Where are you right now, and how did you get there? If you are sitting in your home, perhaps you got out of bed, walked to your desk and sat down. Or perhaps you made a stop at the refrigerator first before walking to your computer, picking it up, and then carrying it to the kitchen table. If you are sitting in a coffee shop, you first had to get there before you found a table, probably by car, but possibly by train or bus.
Describing your route from your bed to where you are right now is a very basic demonstration of transportation management. More specifically, it is the arranged movement of people, animals and goods from one place to another.
Differences Between Transportation Management and Supply Chain Management
Supply chain management relies on transportation management, so there are many similarities between the two. However, transportation management is only a piece of the complicated supply chain puzzle, which involves other elements, like packaging, import and export regulations, vendor and partner management, and insurance. Transportation management focuses only on moving goods and services.
By Air or by Sea?
How goods travel is as important as where they go. After all, consumers expect their shampoo and protein bars at a steady price, or they may switch brands. When people think about what can change the costs of their products, they usually think of the supplies and ingredients within those products. Rarely do they consider the shipping.
For example, a luxurious shampoo from Italy costs 10 dollars a bottle. There may only be five dollars’ worth of shampoo and one dollar’s worth of plastic in that product, and the company needs to make a profit once it lands on store shelves. A transportation manager must do everything within his or her power to ensure that shipping that shampoo from Italy to California is as inexpensive as possible. If it costs four dollars to fly it on a plane, which will get it stateside within a few days, but it only costs 50 cents to send it by boat, which may take a month, which is the better choice? Since the product is worth six and sells for 10, 50 cents makes far more sense than four dollars.
These numbers, while fictitious, offer a good example of how transportation managers must think about the products they move around the world. They must consider the time it takes a product to travel from the factory to its destination while justifying the cost.
Connecting People With Companies
For most companies, the product in their consumer’s hand is their greatest form of communication. More than advertising, branding and PR, the product is the most important touchpoint with people. If the product never makes it to consumers, then there is no point in the first place.
This idea is as practical as it is profound. Products need to be available to customers when and where they want them. Shipping and fulfillment can mean the difference between a customer, or many customers, switching brands and reducing the demand for a product, or something more serious, like patients not getting the medicine they need.
Transportation management gets goods, people and animals where they need to go. The next time you go anywhere, consider the simple logistics of moving yourself from one location to another; consider the roads, the methods of travel and the costs.
Now expand that into a global model and you have a good understanding of how vital transportation is in the supply chain.