The Role of Transportation in Supply Chain, How it Helps in Cost Cutting
Transportation plays an important role in the supply chain to make raw material available for the company to manufacture and make the easy supply of product to the distributors. It has been also considered to decide the price of the product.
Proper selection of the transportation reduces the cost of the product. Most companies are making their business in the global market and making import and export which is increasing the cost and price of the product as well.
Appropriate transportation facility helps to reduce the cost of the product when raw material has been transported through shipping then it required less cost in comparison when it has been transported through other means of transportation.
We all are aware of the pricing of the fuels which is increasing day by day, and it rising cost of the product, and it is available in the market at a higher price and company losing their existing customers so it is necessary to develop a proper transportation system to cutting the cost of raw material and finished product as well.
Logistic department of the company tried to make the proper flow of raw material as well as the finished product. For this logistic department design transportation strategy in such way that it leads to cost cutting. There are lots of factors which affect this strategy like mode of transport, a number of warehouses, market size. Mode of transport is the key factor
Mode of transport is the key factor in this strategy like product flow should be by train, by road or with the help of other modes of transportation. The second factor is the number of warehouses on that route; warehouses are the checkpoint of raw and finish material here company store material and the point of distribution. Market size is the third factor if
Market size is the third factor if the market size is a small company manage that market with the help of nearby warehouses or distribution point if the market size is a big company has to plan separate distribution strategy. After the calculation of all these factors company select the best option out of all and this should be a long-term plan for the organization.