Role of Transport in Supply Chain

Transportation is one of the biggest components of the cost structure of logistics and supply chain of a company. The objective of this paper is to review a literature on the role of transportation in the supply chain process. It includes different types of transportation which assist the companies in their supply chain and logistics.

Running Head: TRANSPORT IN SUPPLY CHAIN 1
Role of Transport in Supply Chain

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Table of Contents
Introduction......................................................................................................................................3
Literature Review............................................................................................................................3
Conclusion.......................................................................................................................................6
References........................................................................................................................................8

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Introduction
Transport is one of the biggest components of the cost structure of logistics and supply chain of a
company. In today’s competitive business world, supply chain managers who are outperforming
their competition have done largely by the acknowledgement of transportation as a prepared
vehicle. Through this organizations are leading to save the costs and create value within its
supply chain and logistics process. The operation of transportation determines the effectiveness
and efficiency of moving products and materials. The objective of this paper is to review a
literature on role of transportation in supply chain process. It includes different types of
transportation which assist the companies in their supply chain and logistics.
Literature Review
Transportation plays a significant role in the process of supply chain management. According to
Bhattacharya and Guiffrida (2014) transportation has become one of the major elements of the
supply chain valuation for several companies. The author defines that transportation is the
movement of goods and products from one location to another location (Bhattacharyya and
Guiffrida, 2014). According to Lu (2011), supply chain is the network of organizations,
individuals, processes, technology and activities which are involved in the manufacturing and
sale of products. It includes all the processes from the delivery of raw materials from supplier to
manufacturer and to the final customer (Lu, 2011). Moreover, supply chain management
includes the logistics which covers the information and material flow, buying and selling in
terms of operative contexts like ordering, transportation, packaging and competition as well.
In this context, Christopher (2016) stated that supply chain professionals consider all the
procedures which are from source materials to production, wholesaling and retailing. By the use
of different software, these people can examine how an organization can save the money and
work more efficiently. This process includes the selection of transport also. From total
distribution cost, a business spends 36% of total on transportation while another 64% is spent on
other components of supply chain (Christopher, 2016). This transportation cost includes the
modes of transportation, containers, corridors, pallets, labors, terminals and time.

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Kale (2016) stated that transportation is a significant supply chain driver because products are
rarely manufactured and consumed in similar location. It is significant as it enables trade
between people that is necessary for the development of advancements. Today, international
business has become a huge part of economic activity all over the world (Kale, 2016). The
success of supply chain is closely connected to the suitable use of transportation. Generally,
organizations use responsive transportation in their supply chain so that they can centralize their
inventories and run with fewer facilities. In this context, Marrero (2015) described that to
practice effective supply chain management a company must place the base for a responsive
transportation network. With this, the company is able to apply primary strategic changes to
decrease the costs and enhance service levels with little interference to the overall flow of supply
chain (Marrero, 2015). This network starts with the network visibility that allows the company to
centralize manufacturing operations to lower cost areas without affecting the customer services.
In short, it can be said that transportation is very important for the supply chain as the movement
across the distance adds the value to the products and materials. It provides the growth
opportunities under competitive situations. It increases the distribution of products and goods
that enhances the demand of products. Wal-Mart is the best example for understanding the
importance of transportation in supply chain (Jawad, 2017). A major feature of Wal-Mart’s
supply chain is its fast and responsive transport system.
In their article, Tseng, Yue and Taylor (2005) examine the interrelationship between
transportation and supply chain management. The authors stated that without well-maintained
transportation systems, supply chain cannot bring its benefits into full play. Moreover, an
effective transportation system in supply chain can provide better supply chain efficiency,
decline operations costs and enhance service quality (Tseng, Yue, and Taylor, 2005). The
enhancement in transportation system requires the efforts from both the private and public
sectors. If the transportation system will be appropriate then supply chain system will work
effectively. A well-managed supply chain system can enhance the competitiveness of
organizations.
There are various activities of supply chain which are affected by effective transportation system.
The requirement of inventory is affected by the mode of transportation chosen for use. When the
company uses high priced and high speed transportation system, the inventories needed to be

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maintained in supply chain system will be smaller in comparison to that when less expensive and
slow transportation system are utilized. In addition to this, the material handling requirements of
firm are determined by the kinds of carrier used for the transportation. Iyenger, Goldssby and
Rao (2014) described that the role that transport has in supply chain is very complex than
carrying the products for the proprietors. Its complexity can impact only via higher quality
management. By the modes of well-managed transportation system, the products can be
delivered to the right place on right time so that they can satisfy the demands and needs of
customers. The authors stated that an effective transportation system brings effectiveness and it
develops a bridge between customers and manufacturers (Goldsby, Iyenger and Rao, 2016).
Thus, transportation is the fundamental of the efficacy and economy in the business supply chain
and it expands other functions of supply chain like logistics, inventory management,
procurement etc. From the analysis, it can be stated that a better transport system in supply chain
can bring the benefits not only to the competitiveness of company but also to the quality of
service delivery (Ross, 2015).
Tseng, Yue and Taylor (2005) have stated about the different modes of transportation which can
be used in supply chain. These modes include rail transport, road transport, air transport, sea
transport and pipeline (Tseng, Yue, and Taylor, 2005). Different modes of transportation have
different advantages to the organization’s supply chain. According to Bookbinder and Matuk
(2009) road transport is one of the cheapest transportation modes. It is a flexible mode as
unloading and loading is possible at any place. In business’s supply chain, this mode assists to
carry the products from one location to another location, in places that are not linked by other
modes of transport for example hilly areas. Trucks can travel from one nation to another nation
and everywhere within a nation. Another transport mode is rail transport in which a company
uses freight trains for the delivery of goods and materials (Bookbinder and Matuk, 2009). These
trains are generally operated by steam, electricity and diesel. There are some examples of
industries which prefer to use rail transportation system. These industries are like food grains,
coal, cement and fertilizers. It offers various benefits to the organization’s supply chain as it is
comparatively faster and cost effective mode than road transport. It is appropriate for delivering
heavy goods for long distances.

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Air transportation is the most suitable mode for high value and small shipments. It is the fastest
mode of transportation that reduces the lead time and enhances the service delivery. There are
several organizations which contact with the package carriers (Rushton, Croucher and Baker,
2014). Package carriers are the transport companies that carry small packages. The examples of
these agencies are such as DHL, UPS, and FedEx etc. This is the most appropriate mode for e-
commerce business. All modes of transportation system play different role in the supply chain
management process of an organization. Sreenivas and Srinivas (2014) concluded that supply
chain and transportation have interrelated relationship which supply chain management requires
transportation to perform its processes. An effective logistics management can assist in
enhancing the transportation development and traffic environment. Furthermore, they stated that
since the transportation contributes to the highest cost among all the related components of
supply chain system, the enhancement of transport effectiveness can change the performance of
supply chain of business (Sreenivas and Srinivas, 2014). In this way, it can be stated clearly that
transportation has a critical role in supply chain system and its processes. Without adopting a
strong transportation, a powerful supply chain strategy cannot bring into the capacity into a full
play. This is the major reason that an organization makes most of its investment in transportation
from total distribution cost (Bhattacharya, Mukhopadhyay and Giri, 2014).
Conclusion
From the above analysis, it can be concluded that transportation is the most important factor in
the process of supply chain management. It is essential for a company to adopt effective
transportation so that it can move the products and materials via the chain to the final customer.
There are various modes of transportation which can be used by an organization to move its
products from one place to another. Many organizations use more than one transportation mode
to deliver a shipment to its final destination. The use of transportation has increased international
business all over the world. The above paper includes the opinions of different authors about the
transportation and its role in supply chain. In today’s competitive business environment, the
companies should make efforts to improve transportation to increase effectiveness of supply
chain system. They should use updated and advanced technology to enhance the performance of
transportation. It should align its transport strategy with the competitive strategy of the company.
These recommendations will enable the firms in delivering the goods to right place at right time.

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References
Bhattacharya, S. Mukhopadhyay, M. and Giri, S., 2014, Supply Chain Management In Indian
Automotive Industry : Complexities, Challenges And Way Ahead, International Journal of
Managing Value and Supply Chains, 5 (2) 49.
Bhattacharyya, K. and Guiffrida, A.L., 2015, An optimization framework for improving supplier
delivery performance. Applied Mathematical Modelling, 39 (13) 3771-3783.
Bookbinder, J.H. and Matuk, T.A., 2009, Logistics and Transportation in Global Supply Chains:
Review, Critique, and Prospects, Operation Research Informs, 182-207.
Christopher, M., 2016. Logistics & supply chain management. UK: Pearson.
Goldsby, T.J., Iyenger, D. and Rao, S., 2014, The Critical Role of Transportation in Business and
the Economy [Online], Available from http://www.informit.com/articles/article.aspx?
p=2171313. [Accessed on 10 April 2018].
Jawad, S, 2017, A literature analysis of Walmart’s supply chain excellence in term of integration,
distribution and operations, Haaga-Helia Univversity of Applied Sciences.
Kale, J.M., 2016, Logistic management & distribution problems, International Journal of
Commerce and Management Research, 2 (12), 137-141.
Lu, D., 2011, Fundamentals of Supply Chain Management, UK: Ventus Publishing.
Marrero, N., 2015, The Role of Transportation in Supply Chain Management, [Online] Available
from https://www.linkedin.com/pulse/role-transportation-supply-chain-management-nancy-
marrero [accessed on 10 April 2018].
Ross, D.F., 2015. Distribution Planning and control: managing in the era of supply chain
management. US: Springer Publications.
Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution
management: Understanding the supply chain. UK: Kogan Page Publishers.

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Sreenivas, M. and Srinivas, T., 2014, The Role Of Transportation In Logistics Chain, SIAM
Journal.
Tseng, Y., Yue, W.L. and Taylor, M.A., 2005, The Role Of Transportation In Logistics Chain,
Proceedings of the Eastern Asia Society for Transportation Studies, 5, 1657 – 1672.