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Incoterms Selection Consideration

Discuss about the DHL Express Transportation and Distribution Management.

This study primarily investigates the operations of DHL Express being the international firm that deals with transporting of different types of goods in different geographical destinations. Additionally, it will attempt to highlight the magnitude or coverage of its market globally and further advances some of the strategies it has laid down to see to it that it operates  a profitable business and one that meets the needs of the clients from the diversified parts of the world. Notably, DHL is an internationally company that purposefully deals with transportation. The firm was founded back in 1969 in USA at the states of Honolulu and San Francisco. However, later on the firm has taken different shifts and transformations in its ownership and how its activities are ran on. It is currently headquartered in Bonn and operates in more than 2220 countries globally. In analyzing this firm and its efficacies of operations, there are three primary areas that are to be considered. These are incoterms selection, selection of carries and lastly the carrier management relationship. Those three areas will be the major focal point in this study. Ideally, DHL’s major competitor is Federal Express (FedEx) (Portman, 2014). Above all, incoterms policies would be critically analyzed to see its effectiveness in this business operations.  

Barnhart and Laporte (2007) allude that incoterms (2010) has provisions for well interpreted rules governing trade at international level. In nutshell, incoterms provides the trade terms that ought to be employed by any business conducting its carrier services so as to enhance mutuality and in the long run conducting profitable business that would meet the satisfaction of the clients. Trade terms is a short term spelling out the roles of both seller and buyers. Waters and Institute of Logistics and Transport (Corby, England). (2003) accentuate that it governs the way they ought to conduct their business for transparency matter and credibility of the business. This trade terms came to realization after International Chamber of Commerce (ICC) saw the need of initiating it in the system for proper coordination of business and having a harmonized structure or law governing such business globally. There are various factors that has to be considered in selecting appropriate incoterms for the business (Job Corps (U.S.), 2014). These are highlighted as follows; the nature of the goods. This basically implies whether the goods are bulky, manufactured or they have been put in containers. As such, one may be able to gauge which incoterms would be relevant for the firm. Another consideration that DHL has to look into critically is the means of transport. The means of transport may be by maritime, rails, pipelines, mail, road, and inland water. This prepares DHL to see which incoterms would best suit them in their operations. On the same breathe, mode of payment also matters a lot. There are different ways in which one may make their payment. The payment may be made upon delivery of goods or at times prior to its consignment. Similarly, this payment are made in different ways such as through use of PayPal, bank deposit and other technological way of payment that seems to be relevant to the concerned parties. Notably, most firms would prefer the mode of payment that is to the best interest of their clients so as to allow transactions to be easily conducted without much difficulties on the part of the buyer (Mallegg & Palmisano, 2014). Lastly, the efficiency of seller is also put into consideration to establish the suitability of incoterms for its employment in the business deal. Therefore, all this criteria of selection solely revolve around three primary areas of consideration namely; consignment mode, conditions, and operations factors. The suitable incoterms to be adopted by DHL is Free on Board. This ensures that goods to be exported are cleared by the seller and thereby the buyer would not incur any additional costs. Is also aids to the buyer to determine the credibility of good since it would have passed the safety and regulations tests of a particular nation before its exportation (Kara, Sabuncuog?lu, & Bidanda, 2015). However, there are other relevant incoterms that may also suits the business. One is free carrier, where the seller delivers goods at any convenient place of the buyer and thereby making it possible for the buyer to access their goods with ease.

Carrier selection criteria

According to Hausken, and Zhuang (2015), DHL is a well-established firm that has operated for so long. It has survived in the market for many decades due to clear modus operandi it has initiated in its daily activities. It is from this point of view that this work will delve on the goals that DHL has instituted for its business. DHL is a reputable organization globally in terms of carrier and transportation of different goods. It is from this framework that it has to be very cautious when selecting a particular mode. According to Kappauf, Lauterbach, and Koch (2012) the success of DHL squarely lies on its long term and short term strategies that it has employed in its business. The goals of the said firm are easily explicated from its vision and mission statement of the company. The firm operates under the principles of bettering the lives of its customers and also its employees. Moreover, for a long it has maintained good cordial relationship with its employees a fact that makes it to be at the peak in its business in respect to its competitor such as FedEx (Button, & Reggiani, 2011). Similarly, its ultimate aim is to grow into a big firm globally and continue expanding its business to other parts of the world. On the same breathe, it has been observed that the company would wish to maintain its reputation and break the record by being the best company globally in logistics operations and thereby win the trust of many from diversified parts of the world (Hausken & Zhuang, 2015). The three cardinal focus of the venture is to focus, connect, and grow. Basing its strategies on the three areas, it has come up with some framework to see to it that it religiously adheres to its focus which is to make it a great venture in the market. In order to realize this, it consistently treats its workforce well by assigning them better remunerations (Drake & Business Expert Press, 2012). It is common knowledge that the labor force in any business plays a primary role in its success. It is for this reason that DHL is still performing well in the business of carrier of different goods and provisions of different services. Therefore, the best criteria that should be considered when selecting carriers is the nature of the goods to be freighted (Song & Panayides, 2015). It is incumbent to state that the nature of goods ranges from the most brittle items to bulky ones and thereby its nature would give the company an insight on what mode to apply in its consignment so as to reach its destination safely.

Carrier Relationship Management

The carrier relationship management centers on commitment to solve a particular problem within the venture (Transportation, distribution & logistics, 2012). It is important to underscore that the efficacy of carrier management solely depend on the supply chain. It is for this reason that the firm needs to build a wining supply chain to ensure that delivery process is well conducted and thereby reducing the probability of the whole process aborting. In order for DHL Express to realize its core goals in its operations, there is need for it to maintain high degree of integrity and credibility in its entire work and operations so as to have trust of many buyers from diversified parts of the world (Watada & Wu, 2014). As earlier stated, it was clearly observed that DHL operates in more than 220 countries globally. It is for this reason that it needs to be in good terms with its clients so as to operate a successful business throughout its operations. Similarly, it is incumbent of the firm to share important and sensitize information to the concerned parties so as to iron out some of the issues that seems to be affecting the firm and need urgent attention for smooth running of activities (Liu, 2012). At this juncture, it is ideal to engage fully the transportation manager so that they may see how best to counter the challenge facing the firm to harness productivity and efficiency (Cook, 2015). The role of transportation manager is very important in the sense that he/she is the one who oversees the day to day operations of the venture and thereby his involvement is of great aid to the organization (Stark, 2011). Therefore, it is the prerogative of the aforesaid personnel to see to it that it creates a favorable working relationship with its clients.

 Additionally, it is ideal for this manager to know well the needs of their clients and able to deliver the goods at the places of their conveniences. Cook, (2015)) asserts that carrier business needs high sense of good cordial relationship between the buyer and the seller. The one who can effectively bridge the two is the transportation manager who would see that the consignment of the goods reach its destination well. Some of the approaches that has to be laid down to see this comes to realization is by having constant communication with the clients. It is important to maintain effective communication so as the clients may know at what particular time they are expecting their goods to be delivered. In so doing, the trust would be built among the buyers and thereby increasing and improving the performance of the firm (Abouee, 2011).

Conclusion

This study has enumerated on selection of incoterms in the business. It has further highlighted some of the strategies that DHL has laid down so as to conduct its business productively despite facing stiff competition from its immediate competitor such as FedEx. Some of the mode for selecting incoterms are the nature of goods, the means of transport and mode of payments. This has been well covered in the report. Moreover, the study has attempted to underscore the efficacy of the supply chain analysis and design in any venture. On the same breathe, both the long term and short terms of DHL Express have been explicated in the view of ascertaining its performance on daily basis. Notably, some recommendations have been advanced in the light of heightening the productivity and performance of this transportation sector which is of primary value in the business. Similarly, the future focus of the company has been looked into to see its suitability and whether it would be realizable depending on the strategies the firm has laid down. Trade terms as earlier explicated spells out the primary obligations of both the buyer and the seller in the business.

References

Abouee, M. H. (2011). Managing Inventory, Transportation and Location in a Supply Chain.

Barnhart, C., & Laporte, G. (2007). Transportation. Amsterdam: North Holland.

Button, K., & Reggiani, A. (2011). Transportation and Economic Development Challenges. Cheltenham: Edward Elgar Pub.

Cook, T. A. (2015). Managing Growth and Expansion into Global Markets: Logistics, Transportation, and Distribution. Boca Raton: CRC Press.

Drake, M., & Business Expert Press. (2012). Global supply chain management. New York, N.Y.] (222 East 46th Street, New York, NY 10017: Business Expert Press.

Hausken, K., & In Zhuang, J. (2015). Game theoretic analysis of congestion, safety and security: Traffic and transportation theory.

Job Corps (U.S.), (2014). Material handling and distribution operations.

Kappauf, J., Lauterbach, B., & Koch, M. (2012). Logistic core operations with SAP: Inventory management, warehousing, transportation, and compliance. Berlin: Springer.

Kara, B. Y., In Sabuncuog?lu, I., &  Bidanda, B. (2015). Global logistics management.

Liu, J. J. (2012). Supply chain management and transport logistics. Milton Park, Abingdon, Oxon: Routledge.

Mallegg, K. B., &  Palmisano, J. (2014). Transportation, distribution, and logistics.

Portman, J. (2014). Building services design management.

Song, D.-W., & Panayides, P. M. (2015). Maritime logistics: A guide to contemporary shipping and port management.

Stark, J. (2011). Product lifecycle management: 21st century paradigm for product realisation. London: Springer.

Transportation, distribution & logistics. (2012). Chicago, Il: McGraw-Hill Education.

Watada, J., Xu, B., & Wu, B. (2014). Innovative Management in Information and Production. New York, NY: Springer New York.

Waters, C. D. J., & Institute of Logistics and Transport (Corby, England). (2003). Global logistics and distribution planning: Strategies for management. London: Kogan Page.

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