11. July 2012 13:32
One of the biggest threats to the transportation industry has been, without question, the staggering jump in fuel prices. It's looking unlikely that the industry will ever be able to return to its customary position because there are a number of other key factors that have changed as well. Infrastructure, bankruptcy and capacity concerns are a few of the contributing factors, but the biggest and most complicated issue has been the tremendous shift in the nature of supply chains. The days of simple, short and linear supply chains are gone; today they are more like intricate webs that weave together multiple locations from around the globe with highly sophisticated systems of delivery and coordination.
With the dramatic increase in transportation costs over the past few years, manufacturing companies are looking much more closely at ways they can make their supply chain more cost effective, especially in the area of ground transportation. Even though it appears that inflation is at a slightly lower level than previous years, the cost of materials like chemicals, plastics, metals and fuel continue to rise. Therefore, supply chain managers must continue closely monitoring their transportation fleet in order maintain control of their costs.
Ground transportation is certainly an area worth examining, given its importance to the successful functioning of an effective and efficient supply chain. Here are a few ways to ensure that the efficiency of your supply chain transport is maximized.
- All trucks should be loaded as fully as possible before going out. Partial loads are a very inefficient use of space, time and money.
- Land routes should be mapped and managed for maximum efficiency. GPS systems and good communication among drivers allow for hurdles such as traffic and construction to be anticipated and consequently avoided.
- Diesel fuel is expensive, so companies should carefully consider upgrading their fleet to include green or fuel-efficient vehicles. This doesn't have to be done all at once; it can be implemented gradually as older vehicles need to be replaced.
- Determine how profitable your clients are. Is your company still making money on a particular account? If not, evaluate whether or not to let the client go in order to better manage your transportation costs.
- Maintain a fleet of high-quality carriers that can be counted on for excellent performance. This type of stable control will contribute to managing your overall transportation costs, and stability means that planned operations will continue to be executed efficiently.
- Consider changes to packaging that could optimize packing operations for your ground transportation.
- Consider researching collaborative shipping opportunities. It may take some research to find and develop these relationships, but this type of arrangement might prove beneficial to all involved parties.
Industries of all types continue to face ever-increasing transportation costs. Reasons for this include more complex supply chains, rising energy costs and a marketplace that has become highly competitive as customers become more demanding. The bottom line is this: Lowering transportation costs is critical to a company's success and overall survival. The most successful companies are regularly monitoring, evaluating and revising their supply chain processes in order to keep up with the changes in the industry.
About the Blogger: Pete Kontakos, Media Relations for Michigan State University Online supply chain management programs, specializes in writing about supply chain management and logistics training and online education.
Images by Silvain Racicot and grendelkhan
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