Transportation Infrastructure Continue to Be

transportation infrastructure continue to be pessimistic on its ability to support the needs of our global economy. How might this impact global supply chain efficiency?

Two aspects of the Obama spending package discussed in the article by Johnston & Runningen (200d9) suggest that improvements may be on the horizon for a transportation infrastructure badly in need of modernization. First and foremost is the continued demonstration of the president's commitment to reducing American dependency on foreign oil sources. In the current legislation, this takes the form of a tax incentive for homeowners who retrofit their homes to achieve greater energy efficiency. The priority of lowering demand for fossil fuels is likely to reduce transport costs across the boards for the United States. The 'price at the pump,' a telling indicator of America's economic climate, impacts the cost of everything from daily commuting to a bag of groceries. America's globaTl supply chain, therefore, hinges significantly on the degree to which these prices are kept in check.

This is supplemented in the same spending plan by a pledge to devote $50 billion to transportation infrastructure programs such as the improvement of highways and public transportation routes. Again, this appears to be a step that will significantly alleviate the downward spiral of a transportation sector neglected during the previous administration. This spending package would improve driving conditions for the travel, tourism and trucking industries, reducing the occurrence of accidents and thus helping to lower the economic burden imposed by said accidents. Additionally, improvements in public transportation and subsidies to lower fares for riders would encourage the use of our buses and light-railways. This also represents a reduced demand for fossil fuels and a lowered number of cars on the roads. For a transportation infrastructure that is most damaged by its dependency on a finite and environmentally unsound fuel source, these seem appropriate steps in easing toward a transition to alternative fuel sources.

For extra credit, up to five points, identify an organization which has reached the fifth level as defined in this paper. Please provide a response, with references, of up to 750 words, to demonstrate that your target company has reached the fifth level.

Wal-Mart is a company which has clearly achieved the 5th level of supply chain management, which the White Paper by Transite identifies as "Optimized." The Wal-Mart retail chain exists on an enormous scale and has impacted a wide array of sectors in the world economy. Significant amongst them is the distribution sector, which performs the functions of packaging, housing, shipping and delivery, usually as the go-between in the relationship between suppliers and retailers. Today, Wal-Mart is altering the retail landscape in many ways, primarily by parlaying its power as a retail chain into operation as a full-scale distributional company as well.

The attention dedicated to improving the cost and efficiency of its distributional operation underscores the emergent strategy which Wal-Mart is using to change the retail business altogether. This aspect of its operation has become a major effecter in its relationship to suppliers. For instance, "Coke altered its century-old distribution model to accommodate the world's largest retailer, and in April began delivering its Powerade sports drink to Wal-Mart warehouses, rather than direct the retailer's stores." (Hoffman, 28) This demonstrates the manner in which Wal-Mart has come largely to change many of the rules which were once well-established in the retail business. Namely, suppliers have always functioned as the power in the retail industry. By controlling the cost of items, leveraging the available supply of these items and distributing them across a competitive retail landscape, suppliers have historically been in a place of determinant authority where price structure and demand are concerned. The enormity, dominance and permeation of Wal-Mart have all had the effect of changing this.

By functioning both as the most pervasive front in the retail world and simultaneously by controlling prices at a level which most directly benefits the consumer's spending ability, Wal-Mart has created a context in which suppliers absolutely need its business. It has become the most powerful distribution agency in the world and as a result, can levy demands upon its suppliers that invoke discomfort but nonetheless become more preferable to the alternative of losing their best point of access to the consumer. This relationship with its suppliers has functionally reversed the power structure typically accorded to retailers and suppliers, placing the latter in an unfamiliar and uncomfortable position.