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Dependence of Suppliers on Multimodal Transport - Essay Example

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Dependence of Suppliers on Multimodal Transport

As the supply chain lengthens and transport distance increases ICs must find more cost effective methods of shipment. In this competitive market, customers expect fast delivery and quality product and services at the lowest price possible. "Trade and transport are inextricably linked: efficient transport services are a prerequisite to successful trading" ("Multimodal "UN 2006, screen 1). To compete, ICs are turning to MTO operators to handle the complexity of logistics required to accomplish timely delivery of the finished product, a marketable product with an economic value to the customer ready to be used without the requirement of further alteration of its form, ("Product" 2005) also the most critical, direct link with the customer.
The complexity of international transportation of finished product, goods and services shipped to the end user, has resulted in a lengthening international supply chain (ISC) comprised of economic, technology, social/legal and environment issues and innovations necessary to improve efficiency and effectiveness. (Trienekens et al. 2003). Figure 1 demonstrates an ISC Flow Chart. The main intent of the ISC is the smooth integration of suppliers and customers within one process from raw materials receipt to delivery of finished goods (end user product) to the customer. The continuum of the supply/demand cycle and increased innovations throughout the ISC create a two way dialogue at all stages of the chain increasing efficiency and effectiveness.
Figure 1: ISC
(Marlow 2004)
As seen in Figure 1, the expanded ISC encompasses all process within a company and has further expanded to include vendors and customers all working in tandem: to maximise buying; materials management; production; and shipment to customers. This increased efficiency is accomplished through information sharing and seamless coordination of transportation - land, sea, rail and air, and of storage and handling between each phase of the transportation chain all handled by the MTO. Multimodal transport is the door-to-door service from supplier to customer in another country utilising multiple modes of transportation to effectively and efficiently ensure delivery. ("Multimodal" 2006;"Intermodal" 2006). The Multimodal Transport Operator is "any person whoconcludes a multimodal transport contract and assumes responsibility for the performance of the contract" ("Implementation" 2001, p.5).
Critical Analysis: The Inter- Dependence of Finished-Product ISCs and MTOs
Companies are relying more and more on MTOs which offer door-to-door service to meet customer needs while coordinating all logistics involved in multimodal use. (Coyle et al. 2003) One factor leading to the development of the MTO was containerisation, placing smaller units inside larger containers for shipment. (Hoyle et al. 1992) The last area to define is the MTO hub, centralized ...Show more

Summary

As the world continues to shrink due to market globalisation, the importance of intermodal transportation partnerships and expansion of multimodal transport infrastructure are critical to optimising supply chain functionality. According to Rondenelli and Berry there are four movements leading the international company's (IC) quest to continued success: "continued economic globalization as the driving force in trade and investment, the growing demand for speed-to-market product delivery, the adoption of agile manufacturing and business practices, and the need to manage supply chains more efficiently " (2000, p…
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