Logistics And Supply Chain Management For C.K. Tang Limited

Overview of C.K. Tang Limited

Question:

Discuss about the Transportation & Distribution Management for Purchasing.

The service sector contributes 73% to the GDP of Singapore with retail services capturing large proportion. C.K. Tang Limited is one of the important and biggest player in the retail industry.  The firm came into operation 1932 as provisional store founded by C.K Tang an immigrant from China. In 1950s he expanded and shifted the location of store to capture consumers travelling downtown in the Orchard street (Aguezzoul, 2014). In 1982 on the face of changing landscape in retail, Tang began its repositioning making inclusion of array of international brand that made the firm transform into superstore. The firm further transformed its outlook toward building family-friendly retail store making it an iconic shopping destination of world class.

The tagline “All The Best Under One Roof” launched in 1980 clearly indicated the huge diversification of the firm. The firm undergone changes in market strategies like operating the store even on Sundays in order to attract more consumer base. The firm underwent transformation in large scale at Tang Plaza in order to make a repositioning of its retail existence as family- friendly store. The retail organization holds collection of huge product mix of different international brand. The range of products and services includes beauty, fashion, home, foods & beverages and kids (Aguezzoul, 2014). The product line attracts the shoppers with mindset to blend with local as well as international quality, heritage and modernity. In Singapore and Malaysia, the firm has six stores operating throughout.

The firm not only plays pivotal role in internal market but also makes huge trade transaction with nations like USA, China, and Malaysia. With increased globalization over time, the volume of trade has increased and has evoked the importance of supply chain management and it subsequent distribution and transportation management. This requires proper incoterm selection at first place in order to come up with proper shipping strategies. Based on the mode of shipment through rail, sea or water, carrier selection is done based on the criteria. This also considers various other factors like geographical span, type of goods being carried, and time taken and so on. The paper makes an overall analysis of all these including the carrier relationship management of retailer firm Tang.

The International chamber of Commerce publishes commercial laws that sets pre-defined rules known as international commercial terms applicable in commercial procurement and transaction in international sales.the incoterms underwent revisions  1953, 1967, 1980, 1990 an 2000. The Incoterms of 2010 specifies eleven rules of shipment making provision of clear guidelines for the exporters or importers involved in the entire process of international trade and goods movement (Johnson, 2014). This includes how the transfer of responsibilities taking place for example whether at the place of loading and unloading the goods take place at factory of exporter or in the warehouse of importers. The incoterm rule also specifies and assigns task between importers and exporters.

Incoterm Rules for International Trade

First important factor is choosing the method of shipment. Based on the mode of transportation used in the trade the shipment method is selected. Their ability and willingness of the importers and exporters shape up the knowledge of possible international transportation that further determines the quality of incoterms. Greater the experience and trust between importers and exporters higher is capability of the parties t perform task enhancing the incoterm methods.

The Incoterm 2011 outlines 11 modes of shipment covered broadly within four groups E, F , C and D. E is used when the responsibility of shipment is taken up by importers form departure point allowing the importer to have more powers in operations of all tasks and conferring least control to the exporter. D is the term indicating least control of importers and more control of exporters in all the task performance and C are the terms referring to carriage being paid by importer and exporters respectively.  Different mode of transportation proposes different rules to be followed in incoterm consideration.  Following shipments are eligible for any kind of transportation

Different Shipment Methods;

EXW: Ex-Works confers importer all responsibilities for the shipment and exporter just arranges for the availability and pick up by importer.

FCA: Free Carrier suggests that exporter pays for the cost of delivery of the shipment paid. The export is  cleared to the pre-designated carrier of the importer from where it is takeun up by importer who then pays for the main transportation, insurance and customer clearance(Aguezzoul, 2014)

FAS: Free Alongside Ship is rule for shipment in sea and inland water ways. Exorters delivers goods to named port of shipment mentioned by the importer from where theimporter receives the responsibility o fall risk and damages caused to the goods (Johnson, 2014). The exporter plays for the delivery of shipment only and main transportation risk is borne by importers.

CPT: (Carriage paid To) Here the exporter pays for the goods in carriage when it reaches the place of destination named earlier.

CIP: (Carriage and Insurance Paid To): Along with CPT the exporter needs to acquire insurance of te goods while making the transition and transportation.

For the retail firm C.K. Tang best two method of shipments would be Ex-works and CIP due to the huge amount of consumer goods being transported through land as well as waterways.

After selecting the shipment method the next important task facing Tang is to choose for proper carrier so as to ascertain safe and damage free transporation and transition of goods from one place to another. The decision of carrier selection is based upon few factors like the geographical coverage of the goods movement. Greater distance requires more solid carrier. Average time required in transition and how reliable the mode of transportation is determines the mode of carrier. Delivery of the shipment and pick-up on time shapes the kind of carrier to be selected. Availability of equipment, capacity and capabilities in technical grounds are also important factors (Robinson,Thomas & Manrodt, 2013). The major component in selecting carrier is the financial stability and rate of the freight. How secure the carrier is from damage determines the level of safety and protection to the products being shipped.

Selecting a Carrier for Transportation of Goods

In decision, making process identifying the criteria and ranking them accordingly the goals and purpose of the business operation of any firm is important part of carrier selection in transportation management. A proper carrier selection strategy can provide immense benefit to the business of Tang (Graham, 2013). This allows the firm to be associated with lots of service providers making the shipments delivery and gain better idea regarding free flow of freight. This also allows Tang to monitor the performance of the carrier base the firm has. Proper carrier selection evokes the leverage for the company to purchase dollars at all rates available. Carrier selection should always have a back up procedure in order to face contingency period that would provide protection both the exporter as well as importer from damage of goods.

Now if we look at the goods being sold in Tang, it can be found that both perishable and non-perishable goods are offered by the firm. In food category many items like vegetable, fruits are perishable whereas as wheat based, dry and packaged item are protected from being perished. Based on the damage options the carriers selection criteria are ranked prior to selecting for the mode of carriage (Brands, 2013). For perishable good transition time taken and reliability of delivery are important criteria owing to the top of the list. If the good s are not delivered and picked-up time then it might lead to disruption and loss for the firm. In such case, the shorter the transit time, higher is the chance the goods are safely transported. The diversification strategy and cross border market expansion strategy of the firm, it had to make greater geographical coverage that requires the firm to come up with increased availability of equipments and technological innovation applied within logistic. The lower ranks are possessed by the components like financial stability and damage lost. Even if financial stability of the carrier selection are maintained the firm can still face problem because of not considering the importrant criteria exposing the firm to greater risk  (Choudhary & Shankar, 2013). The ranking of the criteria would allow the firm locate the important mode of transportation as well as selecting option for carriage.

It is found from the analysis that carrier selection and incoterms considerations are related with each other. Mode of shipment primarily determines the carriers type. If the shipment takes place through train or land then trucks then the carriage selection will be different than ocean or sea mode of transport. What carriers to be selected based on the criteria, shipment methods and further types of the goods being moved, the transportation system management determine that as a whole (Shang & Lu, 2012). This as subset of supply chain management is more concerned about the transportation ad movement of goods. The firm Tang being a biggest market player in Singapore retail industry is responsible to make huge amount of goods transition both locally within nation across nations as well. This requires proper planning of the entire logistics while managing the transportation system smoothly, which further depends on proper resource planning of the firm.

Ranking of Carrier Selection Criteria

The transportation of goods in any commercial transaction or trade involves export and import, which requires goods to be delivered and shipped from place of production to final destination. This involves numerous carriers, suppliers and other parties within the process. The role of carrier relationship management is to ascertain the balance through advocating in lieu of the shippers. This ascertains the business operations for both the firms and its carrier partners providing support to the firm.

To consolidate the transportation goals of Tang, the firm needs to identify and strengthen the important roles played by transportation management unit of the company. Proper execution of the management helps in planning and optimization of terrestrial rounds of transport. It provides ease in selection of inbound and outbound mode of transportation (Shang & Lu, 2012). All the elements used in the process like motor carriers, air modes, rail and all kind of transportation used are well managed and supervised by the team. The management also allows the firm to optimization of route and load of the vehicles, tracking of transportation, service quality control, cost control, freight audit and shipment batching of orders.

The crucial transportation goal facing the retail leader Tang is the development of cost-effective transportation that would increase efficiency. The efficiency is further ascertained by the reduction of total inventory overhead and per order processing cost. In order to improve the warehouse operation of the firm, Tang has decided to work way that is more integrated with the provider of transportation. The establishment of two-way relationship with carriers of the firm would allow it to address issues quite easily while enhancing the opportunities of the firms (Robinson,Thomas & Manrodt, 2013). Greater the transportation quality higher will be the quality of service provided to the customers that further marks growth for the business of the firm in terms of increased sales.

The important transportation goal of Tang is to build a two way relationship between retailer and carrier which is identified as the key to the logistic success (Johnson, 2014). Carriers should be provided with more information of the business of Tangs. The role of carrier relation manager Is to consolidate it through staying involved in the process, verifying reports and results, bill audits making cost considerations and carrying a dynamic and flexible approach to make as many contacts and relations as possible.

Conclusion:

Pertaining to the fact that Tang plays pivotal role in the national economy of Singapore the huge operation of the firms involves transition of goods locally and internationally. A good transportation management involving incoterms consideration, carrier selection and maintaining the relationship between retailer and carrier have been pivotal for the firm’s growing popularity and business expansion. The firm faces huge export to the countries like China, Malaysia, US and so on that allows is to choose an universal incoterms in form of CPT and Ex-works. The firm focused on consolidating the carrier relation to stimulate its market expansion and business growth.

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