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Shining a light on the “black box” of transportation

Transportation carriers aren’t just agents for shippers. They’re full-fledged partners who are crucial to your production processes.

By ·

Supply chain linkages are like a skeleton. They establish a business structure so that supply chain partners can fulfill their common strategic goals. Logistics acts like a circulatory system within a supply chain, giving it vitality. This structure-and-flow relationship is symbiotic—you can’t have one without the other if you expect the supply chain to work properly. Yet when we consider these links, one player is never featured as prominently as the others: transportation carriers.

Most supply chain professionals know the generic names of typical supply chain partners. Upstream we have end customers, retailers, wholesalers, manufacturers and raw material extractors. Contractual linkages among these partners form a standard supply chain. But there’s more here than meets the eye. Intermediaries are often present between any two of these partners, especially when one or both hire an agent to better fulfill the relationship. This is especially true when linkages take place across different countries. Agents who can deal with cultural and regulatory differences between the two partners have their place. Whether or not supply chain partners are in the same country, transportation is another important area. When items have to be shipped a considerable distance, it’s very likely that a for-hire carrier will be needed.

There is a reason why transportation is the most outsourced logistical activity today: Organizations typically don’t want to maintain a private conveyance—let alone an entire fleet of trucks and trailers. At the same time, transportation is often seen as a “black box” where items are shipped from origin to destination with supply chain partners only concerned about what’s happening during this process when something goes wrong along the way.

This complete article is available to subscribers only. Log in now for full access or start your PLUS+ subscription for instant access.

 

By ·

Supply chain linkages are like a skeleton. They establish a business structure so that supply chain partners can fulfill their common strategic goals. Logistics acts like a circulatory system within a supply chain, giving it vitality. This structure-and-flow relationship is symbiotic—you can’t have one without the other if you expect the supply chain to work properly. Yet when we consider these links, one player is never featured as prominently as the others: transportation carriers.

Most supply chain professionals know the generic names of typical supply chain partners. Upstream we have end customers, retailers, wholesalers, manufacturers and raw material extractors. Contractual linkages among these partners form a standard supply chain. But there’s more here than meets the eye. Intermediaries are often present between any two of these partners, especially when one or both hire an agent to better fulfill the relationship. This is especially true when linkages take place across different countries. Agents who can deal with cultural and regulatory differences between the two partners have their place. Whether or not supply chain partners are in the same country, transportation is another important area. When items have to be shipped a considerable distance, it’s very likely that a for-hire carrier will be needed.

There is a reason why transportation is the most outsourced logistical activity today: Organizations typically don’t want to maintain a private conveyance—let alone an entire fleet of trucks and trailers. At the same time, transportation is often seen as a “black box” where items are shipped from origin to destination with supply chain partners only concerned about what’s happening during this process when something goes wrong along the way.

 


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From the January-February 2019
If history is our guide, economies take a turn every nine years. Yet time and again, a strong business cycle and fading memories convince us the good times will go on forever. Ten years after the great recession, we surveyed 100 manufacturing firms to find out if businesses are ready to fight through the next recession.
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EDITORS' PICKS
Supply Chain Management Issues Confronting Us This Year
A variety of fresh challenges will surface for global traders in January and beyond
Global Supply Chain Pricing May Face New Pressures in 2019
The global economy started 2018 with strong, synchronized growth, but the momentum faded as the year...

IHS Markit’s New Economic “Predictions” for 2019 and Impact on Global Supply Chains
The U.S. will remain “above trend,” while other key economies will experience further...
Global Kuehne + Nagel Indicators Signal Global Supply Chain Resilience
So far this year, international merchandise trade has risen by 10.6%. Emerging markets and North...