How Does Transportation Add Value in a Supply Chain?
The significance of the transportation processes in the supply chain management setting can hardly be overrated. Being an essential part of SCM (Wang, 2012), transportation affects the way, in which the products and services of a company are perceived by the end customers and, thus, defines the customer loyalty rates. The choice of the transportation system, the route, which the raw materials and the products will be delivered by, the tools that will help keep the materials and the products safe, the reduction in the transportation time, etc., are the key means of adding value to the supply chain with the help of transportation. Therefore, the proper choice of the means of transportation, the route, the partners and the way, in which the items are going to be transported, adds a significant part of the value to the supply chain, is crucial for the company’s performance.
What Are the Potential Disruptions in Transportation?
The process of transportation can be hindered by a variety of factors, starting from economic problems to weather issues, which may make the task impossible to carry out. Among the most typical obstacles, natural and political deserve to be mentioned. Indeed, a closer look at the contemporary transportation processes will show that the possible disruptions in the transportation process may embrace the issues such as natural disasters (e.g., tornados, earthquakes, landslides, etc.), weather issues (e.g., storms, the wind, etc.).
Apart from natural problems, the hindrances, which a company may experience in the process of products or materials transportation include economic or political issues. Particularly, certain confrontations between the states, in which the transportation occurs, the adoption of new laws or economic reforms that shape the goods transportation process considerably, etc., need to be taken into account.
The malfunctioning of equipment is another reason for the transportation issues to occur. For instance, the breach of the transportation tool or some of its elements, which make the further transfer of the items in question impossible, can be viewed as a significant obstacle. While some of the problems in question are rather easy to address (e.g., a flat tire or an empty gas can), other concerns, such as the malfunctioning of the transportation tools, may pose a significant threat to the successful delivery of the item to the end user.
Last but definitely not least, the last-minute changes made by the partners due to specific reasons should be brought up. It is quite obvious that a company needs to use the assistance of partners when operating in the global environment. The firms that the entrepreneurship teams up with, however, may face certain issues that trigger a delay in the provision of the required items or services; consequently, a delay or even a disruption in the transportation process may occur (Morana, 2013).
How do the disruptions impact the performance of a supply chain?
Needless to say, the disruption in the transportation processes is likely to have a drastic effect on the supply chain. First and most obvious, the speed and, therefore, the quality of the company’s services will drop significantly. Consequently, the threat of losing customers may emerge. In other to avoid the above-mentioned issues, an organization is likely to have to consider the measures that will be aimed at retaining customer loyalty rates and keeping the customer satisfaction rates high. Therefore, extra expenditures can be viewed as an inevitable effect of disruptions in the transportation process. The financial strategy of an organization will have to be altered to retain the necessary sustainability rates in the specified scenario.
Reference List
Morana, J. (2013). Sustainable supply chain management. New York City, New York: John Wiley & Sons. Web.
Wang, J. (2012). Management innovations for intelligent supply chains. New York City, New York: IGI Global. Web.