The Role of Transport in Supply Chain - Term Paper Example

Running Header: The role of transport in supply chain Name: University: Course Title: Instructor: Date: The role of transport in supply chain Introduction Transport describes the movement of product from one place to another as it manoeuvres from the commencement of a supply chain to the customer’s handle. In this thrilling new broad scope at the business of transportation, including Logistics, Supply Chain Management & procurement transport plays a key role (Monczka et al, 2008, p. 28). In supply chain, the term transport bares close relationship with the term logistic. Logistics is can be defined as a component of supply chain method which implements, plans, and controls the capable and successful forward/ reverse movement and storage of services, products and associated information involving the origin point and the consumption point so as to satisfy consumers’ needs. Currently the costs of transport institutes almost one third of overall logistic expenses (Rushton et al, 2000, p. 453). Many retailers and manufacturers have found out that they can make use state of the art supply chain management to minimize warehousing and inventory costs while speeding up the process of delivery to the end consumer (Hazen & Clifford, 2008, p. 257). The success of any supply Chain is closely associated to the proper use of transportation. For instance, Wal-Mart has efficiently used an approachable transportation system to reduce its general costs. More so, a number of companies use cross-docking, a procedure in which products are exchanged between trucks in order that each truck heading to a retail store contains products from dissimilar suppliers. Meanwhile, the blooming development in shipments to and from China is generating bottlenecks opportunities. Most of the major corporations have dedicated their investment in significant purchase of offices in India, China and elsewhere (Sinha, 2009, p.113). Supply Chain Management (SCM) SCM is the idea based on handling the production procedures in broad sense. An efficient Supply Chain Management application may possibly boost the business to meet the requirements of new business situation (Coyle et al, 2010, p. 405). Supply Chain Management can also be defined differently. This is its definition as a constantly developing management viewpoint that tries to find a unifying factor between the resources of business operations and collective productive competencies. These competencies are found both within the venture and outside the company’s related business associates situated along interconnecting supply outlets into a cutthroat, consumer elevating system of supply aimed at developing ground-breaking results. They at the same time aid in the coordination of the stream of market information, services and products to generate exclusive, individualized basis of consumer value. Supply Chain Management can be sub divided into 3 major activities namely; manufacture, purchase and transport. Moreover, there are 3 components of SCM Management and include SCM components, supply chain business processes and supply chain network structure (Chopra & Meindl, 2009, p. 132). The flow of information is like a single system to connect the entire supply chain from the supplier and the manufacturer to the customers. Unhindered flow of information might lead to boost in the operation precision for saving costs and promoting the competitiveness of enterprises. The flow of product continues throughout the whole processes of production from material supply through manufacturers until giving the products to customers (Jung et al, 2007, p. 331). This is where transport plays a crucial part. In this paper, we focus on transport and the role it plays in the process of Supply Chain Management (Gattorna, 1998, p.369). Modes of transport The varieties of forms of transportation include rail, truck, water, intermodal, air, pipeline, and package carriers. Water is characteristically the cheapest mode. However, it is also the slowest whereas package carriers and air are the most expensive and the fastest. Water and rail are best suitable for low-value products and large shipments that do not need to be transported in a hurry. Air and package carriers are best suitable for small, high-value, emergency transportation. Intermodal TruckLoad (TL) carriers tend to be faster than rail and water. However, they are somewhat more costly. Less Than TruckLoad (LTL) carriers on the other hand are best suitable for small consignments that are too bulky for package carriers but much less for a TruckLoad (TL). Key players in transport sector There are two major players in any transportation activity in Supply Chain Management that occurs. These are the shipper and the carriers. The shipper is that group that entails the movement of the product between point A and point B in the supply chain. On the other hand the carrier is the party that is concerned with movement or transportation of the product. For example when Dell utilizes UPS to move its computers from the factory plant to the customer, Dell is the shipper whereas UPS is the carrier. There are various factors affecting carrier decisions. These factors include: The vehicle- related This is concerned with whether the vehicle is in service or not and is deemed fixed for short-term operational firmness by the carrier. Fixed operating cost This is generally relative to the size of facilities in service. This entails any cost related with airport gates, terminals & labour that are encountered whether vehicles are in service or not. Trip-related cost This entails the cost of labour and fuel encountered for each trip independent of the amount transported. Quantity-related cost These are loading and offloading costs and a segment of the fuel price that varies with the amount being transported. Overhead cost This entails the price of planning and scheduling a transportation system as well as any investment put in information technology. A carrier’s judgments are also influenced by the responsiveness it tries to offer its target section and the costs that the market will tolerate. The Role of Transportation The supply chain objective is to reduce the total charge while providing the preferred level of responsiveness to consumers. Transport system ensures that products are movable. It also gives well-timed and local efficiency to support value added under the smallest amount of cost principle. Transport has an effect on the outcomes of supply chain activities and, certainly, it affects production and sale. In the logistics system, the cost transportation could be looked upon as a constraint of the target market. Transportation value differs with diverse industries. For goods with high value, low weight, and small volume, transportation cost merely occupies a very little part of sale and is less considered. For those products that are large, heavy have a low value, transportation occupies a huge part of sale and therefore, influence profits more hence it is more considered (Coyle et al, 2010, p. 369). Currently most of the major companies are making use of internet and e-commerce to market their commodities. This strategy has worked well for this companies hence leading to huge profit margins. However, this strategy still requires transportation for the actual delivery of goods. After one orders a good through the internet or e-commerce tool such as eBay, the manufactures or the retailers are obliged to physically deliver the product to the consumer. This is where transportation plays a key role. Effective and efficient transportation enables the retailer, wholesaler, or the retailer to actually deliver the goods to the customer through an appropriate means. This therefore has led to an important relationship between the internet commerce and transportation (Taylor et al, 2005, p. 1666). The role that transportation undertakes in Supply Chain Management system is more compound than delivering products for the owners. Its intricacy can take effect only through a high quality management. By process of well handled transport scheme, merchandise could be sent to the correct position at the appropriate moment so as to meet consumer’s requirements. It conveys effectiveness, and also builds a link between producers and the consumers. For that reason, transport is the foundation of effectiveness and economy in supply chain and expands other purposes of logistics system. More so, excellent transport method taking part in logistics actions results to benefits not only to the service quality but also to the enterprise competitiveness (Axelrod et al, 2009, p. 189). Conclusion In conclusion, the amalgamation and endorsement of trade actions have to engage transportation systems at a variety of stages. The amalgamation of a range of applications brings the ease through endorsing the structure of flow of information and enterprise operations. Consumers and enterprises could make business easier and more proficient through the help of the Internet and e-commerce. Nevertheless, physical delivery still depends on the transportation structure to end the operations. The rate of transportation process may be one third of logistics expenses. In the meantime, transportation structures and methods are desirable in almost every supply chain management activity. Consequently, the improvement of business patterns has to regard transportation systems as an important tool. Transportation is considered as a key factor when it comes to the success of a business. In the supply chain sector, transportation is considered to be a major factor. Without proper and efficient transportation, it is hardly possible to succeed in business. Products and services needs to reach the customers hence transportation should not be disregarded at any time when it comes to supply chain. More so, transportation has also led to reduce storage costs by the manufacturer therefore larger profit margins. Transportation also ensures that the goods and services reach the customers in time therefore satisfying their needs. These factors make a significant factor in the supply chain sector. Consequently, a lot of enterprises have invested heavily in transportation sector for them to succeed in competitive business environment (McKinnon, 2002, p.465). Bibliography Axelrod, C., Bayuk, J. & Schutzer, D 2009, Enterprise Information Security and Privacy, Boston, Artech House. Chopra, S. & Meindl, P 2009, Supply Chain Management: Strategy, Planning, and Operation, New Jersey, Prentice Hall. Coyle, J. et al. 2010, Supply Chain Management: A Logistics Perspective New York: Cengage Learning. Coyle, J et al 2010, Transportation: A Supply Chain Perspective, New York, Cengage Learning. Gattorna, J 1998, Strategic Supply Chain Alignment: Best Practice in Supply Chain Management, Melbourne, Gower Publishing Ltd. Hazen, K. J. & Clifford, L F 2008, The Role of Transportation in the Supply Chain, Memphis, CFL Publishing. Jung, H., Chen, F & Jeong, B 2007, Trends in Supply Chain Design and Management: Technologies and Methodologies, New York, Springer. McKinnon, A 2002, Transport Logistic, Northampton, E Elgar. Monczka, R., Handfield, R & Giunipero L 2008, Purchasing and Supply Chain Management, New York, Cengage Learning. 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