Shining a light on the “black box” of transportation

Supply chain linkages are like a skeleton. They establish a business structure so that supply chain partners can fulfill their common strategic goals. Logistics acts like a circulatory system within a supply chain, giving it vitality. This structure-and-flow relationship is symbiotic—you can’t have one without the other if you expect the supply chain to work properly. Yet when we consider these links, one player is never featured as prominently as the others: transportation carriers.

Most supply chain professionals know the generic names of typical supply chain partners. Upstream we have end customers, retailers, wholesalers, manufacturers and raw material extractors. Contractual linkages among these partners form a standard supply chain. But there’s more here than meets the eye. Intermediaries are often present between any two of these partners, especially when one or both hire an agent to better fulfill the relationship. This is especially true when linkages take place across different countries. Agents who can deal with cultural and regulatory differences between the two partners have their place. Whether or not supply chain partners are in the same country, transportation is another important area. When items have to be shipped a considerable distance, it’s very likely that a for-hire carrier will be needed.

There is a reason why transportation is the most outsourced logistical activity today: Organizations typically don’t want to maintain a private conveyance—let alone an entire fleet of trucks and trailers. At the same time, transportation is often seen as a “black box” where items are shipped from origin to destination with supply chain partners only concerned about what’s happening during this process when something goes wrong along the way.

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