Transportation Management

When asked to provide a definition of distribution, both the public and professionals alike will most likely structure their response around two functions: warehousing and transportation. As was discussed in the previous chapter, warehousing is concerned with the storage and handling of inventories. Warehousing provides value by satisfying marketplace time and place utilities. Transportation, on the other hand, is associated with the movement of product from one node in the supply channel network to another. This ability to provide purposeful movement of goods in the supply chain is fundamental in assisting companies achieve time and place utilities. No matter how sophisticated the warehouse system, if a product is not available at the specific time and place it is wanted, the firm risks lost sales, faltering customer satisfaction, and increased costs resulting from order expediting. Transportation attempts to solve this problem by ensuring that product is moved as efficiently and cost-effectively as is possible from the point of origin to the point of consumption. Basically, transportation creates value by changing the location of inventory. In this sense, to conceive of a “world-class” supply chain without an efficient transportation system to support it is clearly an impossibility. Transportation’s ability to create place utility by ensuring that product is available at the time the customer wants it defines a fundamental pillar in the search for competitive advantage.