Supply chain management processes play a crucial role in the profitability of a company. The supply chain procedures are associated with logistics costs and must be reduced by appropriate handling of goods. Managing the supply chain costs to low levels is crucial in maximizing profits of a company. As such, identifying factors influencing the distribution and transportation of goods is the key in ascertaining a company’s financial success.
Factors Influencing Supply Chain Processes
Several factors influence the transportation and distribution of an organization’s product. High global demand level of a product requires faster transportation and delivery of goods. The service level also impacts the selection of the mode of distribution and storage of goods. The need to fulfill customer satisfaction may force a company to consider a sound transportation system that offers quicker delivery while maintaining product quality (Jafari et al., 2020). A product’s characteristics also influence the choice for the shelf space during the transportation and storage of goods. Finally, the logistics costs affect these options for a product. High distribution costs force corporate managers to adopt such strategies as an in-house storage of goods.
Impacts of Global Trade on Supply Chain Processes of a Product
Global trade affects the supply chain processes of a product. For instance, greater access to the worldwide market increases a company’s product demand, forcing it to engage in bulk production and quick means of transportation. Global firms also adopt standard service levels in meeting customers’ satisfaction (Khan & Wisner, 2019). They must produce goods that meet customer needs. International companies face legal barriers creating stiff market competition. To become a market leader, a company must adopt unique strategies, such as engaging only its personnel in producing and distributing goods to maintain low logistic costs.
Effects of COVID-19 on the Distribution Chain of the Automotive Industry
Covid-19 has negatively impacted the automotive industry’s distribution chain, ranging from the interrupted shipment of the cars across the global regions and the suspension of normal operations of different firms to high costs of managing distribution processes (Guan et al., 2020). The current multinational companies experience inefficient inbound logistic processes attributable to the delayed delivery of goods. These organizations cannot meet the required level of customer service. Therefore, the trend of demand, product characteristics, logistic costs, and service levels of a product are vital in creating effective supply chain management.
References
Guan, D., Wang, D., Hallegatte, S., Davis, S. J., Huo, J., Li, S., Bai, Y., Lei, T., Xue, Q., Coffman, D., Cheng, D., Chen, P., Liang, X., Xu, B., Lu, X., Wang, S., Hubacek, K., Gong, P. (2020). Global supply-chain effects of COVID-19 control measures. Nature Human Behaviour, 4, 577-587.
Jafari pour, Z., Sajadi, S. M., & Hajimolana, S. M. (2020). An optimal two-level supply chain model for small and medium-sized enterprises with a rework for new products and price-dependent demand. Scientia Iranica.
Khan, H., Wisner, J. D. (2019). Supply chain integration, learning, and agility: Effects on performance. Journal of Operations and Supply Chain Management, 12(1), 14-23.