Measure Transportation Efficiency with a Broad Set of Metrics
Supply chains and logistics have become increasingly complex, and it has become important to measure transportation efficiency. This should be done without ignoring any of the important metrics.
With the increasingly complex supply chains that organizations must deal with and often manage, it has also become increasingly important to be able to measure transportation efficiency accurately. Supply chains, of course, refer to the path from initial supplier to the final consumer, and are often quite involved, being composed of many different firms and agencies. Raw materials are gathered and processed; products are manufactured at factories, transported to warehouses and retail outlets, and delivered to end consumers. Each part of the chain depends to an extent not only on those parts immediately before and after them, but on all the other parts of the chain. In many cases, a catastrophic failure at any part of the chain would have repercussions on all levels, which might eventually lead to a larger failure of the supply network itself.
Since transportation plays such a huge role in these systems, it would only make sense to be interested in maximizing the efficiency in transportation processes. But, again, even restricting attention to transportation alone, there are still a large number of factors that should be considered. And often, it is not even possible to narrow the field down to just a couple of factors because of how many of these factors are interrelated, much like the steps in the bigger supply chain. Optimizing according to just one of these metrics might seem to be a good idea, but without the proper analysis and synthesis with other factors, it could very well just lead to lesser efficiency overall.
For example, one factor that is obviously quite important is transit time. This refers to how long a shipment is in transit, or, that is, how long it takes to arrive at its destination from the time it leaves its source. Transit time would depend on many things, such as the transportation channel or channels to be used, local geographic conditions, along with specific considerations, such as fragile cargo and other circumstances. In general, average times are provided by the shippers themselves, and transit times are measured against these estimates obtained through experience. Optimizing transit time while ignoring all other factors is obviously a bad idea. Because although it might lead to greater efficiency in terms of turnover through time, it would also most probably lead to greater costs and greater risk of damage and loss.
Managing transportation should always start by ensuring that there exists a system to measure transportation efficiency. This may seem like common sense but it bears repeating. Management aims to improve the performance of a process or organization and this improvement will only be tangible if accurate comparisons can be made. These comparisons should be based on the relevant metrics or measurements, of which transit time is just one among many. By keeping a broad base of transportation metrics and maintaining an up to date, accurate tracking system for measuring and recording these, management will be much better able to make optimal decisions. And a smoothly working, efficient transportation system will go a long way towards making supply chains and networks that much more cost-effective.
Tags: efficiency, transportation
