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The Role Of Transportation In Supply Chain Management

Published On: Tue, Dec 13, 2022

The Role Of Transportation In Supply Chain Management-featured-image

Supply Chain Management is the practice of organizing the secure flow of goods and services. Depending on the industry this can vary from the product offered by the specific industry. The process includes and considers the entire conversion of raw material into finished products, and then reaches the hands of the end customer.

The management part of this process is where it gets interesting. It is required by managers to minimize the effort and resources that it takes to make the supply chain more economical. Streamlining this process to gain a competitive advantage and make happy customers is what SCM is all about.

SCM includes everything from the production of products to the development of information systems to keep track of everything. The chain has 3 main components from start to finish which simplifies the process a little. These components are Purchasing, Manufacturing, and most importantly Transportation.

Having a clear and economical transportation strategy is absolutely vital to grow your business. It involves creating a wide web of seamless distribution and sorted-out transportation plans for both receiving and shipping products. A good shipping flow is what keeps your customers coming back for more business because nobody likes to receive late orders.

Working with Transportation in SCM

Transportation is the metal link that holds the supply chain together. Every step of the process is connected together through transportation, since raw materials are moved from the dealers or where they are purchased from, to the place where they are manufactured, and finally to the end customer. If you don’t have an economical and stable shipping plan in place, you end up losing a lot of money, and that can be a competitive difference.

Let’s understand further how the role of transportation is important in a supply chain.

Reduce Costs

Operating a business is a costly affair already. With meticulous planning and plotting, one can save a lot of money with a good transportation strategy in place. Transportation can involve a number of different modes (air, water, or land), fuel costs, and weight. To keep the cost of such logistics to a minimum, it is suggested to conduct a full-scale freight audit.

Enhanced Customer Service

The customer should be the top-most priority of a business and by proxy, also the supply chain. Tightening up your transportation lines is one way to ensure that shipments reach your customer on time and in good condition. For a large-scale operation, this tiny little detail is even more important.

Segmenting Shipments Based on Priority

A business must understand the varying degrees of priority that shipments might have. Sometimes getting some packages quicker might be more important than getting all the packages at a moderate regular time. This is why, segmenting shipments based on factors such as different customers, types of products, suppliers etc. is highly essential.

Using a Transportation Management System

TMS or Transportation Management System is software that allows for regular and efficient tracking of your transportation network. This helps you a great deal when it comes to analyzing and making informed decisions. With a TMS, you can track route planning, fleet management, fuel costing, cargo handling, and customer communications, all using one platform.

Various Modes of Transportation

One way for businesses to grow is by expanding their reach globally. For that to happen, they would need to figure out ways to transport shipments everywhere in the world. This means adopting a combination of various modes of transportation and figuring out the fastest combined way to get the product available worldwide.

Transportation to Dissolve Geographical Limitations

This is an extension of the previous point. Trucks have been the preferred mode of transporting shipments in every country. They are tangible and on the land level, can go beyond what the railway lines allow. A fleet of trucks is the best way for local businesses to manage their transportation needs.

Helping Better the Economy

With transportation methods getting flexible and stretching across borders, global trade is at an all-time healthiest. Businesses in every country, with some meticulous planning, can not only expand their reach but also help their country’s economy while doing so. Global trade, due to the possibilities of various modes of transportation, has made the world smaller in the best way.