Knowing what is shipped, how its shipped, where its shipped and how much is shipped is vital intelligence to any business. Obviously any company either located in the US or abroad knows where their current customers are located. It is as simple as looking at your invoices at any point in time. A company will also know some of their prospect locations. They may also know where their competition is. All of these factors entails knowing something about geography and how it relates to doing business in today’s economy.
A supply chain is described as the point of manufacture (where) to the point of consumption. (where) It can also be expanded upstream to acquiring the raw materials for manufacturing. However for this exercise we will start at the point of manufacture. Once these points are established for each customer or prospect we then need to determine the commodity and quantity (what) shipped and the mode of transportation (how) throughout the supply chain for each customer or prospect. The same can be done from your competitors manufacturing (where) to the point of consumption (where) by using the same model.
So if a company is trying to determine if their supply chain is optimized to reduce cost while maintaining service levels an understanding of economic geography is very much in play. How to approach developing the model with the various components is the key in understanding a final recommendation and implementation of a solution. There will be trade offs between the (where) withing its own category. For example, manufacturing to produce paper near the end user can and must likely be impossible. For instance, pulp (used to make paper) newsprint, paper and paperboard accounted for 33 million tons in the Midwest in 2007 according to the US Census. However, there are very little paper mills located in major Midwest metropolitan cities because of the obvious reason – to produce paper needs wood. So paper mills tend to be located in less populated areas with an abundance of wood to make paper. Thus, Maine is one of the largest producers of paper in the US. Therefore the manufacturing component is less flexible in its location. The Midwest is a large consumer of paper products and primary in major metropolitan areas. Therefore, a paper supply chain will account for a relatively longer distance between manufacture and consumption.
The last component is how paper is shipped a longer distance because of the product and where it is produced and consumed. The longer the distance impacts the actual mode of transport to make it cost efficient and still meet service requirements of the customer. Also the weight of the product will also have an impact on how it is shipped in conjunction with the mode of transport. In the case of the paper industry most manufacturers will locate a warehouse in chicago or find a chicago warehouse with rail (mode) to accommodate heavy shipments over a relatively long distance. (750 miles or more)