The Transportation Capacity Crunch Is On Its Way: Don't Let It Grind Your Supply Chain

I was recently discussing transportation capacity on Twitter with a few folks. The big question was: Is the capacity crunch lessening? What’s your view on the subject?

I think the transportation capacity crunch is bound to increase. The recession eased domestic transportation capacity issues in the short-term, but essentially the problems are unchanged.

With this eventual post-recession rise in shipping volume comes the rise in transportation cost rates and fuel costs as well. How do you keep supply chain transportation costs down and still maintain a well-controlled transportation plan? Supply chain managers are interested in this, and so are executive-level leaders who see the opportunities for post-recession cost savings in their operations.

This transportation question overlaps perfectly with the blog post series I started recently, looking at the supply chain mega-processes: Buy, Make, Move, Store, and Sell. Transportation is the Move piece, and Store relates to inventory, storage, and similar processes.

The “Move” Mega-process and Profitable Growth

One way to save on transportation costs is outsourcing, which was another recent topic being discussed on Twitter. Transportation outsourcing providers offer a full suite of services with potentially advantageous cost savings. (Six more ways to cut transportation costs can be found in this new Tompkins white paper, "Leveraging the Supply Chain for Increased Shareholder Value.")

The "Store" Mega-process and Profitable Growth

Inventory costs (the Store mega-process) can be so difficult to reduce that "storage cost cutting" seems like a contradiction in terms. With the use of supply chain planning, purchasing and procurement management – and the application of best practices -– profitable growth can be reached both in the short and long term.

The supply chain, and its potential to enhance an organization'’s profitable growth goals, is really under the spotlight right now. As we enter 2011, supply chain value will continue to be a focus for any company looking to reduce risk and uncertainty while achieving profitable growth.

What are your thoughts?

Jim
Tompkins Associates