Transportation and Logistics Goals Amanda Contreras November 16, 2012 640 The central goal of my company is to keep retail prices low. Working with suppliers to ensure their prices are constantly low, but also means price changes are kept to a minimum. Aiming to become lowest cost producer, the firm can compete on the price with every other industries and earn higher unit profits. Cost reduction provides the focus of the organization strategy. It targets a broad market.
Competitive advantage is achieved by driving down costs. Price Leadership – The Company is well known for its “Every Day Low Pricing”, but is aiming to give the consumer greater value for each product category. Through leverage selling general and administrative expenses, the Company can ask suppliers to introduce efficiencies in the transportation of items. This can be the supplier to the distribution center, distribution center to the store and also within the store.
Since transportation can be as much as one-half to two-thirds of the total cost of distributing product it only makes sense to drive is in as many efficiencies into your transportation network as you possibly can. The 1st strategy is to limit the margin that would have to be paid to a third-party providing that service. The 2nd strategy is controlling the fleet my company can control the quality and timing of the service to move the freight from the distribution centers to the stores.
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That 2nd strategy is an important goal in reducing labor costs and maximizing the utilization of assets and resources. Currently, the vendor manages nearly all vendor shipments to my company. My company arranges backhaul pick-ups at vendors after one of its trucks makes a delivery to its stores. More stock will be needed prior to the seasonal upturn in sales volume. As sales decline, less merchandise is needed. My company balances the "need for speed" with the costs inherent in the mode of transport.
This includes the rate charged for the service, minimum weight requirements, loading and unloading facilities, packaging, possible damage in transit, and any special services that may be required. The basic modes of transportation are water, rail, motor carrier, air and pipeline. Water being the slowest mode with rail, motor carrier, and air following in order of speed of delivery. Generally, the order is reversed when looking at costs. Selection of the appropriate carrier has several steps. First the firm selects a transportation mode.
The shipper must compare the service desired with the rate or cost of service. Service usually means transit time or the time that elapses from the time the consignor makes the goods available for dispatch until the carrier delivers to the consignee. Once the mode and type of carrier is determined a final decision can be made based on other factors. Accessibility is one such factor. Some firms have geographic limits to their routing network. Others may not possess physical access to needed facilities or have the ability to provide the equipment and facilities that movement of a particular commodity may require.
Reliability, the consistency of the transit time a carrier provides, is also a key factor. Finally, convenience and communication are other important considerations when selecting a carrier. Measures that a transportation firm would use to judge its performance include: orders shipped on time, orders shipped complete, order preparation time, product availability, and transit time. From the customer perspective performance can be gauged from orders received on time, orders received complete, orders received damage free, orders filled accurately, and orders billed accurately.
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