The main purpose of this essay is analyzing the three main aspects of transportation management which are incoterms selection consideration, carrier selection criteria and carrier relationship management. Inco terms is defines as the binding rules and terms of contract that offer guidance to global businesses that involve movement of goods from a seller to their buyers. The case study and organization in reference in respect to global transportation is the proctor and gamble company. The essay discusses on this company carrier selection as well and the determining factors towards these selection of a carrier good as a transportation manager in this company. This paper focuses on how to maintain a relationship between a carrier and proctor and gamble company. Moreover, it will also touch on relationship management that exists between the carrier and proctor and gamble company , some of the factors that should be considered when disbursing, staging and collection of orders so as to overcharging in the carriers as way of making transportation and distribution cost very low.
Proctor and gamble is an organization having its headquarters in Cincinnati in the United States of America. The company was founded in 1837 but its incorporation was by the year 1905. It deals with packaging on goods for consumers. The company specializes in production of goods in several segments that include beauty products like body lotions, fabric care materials like baby diapers, home care appliances, family care products and feminine as well as baby related products. The company has grown it services to about 180 countries in the world shared among the world’s continents. This makes it one of the global market present companies hence an appropriate one to help is study for transportation and distribution management. The company as well established office branches in most of its business operation centers. (Mason- Jones, 2007) The company operates in competitive field. Its main competitors include companies liken uniliver, Johnson and Johnson, beiersdorf and Henkel. (Ghatlia, 2005) Moreover, they have developed an overall brand strategy where the company’s information tend to be uniform in a global business perspective and in the event of rise in competition, the company upgrades their products and more so the marketing techniques and gimmicks. Their products are mainly sold in supermarkets, chemical and drug stores, online through the company website and distributors of beauty products like salons. The company’s goal after many years of existence is to change everything basing on competition and building a better company based in company’s core values. (Camm & Thomas, 2008)
Proctor and gamble company has over the past switched the mode of transporting its goods from the road mode of transportation to rail and water inland shipping modes. Moreover, the company conducted some analysis in instances where a lot of wastage was being experiences and managed to reduce wastage instances in course of production and transportation. The company has been able to outdo its competitors due to the application of waste reduction strategies and use of other modes of transports which cut mike deliveries. These two have led to a cost effective logistics system of transportation and distribution of their goods. One of the projects that the company came up with to reach this success is Tina which is one of the environmentally friendly project which helps in saving an approximate of 67000 tons of carbon emitted each year. After the launch of the project back in 2009, many organizations have adopted all over Europe by the Proctor and gamble company branches. Since the time of project introduction, it has been possible for this company to redesign its supply network as well. With reduction in waste in the transportation network, it has also been possible for the company to move its business centers and branches closer to the customers who comprise of retailers, individual customers and wholesale customers as well. (Bob, 2015) In addition to that, the proctor and gamble company has changed on the volumes it has been packaging its commodities and ensures that its products are now in compacted form where the measure has reduced the volumes of packaged goods making the transportation very easy fast and cost effective.
It’s recommendable for the proctor and Gamble to use incoterms that has covered transportation of goods via railway and water medium of transport. The binding guidelines in those contracts should cover by defining aspects regarding geographical locations, goods handling conditions as well as destination for the goods. As the transport manager to the proctor and gamble company, I would therefore recommend for certain incoterm for the company. (Coyle, 2018) This is inclusive if FCA which is a certain incoeterm categorized under carriage. It’s under this term of contract that the company is able to deliver all products that have been cleared for exports to the shipping company and also that has been chosen by the customers at the agreed pick up station. Under this incoterm, if delivery occurs at the proctor and gamble selling centre, then it’s the responsibility of the organization to cater for all loading requirement. On the other hand, if delivery does not happen at the selling centers, proctor and gamble is therefore not responsible of any loading process or charge. (Ismail, 2008)
Another incoterm I would recommend for the proctor and gamble company is the FAS which mean a free alongside ship. With this incoterm, the company is able to deliver upon good that have been delivered alongside the ship at the known or named shipping port. It’s after goods delivery that the customer will be forwarded for all the cost and risks that may be associated with goods after that. In any case that this customer intends to exports the goods, he therefore has to clear the cost of exportation.
Another incoterm which is recommendable for our company is the DES which stands for delivered by ex ship. According to this guideline, the proctor and gamble company will only transport and deliver in the event goods are available to the buyers on board. Moreover, under this incoterm, the ship is never cleared by import authorities at the goods destination ports and the seller will therefore have to be responsible for all cost of unloading the goods.
Lastly, cost insurance and freight incoterm is very much recommendable for the proctor and gamble company. According to this guideline, our company will be responsible for transportation of the goods to the customer and other associated issues and risks like losses associated with transport of goods. Due to this, the company is tied to taking insurance covers but covers of minimum costs. This guideline is an advantage to the company incase unexpected risks occurs. Some of these risks include, capsizing of ships ferrying the company’s export products, development of mechanical issues which can result to losses arising from delay in delivery of timely company goods such as baby products. However, under this guideline, the other extra insurance charges after good shipment, the buyer is responsible for. For rail transport Proctor & Gamble can use the incoterm EXW, the company having embraced the idea of having the storehouses closer to the buyers, it will deliver products to its warehouses via the rail to the packing plants next to the buyers, in this incoterm the buyers are responsible for loading, formalities in place in exporting and importing all costs that Proctor & Gamble will incur as it submits the goods to the buyers via the rail.
According to the product and supply officer in Proctor and gamble company globally, the main goal for this company in respect to transport is to ensure that the company’s operation are much justified and measured from the customers end in a manner suggesting to 80% appealing to customers. According to the company goals, it should take only one day to distributed ordered good by retailers.
The company has considered the need of coming up with mega goods distribution centers that have located in every country acting as a footprint of the company’s business. These centers tend to receive goods from business units in the distribution centers and this will facilitate fast and efficiency in product delivery as well. In order to support these distribution centers, which will help attain the 80% delivery goal, the company has therefore restructured its North America manufacturing base as a way of ensuring that distribution centre needs are immediately responded upon. The company has a set a goal to achieve by 2020. This is to reduce the goods that are being transported by use of trucks. (Foeken, 2016)
At the point when Proctor and gamble choosing a transporter, it ought to consider factors like travel or average transit time, in light of their need to supply 80% of retailers on a given day, speed is required here. Since the organization attempts to utilize rail and water transport more than the road medium of transport, it is exceptionally suggested that the transporter chose ought to be in a situation to convey the merchandise with offices that are water safe, the storage capacity of the carrier, ought to convey the products at the coveted temperatures to the purchasers. (Grammenos, 2013) Things such garments or diapers which are sold by Proctor and gamble, whenever exposed to water may contribute to loses to the organization, the carriers chosen ought to have the packaging centers that guarantees products reach the coveted destination in the most alluring state, to the purchasers and clients.
The organization ought to likewise utilize a predetermined number of transporters, the carrier chose ought not be serving numerous organizations in the meantime, set number of transporters will empower it to have a decent buying request of dollars at a lower or moderate rate and manufacture associations with the specialist co-ops who will, at last, comprehend business tasks of proctor and gamble The transporter chose ought to be a bearer that has agreed on quality administration and proficiency. To wrap things up the carrier chosen ought to be in a position to deal with volumes of the products transported by the organization particularly by the rail transport, making the supply nonstop. The majorly objective for the proctor and gamble organization by 2020 is a decrease of transport using the trucks, ensuring that fewer kilometers are covered while transporting products and furthermore ensuring that merchants are an inconsistent supply of merchandise. (Myerson, 2015) The organization is also working hard to ensure that it produces less carbon in the air.
|
rank |
criteria |
Weight |
|
1 |
Average transit time |
65 |
|
2 |
Reliability |
20 |
|
3 |
Geographic coverage |
15 |
|
Total |
100% |
It’s very important for a company like proctor and gamble to outsource. A company size of proctor and gamble should adopt a clear work relationship with its carriers. From analysis of the company activities and needs, it would be correct to recommend for the type ii partnership with its carriers which is the longer term contractual relationship of about 3 years and above. (Jaffeux, 2012)Under this type of relationship, the following guidelines are practicable,
Moreover the company needs to have established and bear a positive relationship with contact personnel that link them with the carriers. This relationship with contact personnel will help the carrier in noting the proctor and gamble company’s operations and understanding the urgency of goods that are awaited and needed in the market. It’s from the relationship that the company can know the state of goods in which they have been received after transportation by the carrier agents.
Proctor and gamble company ought to have a very direct relationship with all carries linked to them. This is an advantage to the company since it helps them in knowing what is happening within the process of goods transportation by the carriers because the company has been using different carrier companies to different distribution centers. These carriers differ due to different medium of transport used to ferry these goods. E.g. rail transport and sea transport. Moreover, it’s very important for this company to practice an intercompany relationship. This type of relationship is brought about by making payments to the transport urgencies without delay and responding to carrier calls for cases of emergency. Working relationship with carrier companies initiates feedback generation in relation to experience gained in the process of transportation and explanation on what motivates efficiency in role play. (Taylor, 2014)
Conclusion:
The proctor and gamble company as analyzed above appears to be one of the successful organizations in supply chain and management business. (Sell, 2009)This paper has analyzed the company and the way it transports its products to its customers by use of carrier services. It has defined the guidelines and set of rules that bind contract between the proctors and gamble company and its carrier offering companies. Assuming the role of a manager in the proctor and gamble company, the analysis is an overview of effectiveness of transport capability of the proctor and gamble company, reduction in transport by use of road method to rail and water means of transport. The analysis has given a recommendation for a list of incoterms covering different aspects of goods distribution like time, risk associated and cost incurred. Lastly, the paper has given some recommendation and importance of relationship management between the porter and gambler company with its carrier companies.( Noel & Wright, 2006)
References:
Bob, T. (2015, January 2). What does it take to remain a supply chain leader. Retrieved from https://www.supplychain247.com/article/what_does_it_take_to_remain_a_supply_chain_leader
Camm, J., & Thomas, C. (2008). Blending OR/MS, judgment, and GIS: Restructuring P&G’s supply chain. Interfaces , 128-142.
Coyle, J. (2018). Supply chain management: a logistics perspective. nelson education, 55.
Foeken, A. (2016, July 9). Facilitating international electronic commerce by formalising the Incoterms. In System Sciences, 1997,. Proceedings of the Thirtieth Hawaii International Conference on, pp. 458-467.
Ghatlia, N. (2005). Sachet for cleaning machines . U.S patent application, 138-591.
Grammenos, C. (2013). The handbook of maritime economics and business.
Ismail, R. (2008). Logistics Managemen. India: Excel books.
Jaffeux, W. (2012). Essentials of logistics and management. CRC press.
Mason- Jones, R. (2007). Information enrichment: designing the supply chain for competitive advantage. Supply chain management. An international journal, 137-148.
Myerson, P. (2015). Supply chain and logistics management made easy: methods and applications for planning, operations, integration, control and improvement, and network design. person education.
Noe, H. R., & Wright, P. (2006). Gaining a Competitive Advantage, . McGraw education.
Sell, S. p. (2009). Sell, Supply Produce Distribute. “Introduction to supply chain management.
Taylor, F. (2014). Business-to-business:A Global Network Perspective. Routledge.
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