TRANSPORTATION
MANAGEMENT STRATEGY
TRANSPORTATION MANAGEMENT
STRATEGY
• Why does managers get involve in transportation?
• Because transportation contains basic solution to many problems that plague a company’s Functional
area
• Which are the transportation strategies?
• Reducing Number of Transport Carriers
• Freight revenue and Freight volume can be increased per carrier
• Thus each carrier becomes more dependent on the shippers business and therefore is more willing to negotiate
with the shipping firm
• This Shipping firm gets negotiating power
REDUCING NUMBER OF TRANSPORT CARRIERS
• Advantages:
• Increase in market power for the shipper
• Reduce in Transportation Cost
• Improve working relation (reduce logistics cost such as information processing, inventory, warehouse)
• The possibility of providing a carrier with balanced load of inbound raw material as well as outbound finished goods
which will lead carrier to reduce its cost and enhance its service
• Disadvantage
• Firm’s increase in dependance on the carrier which can lead to shipment Disruption and resulting decline in customer
service levels
• Risk is high
NEGOTIATING WITH CARRIERS
• Everyday practice
• Transportation managers must of negotiating skills
• Negotiation factors :
• rates and services
• Market places defines it well
• Shippers operational needs, customer demands and company objective
CONTRACTING WITH CARRIER
• Eliminate uncertainties of a rate and services that carrier provide
• Shipper fix service level and apply penalties if not followed
• Both agree’s the rate and services
• Eg: Rail Road Transportation,
• Companies applying JIT system uses this for safe, consistent and fair service
• Transportation delay, Decrease production, Increase Cost of inventary
CONSOLIDATING SHIPMENT
• With increase in volume fright cost decreases
• Motar carrier specially put discounts on weight of 500 kg than 1000 Kgs, 2000 Kgs, etc
• This is also used to support a competitive price making strstegy which enables the shipper to
reduce the unit selling price
• Control shipping cost of B2C E commerce
MONITORING SERVICE QUALITY
• Product can be differentiated
• Consistent Timely and undamaged basis which in turm reduces the buyer’s inventory and stock
out costs
• Eg 3 days of service and 2 days of service
• To derive the quality : Carrier evaluation report shows the evaluation criteria,
maximum rating for each criteria and the carrier rating against each carrier.
TRANSPORTATION MANAGEMENT SYSTEM
• Focuses on inbound and outbound transportation of the firm and forms an integral part of the
logistics information system, Information such as
• Order Content
• Item weight
• Volume
• Quality
• Promised Delivery Date
• Vendor shipping schedules
TMS INVOLVES
• Mode Selection: Performance with cost
• Fright Consolidation : Size increase cost less
• Routing and Scheduling Shipment:
• assign loads to vehicle ,
• Suggests sequence In which vehicle stops should be made
• Factors
• Time windows during which stop offs can be made
• Pick of returning merchandise from the stop off point
• Drivers restriction on speed
• Data of stop location, Vehicle type number, capacity, loading unloading time, stop time windows
TMS INVOLVES
• Claims Processing: Insurance
• Tracking shipment: once product have been shipped from origin to destination
• Process needs to be tracked
• IT : bar code, radio transmission in route, GPS,
• This helps to estimate arrival times
• Fright bill payment and auditing :
• Shippers can make claim if there is difference between actual charges and lowest charges
it can be rebated . Computer based TMS can easily search
