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Transportation Management System and its Use in Supply Chain Management
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Transportation is the vital component of a supply chain that involves the delivery of products from the start to the end of a supply chain. The transportation segment must be managed efficiently for an effective supply chain. It includes carrying a product from a supplier to a customer or a distribution store by road, rail, air, or sea. Factors involved in transportation include service/transit time, cost, and movement of products. These are the most relevant issues in an effective supply chain. Others include integration among customers, carriers, suppliers, and information flow.
Components of Transportation Management System
Transportation Management System automatically tracks shipments, tender loads, and gather and recognize previous performance data. This data often referred to as big data which allows a company to observe what’s happening in its shipping operations. Once transparency is gained into transportation operations, changes can be made to increase efficiency and customer satisfaction, reduce transportation costs, and optimize packaging or storage procedures that can harm overall supply chain goals.
· Inventory Flow
Effective transportation makes a company’s whole supply chain runs smoothly. With the successful execution of transportation, inventory can be kept inclined and can be moved in and out of a warehouse efficiently and quickly. This reduces the overall lead time, improves warehouse efficiency, and saves money on storage. Supply chain disturbances can be costly and hurt customer satisfaction and loyalty. Creating an effective supply chain with transportation management prevents damage caused by the disruption.
· Sustainable Logistics
Consumers are aware of what they’re buying and what values a company has. Customers want to buy from those companies who take social responsibilities seriously, work hard to reduce their carbon footprint, and also minimize their energy consumption. A disorganized transportation strategy will increase a company’s carbon footprint as well as its impact on the environment. It can also run sales away from your products due to a negative perception of your brand’s environmental awareness and impact.
· Preferred Shipper Status
The transportation industry is currently short with 48,000 truck drivers. This shortage is expected to grow up to 240,000 by 2022. The truck capacity trouble is caused by the significant lack of drivers. A company that has improved transportation processes will be preferred because carriers will want to work with someone who encourages their efficiency. Access to trucking size will lower logistics costs in the coming years. Additionally, it will continue to provide a quicker and more reliable service for customers.
· Customer Satisfaction
The process between acquisition and shipping can be long and complicated, but out of all these processes, transportation is the one where a company has a direct connection with a customer. The point of delivery reflects the proficiency of the entire organization – if a company constantly delivers products late, the customer will develop a negative perception of the company and will likely not use their services anymore. The last stretch before delivery is costly, complex, and often a part of the delivery that causes disturbances and delays.
Transportation is frequently used for boosting a supply chain. Below are some uses of transportation in supply chain management:
· Transportation reduces the cost
Transportation in supply chain management can be used to control costs in a business operation. Shipping and fuel costs take up most of the budget. Moving cargo from one place to another using one or a combination of the various modes of transportation is a cost-increasing factor. To regulate transportation costs and keep them as low as possible, conducting a full freight analysis is essential.
Luckily, the existence of technologies makes it possible to enhance transparency in transportation and logistics. Companies that make use of technology and data can increase their awareness of both, how it interacts with the broader transportation ecosystem and the supply chain network in general.
The right data gives transporter insights into freight flows and other factors that are likely to impact shipping costs to various destinations. This gives them a broader insight into the transportation environment and how it affects the entire supply chain.
· To enhance customer service
As products are transported from one location to another, and from the supplier to the customer, the customer needs must be at the heart of the transportation system. Making sure products reach a customer in the same condition they were shipped in and on time is important for transportation in a supply chain.
· To segment shipments in the supply chain
Shipment prioritization is essential in transportation. Among other factors, the customers, suppliers, time of year, and products, determine the importance of goods in transit.
The transportation in supply chains must be segmented to reduce complexities. This often requires a change in the mode of transportation and settling on alternative carriers.
· To synchronize with supply chain technology
Transportation management software (TMS) best handles the daily monitoring of transportation operations. The activities tracked by a TMS are route planning, fleet management, customer communications, supplier relations, cargo handling, and fuel costing.
A TMS is highly effective in regulating and lowering transportation costs. For instance, according to Forbes magazine, Transportation Management Software can reduce freight costs by 8%. While not all shipping companies are using a TMS, its uptake is on the rise as companies grasp the realities of efficient and cost-effective transportation.
· To provide more supply chain options
The majority of goods travel throughout the supply chain as they rely on multiple modes of transportation. Therefore, multiple modes of transportation are required for an efficient freight transportation system. Such a system is appropriately suited to support domestic and international supply chains.
Trucks are one of the most popular modes of transportation, which make road transport a crucial part of the supply chain. Pipelines are also very popular, especially for the transportation of liquid and gaseous products. Items moved by air or by road have a much higher value per ton, which means these two modes have a higher value than the other modes of transportation.
The ideal mode of transportation in a supply chain must be wisely selected at every point of the transportation and logistics cycle. Sometimes it uses a combination of modes of transportation for a product to reach a distributor or an end-user.
· To bypass geographical limitations
For a long time, trucks have been preferred as the mode of transportation in supply chain operations. They traverse roads apart from railways to carry products across the land efficiently. They feature a frame, that can hold standard shipping containers. Alone in the US, fifty million tons of products are shipped via trucks every day at the cost of more than $100 billion. In Canada, 800 million tons of commodities were shipped via trucks in 2014. Compare this to 320.3 million tons of cargo transported by railway in the same year.
The reason behind choosing trucks as the mode of transportation is that they can pass through regions that other modes of transportation can’t. For instance, trains travel to only limited destinations, similarly, air freight has weight and airport limitations. This makes trucks the most convenient transportation mode for moving vast volumes of products cost-effectively.
· To boost the economy
To freely move goods from domestic to international markets and vice versa, an effective transportation system is a must. The long distances between farms, forests, urban centers, and mines demand a sound transportation system so that manufactured products can reach customers as nicely as possible.
Conclusion
The success of any supply chain is closely linked to the proper use of the transportation system. Proper management of transportation can assure high delivery performance and persistent customer satisfaction. Therefore, it is difficult to magnify the importance of transportation management.
VISIT OFFICIAL WEBSITE
Components of Transportation Management System
Transportation Management System automatically tracks shipments, tender loads, and gather and recognize previous performance data. This data often referred to as big data which allows a company to observe what’s happening in its shipping operations. Once transparency is gained into transportation operations, changes can be made to increase efficiency and customer satisfaction, reduce transportation costs, and optimize packaging or storage procedures that can harm overall supply chain goals.
· Inventory Flow
Effective transportation makes a company’s whole supply chain runs smoothly. With the successful execution of transportation, inventory can be kept inclined and can be moved in and out of a warehouse efficiently and quickly. This reduces the overall lead time, improves warehouse efficiency, and saves money on storage. Supply chain disturbances can be costly and hurt customer satisfaction and loyalty. Creating an effective supply chain with transportation management prevents damage caused by the disruption.
· Sustainable Logistics
Consumers are aware of what they’re buying and what values a company has. Customers want to buy from those companies who take social responsibilities seriously, work hard to reduce their carbon footprint, and also minimize their energy consumption. A disorganized transportation strategy will increase a company’s carbon footprint as well as its impact on the environment. It can also run sales away from your products due to a negative perception of your brand’s environmental awareness and impact.
· Preferred Shipper Status
The transportation industry is currently short with 48,000 truck drivers. This shortage is expected to grow up to 240,000 by 2022. The truck capacity trouble is caused by the significant lack of drivers. A company that has improved transportation processes will be preferred because carriers will want to work with someone who encourages their efficiency. Access to trucking size will lower logistics costs in the coming years. Additionally, it will continue to provide a quicker and more reliable service for customers.
· Customer Satisfaction
The process between acquisition and shipping can be long and complicated, but out of all these processes, transportation is the one where a company has a direct connection with a customer. The point of delivery reflects the proficiency of the entire organization – if a company constantly delivers products late, the customer will develop a negative perception of the company and will likely not use their services anymore. The last stretch before delivery is costly, complex, and often a part of the delivery that causes disturbances and delays.
Transportation is frequently used for boosting a supply chain. Below are some uses of transportation in supply chain management:
· Transportation reduces the cost
Transportation in supply chain management can be used to control costs in a business operation. Shipping and fuel costs take up most of the budget. Moving cargo from one place to another using one or a combination of the various modes of transportation is a cost-increasing factor. To regulate transportation costs and keep them as low as possible, conducting a full freight analysis is essential.
Luckily, the existence of technologies makes it possible to enhance transparency in transportation and logistics. Companies that make use of technology and data can increase their awareness of both, how it interacts with the broader transportation ecosystem and the supply chain network in general.
The right data gives transporter insights into freight flows and other factors that are likely to impact shipping costs to various destinations. This gives them a broader insight into the transportation environment and how it affects the entire supply chain.
· To enhance customer service
As products are transported from one location to another, and from the supplier to the customer, the customer needs must be at the heart of the transportation system. Making sure products reach a customer in the same condition they were shipped in and on time is important for transportation in a supply chain.
· To segment shipments in the supply chain
Shipment prioritization is essential in transportation. Among other factors, the customers, suppliers, time of year, and products, determine the importance of goods in transit.
The transportation in supply chains must be segmented to reduce complexities. This often requires a change in the mode of transportation and settling on alternative carriers.
· To synchronize with supply chain technology
Transportation management software (TMS) best handles the daily monitoring of transportation operations. The activities tracked by a TMS are route planning, fleet management, customer communications, supplier relations, cargo handling, and fuel costing.
A TMS is highly effective in regulating and lowering transportation costs. For instance, according to Forbes magazine, Transportation Management Software can reduce freight costs by 8%. While not all shipping companies are using a TMS, its uptake is on the rise as companies grasp the realities of efficient and cost-effective transportation.
· To provide more supply chain options
The majority of goods travel throughout the supply chain as they rely on multiple modes of transportation. Therefore, multiple modes of transportation are required for an efficient freight transportation system. Such a system is appropriately suited to support domestic and international supply chains.
Trucks are one of the most popular modes of transportation, which make road transport a crucial part of the supply chain. Pipelines are also very popular, especially for the transportation of liquid and gaseous products. Items moved by air or by road have a much higher value per ton, which means these two modes have a higher value than the other modes of transportation.
The ideal mode of transportation in a supply chain must be wisely selected at every point of the transportation and logistics cycle. Sometimes it uses a combination of modes of transportation for a product to reach a distributor or an end-user.
· To bypass geographical limitations
For a long time, trucks have been preferred as the mode of transportation in supply chain operations. They traverse roads apart from railways to carry products across the land efficiently. They feature a frame, that can hold standard shipping containers. Alone in the US, fifty million tons of products are shipped via trucks every day at the cost of more than $100 billion. In Canada, 800 million tons of commodities were shipped via trucks in 2014. Compare this to 320.3 million tons of cargo transported by railway in the same year.
The reason behind choosing trucks as the mode of transportation is that they can pass through regions that other modes of transportation can’t. For instance, trains travel to only limited destinations, similarly, air freight has weight and airport limitations. This makes trucks the most convenient transportation mode for moving vast volumes of products cost-effectively.
· To boost the economy
To freely move goods from domestic to international markets and vice versa, an effective transportation system is a must. The long distances between farms, forests, urban centers, and mines demand a sound transportation system so that manufactured products can reach customers as nicely as possible.
Conclusion
The success of any supply chain is closely linked to the proper use of the transportation system. Proper management of transportation can assure high delivery performance and persistent customer satisfaction. Therefore, it is difficult to magnify the importance of transportation management.
VISIT OFFICIAL WEBSITE
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