Introduction
Every organization's main objective is to maximize profits and minimize cost. Minimizing of cost may require top managers in organizations to implement strategies that maximize efficiency and minimizes the cost of transportation in the supply chain. High transportation cost in a supply chain can be detrimental to an organization's objectives. As a vice president of supply chain management, there are various strategies that I would come up with in order to ensure efficiency and minimized cost in transportation. To assess whether these strategies are effective it is also important to come up with various benchmarks and metrics that measure their success.
Processes To Implement For Efficiency and Minimized Cost of Transport
Minimizing cost means understanding ones total transportation cost. While this seems to be so obvious, it is important to understand all the cost that may be involved in the transportation process. There are various things that I would consider as a vice president regarding this topic. All cost should be identified within the transportation budget process, and no cost should be hidden from the budget. All transportation cost in the organizations budget is tracked for auditing and analysis process. It is also important to understand all the transportation system costs. In understanding the transportation cost, it is important to factor in issues such as whether or not the all the organization's staff functions are being performed by the transportation portion during the supply chain process. To ensure an effective understanding of the transportation cost, I would come up with a team of experts to help in the freight audit process, and no factor of transportation is left out.
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Another key strategy to help in implementing efficiency and minimized cost in transportation would be obtaining a business transportation intelligence system that is scaled to the organization's needs. Many organizations operate in an accelerated velocity of a supply chain that result in a high level of complexity hence often using old data rather than just operating in real time. A transportation business intelligence system can help an organization rid itself of such problems. An accelerated velocity supply chain leads to non-optimal service levels, problems in productivity and the quality of services. Improvement in transportation cost is only possible through a real-time operational analytics. The system chosen should be flexible enough to consider all the changing market dynamics that lead to an increased cost. Good business intelligence should also be able to support key performance indicators.
Frequent auditing also plays another key role in the implementation of an effective transportation cost. An auditing committee and executive management can then be frequently updated about all the processes that can reduce the transportation. Through auditing management, an organization can rely on the process and systems to manage all the risks in costs and additional benefits that the organization can accrue as a result of a reduced cost. Auditing process helps keep in check all the processes that are involved in the supply chain. For an effective auditing process, it is important to come up with a team of experts that can aid in all matters of the transportation process.
Creating an awareness campaign and establishing a corporate transportation mandate. The processes involved in the supply chain can be linked to various functional departments that impact transportation cost one way or the other. It is important to create effective transportation cost awareness in all areas of an organization. A corporate transportation mandate, on the other hand, can help in creating necessary internal dynamics to help speed up the processes of driving to a cost reduction long-term plan.
Benchmarking and Metrics to assess the success of the Strategies
In supply chain benchmarking and metrics can be referred to as the processes of improving performance by continuously identifying, understanding and adapting to outstanding practices that have been put forward by management. They also include leading indicators that specific processes are successful. To assess the strategies above, I would use the following benchmarking and metrics processes.
Collecting operational and managerial data about all factors of cost and frequently comparing them. The data collected is compared with an interval of 4 months and all progress noted. The data collected is also able to identify all the loopholes, and various recommendations can be taken. Data can be collected from the internal and external auditing. The quantitative data is measured in a performance index form.
Receiving and inspection benchmarks can also assess the success of the implemented strategies. Frequent inspection is made on receipts and other stages of the supply chain in order to identify all the nonconforming procedures and transportation products. Receiving feedback from various people involved in the processes also helps in assessing the success of the process and procedures.
Creating an improvement roadmap in all processes involved in reducing cost. The roadmap identifies all the implemented strategies that strongly contribute to the success of the organization in accordance with the objectives. The strategies are arranged according to the best strategy. Emphasis is given on the best procedures and their contribution while an improvement strategy is applied to the lagging procedures.
Conclusion
For an organization to achieve its objectives, it is important to have a cost minimization and efficiency plan. When an organization is incurring a high transportation cost, it is likely not to achieve its profit maximization objectives. It is hence important to come up with various process and procedures to ensure strategies implemented to reduce cost are successful. Such processes include; creating a transportation cost awareness campaign and establishing an intelligence system. To ensure these processes work it is also important to come up with various benchmarks and metrics that assess their success.
