Production & Manufacturing

The Role of Transportation in a Supply Chain

Transportation is the movement of goods, animals and people from one place to another by road, air, land or water. The transport industry is a huge one, a massive employer of labour from drivers, to flight attendants, pilots, ticket officers and those working behind the scene amongst many others.

Most of the things around us came from somewhere else as they were manufactured in different countries, packaged and distributed with the help of the transport industry across the world.

Read: How to Start Importation Business in Nigeria with Only N,5000 Naira or Less

The Role of Transportation in a Supply Chain
Mayor Transport Media for Business Supply – Photo Source: http://www.hipl.co.in

Transportation penetrates every area of human lives and without it many world economies will be disintegrated. A supply chain is a body of people and activities, information involved in moving products from the producers to the final consumers.

There are major areas in a supply chain: Purchasing, manufacturing and transportation of both raw materials and finished products.

Goods cannot be solely consumed in a place where they are produced; they must be transported to other locations to meet the needs of other consumers and flexibility of the products.

It is important for every organisation to make available, a responsive and affordable transportation network as this is the backbone of its ability to satisfy customer services at a reduced cost because the absence of this will lead to an increase in the cost of goods and services.

Importance of Transportation in Supply 

The importance of transportation in any supply or distribution chain cannot be over emphasized. It is one of the most vital economic activities for a business that links a company to its suppliers and customers; an essential activity in the supply chain that supports the economic utility of time and place therefore ensuring that customers have products when and where they demand it.

An inefficient transport system may hinder customer satisfaction as late deliveries can lead to many complaints and even loss of customers; products may also suffer damage if delivery is delayed and this too can cause a decline in business.

But, when a company delivers promptly with complete and undamaged goods, the confidence of the customer is built and his loyalty gained. It is the duty of the person in charge of the supply chain to choose the most convenient, effective and economical means of transportation that befits the company or organisation.

An efficient and stable transport system brings stability in price of products as goods are transported from points of abundance to points of scarcity and this establishes formalities between demand and supply. It helps to supply necessities to consumers at consistent rates.

When consumers are able to get necessities at affordable rates, competition arises among producers and this leads to a mass production at low costs.

Transportation provides mobility to capital and labour. This encourages labour and capital to invest in more productive sectors.

Transportation establishes utility by reducing geographical distance. it encourages international trade, uniformity and strengthens national security, it is a major contributor to economic prosperity because a good transport system boosts commerce.

It encourages division of labour and specialisation on geographical basis because cost of transportation is a core factor that affects the localisation of industries, making it possible for local resources to be utilized at maximum.

The distribution of raw materials for the purpose of production and distribution of finished goods for consumption is solely dependent on transportation.

This narrows the gap between producers and consumers and facilities timely and affordable distribution of goods and services.

Transportation can be hazardous and risky. It causes accidental injury, deaths. Environmental pollution and sometimes criminal activities.

Transportation helps to fulfil the economic utility of time and pace; it provides the link that connects nodes in the supply chain, linking a focal company to its suppliers and customers.

TRANSPORTATION AND THE SUPPLY CHAIN

A supply chain as mentioned earlier, is a network of bodies that work towards providing a good or service for the final consumers. It is an embodiment of the planning and management procedures involved in sourcing, procurement and logistics management.

Most organisations rely on supply chains to help them reach their end user market; they rely on outside parties for effective marketing strategies that aid customer satisfaction.

Supply chains also include coordinating and collaborating with supply intermediaries, third party service providers or customers.

It integrates the management of supply and demand within and across companies. Effective management of a supply chain equates to managing business relationships among companies and their supply chain partners which include customers and suppliers.

When a level of a supply chain experiences delays and difficulties, its affects the ability of the lower levels of the supply chain to satisfy its customers. And this ultimately affects the economy; factors that may disrupt transportation are failures of equipment, government intervention, bad roads and natural disasters.

With right tools in place, transportation provides an opportunity for the supply chain to continuously create operational efficiency and improve the bottom line, unlocking untapped value for investors.

It is the least complex but most critical aspect of the supply chain because it represents the biggest percentage of the supply chain.

The integration and promotion of business services have to involve transportation systems at different stages, it plays a connective role that results in the conversion of resources into useful goods in the name of the ultimate consumer.

The role transportation plays is more complex than carrying goods for business owners, it brings efficacy and builds a bridge between producers and consumers. It is a base of efficiency and economy on the supply chain and expands other functions of the chain. It brings benefits not only to service quality but also to company competitiveness.

If transportation will continue to be of great influence to the supply chain, transportation managers need to study the supply chain to identify where the importance of transportation was mostly felt, so as to educate their chain peers on these impacts.

It is important to further get involved with the upstream of the supply chain by driving continuous improvements into processes and decisions to ensure that transportation continuous to deliver excellence for their organisations. He must understand and support the company’s strategy to provide valuable inputs.

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Lami Ogar

Lami is from cross river state and holds a B.sc in accounting from a Nigerian university. Writing for her is a form of detoxification, she has written several articles for Essence magazine and runs political commentary on twitter. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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