Missouri Enterprise: The Roles of Transportation in Supply Chain Management

Transportation plays a crucial role in supply chain optimization. Someone once said that “transportation is the blood in supply chain optimization spanning from sourcing to the last miles of delivery”. The most critical component in supply chain is to bring raw materials from sources to customers for finished products on-time to improve customer shopping experiences.

The journey starts from sourcing perhaps via ocean freight if sourcing is originated from overseas to manufacturing, to distribution centers, to wholesales to retailers and finally to customers. In each node mentioned above requires some form of transportation mode depending on types of products and origins of sourcing.

Thus, transportation provides the critical link between organizations along the supply chain, permitting goods to flow between their facilities. Through transportation, organizations can extend the reach of their supply chain beyond the local supplier capabilities and market demand.

With efficient and effective transportation capabilities, organizations can build global supply chains that leverage low-cost sourcing opportunities and allow them to compete in new markets. A shortage of transportation capacity can strand inventory in the system, leading to empty shelves and lost sales.

Transportation efficiency also promotes supply chain competitiveness. On the supply side, cost-effective transportation provides access to higher-quality, lower-priced materials and promotes production of economies of scale. Likewise, low cost transportation improves demand fulfillment opportunities. By keeping transportation expenses reasonable, the total landed cost of product can be competitive in multiple markets.

In addition, transportation service must also be effective. Inexpensive transportation is of little value to supply chain operators if the product does not arrive as scheduled and damage-free to the right location. High-quality, customer-focused transportation has a direct impact on an organization’s success as it delivers the right product at the right time, in the right quantity and quality, at the right cost, and to the right final destination. Also, by working with carriers that offer a range of transit times and service options, organizations can satisfy supply chain demands for expedited and standard delivery speeds.

Transportation influences supply chain design, strategy development, and total cost management. Read the full article at https://www.linkedin.com/pulse/roles-transportation-supply-chain-management-amy-n-susan/.