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Global logistics and supply chain

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Global logistics and supply chain

A supply chain refers to the whole process of production of raw materials, transporting them to the factory, and also transportation of the finished products from the factory to the final consumers. The supply chain comprises production activities, distribution activities, and human resources. Logistics involves planning how either raw materials or finished goods will be stored and later transported to various destinations. Transportation plays a key role in ensuring efficiency in Global Logistics. Taylor and Yue (2005), through their article, ‘The role of transportation in logistics chain’ noted that a sound transportation system effect global logistics efficiency through the conveyance of finished market to the worldwide market, the raw material to the industries and delivery of services to the point of consumption.

Global logistics cannot be possible without the role played by the transportation system. Goods manufactured in the factory needs to be transported to the consumers and delivered on time (Taylor & Yue,2005). The transportation would either be on land, water, or air. Transportation cost of finished products is the highest relative to warehousing, ordering, management, and inventory costs. High transportation costs to the logistics company mean fewer profits, and hence managers need to reduce them without affecting logistics efficiency. The transportation cost is high in companies dealing with heavy products compared to those dealing with light products. Since high costs reduce profitability, they also result in reduced company’s efficiency. Transportation systems affect logistics efficiency in logistics companies by facilitating smooth movement of finished goods to the market cheaper cost.

Transportation plays a vital role in ensuring efficiency in global logistic companies by facilitating faster delivery of raw materials from the source to the point of production (Taylor & Yue,2005). Notably, raw materials are bulky and require a sound transport system to reach the factory where they are converted into finished goods. Since the transportation of raw materials involves high costs due to their bulkiness, it has a significant effect on global logistic efficiency. High prices in transporting these raw materials reduce companies’ profits and reduce overall productivity. Managers strive to reduce costs while at the same time, ensure faster delivery of materials to the firm. This affects the better performance of logistic firms.

A sound transport system can affect a better performance of global logistics. Taylor and Yue studied that a well- managed transport system can improve the efficiency of a logistics company by facilitating goods to the point where they are demanded within the required time. (Taylor & Yue,2005).  Therefore, the transport system helps in bridging the gap between the consumer and the producer. A poor transport system is characterized by delays in delivering products to the consumers and hence affect companies’ reputation and profitability. A company with an efficient transportation system offers high-quality services to its customers and benefits from the competitive advantage associated with it. To improve efficiency, global logistic firms should invest in their transportation system.

As noted by Taylor and Yue, the transportation system directly affects logistics efficiency. Companies need a system that can facilitate faster and cheaper means of delivering raw materials to the industry and finished goods to consumers. Delays in the delivery of raw materials affect the production department while delays in finished product delivery affect the sales department. Therefore, a company that aims at improving its efficiency must start investing in its transportation system. Proficiency in delivering raw materials finished goods and offering quality is key to global logistic firms.

Reference

Taylor & Yue, W. (2005). The Role of Transportation in Logistics Chain https://www.semanticscholar.org/paper/THE-ROLE-OF-TRANSPORTATION-IN-LOGISTICS-CHAIN-Tseng-Yue/5a5ce0c4f011c336da2a5f59e8c2adafb1d348c2

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