7.3 Introduction

When was the last time you took a trip by plane? What do you remember about your experience? If everything went smoothly, your flight was probably pretty forgettable. BUT, if your flight was canceled or if your bags were lost, you may still have vivid, albeit bad memories. Your memory isn't much different from most managers. They also take transportation for granted UNTIL something goes wrong. In fact, we all do. Without transportation, our modern lifestyles would come to a screeching halt. An old bumper sticker tells the story pretty well, "If you got it, a truck brought it."

Transportation is big business. In 2015, U.S. businesses spent $890 billion moving product from one place to another—domestically. 1 That's about 5% of the U.S. GDP. For your company, the transportation bill is likely similar—i.e., close to 5% of sales. Of course, costs vary by industry and by strategy. For example, if your company is involved in international business—sourcing or selling products around the world—your transportation bill will go up.

Yet, as important as it is, the cost of transportation isn't your biggest concern. You probably worry more about delivery timing and are willing to spend a little more for faster, more reliable transportation. Why, you ask? Reliability and speed impact order lead time—the time from when your customer orders an item and you deliver it. This relationship holds true for inbound orders—the ones you place with suppliers. Simply put, transit time—transportation's portion of order lead time—affects both customer satisfaction and other logistics costs like inventory. Transportation is the biggest component of what we often call the "last-mile" problem of delivering goods on time and safely to customers. Let's take a look at some of the decisions you need to make as a transportation manager.