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Product distribution is an integral element of commercial activity, as it represents a finishing, most responsible stage of achieving the purposes of the business and providing consumers with the necessary goods. The classical function of the sale is the formation and the maintenance of an effective system of moving products from the manufacturer to the end-user. The same function, only from a technological position is carried out by transportation. In such a way, it is obvious that transport maintenance directly influences the sale organization, and accordingly on the competitiveness of a product.
Choosing the type of transport along with cost expenses (transport expenses, warehouse expenses, expenses for packing, etc.), it is necessary to consider that during direct transportation, damage, and cargo loss, loss of weight and other kinds of risks are possible. Besides, the cargo delay along the line can lead to the refusal of the goods of a given supplier by the consumer. In some cases, for untimely delivery of cargoes, penalties can be charged.
During the process of choosing the type of transport, it is necessary to consider not only the costs but also the long-term consequences connected with the quality of service and the image of the enterprise. The transport choice depends on a set of such factors, as a market conjuncture, the stability of the prices, the stock level of the goods, and raw materials at the enterprise. In this connection, the decisions for the choice of a transport scheme, as a rule, have a short-term, operative character.
In an ideal world, transportation will meet all the key performance indicators set by the company. Fast, reliable, and cheap, all combined together. However, in the real world, the company should define top priorities, and establish a compromise between different factors affecting the supply chain. In that sense, the process of compromising could be called a “trade-off”.
Applying the concepts of trade-offs to the fashion industry in Qatar, the transport choices should be evaluated based on inventory and responsiveness. (Chopra and Meindl, 2007) Another factor that should also be considered is cost minimization.(2007) As most of the products in the fashion industry are distributed locally, the transportation trade-offs mainly are concerned with the import deliveries. In the area of exclusive and expensive products, which have a demand in Qatar, the key factor is responsiveness. The cost factor is not crucial in such a formula. “The ideal logistics system for a given situation depends on process capabilities, resource costs, and item, demand, and customer profiles.” (Peltz, 2007)
In such a manner, the dependant factor is customer profiles, and accordingly, when choosing the transportation, the optimal solution is the airfreight. The cost disadvantages are sacrificed in favor of timely delivery. In addition, the inventory factor is almost absent as these goods are mostly preordered, and accordingly do not have to be stored.
Another part of the production is concerned with ordinary supplies. The slowest type of transportation will take no more than 2 weeks for the shipment and delivery. Such time interval does not allow the goods to be outdated, nor they are able to break, thus as “the supply chain management involves dealing with conflicting objectives” (Jain, 2004). The main factor is the cost of the delivery. In that sense, sea freight is the cheapest transport available to deliver the goods, and at the same time, the responsiveness is not low to a degree that affects the customers.
It can be seen that a trade-off, is a process of finding what element can be sacrificed for top priority objectives. In case both objectives are important, other factors should be included for consideration.
References
(2007) Exploring the Strategic and Operational Tradeoffs in Internet and Physical Store Retailing. Knowledge@Emory.
CHOPRA, S. & MEINDL, P. (2007) Supply chain management: strategy, planning, and operation, Upper Saddle River, N.J., Prentice Hall.
JAIN, S. (2004) SUPPLY CHAIN MANAGEMENT TRADEOFFS ANALYSIS. IN INGALLS, R. G., ROSSETTI, M. D., SMITH, J. S. & A., P. B. (Eds.) Winter Simulation Conference.
PELTZ, E. (2007) Logistics: Supply Based or Distribution Based? Army Logistician, 39.
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