8. Geographic specialization

There are many ways to categorize and describe the economic importance of transportation. For society or the economy as a whole, transportation makes possible geographic specialization or territorial division of labour. Geographic specialization takes place when a nation or region or state or city produces those products and services for which it is best suited in terms of its capital, labor, raw materials and other resources and talents.

9. Large-Scale Production

The role of transportation in large-scale production is similar to that discussed in connection with geographic specialization in that the availability of an adequate transportation system is a requirement to sustain large-scale production. The benefits of large-scale production in terms of economies of scale, production efficiencies and lower prices are well-known.

The transport strategy should recognize:

1. Customer requirements.

2. Shipments must move timely

3. Mode selection.

4. Carrier relationships.

5. Measuring/benchmarking.

6. Regulatory impact.

7. Carrier mergers and alliances.

8. Flexibility.

15. Describe some of the dimensions upon which supply chain relationships may differ?

The term "relationships" covers a lot of ground in supply chain management. There are strategic relationships, tactical relationships, transactional relationships, internal relationships, and possibly more. There are also relationships among members of the supply chain community.

Types of Relationships

1. Vertical: The traditional linkages between firms in the supply chain such as retailers, distributors, manufacturers, and raw materials suppliers

2. Horizontal: Business arrangements between firms that occupy “parallel” positions in the supply chain (e.g. two ocean carriers that share ship capacity)

3. Full Collaboration: Business arrangements between firms that occupy both vertical and parallel positions in the supply chain (e.g. consortium of carriers and shippers working to reduce empty truck movement)

Regardless of form, relationships may differ in numerous ways:

• Focuses (supplier focus, firm focus, customer focus)

• Duration (ST, MT, LT)

• Obligations (duty, responsibility)

• Interaction/Communication

• Cooperation

• Flexibility

• Planning

• Goals

• Performance analysis

• Benefits and burdens

17. What are the possible reasons for a company to outsource its logistics? What does this trend mean for today’s businesses?

We all know why companies outsource logistics functions - outsourcing should allow them to save money and focus on their primary goals. They look to reduce costs, shorten cycle time, improve shareholder value, decrease inventory, focus on core competencies, gain information technology, increase expertise and more.

Outsourcing is a viable business strategy because turning non-core functions over to external suppliers enables companies to leverage their resources, spread risks and concentrate on issues critical to survival and future growth. One way of extending the logistics organization beyond the boundaries of the company is through the use of a third party supplier, or contract logistics services.

One of the most important reasons why companies outsource their logistics functions is the need to decrease the number of warehouses, vehicles and excess inventories and to reduce shrinkage, and labor costs. Such moves bring down fixed and working capital investment., Companies can therefore focus on their core business activities and share the risks.

Most firms direction considerable attention to working more closely with their channel partners, including customers and suppliers, and with various types of logistics suppliers. This has resulted in the development of meaningful relationships among the companies involved in the overall supply chain activity.

Today more and more business processes are being outsourced. In the West, processes like bill payment, credit tracking, invoice generation, HRD, transport and warehousing are all being outsourced. Outsourcing of these activities may indeed add considerable value to the product.