The importance of transportation in supply chain management
In today’s competitive environment, supply chain management has become more important than ever. Large retail chains such as Zara and Walmart have become experts in this field, in which many argue their efficient supply chain to be the nature of their success. However, with all this competition from large retailers and e-commerce giants like Amazon, supply chain management provides the foundation for the survival of smaller, local stores.
One of the main factors of such management deals with the transportation of the finished goods from the manufacturer to the retailer. In fact, Nancy Marrero, the International Operations, Logistics, and Compliance writer for LinkedIn, explains an increased importance of this particular stage in the supply chain due to globalization. Marrero writes that it is “safe to say goods are rarely consumed where they are produced, and transportation services are the essential trait d’union between all of the elements of the Supply Chain”. Truer words have never been spoken, as it was recorded back in 2009 that the United States only produced 65% of what its citizens consumed, a percentage that has undoubtably plummeted since.
With all the various options out there such as airplanes, trucks, trains, containerships, or some sort of combination, retailers have difficult decisions to make as each method has its own advantages and disadvantages. For example while air travel may be the most expensive option, it is by far the fastest. A local retailer in the United States shipping silk scarves from Asia may be dissuaded by this option, as most smaller operations tend to be unable to cover the added expense. However, the light weight of the scarves may lessen such cost to an amount that the retailer can afford. If not, a much cheaper option would involve using a containership, yet this method is notorious for much slower transportation times. In addition, sea transport has fewer port locations, warranting the need for more land transportation. Therefore the pricing of sea and air travel may become similar depending on how far the retailer is located from one of the ports. Regardless of which method is chosen to transport the scarves from Asia to the United States, additional transportation is needed to bring the scarves from the airport or seaport to the retailer’s location. Due to its speed, flexibility, and reliability, I would suggest that a truck be used for this portion. While it may be more expensive than the railroad, its advantages greatly outweigh its cost.
All in all it is most likely that intermodal transport, that is the use of two or more different transportation methods offered by the same company, is most efficient to use. This will aid in both reducing cost, and ensuring a smoother delivery, two factors that are highly valued in supply chain management.
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