Hello everyone, I am Abhirami - Final year MBA student from Amrita School Of Business majoring in Operations and Marketing. I am back with my blog , today its about Supply Chain Transportation Management.
One of the most complication which was happened to supply chain during covid-19 pandemic was the transportation. Due to the pandemic many stocks where held in place's and couldn't deliver at time , others get stock out because of the insufficient products and the sudden flow for the products. Mainly supply chain managers look at the cost cutting methods when it comes to transportation cost and gives more importance to the raw material cost. Part of the problem is that transportation management and material sourcing usually operate in separate organizational silos and, while costs are ultimately reconciled, they are largely opaque. Rarely do bill of material (BOM) costs properly take transportation costs into account and that's the reason why the world is rethinking supply chain transportation management.
what do we mean by supply chain transportation management is that, transportation is an inevitable part of supply chain and its an organization where goods is transported from manufacture to suppliers thereby customers. The ultimate goal is to ensure the goods are shipped efficiently and to meet the demand. But there is a perception that transportation management is a separate function to purchasing, raw materials procurement and sales. What it doesn't convey is that transportation costs contribute, positively or negatively, to the bottom line, and that transportation decisions need to be part of, and integral with, broader purchasing and logistic planning.
How is the supply chain transportation managed?, There are different solutions for managing transportation it varies from spreadsheet to comprehensive transportation management system (TMS). Organization like Walmart they have in house transportation while the other some other organization follow outbound transportation. It is very complex to manage large number shipping at a time. Even though there are large number of software's we don't know which one will fit in. Large organization often used in house TMS system and recently the companies shifted to cloud based management system because of the ease of access and low cost. Whatever TMS is chosen, a key step is mapping out transportation routes, identifying supply and delivery nodes and using advanced software to determine optimal transportation routing. Ideally, this would be part of supply chain network design, but is often treated as a separate exercise, particularly when working with external logistics .
Mainly transportation cost consist of significant percentage of the total cost. A report from McKinsey and Company stated that outbound logistics represent between 1.8% and 10% of sales costs, while others point to the fact that transportation costs are equal to around 9% of the nation's GDP. The one thing that we are still asking is hoe to make the transportation cost ideal and is not answered yet.
Today the main agenda of the companies is to reduce the inventory while meeting the demand thereby reducing the transportation cost. While Amazon avoids that dilemma by concentrating on direct marketing and Walmart dodges it through their nationwide chain of stores, many organizations are forced to develop omnichannel strategies to stay in the game.
In the current scenario of the civid-19 we know the national and international supply chain transportation is disrupted. So there is need of separate the software between the transportation and supply chain for the better insight. Many companies like Walmart run simulations to predict optimal supply chain routings. However, companies are also taking advantage of prescriptive analysis (optimization) to model the end-to-end value chain, which means modeling supply chain while simultaneously modeling logistics. This analysis is run on top of a digital planning twin, a more expanded version of a supply chain digital twin in that it incorporates financial impact analysis and inputs, in addition to areas outside of the supply chain. This type of modeling has a distinct advantage in that, when running and evaluating transportation scenarios, overall cost — including production and vendor — and revenue can be calculated.
The possibilities of corona virus was predicted back in January 2019 but no one take it seriously and everyone believed in global sourcing. Prescriptive analytics offers a viable alternative. Using modeling software, it's possible to create a model that accurately reflects the organization's supply chain. Then, using the organizational data together with external information, to run what-if scenarios to determine optimal transportation and sourcing solutions. Using prescriptive analytics, it's possible to anticipate the disruption when the unthinkable happens and to determine viable alternatives. In this way, it's possible to objectively rethink supply chain transportation management.
Original post : https://www.riverlogic.com/blog/the-world-is-rethinking-supply-chain-transportation-management
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