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Transportation Management
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A few decades ago, it was normal practice for freight owners (manufacturers/shippers) to deliver their products to wholesalers and retailers using their own in-house fleet of vehicles. Often, products did not reach customers
on time, owing to the unavailability of these vehicles, resulting in loss of opportunity and revenue, not to mention customer dissatisfaction. When manufacturers/shippers started selling their goods internationally, this issue became more serious. During this time, many organizations engaged local road carriers owning one or two trucks/trailers to supplement the work of their fleet. They discovered that such outsourcing was cost-effective and flexible and allowed them to be free of capital investment and the hassle of maintaining aging assets. Soon, using hired or contracted vehicles became a universally accepted method of inland transport. Furthermore, freight owners instituted use of long-term contracts with these types of carriers to avoid any uncertainty regarding services and transportation costs. Carriers owning one or two vehicles increased their fleet sizes and introduced different vehicle types to qualify for these long-term contracts that awarded them a committed volume of business.
As international trade flourished, products began crossing borders. Manufacturers/shippers recruited professionals with import/export and international ocean and airfreight-forwarding experience to manage the movement of their products. To obtain customs clearance, contact and book carriers, provide documentation, and handle the various legal aspects of international shipping, a team of tens to hundreds was required, depending on the size of the business and the location and nature of the freight. Yet, setting up transportation on other continents remained a major challenge. The unpredictable increase in business on some trade lanes and the laws of the importing country added to the complexity of the transportation business.
Globalization forced manufacturers/shippers and retailers to produce products that were cost-effective but high quality. Many well-known and established brands were being challenged by new brands in terms of lower customer prices because the new brands had operation costs comparatively lower than those of their competitors. All aspects
of cost contribution that were increasing expenditures in the supply chain were analyzed. Extended supply chains, reduced inventories, shortened product life cycles, and increased freight cost and handling charges were a few
factors leading to an increase in the cost of supply chain operations. Outsourced logistics was a new idea that emerged during this time. Manufacturers/shippers started focusing on their core areas, while transferring logistics functions
to outsourced 3PLs.
Saylor - Organizational Body
1st Edtion
NONE
Transportation Management
Management
English
2010
1-318
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