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Congested Supply Chains Can Impact Traffic Featured

Congested Supply Chains Can Impact Traffic cars passing through north and south

No one likes getting held up in traffic, but for supply chain companies, traffic jams have a bigger consequence than in any other sector. It not only affects your timelines but can also affect your business in its entirety and might even end up leading to massive losses. According to a survey done by The Associated General Contractors of America, 93 percent of companies that took part in the study reported that traffic and congestion have a significant impact on their operations. Further studies indicate that most populated areas suffer from traffic congestion and its impact than other areas.

Traffic congestion can cost commuters up to $62 billion annually. Although this amount varies by region, the point is, traffic jams have a substantial impact on the movement of goods and services. In California, for example, over $19,000 is wasted per year. A driver in Georgia on the other hand loses over $2,000 to traffic jams. Not only that, almost two-thirds of companies lose at least a day of productivity per worker annually due to traffic congestion, which equates to over 3.5 million days of lost productivity per year.  This waste does not take into consideration things such as missed deadlines and goods that get spoilt while on transit. It does not also take into account the losses made by the delivery trucks. In the same poll by The Associated General Contractors of America, three-quarters of the interviewed contractors claim that traffic congestion adds one percent to their total supply chain costs. On the other hand, one in ten reported that traffic adds more than 11 percent to the cost of doing business.

Traffic congestion is a problem that is on the rise across the world. However, the problem is even worse in the developing nations that have a high rate of economic growth and population increase such as those in southeast Asia like Vietnam. Countries with poor transport systems and traffic management systems lose millions of dollars annually due to issues such as visibility, delays, and late deliveries. Delays lead to customer losses because of dissatisfaction, additional cost in the management of logistics, and reduced profits.

For road users, traffic jams are just a hindrance to vehicles from moving efficiently along the highways. However, for those involved in professional logistics and supply chain companies, congestion means entirely something different. It means a disruption in the flow of goods and services, volumes, speeds, and capacities. It means delayed delivery of items and services from reaching their destinations. Congested supply chains and related delays increase operational costs. It also leads to the use of excess fuel, raises oil consumed, and may lead to higher salaries in the form of overtime pay for staff. Furthermore, you are likely to have issues in making predictions and estimates as a manager. Perhaps the biggest problem is that congested supply chains adversely impact visibility in freights and the location of drivers. It makes it difficult to track Travel Time Reliability because it is hard to measure delays on the road.

Slow-moving traffic is a challenge that affects productivity, stops projects, and raises the cost in almost every industry. Given these challenges, the last thing any supply chain and logistics service provider would want is to burn fuel, waste time, and see money held in traffic jams. However, this is often unavoidable, mainly during holiday seasons, when most people are traveling and when goods and services are needed more. Other causes of delays are bad weather accidents and bad roads.

The best strategy to approach this is to build dominant share positions that enhance the delivery of products and services for customers who value speed, reliability in responses and most importantly planning and managing the supply chain. This will give you the best chance of minimizing disruptions caused by traffic jams.

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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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