Transportation and Distribution

4133 WordsFeb 9, 201117 Pages
Transportation And Distribution Transportation is a key logistics function. Efficient and effective management of transportation at each stage of the supply chain is crucial for both cost management and service level guarantees. We have already looked at the incidence of transportation costs on overall supply chain performance in chapter 3 when we discussed the design aspects of logistics networks. Cost remains one of the key concerns regarding transportation management. The 12th Annual State Of Logistics Report ( USA ) provides a figure of total business logistics costs of US$1.006 billion or 10.1 percent of nominal US GDP. Transportation costs alone were 5.9% of GDP (Wilson & Delaney,2001). At the level of the firm, transportation…show more content…
An integrated approach is required which seeks the minimum cost solution with transportation and inventory decisions taken in concert with the required level of product availability for the manufacturing and processing line. The following reading provides the business logic for an integrated transportation and inventory decision. The main reason for outbound transport and distribution attracting more attention is due to the fact that finished products are usually of greater value compared to the raw material and the availability of these products to the customers determines the service level associated with the supply chain. Distribution The challenge of distribution of finished goods appears to be more onerous compared to the management of inbound transportation. Firms are more concerned about distribution and there are numerous reasons for this. These are: * Most large manufacturing firms are in control of the distribution of their products and find it logical to implement plans to streamline distribution to decrease cost and to improve service. * The quickness with which a firm can respond to customer orders is greatly dependent on the firm 's distribution ability. It is therefore a measure of the firm 's customer responsiveness. * The finished products are usually of greater value compared to raw materials.
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