Chapter 10 ANSWERS TO STUDY QUESTIONS
Discuss the role of transportation in the supply chain. Provide examples of how transportation can positively
and negatively impact supply chain performance.
Answer: Conceptually, a supply chain is a network of organizations that are separated by distance and time.
Transportation provides the critical links between these organizations, permitting goods to flow between their
facilities. By bridging these buyer-seller gaps, transportation allows organizations to extend the reach of their
supply chains beyond local supplier capabilities and market demand. With efficient, effective transportation
capabilities, organizations can build global supply chains that leverage low-cost sourcing opportunities and
allow them to compete in new markets. Transportation service availability is critical to demand fulfillment in the
supply chain. Demand for transportation service can exceed capacity in a strong economy.
Transportation efficiency promotes the competitiveness of a supply chain. In terms of supply management,
cost-effective transportation helps companies gain access to higher-quality, lower-priced materials and realize
economies of scale in production. Likewise, low-cost transportation improves demand fulfillment opportunities.
By keeping transportation expenses reasonable, the total landed cost of a product (its production costs plus
transportation costs and related supply chain fulfillment costs) can be competitive in multiple markets. Not only
must transportation costs be effective, but service capabilities must also be in line with customer requirements.
Inexpensive transportation is of little value to a supply chain if the product does not arrive as scheduled and
damage free to the correct location.
High-quality, customer-focused transportation has a direct impact on an organization’s ability to provide the
“Seven R’s of Logistics”— getting the right product, to the right customer, in the right quantity, in the right
condition, at the right place, at the right time, and at the right cost. Additionally, transportation can create supply
chain flexibility. By working with carriers that offer a range of transit times and service options, organizations
can satisfy supply chain demands for expedited, next-day service as well as more economical, standard
delivery requests. In addition to the linking and customer service roles, transportation plays a key role in supply
chain design, strategy development, and total cost management.
• Transportation service availability, capacity, and costs influence decisions regarding the number and location
of supply chain facilities.
• Transportation capabilities must align with the company’s strategy.
• Intentional tradeoffs should be made between transportation and related activities (e.g., procurement,