Transport and Supply Chain Management for Efficient Routing

Supply chains are constantly evolving and facing new challenges. On a global scale, disruptions from climate change, the pandemic, and technological advancements are leaving transport and supply chain management more vulnerable.

In this article, we will explore the importance of transportation in supply chain management and how tools like Stats, Scheduling, and Automated Routing from Planimatik’s digital freight software are used by transportation coordinators for efficient routing and data analytics.

What is Transport and Supply Chain Management?

Supply chain management (SCM) is the coordination of a business’ entire production flow, ensuring that everything gets where it needs to be, when it needs to be there - as smoothly as possible.

There are three main components to supply chain management: purchasing, manufacturing, and transportation.

Transportation in a supply chain is the movement of products from point A to point B. It begins at the start of the supply chain in the warehouse and ends with the customer’s order delivered at the doorstep.

Some key objectives of transport and supply chain management are:

Optimizing the movement of goods - Inefficient routing can lead to unnecessary mileage, fuel consumption, and time wastage. The goal of transport is to optimize routes in real-time, considering factors like traffic conditions, delivery time windows, and vehicle capacity for efficient movement of goods.

Reducing costs - Transportation can account for up to 60% of total operating costs in a company’s supply chain. There are different types of transportation costs such as fuel costs, carrier rates, mode of transportation, distance, warehousing, customs fees, and insurance. By leveraging freight software, you can identify inefficient costs, spending, and budget allocation in your supply chain.

Improving service levels - Streamlined transportation directly leads to higher customer satisfaction. Quick turnaround of orders and fast delivery times ensure the business is customer service oriented and consistently meets customer expectations.

What is the Importance of Transportation in Supply Chain Management?

Transportation plays a vital role in supply chain management, as it connects suppliers with customers. It is responsible for the movement of products from the place of production to the place of consumption. It also ensures the smooth operation of supply chains by reducing inventory costs, improving delivery performance, and enhancing customer satisfaction.

Let’s explore the way transportation impacts SCM:

Inventory management - One of the best practices for managing inventory is to align it with demand forecasting. Demand forecasting is the process of estimating the future demand for products or services based on historical data, customer feedback, and market trends. By aligning inventory with demand forecasting, businesses can avoid overstocking or understocking and optimize their transportation routes.

Customer satisfaction - According to the University of Tennessee, customers want full transparency into where their delivery is at every point in transit. As customer expectations have increased, their willingness to pay for fast shipping has decreased. 64% of consumers are unwilling to pay anything extra for less than two-day shipping.

Operational efficiency - According to the Retail Industry Leaders Association, 90% of consumers see 2-3 day delivery as the baseline, and 30% expect same day delivery. This statistic puts a lot of pressure on transportation logistics and the supply chain. To achieve operational efficiency, the industry must maintain high service levels while cutting costs. Strategic loading and intelligent route planning can curb unnecessary mileage, enhance cargo capacity, and enable more inventory to be transported at once.

What are the examples of transportation in supply chain management?

Transportation comes in different modes in SCM depending on objective, time frame, and nature of the goods to be transported, such as:

Road - Trucks are the most common way to move goods in the supply chain. Every day, the U.S. transportation system moves an average of over $50 million tons of freight valued at $50 billion. Trucks can get to places that other transportation methods cannot. They are often fitted with a chassis that can hold standardized shipping containers.

Rail - Although shipping goods by rail is often a distant second to using road transportation, engines pull railcars and intermodal railcar chassis which distribute products on land. Moving goods by rail is often cheaper, more efficient, and more environmentally friendly than by road.

Air - Specialized commercial cargo aircrafts are used to ship freight between countries. Due to the high cost of air freight, it is only used for critical shipping needs. When time is of the essence, aircrafts are the most reliable mode of transportation with no delays in the air.

Sea - According to the International Chamber of Shipping, 11 billion tons of goods are transported by ship each year. Large container ships and other ocean going cargo vessels are the primary way to move goods internationally.

What is trucking in supply chain management?

Trucking logistics are important in SCM because they account for a large share of the company’s supply chain costs. Effective transportation and logistics help companies reduce costs, improve efficiency, and increase customer satisfaction.

Planimatik’s solutions are designed to enhance trucking productivity and efficiency by automating route planning, tracking shipments in real-time, and simplifying communications.

For example, Planimatik reduced logistics planning time by 74% for Texas Tissue, a company in the converting paper industry. Texas Tissue saved valuable time and resources by streamlining operations.

Transportation Management Systems (TMS) vs Supply Chain Management (SCM)

There is a difference between Transportation Management Systems (TMS) and Supply Chain Management (SCM). TMS is a software tool designed to plan, execute, and optimize the transportation of goods. It focuses specifically on route planning, carrier selection, shipment tracking, and freight payment management.

SCM is a broader business strategy and set of processes that involves the coordination and management of the entire supply chain, from raw material procurement to the final delivery of products to customers.

Here are some ways leveraging TMS can help streamline the transportation component of SCM:

Tracking and visibility - Providing real-time updates on the location and status of shipments.

Transportation planning - Selecting the best routes, modes, and carriers to deliver goods efficiently.

Freight cost management - Optimizing transportation costs, including freight rate negotiation and managing payment processes.

Routing Optimization - Using algorithms and data analytics to optimize routes for smarter decision making.

Risks Associated with Transport and Supply Chain Management

Transportation coordinators deal with more risks than ever before, mitigating these risks is crucial to keep a supply chain moving with minimal delays. Modern transport and supply chain management risks include:

Weather conditions - Bad weather, such as snowstorms, heavy rains, or even natural disasters such as hurricanes can disrupt transportation routes. Such delays increase fuel consumptions and delay shipments. With Planimatik’s real-time tracking feature, you gain insights and control into your route to avoid potentially problematic weather conditions.

Labor shortages - Truck driving is a grueling profession. According to the American Trucking Association, in 2024, there will be a driver shortage of 82,000. With fewer drivers, greater demand is placed on those drivers on the road which requires smart scheduling. Planimatik’s Scheduling feature optimizes Less Than Truckload (LTL) shipments for maximum efficiency, reduced downtime, and adaptable schedules.

Inefficient routing - Bad decision-making regarding the routes to transport goods can lead to increased costs, delays, higher emissions, and poor customer satisfaction. With Planimatik’s Stats feature, you can easily access freight operation data with a comprehensive snapshot of your logistics performance. You can track average costs, filter data by dates, monitor pick-ups and deliveries, and gain insights into trailer utilization. When you are empowered to make informed decisions, it will reduce the significant risk of inefficient routing.

Technological issues - Integrating new technology with legacy systems in transportation and supply chain management can be challenging. Poor integration can result in miscommunication, data discrepancies, and disruption in the flow of information across the supply chain. Planimatik’s Automated Planning is particularly helpful with RFPs. Ideal for companies regularly handling large loads on a daily or weekly basis, this feature enhances precision and reliability in your logistics operation. It is designed to optimize the planning of recurring lanes, eliminating the need for manual intervention week after week.

Planimatik: Technology Solutions for Transport and Supply Chain Management

In this article, we learned that your supply chain’s success depends on the strategic use of appropriate transportation. Whether transporting by road or air, transport and supply chain management is about optimizing the movement of goods at low costs with the best service levels to meet customer expectations.

As a transportation coordinator, your success depends on ensuring routing efficiency to minimize fuel costs and speed up delivery times while keeping everyone on schedule.

You can leverage modern supply chain management software to optimize transportation, manage supply chain complexity, and stay ahead of the competition in your logistics operation.

If you’re ready to take your logistics operations to the next level, consider Planimatik’s suite of supply chain management tools with features like real-time tracking, route optimization, and data analytics to streamline for success.

Are you ready to transform your logistics operation? Schedule a free demo today.