Integrating Transportation
Integrating Transportation
Introduction
Integrating transportation into the supply chain has become a major issue. People have different views on integrating transportation into the supply chain. Some people think that integrating transportation into the supply chain has a lot of benefits. Others think that incorporating transportation into the supply chain does not benefit the firm. Integrating transportation into the supply chain helps reduce the cost of transportation. Incorporating transportation into the supply chain helps reduce the cost of inbound shipping. Customers are charged for shipping and handling of goods. This affects profits in the organization. Integrating transportation helps the firm maximize profits by retaining customers. The firm reduces the cost of shipping and increases sales.
In addition, incorporating transportation in the supply chain helps improve delivery of services. Firms that have incorporated transportation into the supply chain are able to serve a wide range of customers. The firms serve different geographical region. This makes it easy for the firm to meet customer needs.
Discussion
Wal- Mart
Though most companies have included transportation into the supply chain, the companies are still in first and second level. This is because the firms are not committed into integrating transportation into the supply chain. Firms in fifth level have committed themselves to incorporating transportation. An example of a company that has reached the optimized level is Wal-Mart. Wal-Mart is one of the largest private companies in the United States. The company has employed many employees in the country. The founders of the company have always focused on improving sales and reducing the cost. Also, they have adopted an efficient supply chain system. In addition, the firm has used technology to enhance innovation in the company. Wal-Mart has become the best company in the industry because of its efficient supply chain management services. Wal-Mart delivers its items to the right customers at the right place and at the right time.
The Wal-Mart supply chain management was aimed at reducing the purchasing costs. The company wanted to offer the best prices to the customers and increase sales. So, the company had to reduce the purchasing cost. The firm procured good directly from the manufacturers to the customers (Transite, 2009).
There are various factors that show Wal-Mart in fifth level. First, a company in fifth level has upstream and down steam supply chain staffs who help in planning the shipping process. Wal-Mart had staff that helps in scheduling the shipping process. This ensures the items are delivered to the customers at the right time and place. Also, a company in fifth level has customer marketing channels. The channels are in line with the transportation providers and decision making process is documented. Wal-Mart has a customer marketing channel that the company uses to market its products to customers. The company gets information from the customers through the marketing channel. This makes it easy to design the products according to the needs of the customers (Transite, 2009).
Moreover, Wal-Mart is in fifth level because it has reduced the shipping cost. The shipping cost for the firm reached 3 percent in 1998.The cost has reduced since that time. The company is considered the best in the industry because of the low shipping cost. The shipping cost for competitors in the industry reached 5 percent in 1998. The carriers and customers have collaborated to optimize cost. Integrating transportation into Wal-Mart supply chain has helped the firm optimized the cost by reducing the shipping cost. This has led to increase in sales (Transite, 2009).
A company in fifth level is able to track all the shipments in the company. That is recording the final destination of the shipment and the starting point. This makes it easy to deliver the products to the right customers. The company is served by truck fleets which transport good from the distribution centers to the stores. The transportation system is effective as it has helped the company replenish its stores regularly. The trucks used to transport the products from the centers to the store are considered to be the visible link between the centers and the stores. The company also recorded the shipment, the route and the final destination. The company maintains a detailed description of the shipment. The transportation system used by the company helped reduce shipment cost by eliminating distributors and storage of products in the warehouse (Transite, 2009).
The company has continuously improved its supply chain so as to ensure provision of effective services to the customers. In addition, the company has incorporated the latest technology in its activities. Thus, making it easy for the company to ingrate transportation into the supply chanted feed back from the customers has been integrated into the shipping process. This is to ensure that the company gets adequate information from the customers. Hence, this enables the company to meet customer needs (Transite, 2009).
Conclusion
In conclusion, Wal-Mart has reached the fifth level and it has integrated transportation in its services and realized the benefits of incorporating transportation in the supply chain. The integration of the transportation into the supply chain has made the company more competitive unlike its competitors. It has made it easy for the company to serve its centers. The company has many centers located in different geographical regions. The centers are connected using the supply chain.
Reference
Transite. (2009).Transportation and logistic: Integrating transportation into your supply chain. Retrieved from https://online.apus.edu/educator/temp/iv757/tlmt611b001sum10/TransportationManagementSolutions/TransportationManagementSolutions.pdfOn 24/08/2010
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