Role of Transport within the Supply Chain - Literature review Example

Institution : xxxxxxxxxxx Title : xxxxxxxxxxx Tutor : xxxxxxxxxxx Course : xxxxxxxxxxx @2012 Introduction Transport is argued to be the most significant element within the supply chain. Its contribution within the supply chain is increasing in importance and thus becoming essential to success. According to Coyle et.al, (2010), transport can be perceived as the glue that helps to hold together the supply chain. It holds the lives of many people all over the world, affecting their economic wellbeing, their access to various places and people, their safety, and their environment quality. Hence, when the transport system is not functioning well, it often becomes a source of great frustration, and possibly economic loss. On the other hand, when the transport system is performing well it offers opportunities and rewards for all including the supply chain. This particular paper seeks to undertake a review of literature on the topic role of transport within the supply chain. Literature Review Preetiyadu (2008) defines transport as the movement of goods and services from one place to another as it makes its way from the starting of a supply chain to the end user (customer’s handle).Coyle et.al, (2010) highlights that transport is a significant link in the overall supply chain, which has become a significant concept for many organizations in the 21st century. As highlighted by Cooper et.al (1997), transportation system is a key element within the supply chain that joins the separated activities of the logistic chain. Transportation occupies approximately one-third of the total logistic costs and influences greatly the performances of the logistic system within the supply chain. It is essential in the whole procedures of production, from the manufacturing of goods to their delivery to the end user and returns. Providing the bridging role between supply and demand gaps According to Coyle et.al, (2010), one of the major roles of transport within the supply chain is that transportation provides the bridging role between supply and demand gaps that are natural in the mass production approach. As highlighted by Coyle et.al, (2010), the specialization of labour and production in some parts of the world’s economy, for instance, normally results in an oversupply of goods or services at one location and therefore a demand for such goods in another area. Transportation as a logistical element within the supply chain plays a critical role in the movement of these goods and services to different locations in an effective and efficient manner. According to Morash & Clinton (2000), transport has a significant role in international dependency by providing the ability to match demand and supply requirements on both the local and international basis. The ability of various regions and nations to trade between themselves and to efficiently transport goods and services is a critical element in the success of global expansion, hence the significant role of transport within the supply chain. Fulfillment of time and place utilities Transportation is also critical to the supply chain in making possible that time and place utilities are observed or fulfilled. As highlighted by Mentzer (2001), the logistics within a supply chain entails getting the right products, in the right quantity, in the right place at the appropriate time, for the right customers at the appropriate cost. The logistic network is normally made up of the suppliers, retailers and the end users, who are the consumers. The critical role of transport within an integrated network of the supply chain is normally to satisfy the customer’s orders by enabling time and place utilities are fulfilled when delivering products or services to the customer (end users).The fulfillment of time and place utilities is very important in satisfying the customer delivery and product availability expectations. According to Mentzer (2001), time and place utilities are achieved by managing various key functions of the supply chain, among which transportation as a critical function. Therefore, as highlighted by Morash & Clinton (2000), transport plays a critical role within the supply chain, and without well-organized transportation functions, time and place utilities cannot be realized. Role in the supply chain design, total cost management and strategy development According to Coyle et.al, (2010) transport also plays a significant role in the supply chain design, total cost management and strategy development. As Coyle et.al, (2010) highlights, the accessibility of a transportation service (transport service availability), capacity and costs influences a lot the decisions regarding the number and the locations of the supply chain facilities. For instance, according to Coyle et.al, (2010), a large number of organizations tend to avoid locating their distribution facilities in the Florida state of the U.S.A owing to transportation costs. With very little cargo coming from this state, transporters normally pay costs for the empty outbound trips by charging very high rates to move goods into Florida. Additionally, transportation capabilities often have to be aligned with the firm’s strategy. According to Coyle et.al, (2010), in the year 2004 annual report, Amazon.com demonstrated a business strategy that endeavoured to attain repeat client purchases by offering fast, dependable fulfillment and timely client services. To attain this goal, Amazon.com intended to partner with transporters that deliver clients’ orders quickly and consistently, provide consignment visibility, and charge reasonable transporting costs. Liu (2011) also argues that in order to optimize the efficiency of the supply chain, intentional tradeoffs ought to be made between the process of transportation and related activities such as procurement, inventory management and production. Liu (2011) argues, for instance, that retailers can lower stock levels if the costs of regular and faster deliveries do not surpass the stock carrying cost savings. In the same way, manufacturers may employ lean strategies of production if consignment sizes can be reduced without generating unnecessary transportation costs. Therefore, given these significant roles, it is clear that proactive transportation process is essential to the efficient and economic operation of an organization’s supply chain. Provision of service quality Transportation has also a significant role in providing service quality. As argued by Taylor et.al (2005), transport has a more complex function within the logistic system other than just carrying goods for business owners and its complexity can only be effective through high quality management. Through the use of a well-handled transportation system, goods can be sent to the end users at the right place and at the right time so as to satisfy the demands of the customer. In this case, transport brings efficacy, while also playing the role of acting as the bridge between producers and the end users (consumers).As highlighted by Taylor et.al (2005) therefore, transport is the basis of efficiency and cost-cutting measure in business logistics, and as well expands other roles of the logistic system. Additionally, Taylor et.al (2005) argues that an efficient transportation system performing in the logistic activities bring about benefits not only to service quality but also to the firm or organization competitiveness. Connective role within the various steps that give rise to the conversion of resources into useful products that are finally supplied to the consumers Taylor et.al (2005) also argues that transport has an important connective role among the various steps that give rise to the conversion of various resources into useful products that are finally supplied to the end users (the consumers). According to Cooper et.al (1997), all the steps in the logistic activities traditionally involved separate firms for production, retail service and wholesaling, however on the whole, manufacturing or production plants, merchandising establishments and warehousing services are all about carrying out transportation. Manufacturing (production) plants needed the assembly of materials, supplies and components. Warehousing services from a manufacturing plant to the market outlets entailed separate transport, with merchandising establishments completing the chain with the final delivery to the final users (the consumers).Manufacturers restricted themselves to just the production of products, leaving marketing and the distribution of the products to other firms. However, as highlighted by Taylor et.al (2005), presently there have been significant changes in terms of the number and facilities’ location with the shutting down of a number of single-user warehouses and a spreading out (expansion) of distribution centers and consolidation facilities. According to Taylor et.al (2005), these developments point out the critical role of transport’s connective role among the various steps that give rise to the conversion of various resources into useful products that are finally supplied to the end users. Conclusion From the above review, it is clear that transport indeed plays a significant role within the supply chain. It is evidently the most significant component within the supply chain, with its contribution within the supply chain growing in importance and becoming essential to the success of many organizations. Transports major roles within the supply chain, and based on the above review include providing the bridging role between supply and demand gaps that are inherent in the mass production approach, a significant role in the supply chain design, total cost management and strategy development, provision of service quality, making possible that time and place utilities are observed or fulfilled, and lastly the connective role among the various steps that give rise to the conversion of various resources into useful products that are finally supplied to the end users. On the other hand, for any given supply chain to be successful, an appropriate use of transport is required since a responsive transport system lowers a supply chain’s overall costs. References Coyle, J.J, Novack, R.A & Bardi, E.J, 2010 Transportation: A Supply Chain Perspective, Edition 7, Cengage Learning Cooper, M, Lambert, D & Pagh, D, 1997, Supply Chain Management: More than a New Name for Logistics, International Journal of Logistics Management, Vol 8, No.1, and Pp1-13 Liu, J, 2011, Supply Chain Management and Transport Logistics, Routledge Advanced Texts in Economics and Finance Series, Edition Illustrated, Taylor and Francis Mentzer, J.T, 2001, Supply Chain Management, Edition 2, SAGE Morash, E.A & Clinton, S.R, 2000, The Role of Transportation Capabilities in International Supply Chain Management, Transportation Journal, Penn State University Press, Vol. 36, No. 3, Pp. 5-17 Preetiyadu, 2008, Role of Transportation in Supply Chain, Retrieved on March 30, 2012 from Taylor, M.A, Tseng, Y & Yue, W.L, 2005, The Role of Transportation in Logistics Chain, The Proceeding of the Eastern Asia Society for Transportation Studies, Vol.5, Pp 1657-1672 Waters, D, 2009, Supply Chain Management: An Introduction to Logistics, Palgrave Macmillan, New York Read More