Transportation Needs to Be Integrated Within a Supply Chain

Transportation Needs to Be Integrated Within a Supply Chain

The five levels of an integrated supply chain

Transportation is central to any manufacturer's supply chain processes, and yet very few companies have effectively integrated the transportation function into their operations, observes Robert Handfield, professor of supply chain management with North Carolina State University. "There's a big difference between knowing what it takes to intelligently integrate transportation into a company's supply chain practice, and actually doing it," Handfield points out. "And it's significant money that's being wasted."

Handfield, who along with consultant Charlie Bernard recently wrote a report for Transite Technology on how to integrate transportation into the supply chain, believes there are five levels of integration, with most companies still stuck on the first (lowest) or second level. "It takes a corporate commitment to get to the fifth level, but this is where companies get a full view of their supply chain -- the ability to track your product from beginning to end, letting them troubleshoot problem areas as they happen. This information is not only useful to the head of supply chain, but almost every function within the company."

Robert Handfield, professor of supply chain management, North Carolina State University

The Five Levels of an Integrated Supply Chain

Following are examples of the progression from the lowest to the highest levels of supply chain integration:

  1. Ad Hoc -- Physical distribution and shipping process are not defined.
  2. Defined -- Internal process for shipping and carrier selection are defined and documented.
  3. Managed -- Policies and processes for shipping are defined and implemented.
  4. Leveraged -- An aligned transportation strategy is agreed to across all business units with single portal for access.
  5. Optimized -- Customer marketing channels are aligned with all transportation providers and decision-making process documented.

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