7 May 2021
The role of transportation in supply chain management cannot be overstated. Without the ability to properly transport supplies to the appropriate facility, a company’s entire infrastructure shuts down. For this reason, we have decided to today explore the specifics of how transportation affects supply chain management. We will also review ways to improve one’s transportation solutions and thus increase efficiency.
Most supply chains involve materials, such as wooden crates and industrial packaging, moving from one location to another. The simple fact of the matter is that different facilities come equipped for different tasks. It is not feasible for most products to be produced at a single location.
This fact is key to understanding how to run an efficient operation. The faster materials move, the faster they can be processed. This is a fundamental element of supply chain management. The methods of transportation most appropriate for an organisation’s needs will vary. Most imagine trucks in regards to transportation. However, aeroplane, ship, and even train are all options that bear considering. Broadly speaking, there are two things that one must consider when reviewing transportation options. First, one must consider the cost of the transportation option. Second, one must consider the speed at which goods travel via that option. These two considerations together will generally allow a company to understand how viable an option is for their needs.
Managing supply chains is largely a battle with bottlenecks. Bottlenecks reduce efficiency, often ballooning production costs. Worse still, bottlenecks can stack, slowing or even outright stopping a company’s business flow – slower business means wasted money. Transportation is not the only source of supply chain bottlenecks, but it is one of the most common. Put simply, materials that are ready to be processed but are not on their way to the appropriate facility are (often) a sign of inefficiency.
Materials sitting idle are much like workers sitting idle; they usually signal some element of the supply chain is backing things up. The two most common causes of such backup are transportation issues or processing issues. There is of course nuance to this discussion to be had. It is not feasible for even a quality operation to be 100% efficient with material transport. Pursuing perfection can even cause more waste. Efficiency is a game of priorities; it does not always make financial sense to focus on transportation. In some cases, time and money are best spent solving bottlenecks elsewhere. Operations must be observed as a whole, not with elements in their own bubbles. That said, transportation is often key to becoming more efficient. It is easy to find a transportation solution that “works” while missing cheaper options. Due diligence in this regard is often a big cost saver.
One interesting and often overlooked element of transport is packaging. Packaging serves a number of roles in transportation. It helps to move materials between facilities but also to protect those materials during transport.
The exact type of packaging required for materials will depend on the nature of your organisations’ business. Some companies will be best served by shipping crates or bins. Others may wish to use a specialised industrial packaging service, which can be an excellent option for large or sensitive materials that need to be moved.
As a rule of thumb, the more materials a company can fit into one vehicle, the more costs can be reduced. Costs do rise as the weight transported increases. However, that rise is almost never proportional to the savings from needing fewer trips to transport the same amount of goods. A company does, however, need to account for the potential for damage. The tighter goods are packaged, the greater the risk of damage (all else being equal). While some damage in transport is perhaps inevitable, a company must watch for unusually high reports of damaged goods. Damaged goods are usually a transport problem. Damaged goods often signal packaging needs to be improved to better protect materials. They may also suggest some element of the transport process is causing the mishandling of goods. While in extreme cases this may just be employees mistreating materials, more often a pattern of damages is some kind of packaging issue.
If you wish to improve your own organisation’s transportation solutions, do some research. For example, if you live in Australia, review the costs organisations in your same niche tend to pay. This can help broadly set what you should expect.
Be sure to target your research for more accurate information. Compare yourself to businesses of similar size and scope and, if possible, as close to where the business operates as you can. Precise data may not be possible to find, but broad estimates should be possible. You should also review your transportation solutions internally as well. Compare the cost and efficiency of your current solutions with known alternatives. Additionally, consider if there is a more efficient way to package goods so they can be transported in greater volume.
The role of transportation in supply chain management is an important one. It is often one of the best places to look for ways to reduce costs and increase efficiency. You may find ways to reduce bottlenecks, reduce the number of materials damaged, and more. If you have questions about packaging or materials handling, we hope you’ll consider contacting us at AXIS Industrial. We are experts in the field and may be able to help you with either standard or customised industrial packaging and handling solutions.