Discuss about the Transportation And Distribution Management.
The aim of the study is to carry out a detailed transportation and development service including incoterm analysis. In order to do so, Uniqlo Co. Ltd., the Japanese casual wear designer, manufacturer and the retailer has been selected for the case study. Transportation management deals with the moving products and requires the detailed analysis of the operational activities. The number of companies in the logistic industry is increasing that calls for better initiatives to be taken by the existing logistic companies (McKinnon, 2014). An analysis of the various approaches of the transportation and development management shall be carried on here. On the basis of analysis, certain recommendations can be made as well.
The wholly owned subsidiary fashion retail company is headquartered at Minato, Tokyo in Japan. The company deals in clothing and has notable stores in Australia, Canada, China, France, Bangladesh, Thailand, Philippines, UK, USA and others. The company started its business by outsourcing their clothing to the factories in China were the labour are cheap when Japan was facing recession. In order to ensure better product design and quality of goods, the company believes in fast retailing and so carries out its international trade. The current distribution strategy is more likely from China, US and Mexico (Uniqlo.com, 2017). The company has warehouses and inventories in all these places that help them to be more responsive towards the demand of the market. The company always looks for reasonable shipping for the supply of their products. The company also has online shopping option that automatically increased the importance of transportation and distribution of the clothing products.
Incoterms include set of international rules for the sale and purchase contracts in order to make the global trade easier and also help the partners to understand each other. As commented by Leong, (2014), these terms definitely include price, quantity as well as the characteristics of the goods that are to be supplied by the particular company. The incoterms that are practiced in the regions of Singapore and other areas of operation shall be discussed in this report (Zöllner, 2015). Different modes of incoterms based on the type of payment done in the complete process include the following:
- EX-Works: Here, the seller makes the goods available to the buyers and the buyer is responsible for the entire transportation cost. The seller also accepts the risk of loss of good till the goods are delivered to the buyers.
- Free alongside ship, Free carrier and Free on board: in this means of service, the responsibility of the sellers is only limited to send the goods to the transportation point from where the buyers will collect. This clears the responsibility of the seller further (Lee et al., 2016).
- Cost and freight; cost, insurance and freights: In this form of logistic service, the goods are not insured by the sellers and the buyers have to take the responsibility of the bearing the cost of loading and unloading the goods.
- Delivered at frontier; delivered ex-ship: In this form, the seller is responsible to deliver the goods directly to the named destination. The seller is completely responsible for the loss or risk of the goods.
Uniqlo operates in more than 1,000 stores worldwide and employ different strategies in its business model to manage the distribution of its products. For the distribution of the goods in the domestic market, the organization uses the local distribution channels and the companies. For the international trading, the company surely has to depend on land, air and water transport for the purpose of transporting their products and goods. It has been found that Uniqlo uses delivered at frontier form of shipping and transportation in order to transport the goods and products of the company.
The company has been carrying out the incoterm activities in for of almost all types of incoterms considering the need of the logistics and delivery services. There is involvement of any third parties as well that help to deliver the goods in the right places. Keeping the present situation into consideration, it can be said that the Ex-works incoterms could be the best possible means of incoterm that this company can adopt for the delivery of the products in domestic and international places. In such cases, the risk of the sellers is minimized and the buyers are more responsible ranging from loading the goods to reaching it out to the consumers (Coetzee, 2013). Thus, the responsibility and the cost of delivering will be reduced as well and the company will be in profit. In such cases, the export reporting and clearance process will be easier and the seller will be less responsible towards the entire transaction process.
Incoterms selection consideration
Reading Stapleton, Pande and O'Brien, (2014), it has been found that there are a number of carrier selection criteria that are adopted by the major exporters or a logistic company. These are as follows:
- Arm’s Length Relationship: The type of transaction relationship transaction that lasts only for a single transaction between two parties and the companies have no future commitments is called the Arm’s Length Relationship.
- Type I Partnership: In this process, the companies get involved in a commitment and relationship with each other, and a short term contractual relationship is built between them that automatically requires a little investment to be made (Rushton, Croucher & Baker, 2014). However, both the parties have limited scope of activities to be carried on with each other.
- Type II Partnership: The kind of partnership that are meant to last longer and requires the investment from both the parties in order to gain a status of ‘preferred supplier’. In this process, effort is made from both the end related to reducing the cost and expenditure involved in the shipping process.
- Type III Partnership: The type of relationship that does not depend on a formal contract or mechanism and the contract can be referred as evergreen is the partnership of type III. The assets can be jointly owned and can be shared substantially. The success or the failure of the relationship will have great impact on the higher executives (Okdinawati, Simatupang & Sunitiyoso, 2014). The scope of the activities to be shared is substantial and requires huge investment from both the parties involved.
From the above findings, it can be said that Uniqlo has been operating in the market and needs the support of logistic companies for the transportation and it has good reputation with its partners. For maintaining a long term relationship with the other partners, Partnership I or Partnership II can be the most preferable form of partnership that the company can make. As pointed out by Crainic and Laporte, (2016), when the company is responsible for carrying out huge capacity of carriers and requires the movement in a timely manner. The companies need to have enough resources, equipment and the human power to operate in the particular industry. For the same reason, Partnership I or II could be the best possible means of viable partnership that the company can adopt as a viable means. In this respect, Ross, (2015) commented that there are other benefits of getting into Partnership I and II forms. For instance, the companies in contract can make investment in the technology or the means of distribution to the buyers and the cost can be incurred in a mutual way. This way, the complete process will be carried on systematically starting from packaging to delivering the product from the seller to the buyer. Since, Uniqlo is responsible for the supply and distribution of clothing and other retail products, it is expected that the company should consider partnership I or II for providing better services to the customers.
The major goals and objectives of Uniqlo can be considered to think of better management in terms of its costs, customer services, industry awareness and continuous improvement. It is needless to say that without carrier relationship management, the survival of the clothing company like Uniqlo would not be possible (Tseng & Hung, 2014). Carrier link will provide long term relationship that is most important in a competitive market situation. In this respect, three most important carrier relationship management criteria can be mentioned here.
- Offering reliability: The service that Uniqlo provides has to be reliable enough that the consumers can trust on the company for the delivery services this company is responsible for. In the age of online shopping, the importance of delivering goods on time has become crucial than ever. As stated by Wensveen, (2016), the service should be focused on delivering the goods on time, offering zero damage delivery with the accurate invoice of the product. In fact, the third party service should consistently meet the next level of shipping and delivering the product. This way, the company can be able to uncover the further costs and savings that the company might incure in order to provide improve carrier operations.
- Responsiveness: The service provided by Uniqlo should show the responsiveness towards the customers that would lead to better reputation of the company and help to increase the market share. In order to do so, dash revealed that tailored services can be offered to the customers that would automatically increase the cost of delivering that would add to the buyers’ end (Jiang & Mahmassani, 2014). Being responsiveness towards the customers can also improve the relationship with the customers that can be easily considered as one of the vital components business.
- Innovation services: The logistic service is highly depended on the innovative and technological approach made by a company. The innovative management would include the inventory management, information system, billing and collection of the money from both the buyers and the sellers. With better innovative approach, the company would be able to accelerate the means of serving people and the overall cost can also be decreased.
As mentioned by Tsao, Zhang and Chen, (2016), these approaches can be made easily in order to improve the overall management activities of the transportation and logistics services. For this purpose, it is highly recommended to use the Type III Partnership that is based on a consistency between the sellers and the buyers. Apart from these benefits, the money can also be directly collected through bank accounts because at many times it is observed that the exporters do not sign the financial contracts and the money that is paid to them goes missing (Tseng & Hung, 2014). In addition to this, it can be said that by this way, the objectives and the goals of the mentioned company can be fulfilled. In order to get high return of the investment, it is expected that company would undertake these approaches that would bring prosperity in terms of both economy and reputation.
Carrier selection criteria
A detailed analysis has been carried out on the transportation and distribution management and incoterm analysis. Uniqlo had been selected for the process of analysis. It has been found that the organization operates globally and has clear goals and objectives of expanding its business in the major areas where it operates. Considering the incoterm selection, it has been found that Ex-Works is the best suitable form of incoterm that the organization can adapt. It is important to include innovative means of carrying out the incoterm activity that would help the organization to increase its market share and improve its relationship with the customers.
To recommend further, it can be said that the company should focus on the transportation service and try to deliver the products as early as possible. In order to do so, apart from partner shipping with the other logistic companies, Uniqlo should also make partnership with the innovative companies that provide robot service to reach out the customers. In doing so, the uniqueness of the company will go high and it can easily attract more consumers. Moreover, the reliability of the service would increase that would lead to the increasing demand of the goods and products of Uniqlo.
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