency and enhance the bottom line(Scott, Darren, David Novak, Lisa Aultman-Hall, and Feng Guo,2006). The concept of supply chain is regarded as the network of the firms who are working together to offers goods or service to the end users as well as customers. There is presence of several firms that are operating in the supply chains, depending on the outside parties that is suppliers and customers which assist them in reaching to the end user market. In other words most of the firm do not entirely possess their own supply chains. Supply chain is comprised of the planning as well as management of all the activities that are engaged in sourcing, procurement, conversion as well as management of logistics. This also involves coordination and collaboration with the channel partners that can be suppliers, intermediaries, third party service offeror or customers. The term supply chain management is integrating supply and demand management in and across the firms. Management of the supply chain reflects management of the relationships of the firm between the focal company and its outside partners of supply chain that includes customers as well as suppliers.

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Transportation reflects the physical connection between the firms within the supply chain(Scott, Darren, David Novak, Lisa Aultman-Hall, and Feng Guo,2010). It deals with the movement of the product from one area to other as it is effective in making way from the starting of supply chain to the handling of the customers. The success of the supply chain is closely associated with the suitable utilization of transportation. It is important for the managers to make sure that organization's strategy of transportation offers assistance to its competitive strategy. The business needs to make evaluation of the transportation function on the basis of combination of cost of transportation, other costs like inventory influenced through decisions of transportation as well as responsiveness level attained with the customers.(Panayides and Photis,2006). There is greater needs of the managers to take into account suitable combination of business owned as well as outsourced transportation for the sake of meeting their requirements. The objective that is associated with the transportation logistics, one of the component of integrated logistics management, is towards compressing time in addition with the entire supply chain.

There is greater importance of supply chain as a reason that it is facilitating trade, exchange as well as travel. Absence of suitable transportation, regions are isolated from one another. Effective, affordable transportation has important role in letting the individual move to the areas that are new (Kleindorfer, Paul  and Germaine Saad, 2005). Freight transportation is considered as the subset of the logistics management. It has been examined that transportation is comprised of moving the goods from one location to another by the means of any mode that can be air, rail, maritime, road as well as barge. It has been determined that transportation is considered as the expensive and emission heavy procedure but several firms overlook the significance of transportation management. There is presence of several benefits that are associated with transportation management. These are presented as such. The initial one is related with visibility. It has been examined that proper management of transportation starts with transportation management system. A TMS tender loads, track shipments as well as collect and make analysis of the historical performance data. This data is regarded as big data that is allowing the firm to view what is happening in the operations of shipping. Once visibility is being attained within the operations of transportation changes are executed for the sake of increasing efficiency as well as satisfaction among the customers. Further it is comprised of reducing the spending on transportation and optimizing packaging as well as storing process that is considered harmful for the entire targets of the supply chain. This reflects that there is presence of greater link among transportation and supply chain as impact of one affects another to a significant level.

Another major importance is the inventory flow. This has been determined that effective management of transportation assist in keeping the entire supply chain run in smooth manner. By the means of successful transportation implementation, inventory can be kept lean and thus it can be moved in and out of the warehouse in quick and effective manner. Such is enhancing the efficiency of the warehouse and minimizes the overall lead time. Along with this it saves money on storage as well. Disruptions in the supply chain can be considered costly and this affects the loyalty of the customers and their level of satisfaction. Creation of suitable flow of inventory by means of transportation can avoid the damage which is being caused by disruption. Following this another important factor that is related with transportation is sustainability. This has been determined that consumer have greater awareness regarding the products which needs to be purchased and what is the ideal firm. As transportation is regarded as the emission heavy industry thus customers desires at making purchase from the firm that is fulfilling its social responsibility to a greater extent (Seuring and Stefan,2013). The firms are required to increase efforts at minimizing the carbon footprint and reduce the consumption of the energy. Possessing ineffective transportation process enhances the environmental hazardous process and make product unattractive for the customers as a reason of harm that is coming with it. In addition this another benefit associated with transportation is customer satisfaction. It has been determined that process in between the procurement as well as shipping can be considered long as well as complicated. Transportation is one in which firm possess direct connection with the customers. The delivery point demonstrates the competency of the firm. In case the business is making delivery of product late constantly then such would result in creating negative view of the customer regarding the business. Moreover they would not make use of firm's service as well. (Stadtler and Hartmut,2015)Proper transportation management can makes sure higher performance at the time of delivery and it assist in attainment of satisfaction among the customers.

It can be concluded from the present essay that transportation is considered non separable part of the community. Along with this it is exhibiting very closer association to the style of life, location of activities as well as good and services that are available for the sake of consumption. There is presence of link among the supply chain and transportation. With the assistance of effective transportation the objective of the supply chain can be attained to a greater extent. This has been inferred from the essay that there is greater importance for the business to make use of proper logistic so that product can be delivered to the target market in an effective manner and with no delays. It has been gained that management of the supply chain reflects relationships management among firm and focal company and its outside partners of supply chain.

REFERENCES

  • Beske, Philip, Anna Land, and Stefan Seuring. "Sustainable supply chain management practices and dynamic capabilities in the food industry: A critical analysis of the literature." International Journal of Production Economics 152 (2014): 131-143.
  • Kleindorfer, Paul R., and Germaine H. Saad. "Managing disruption risks in supply chains." Production and operations management 14, no. 1 (2005): 53-68.
  • Meixell, Mary J., and Vidyaranya B. Gargeya. "Global supply chain design: A literature review and critique." Transportation Research Part E: Logistics and Transportation Review 41, no. 6 (2005): 531-550.
  • Panayides, Photis M. "Maritime logistics and global supply chains: Towards a research agenda." Maritime Economics & Logistics 8, no. 1 (2006): 3-18.
  • Scott, Darren M., David C. Novak, Lisa Aultman-Hall, and Feng Guo. "Network robustness index: A new method for identifying critical links and evaluating the performance of transportation networks." Journal of Transport Geography 14, no. 3 (2006): 215-227.
  • Seuring, Stefan. "A review of modeling approaches for sustainable supply chain management." Decision support systems 54, no. 4 (2013): 1513-1520.
  • Simatupang, Togar M., and Ramaswami Sridharan. "An integrative framework for supply chain collaboration." The International Journal of Logistics Management 16, no. 2 (2005): 257-274.
  • Stadtler, Hartmut. "Supply chain management: An overview." In Supply chain management and advanced planning, pp. 3-28. Springer Berlin Heidelberg, 2015.
  • Sullivan, J. L., D. C. Novak, L. Aultman-Hall, and David M. Scott.
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