Transportation cost is one of the major budget issues for companies of different sizes. However, this problem is especially topical for the large corporations with broad customer bases characterized by the diversity of locations. Due to the need to serve to the consumers located in different areas without overspending on the supply chain and transportation, the corporations are to apply smart logistics and design flexible and cost-effective transportation routes allowing a broader reach with moderate cost. As specified by Sreenivas and Srinivas (n.d.), transportation is the activity involved in a wide range of operations such as production, manufacturing, delivery of resources and final products, and product returns. The smart and well-calculated coordination of all these aspects is needed for the supply chain to reach the maximum of its efficiency and improve its adaptability and flexibility.
There exists a multitude of strategies designed to increase the cost-effectiveness of the supply chain. As a Vice President of Supply Chain Management in a major organization, I would first focus on the creation of an inbound supply chain. The latter task includes the strengthening of the receiving docks and personnel teams, as well as the creation and maintenance of vendor compliance policies allowing to establish a leaner approach to supply based on just-in-time practices (Barry, 2017).
Moreover, in a major company with a broad and diverse customer base it is critical to establish the appropriate number of distribution centers; moreover, the decision needs to be made whether the centers should be owned by the organization or rented from a third party (Schecter & Sander, 2003). In addition, when an intensive flow of goods and products needs to be handled on a daily basis (this is usually the case with the large organizations with multiple suppliers and clients), it is critical to pay attention to the warehousing capacity of the chain. In other words, the storage needs to be maximized for a more effective shipping and moving operations that add flexibility to the transportation activities and allow transforming and adjusting the routes should the need arise (“Improve logistics efficiency,” 2014). The adaptability and flexibility of the supply chain are the core factors helping the organizations survive and stay at the top of the competition in a fast-evolving business environment of the contemporary world (O’Byrne, 2011).
As for the metrics driving the change, I would use internal research focused on the estimation of the total transportation cost prior to the implementation of the new practices and the evaluation of cost minimization that is available in correlation with its impact on the efficiency (Fay, 2012). The benchmarks for the process will be established based on the most optimal solution. Further, the overall supply chain strategy will be subdivided into several components the efficiency of which will be estimated on a regular basis (monthly or quarterly) so that it can be seen what factors impact the effectiveness of the supply chain and in what manner.
In conclusion, out of a multitude of practices helping to maximize the effectiveness and minimize the cost of the supply chain, I, as a Vice President of Supply Chain Management in a major organization , would focus on the maximization of the warehousing capacity, the establishment of distribution centers, and the creation of an inbound supply chain with stronger receiving docks and a vendor compliance policy. These strategies will allow a higher adaptability and flexibility of the supply chain helping the organization regulate and transform it when needed without losing profit.
Barry, C. (2017). 10 ways to improve warehouse efficiency and reduce costs. Web.
Fay, G. (2012). Maximize your transportation spend. Web.
Improve logistics efficiency. (2014). Web.
O’Byrne, R. (2011). 7 ways everyone can cut supply chain costs. Web.
Schecter, D., & Sander, G. (2003). Delivering the goods: The art of managing your supply chain. Web.
Sreenivas, M., & Srinivas, T. (n.d.). The role of transportation in logistics chain. Web.