In the recent past, companies in various sectors have become cognizant of the fact that the supply chain involves more than just the cost of moving products among the suppliers, distributors, and customers. Managers can leverage on it to facilitate minimum transport costs and maximum efficiency in product distribution, ultimately resulting in a cost-effective logistic model.
Predictably, transport is a crucial part of supply chain logistics since its efficacy is directly proportional to the overall effectiveness of the entire supply process. Therefore, the objective of this paper is to examine some possible solutions that can be implemented to facilitate the realization of a streamlined and cost-efficient transport system in the supply chain.
Understanding of costs and systems
The first step is for one to be aware of the various aspects of transportation costs. Admittedly, this might seem obvious, but that is the very reason most managers fail to address it sufficiently. I will, therefore, audit my records to determine exactly what transportation of cargo costs us. To this end, I will isolate the various transport expenditures to discover if we incur hidden costs or duplication of roles in the process of transporting goods.
Furthermore, I will order an independent transport budget to be drawn up factoring in all related expenditures such as cargo insurance, security, and any others. These steps will provide me with a clear picture of where to start implementing the changes needed to improve the transport system in the firm.
Intermodal transport and Cross-docking
Secondly, it is important to invest in intermodal transportation, which has been found to be one of the most efficient transport solutions for big companies (Janic, 2007). For example, after considering the factors listed above, I realized that my organization spent a lot of money at various warehouses and ports as we unloaded goods from the suppliers’ vehicles to our own. Wal-Mart, which runs one of the most efficient supply chains in the world, appears to have worked out a solution for this.
They have implemented intermodal transport techniques that ensure their suppliers and distributors all use the same custom-made containers, and by so doing, eliminating warehousing from their transportation budget (Chen & Song, 2009). In our case, if the same model were applied, it would allow cross-docking and significantly reduce both the cost of warehousing and the time taken to transport and unload cargo.
Before undertaking to study the situation objectively, I had assumed that storage and transportation costs were separate, but this shift in perspective helped me realize they are really on the same budget (Chen & Song, 2009). If it were possible to cross-dock by emptying suppliers’ trucks into our own, we would eliminate storage costs, and goods would seamlessly move from suppliers’ stores into ours.
Metrics and benchmarks
To ensure the proposed changes are carried out, it will be necessary to have a means of evaluating their effectiveness, which calls for the setting of benchmarks and metrics. In this case, I will calculate the percentage of savings expected from introducing cross-docking and intermodal transport. I will then use the theoretical percentage as the benchmark upon which the success of the first quarter of implementing the changes will be measured.
That way, we can monitor the new strategies and ensure they save money and time as projected. In addition, I will be stricter with the schedules followed by our fleets and set a minimum number of hours that it should take for cargo to transit from one port to another. Consequently, I will be in a position to determine if the intermodal transport solutions are saving on costs and time and if so, by how much.
Chen, F., & Song, K. (2009). Minimizing makespan in two-stage hybrid cross docking scheduling problem. Computers & Operations Research, 36 (6), 2066-2073.
Janic, M. (2007). Modelling the full costs of an intermodal and road freight transportation network. Transportation Research Part D: Transport and Environment, 12 (1), 33-44.