Transportation Is a Critical Link in the Overall Supply Chain. Do You Agree That It Can Be Viewed as the Glue That Helps to Hold the Supply Chain Together?

Global Distribution and Transportation

Assessment 1

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Topic: Transportation is a critical link in the overall supply chain. Do you agree that it can be viewed as the glue that helps to hold the supply chain together?

Student ID: 19069919

Name: Dang Tran Viet Khanh

Lecturer’s Name: Dr Alvin Ang

Introduction

At the beginning, the production process was quite simple, including the movement of goods from raw material suppliers, producers and consumers (Tang et al., 2011). Researchers point out the emergence of a more complex supply chain, today, because of shorter product lifecycles as well as increased demand at all stages. According to Chopra et al. (2016), the process in which all organizations are linked by direct or indirect methods, is widely understood as the supply chain which leads to result that customers are provided service and merchandise. Each supply chain is distinctly associated with each individual product. The origins of the Cadbury chocolate which is ready to be distributed to consumers are cacao beans that grown on farms.

Supply chain is always moving and its size, configuration and shape always change and develop. This takes place in both the management, control and coordination of the supply chain. According to Mandal (2012), the emergence of new supply chains is possible because of several causes such as changes in production technology (Min-Jeong et al., 2013); the emergence of a whole new product category (Hahn, 2015); or penetration into new geographic markets (Russo et al., 2012). Fritz (2014) and Wang et al (2015) indicate that when demand is no longer large enough to boost the supply chain, the supply chain will decline or disappear. The Supply Chain Council defines a supply chain as the activities of the supplier's supplier during the production and distribution of the final product to the customer's customer. These activities, including supply and demand control; searching for materials; production and assembly; warehousing and inventory tracking; entry and manage orders; distribute goods to customers through all channels, are defined by five basic processes that include plan, source, make, deliver and return (Sillanpää, 2013). Casson (2013) argues that supply chain indicators such as shape, size and nature are determined by economic considerations that are critical to supply chain. Nevertheless, not only the economic and technological dynamics, the impact on the structure, operation and coordination of the supply chain can also be caused by other forces such as political factors (Buckley et al., 2007; Gereffi, 2014), regulatory frameworks (Woody, 2012), strategic choices (Ketchen et al., 2004), and sustainability agendas (Pagell et al., 2009). The structure of the supply network is significantly altered by global sourcing strategies (Jia et al., 2014). Gasparro (2015) investigates that, in order to better serve its market, the active in reengineering of production and marketing networks is necessary for companies. At each stage and at all stages of the supply chain, which include manufacturers; transportation; distribution; wholesale; retail and end customers, the reliable and timely distribution; ensuring the quality and quantity at the lowest cost are expected by all partners (Mandal, 2012).

In the supply chain, the partnership is extremely important to help improve supply chain performance (SCP). In addition, the concept of supply chain management (SCM) is paid attention to by companies that are subject to strong global competition and co-operation as the core element of their goal achievement (Dos Santos et al., 2008). In the context of the supply chain, partners are particularly concerned about the continuity of performance improvement. Morgan (2007) suggests that the increasingly complex task of firms is to find tools to monitor and improve supply chain performance. Another concept that needs to be addressed here is supply chain management. Among many concepts that address supply chain management, it is widely known as logistics, supply and supply chain control (Soni et al., 2010). Sillanpää et al (2013) provides different categories, which are considered as drivers of supply chain performance, including facilities, transportation, information, inventory, sourcing, and pricing. Furthermore, supply chain performance is also influenced by information technology (Kim, 2016); flexibility, planning tools, communication tools, company environment (Henry et al., 2012); policy and regulation, markets and competition (MacCarthy et al., 2016). There is an idea that transportation is seen as an important factor in the supply chain. Soni et al (2010) suggest that the spatial value of supply chain related products will be generated by transportation. Transportation is made up of decisions about the size, type and location of the transportation fleet. Activities such as network design or transportation options are the major components of transportation. The company may own shipping methods or hire a third party to take on shipping. The accuracy of the idea whether transportation is glue that spans stages in supply chain will be discussed in the next section.

Discussion

One of the most important components in the supply chain is transportation (Tsao, 2012). The rise in demand for fast, predictable and cost-effective transportation has promoted the movement of goods based on the basis of door-to -door or intermodal that related to one or many types of transport such as road, rail, air and maritime (Soni et al., 2010). Throughout the years, the logistics transportation industry has been radically transformed by intermodal supply networks. The number of suppliers and customers, who choose the form of intermodal transport to distribute goods from manufacturer to consumer, is increasing. They do not need to be concerned with the means of transportation, but only with regard to liability and delivery time. In his study, Toptal (2009) also referred to transportation costs as a factor to consider in the supply chain. The cost of a supply chain can be reduced when transport costs are properly calculated when making additional inventory decisions. As the backbone of society as well as the supply chain, transportation is an integral part of the supply chain (Houshyar, 2013). The author argues that any threat to the transport network is considered as a weakness of the supply chain. The decline of the efficiency of supply chain operations, and the addition of the supply chain costs are the results of the unreliability of the transport system. Transport disruption entails the delay or stoppage in the production of goods as well as the flow of goods. Coyle et al. (2016) argues that in the whole of supply chain, companies will carry more inventory or safety stock when untrustworthiness in transport services occurs. Transport time also affects inventory. As the transit time is longer, as a consequence, there is an increase in the amount of inventory. Transport therefore is an important link in the supply chain.