Transport Management & Theory Practices (13)

1,380 views

Published on

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,380
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
60
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transport Management & Theory Practices (13)

  1. 1. Management of Transportation Seventh Edition Coyle, Novack, Gibson & Bardi © 2011 Cengage Learning Chapter 13 Shipper Strategies © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  2. 2. 2 Transportation Management • Term applied to the shipper’s purchase and control of transportation services – Replaced traffic management – Now has strategic and operational orientation – Changing goals over time, evaluated based on • Minimize transport costs • Minimize total logistics costs • Meet customer service goals in cost-efficient manner © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  3. 3. Transportation Management • Trans. mgmt. as a procurement function – Procurement - obtaining goods and services for the firm, includes analysis and activities • Quality • Pricing • Specification • Supply source • Negotiations • Inspection and assurance of quality • Timing • Conducting value analysis of alternative methods and sources • Capital analysis • Make or buy decision • Legal and regulatory constrains • General management © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3
  4. 4. 4 Shipper Transportation Strategy • Designed to support logistics, corporate, and supply chain strategies • General strategy (applies to all shipment types) – Proactive management • Problem solving orientation • Seek ways to use transport for competitive advantage – Improve information • Availability (flow), quality, use for manager to plan & control transportation activities • Transportation costs, shipment volume, carrier performance are typical data collected, essential for carrier negotiation, contracting, etc© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  5. 5. 5 Figure 13- 1 © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  6. 6. 6 Shipper Transport Strategy, cont’d • General strategy, cont’d – Limit number of carriers used • Strengthens market power • “Core” carriers; Risk: increases dependability on carriers used – Carrier negotiation • Market power determines the shipper’s ability to negotiate acceptable rates and services • Also determines by the characteristics of freight – low density, hard to handle, easily damaged, low value, empty backhaul, etc © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  7. 7. 7 Shipper Transport Strategy, cont’d • General strategy, cont’d – Contracting • Realize the lower rates and necessary service levels • During the term of contract, the shipper is guaranteed the contract rate and service, equipment and liability – Review private motor carrier transport • Outsourced? • Some shippers manage their private fleets as a profit centers © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  8. 8. 8 Shipper Transport Strategy, cont’d • Small shipment strategy – Thrust – to reduce high transport costs/lbs. associated with small shipments – Freight consolidation • Match shipments going to same geographic area • Facilitated by order entry system – Utilize pooling services for different consignees – Stopping-in-transit service allows shipper to load a number of shipments on a vehicle and stop along the way to unload the individual shipment – Avoid private carriage © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  9. 9. 9 Table 13-1 © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  10. 10. 10 Figure 13- 2 © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  11. 11. 11 Shipper Transport Strategy, cont’d • Bulk shipment strategy – Long-term contracting • Recognition of mutual dependency – Seek balanced (by direction) loads – eliminate the empty backhaul costs • Inbound transportation strategy – Taken on added significance • Manipulate terms of sale – Use same general strategy thrusts – Reverse logistics © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  12. 12. 12 Shipper Transport Strategy, cont’d • Reverse logistics – The handling of return goods, as well as salvage and scrap disposal (waste materials) – Buyer may return items to the seller due to product defects, overages, shipping errors – Customers return products for warranty repair, replacement, remanufacturing, or recycling, – Reverse logistics are high relative to forward logistics costs some as much as five to nine times more than moving the same product from producer to consumer © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  13. 13. 13 Line Aspects of Transport Mgmt. • Daily activities of transport management • Shipment planning – Monitor flow requirements, schedule shipping • Carrier selection • Ordering service – More frequent use of electronic means • Expediting/tracing – Critical control tool © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  14. 14. 14 Line Aspects of Trans. Mgmt., cont’d • Pre-auditing/rating – Determining proper freight charges • Auditing/paying the freight bill • Detention/demurrage processes • Claims – Carrier liability – Carmack Amendment exceptions to liability – Claims filing process © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  15. 15. 15 Line Aspects of Trans. Mgmt., cont’d • Private car and motor carrier fleet mgmt. • Transportation budget management • Staff and administrative aspects • Mode selection • Monitoring service quality – Developing and using carrier evaluation reports • Service/supply assurance • Negotiations © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  16. 16. 16 Line Aspects of Trans. Mgmt., cont’d • Regulatory matters • Policy matters • Planning annual transport requirements • Budgeting • Information systems • Systems analysis • Management and executive development • Trans. dept. human resources management © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  17. 17. 17 Mode Selection Process • Transport selection decision: 2-part decision – Mode selection – Carrier selection • Process begins with cost and service goals – Definition of cost and service measures • Selection criteria/measures – Transportation costs • Rates and charges assessed by mode © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  18. 18. 18 Mode Selection Process, cont’d • Selection criteria/measures, cont’d – Transit time and transit time reliability • Affect inventory and stockout costs – Accessibility – Capability – Security, damage, loss • Affect inventory and stockout costs • Strategic significance of mode selection © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  19. 19. 19 Carrier Selection Process • Can consider same five selection criteria – Usually, accessibility and capability are similar among carriers in a given mode – Often more specific measures utilized – Relative importance • Transit time reliability • Transport rate • Total transit time • Willingness to negotiate • Carrier financial stability © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  20. 20. 20 Relationship Management • Core aspect of the boundary-spanning environment of logistics and SC mgmt. • For each non-in-house activity, firm must develop proper relationship with suppliers • Well executed relationship management between shipper/carrier is critical given position of transport – Last link between shipper and customer – Potential role in corporate strategy © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  21. 21. 21 Types of Buyer/Seller Relationships • Arm’s length relationships – Most common: transaction-specific ; relationships last for a single transaction between two parties, and no commitments are made for future transaction – Defining factor in supplier selection: usually price • Reduced opportunity for long-term cost reduction – Viewed by many as inefficient – Appropriate when service is viewed as commodity or standard requirement © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  22. 22. 22© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure 13- 4
  23. 23. 23 Types of Buyer/Seller Relationships, cont’d • Type I partnerships – Partnership definition • On-going, commitment over extended time, sharing of info., risks and rewards – Type I: Short-term contractual relationship • Little investment required • Limited scope of activities • Common in transport – Ex: 1 year contract, guaranteed delivery times, min. dedicated fleet, guaranteed minimum volume – Price is volume driven © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  24. 24. 24 Types of Buyer/Seller Relationships, cont’d • Type II partnerships – Longer-term contractual relationship – May require investments – Broader scope of activities – Transport examples • Carrier certification programs, core carrier programs – Guaranteed annual volumes – Dedicated freight lanes – Incentives for cost reduction © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  25. 25. 25 Types of Buyer/Seller Relationships, cont’d • Type III partnerships – Not governed by usual contracts • Documentation outlines general operations and management philosophy – No formal endpoint – evergreen contact – Substantial joint ownership of assets and sharing of activities • High risk, investment, potential rewards for both – In transport, carrier would perform many services beyond basic transport in such relationships © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  26. 26. 26 Types of Buyer/Seller Relationships, cont’d • Joint ventures – Purpose/outcome: creation of a new firm – Investments required by both parties – Long-term type of relationship • Vertical integration – Driven by “make or buy” decision – Common transport ex: private fleets © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  27. 27. 27 Why Enter Relationships? • Definition and background of 3rd parties • Availability of external suppliers • Cost efficiencies – Economies of scale and scope – Moving assets off the balance sheet • Access to third-party expertise – Facilitates focusing on core competency • Customer service – Issue of control © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  28. 28. 28 Table 13-4 © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

×