STUDENTS' CORNER - 95

Transportation is an internationally significant component in logistics. Restricting it to business and trade, transportation refers to the movement of goods from one location to another location by air or rail or road, primarily. No business worth the name is possible without the movement of goods, or, what is known in business terminology, freight. Freight is generally a product.  A raw material is progressively transformed into a product which then is shipped to a customer, the end-user through many intermediaries. All those involved in the process of production and distribution make what is popularly called supply chain, another very critical component of the logistics. Transportation Supply Chain refers to the movement of the goods from the beginning to the end-user passing through many intermediaries like wholesaler, agents, stockists, distributer, and finally the customer who uses the product. Basically the act of getting the needed finished goods from start location to destination is called the transportation supply chain

There is an English saying that goes, ‘The chain is no stronger than its weakest link’. The strength of the chain is decided by the weakest part of it. So also, if any one of the intermediaries in the supply chain proves defective, the supply chain gets seriously affected. Supposing the supplier of the raw materials required for the product delays the supply, it continuously affects the entire process of supply chain. Production is delayed; distribution therefore does not take place in time and finally the customer does not get his product in time. This lapse sometimes forces the customer to shift loyalty to some other brand thereby causing loss of business to the company.

Transport links all the intermediate business partners and if the transport is effective, it reduces the cost of transportation finally influencing the pricing of the product. Therefore, the success of a supply chain depends on the efficient management of transport. Transportation cost is critical to the cost of the supply chain. Transportation strategy also is being discussed by companies to achieve the lowest transportation cost. Efficient transportation helps the company in many ways to face the competition the market poses with increasing intensity. The lesser the transportation cost, the greater the possibility of more margin of profit. Efficient business gets the materials from starting point to destination cost effectively at every stage of the supply chain process.

If transportation is not well planned and managed, there will be delays causing unnecessary expenses; at times, ill-managed transport throws production schedules into disarray creating non-productive labour and sometimes permanent loss to the company.

We will see in our next session some benefits of transportation management.