Transportation And Distribution Management: Incoterms, Carrier Selection And Relationship

Discuss about the Transportation and Distribution Management.

Ultra Design is an original brand manufacturer that manufactures modern quality designer clothes for its diverse market in the whole world.  The company operates as a multidimensional company that has different departments including the transport and distribution department. The company is greatly involved in the overseas trade where it uses shipping companies to transport and market its products in other countries. It provides the customers across the world with the best brand of clothes depending on their requirements and is made possible through shipping services.

The company dominates the textile industry across the world. In relation to this, Ultra Design Company mostly faces transportation challenges due to the ever increasing demand for its brand products and as such it requires a strong and professionally run transport and distribution department. This essay deals with the incoterms or the terms used in the international transport arena. It takes into account the carrier relationship especially the procedures for selecting the best means of transport to use in the distribution of the brand products. In addition, the essay is concerned with relationships of the company with the transportation companies. Basically the whole essay will revolve around incoterms, carrier selection and carrier relationship and will integrate the role of a manager on the same.

Incoterms refers to a combination of policies and rules set for the international operation and the interpretation of the often operationalized terms and vocabularies used in operation of the international trade (Del Rosal Fernández, 2013). More often, as a transport manager I highly use incoterms to eliminate misunderstandings that may develop in daily contracts engaged in the global business. The bargaining and negotiation terms are involve in getting into special terms and mutual agreements between the company’s stakeholders (Del Rosal Fernández, 2013).Basically, the terms used in the trade are mostly professional and with in-depth meanings whereby the shipping partners involved for transportation need to incorporate a third party. The party incorporated help to foster a productive discussion during negotiations on transportation of clothes globally (Ding, 2012). Upon transportation of clothes, multiple terms are considered in explaining the trade’s details such as consignee, shipping invoice and letter of hypothecation.

The incoterms are so effective in their operations since they are strictly administered and regulated by the body called the international chamber of commerce (ICC). The rules are upgraded every ten years to ensure conformity with the international standards. As the transport manager of Ultra Design Company, I optimally utilize the incoterms to facilitated effective transportation of clothes. Mostly, I use terms such as ex-works, free carrier, carriage paid to and delivered duty paid during daily operations and interactions with company’s clients (B?lun?, 2012). In my managerial position, I work on mitigating risks by considering international trade terms on interaction with different communities in clothes distribution. For sea transport industry, there are four classes of terms that need to be clearly understood before clothes transportation. The E terms relate to scenarios where the seller has no obligation to deliver goods to the buyer. Secondly, the F term occurs where the seller has an obligation to deliver goods to a carrier hired by the buyer (Choudhary & Shankar, 2013). Also, the C terms obligate the seller to enter into a contract with the carrier but does not bear the risk of loss of the goods in case they become damaged during shipment. Finally, the D terms occur in scenarios where the seller agrees to cater for all costs incurred during the transportation of clothes to the buyers.

Carrier Selection Criteria

In most scenarios, the most reliable term for the clothes company in relation to shipping company is the C-term. Particularly, most sea transporters use the Cost Insurance and Freight (CIF) since it entails better terms of the shipment method (Ng, 2014). Shippers prefer the term since it’s most convenient for them and due to lesser risks. In conclusion, the advanced level of technology requires all transporters to use very efficient up to date methods of shipping so as to compete favorably with the global competitors in line of clothes distribution.

Diagram showing the payers of carrier charges and terms associated        

When selecting the appropriate method Ultra Design Company can use to effectively transport the brand clothes to the required destinations, extra care must be considered to effectively select an efficient and most secure means of transporting the products. In addition, aspects such as safety, speed, reliability, costs and incidences of loss must be considered (Panda, Iyer b& Ma, 2012). The process of carrier selection is very crucial in any company involved in goods that require transportation over long distances. As the transport manger of Ultra Design Company, my main aim is to select the best means to transport our cargo. All companies aim at achieving optimum services from the companies they contract. An effective contract will require all parties involved to be considered (Panda, Iyer b& Ma, 2012). Our company aims at the best service while the transport provider looks forward to the optimum return in terms of money from the services they offer. In this regard, there is a periodical carrier evaluation after the contract is awarded to ensure close monitoring of the operations of the firm to ensure the security of the clothes. 

The carrier selection criteria adopted in return affects the seller-buyer relations. A transportation company that has highly efficient services helps to build a strong and cordial relationship with the buyers and sellers of the product the transporter carries (Stadtler, 2015). There are multiple factors to consider when making the choice of what the carrier to use. To begin, the capacity of the carrier is a very crucial consideration and only carriers with the ability to handle a specific task should be allocated to perform it (Stadtler, 2015). The financial ability of the carrier should also be considered so as to avoid delays due to financial shortages. The carriers’ level of technological advancement should also be taken into consideration since it enhances efficiency of the services.

Carrier Relationship Management

The flexibility of the operations of a carrier should also be considered. A flexible carrier is able to provide better services since it works with the schedule of the clients and offers personalized services (Dekker et al, 2013). Optimal pricing can also be another factor to consider. Finally, optimal prices do not necessarily mean lowest prices. The prices charged should tally with the quality of the service offered. As the transport manager of Eco Transit Company, I ensure that all the above characteristics are met.

To survive in a competitive industry of our times, effective characteristics of any industry must be adopted. However, deregulation has greatly impacted on the transport sector (Dekker et al, 2013). The Increased competition due to search for profits, has led to the adoption of client-tailored services (Dekker et al, 2013). The transportation sector has been fragmented into different segments based on customer abilities. Our company always goes for the best transport provider after the consideration of all basis of the company. Following this, cordial relationships between the sellers and the importers must be upheld to ensure that best services are offered to the clients at the most optimal prices that reflect the value they get from the services they receive as explained by the diagram below.

The transportation operation is critical in the facilitation of the logical operation of Ultra Design Company. The improvement of the transportation performance depends on the kind of relationship formed between the company and its carriers (Shang & Lu, 2012). There exists the need to attain a closer relationship between the Ultra Design Company and the carriers. This includes heightening the level of service delivery, trust and increasing the number at which the company communicates with their carriers (Fontana et al, 2014). Proper management of carrier relationship in regard to Ultra Design Company intensively results to customer satisfaction (Shang & Lu, 2012). Carrier relationship management is also driven by a metric that boosts the company’s performance in clothes distribution. In the first place, the metric focuses on timely delivery of cargos. The need to satisfy the customers is thus achieved (Stadtler, 2015). Through this, on time delivery of clothes impacts on facilitation of efficiency and effectiveness of carrier distribution networks which in return results to the good relationship between the carrier and the company (Stadtler, 2015). As a transport manager in Ultra Design Company, I works towards maintaining a proper relationship on shipping company in order to improve profitability. A recommendable relationship between the company and the carrier exists through which carrier deeply understands the prioritized need of the company and vice versa. Based on this, a good relationship is enhanced.  The diagrammatic representation in figure 1 below shows how a good relationship exists in the shipping business environment.

There exists both the companies and carrier needs that must be taken into account in order boost their relationship. The company’s common needs involve the pricing terms on the goods transit. The Ultra Design Company take into consideration on amount of money to be charge shipment of clothes. The existing relationship aim at instilling a positive customer service that would create a platform where a carrier may provide the company with dedicated customer care services (Panda, Iyer & Ma, 2012). As a result of these activities, a good relationship is built between the company and the carriers. In addition, carriers should consider certain needs which should be known by the company in order to work under that perimeter. These needs may include the improvement on the accessibility of clothes delivery points. Finally, as a transport manager for Ultra Design Company, I consider paying shipping company on time so as to motive them to work at their level best.

Driving my point on this, I can highly recommend on appropriate ways of improving the relationship between the company and the carrier. The company managerial personnel should be deeply committed to the carrier. This will as a results lead to carrier higher commitment to the organization’s activities. Secondly, I would highly recommend the incorporation of technology in boosting a company and carrier relationship. It will be as result of the provision of real-time data that will be represented in technological ways.

Conclusion

The incoterm possesses some terms that eliminate misunderstanding that develops in the day to day buying construct engaged in global business. Incoterms are effective in the operation since they are strictly administered and regulated by the international chamber of commerce. Incoterms are used to mitigate against possible risks in international trade. With advancement in technology, the application of incoterm has been enhanced. In addition, the carrier selection criteria exists as methods that shippers can use effectively in delivery of goods. In relation to this, it clearly explains the methods to follow in selecting a carrier. The features of an effective carrier are considered in order to come up with the most effective way of goods transfer. Finally, there exists consideration of carrier relationship management concept that seeks to explain on how the company can create the good relationship with the carriers. With good term between the company and carrier, consumer satisfaction is enhanced which in return results in company’s profitability. Adding to this, there exist a company’s and carrier’s needs through which each of them has to understand each other needs. As a result, a strong relationship will be boosted and this transportation industry will tend to work efficiently

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