VP Letter, Essay Example

It is important for organizations to create an optimal supply chain procedure due to the productivity and reduction of costs that can result. Although all the supply chain steps are important to consider when developing an accurate business plan, it is important to note that a lot of unnecessary expenses could be cut by optimizing the transportation component. Many business professionals and third party transportation companies offer insight to businesses about how they can reduce transportation costs and ensure overall efficiency of their transportation systems.

Firstly, it’s important to coordinate transportation with inventory and vendor strategies. In “Efficient transportation logistics can reduce other supply chain costs”, the Genco company recommends that businesses assess their less-than-truckload (LTL) rates (Genco, n.d.). They argue that there is a way to increase the rate at which inventory travels without increasing the LTL rate. Increasing the shipping rate means that a company will be able to ship more inventory and in a quicker time frame. By attempting to decrease the LTL rate, companies will save money on extraneous travel expenses such as gasoline and delivery personnel. Since there will be less trucks on the road if all trucks are filled to the maximum capacity, this LTL decrease could make a large difference for a company if they previously focused on speed of delivery rather than efficiency. To take measures that will ensure speed will be maintained throughout this process, the company should reallocate its resources to the warehouse and inventory; if there are more people available to determine the organization of the products on the trucks, the LTL rate will decrease and the speed of delivery may increase as a result of the additional labor.

To determine whether this method is successful, it’s important to determine both the LTL rate and the speed of delivery both before and after the implementation of this process. If the total LTL count decreases by at least 15%, we can claim that this new policy is helping to decrease the LTL, although there are extra steps we should take to ensure this number decreases further. If we are able to decrease the LTL by at least 50%, we can conclude that we are doing a good job and shipping our products efficiently.

Next, we must measure the speed of delivery. To ensure this process is favorable for our company, the average delivery times should be measured for trucks that travel to the most common and important destinations to the business; this measurement should take into account all deliveries that have taken place over a month’s time before the implementation of the LTR reduction plan. Next, after the LTR reduction plan has been implemented for at least three months in order to ensure that the employees have mastered their altered job functions, the delivery rates will be measured. The new delivery rates will be compared to the old ones and a percent change will be calculated to determine whether the LTR reduction has an impact on speed of delivery. If the speed of delivery has significantly decreased, we will switch back to the old operations method and consider alternative delivery options. However, if the speed has stayed the same or increased, the LTR reduction plan will be considered successful; even if there is no increase in speed with this plan, there is an increase in efficiency which benefits the company.

References

Blanchard, David. (2010). Supply Chain Management Best Practices (2nd ed.). John Wiley & Sons.

Genco. (n.d.). Efficient transportation logistics can reduce other supply chain costs. Retrieved from http://www.genco.com/resources/logistics-article.php?aid=800513154