Fuel prices remain volatile and continue to increase. The price of fuel has a direct impact on transportation costs. Some experts have calculated that each $10 increase in the cost of barrel of oil results in a 4-cent per mile increase in transportation rates. That adds up! For an average arviem client, this would mean around 400US$ more for each and every shipment. Increased transportation costs can affect the optimal design of a supply chain. With low transportation costs, it often makes sense to pool inventory in fewer locations so you can optimize space, labor and inventory pooling. However, as transportation costs increase it is more optimal to place inventory closer to customer locations, reducing overall transportation miles. However, as a distribution professional, it can be significantly more complex to manage multiple smaller warehouses rather than a single large facility. Another key to managing the fuel-optimized supply chain is transportation...
In a world faced with the prospect of tightening supplies, higher energy costs heightened geopolitical risk, and strained transportation networks, advanced supply chain technologies will become mission-critical for many more companies. The supply chain task is not an enterprise problem; it is an end-to-end network problem involving multiple enterprises. Therefore, the solution does not lie in fixing one link in the chain but in devising a community.