Tailored Transportation

Tailored transportation is nothing but customised transportation of products by using various types of transportation network and modes based on the product and the customer characteristics. Tailored transportation is a tool in the hands of supply chain managers to helps reduce the total costs to the firm.

With the help of tailored transportation, a firm is able manage each of its customers cost effectively and with suitable responsiveness, some of the things to be kept in mind while adopting tailored transportation are –

• Customer density and distance – Firms consider tailored transportation on the basis of customer density and distance from the warehouse while designing the transportation networks.
• Size of the customer – Firms must consider tailored transportation by size of the customer while designing transportation networks. Large customers can be supplied using a truck load carrier, whereas the smaller customers will require a less than truck load carrier or Milk Runs.
• Product value and demand – Firms must consider tailored transportation by product value and demand. The level of inventory aggregation and the modes of transportation used in a supply chain network should vary with the demand and value of the product. High value products within high demand must be subject to disaggregate cycle inventory and aggregate safety inventory.

Transportation in Practice

 Transportation costs form a major fraction of the total supply chain costs, a thorough analysis is required by managers to select appropriate modes of transport in order to reduce costs and manage the level of response required. In order to achieve these two goals, a firm may have to fulfill the following conditions to make their transportation decisions effective –

• Align transportation strategy with competitive strategy – Company’s transportation strategy must support its competitive strategy. Functional incentives should be introduced to achieve this goal.
• Keep in mind both in-house and outsourced transportation – Supply chain managers must consider an appropriate combination of in-house (or company owned) transportation and outsourced transportation to meet their needs.
• Be compatible with e-commerce – Transportation systems must be able to provide on time delivery (i.e. needs to respond quickly) but must also be able to exploit the opportunity for aggregation; and even with competitors in some cases, they should be able to help reduce the transportation cost of small shipment.
• Use technology – Supply chain managers must use information technology available to them in order to decrease the transportation costs and increase response in their transportation networks.
• Allow design flexibility in transportation network – Uncertainty in demand and availability of transportation should be taken into account while designing transportation networks. If one ignores uncertainty in transportation, then there is a greater use of inexpensive and inflexible transportation modes that perform well as per planning.