Managment of Road Freight Transport - Case Study Example

Introduction The evolution of society has triggered many new fields and areas of study which did not exist before. The laws of economies interestingly apply to the need of human evolutions in many areas. This may not feel as obvious on initial observation as one may expect. In the larger context of things we can however observe many examples which prove the argument provided above. For example, we can see that human needs create demand for technologies and the forces of supply force our intellect to form new areas of study to fill this gap. A few decades ago there was no mention of any management of road vehicles. This was because there was not much traffic on roads to create problems from excess traffic. As the density of traffic increased with increased human population a need was created to manage movement of transport vehicles. As however the density and complexity of traffic has increased, complex and advance mathematics is increasingly being used to make this field more advanced and sophisticated. The diversity of operations in companies has given rise in a similar fashion to new areas of study such as transport study. This diversity is basically stemmed from a number of different factors. The primary factors which effect the formulation of diversity in our corporations and companies is tough competition being faced in every area of society. As the competition in a particular field grows companies expand looking for newer fields to diversify business and increase operating margins. The emphasis on integrations has thus over the years increased as companies enter different markets with different transport needs. This need is not only started by companies looking for diversification but also a movement in diversification of transport companies themselves. The number of vehicle manufacturers has increased many folds over the years. This has increased with introduction of concepts like competition and out sourcing. There was for example one dominant manufacturer for transport vehicles in United States a few decades ago in form of Ford. This has however changed over the years as different companies from other competitive countries have entered to provide transport solutions. A very good example is of Nissan and Toyota. They have over the years capitalized on their manufacturing efficiencies to provide better goods for corporations around the world. The other very dominant factor has been introduction of the concepts of outsourcing. A few decades ago in absence of concepts such as ‘keep market fair i.e. eliminate monopolies’, it was very difficult for new players to enter the market. In that era usually there was a total domination of few players, resulting in monopoly pricing and control of supply chain. This control of supply chain and unfair pricing meant that it was not possible for new entrants to compete, rendering the industry unavailable for competition. The control of supply chain here includes controlling both suppliers of auto parts and distribution channels. The newfound competition in the manufacturing industry of vehicles increased the diversity of available solutions. The aggressive marketing makes it even more impossible to makes intelligent decisions when deciding what transport solutions to use. This is because the gross margins have gone down in most industries related to manufacturing. The reasons lie in both foreign and domestic competition. The phenomenon that is relevant to both foreign and domestic competition is out sourcing once again. The competition for outsourcing has both driven local and foreign competition. The increase in foreign competition is basically from emerging economies such as Brazil. The increase in competition is still the most dominant for the manufacturing industry. This is because this industry is the most affected by out sourcing. A very good example can be taken from the apparel manufacturing industry. There was a time not long ago when apparel companies such as CK and Levis used to have their own stitching plants. However with the advent of outsourcing it has become almost possible for any company to just set up a warehouse and use outsourcing to start business operations. This mammoth reduction in gross margins has forced companies to further emphasize on increasing operating efficiencies. This is indeed the biggest reasons for an increased emphasis on studies such as Logistics and Supply chain management. Methodology To understand the concepts being used in transport operations management and logistic, we will use the comparative method of analysis. There are a number of advantages of this methodology. The major advantage is off course that it creates a very homogenous mix of theory and reality. This enhances understanding and allows deeper analysis of real life situations which increases reliability in research. Case The transport operations of two different freight companies would be compared in this case study analysis. The main focus will be on defining the key operational factors which are important for each market participant. The analysis about different vehicles being used would a primary part of this analysis. The historical informational given in company reports would also be useful in understanding the specific operational requirements when it comes to transport operations. The types of vehicles used would also be affected by other factors besides operational requirements. One of the main factors which can affect types of vehicles being used to render services is marketing aspect of operations. The type of vehicles being used is readily affected by the culture. There is a great and deep link between cultural and marketing aspect of a business. This would obviously be a more dominant factor for a company lending out its transport services than a company which would be using their transport department as a mere support service for their other primary business. In some cultures such as Japanese culture there are strong industrial linkages between different industries and companies tend to use homemade brands rather than imported competitors. Moreover some brands are linked with reliability and others with power. The brand positioning of a company can in such cases determine which brand it will use as its primary vehicle service. To carry out such an analysis we have therefore chosen two different types of companies. To keep the understanding clear we have used a transport company as an example comparing it with a hot tub manufacturer which does not have transport logistics as its primary function. Company profile W Allen Transport Company W Allen is a private transport company which operated all around Europe and United Kingdom. The company provides transport service for a wide range of weights. The lightest category of weights that they can transport for their customers is 1.5 tons and the maximum is 44 tons i.e. includes both flatbed and box trailer and also multi vehicle transporters. Recently W Allen increased their vehicle portfolio size by adding into their twenty feet enclosed unit. The main target market for W Allen is machinery and vehicles i.e. both partial load and fully loaded. This business is most attractive to small business and home owners which are looking to relocate across Europe. Another important aspect of their business is transport services from the harbor to anywhere in Europe. A very important factor in this high risk business is insurance coverage. The level of coverage does not only reflect the quality of service but reliability as well. This factor has been incorporated into their website by adding an effective feedback system. Splash Spa This company operates from New Hampshire England. The main business of the company is providing top quality bath equipment to both businesses and individual customers. The company is one of UKs leading online retailer of hot tub and water treatment solutions. The other very significant aspect of the service is their friendly customer service and free delivery. This is a very rare service provided to customers only in Hampshire. The delivery system being run by the company is very efficient and effective. Delivery for goods worth more than sixty pounds is made to company homes. The delivery system is a very important aspect of this business. This is mainly because the main focus of the company is to provide online retail services. This increases the importance of their delivery services as only the top notch delivery service can make an online business successful. The deliveries are not insured as there are different customers and different types of goods being transported. The customer can however use their own insurance to cover any contingencies. The main interaction between the customer and Splash spa occurs at time of delivery. Therefore the company ensures that all checks of goods are complete and once delivery is made the company does not take any responsibility of contingency. Operational Differences There are many differences in operations of both W Allen and splash Spa. The primary differences stem from the fact that for W Allen transport is the main business whereas Splash Spa uses it as a support activity. This leads to some fundamental differences in their way of managing the operations of their transport system. The main focus of W Allen’s operations should be on minimizing operational cost. This is because the charter is paid in advance and at a fixed price. Therefore any extra costs the company has to pay for operating expenses reduces their operating margin. The focus of Splash Spa transport however is to maintain customer delivery times as short as possible because their operating margins are based basically on their tubs. Another very important factor in the two transport operations that must be considered is the time and distance of delivery. W Allen would have a basic difference in operations because of time distance covered. Each truck could take thousands of miles to cover a delivery, where as bath tubs are delivered only inside New Hampshire. This would mean that planning and control of operations would be different. The operational department of W Allen would focus on an approximation of distance travelled in weeks or days to calculate operational efficiency. This would mean that each truck driver would have maximum decision power in regards to routes taken and stops. The billing would be using special fuel cards or company owned credit cards. The drivers would be given a special stipend for the journey. Splash Spa however would operate all vehicles from centralized locations with administration looking after fueling and scheduling. The forecasting is also a major aspect of any transport operations. The forecasting in Splash Spa would be based and linked to demand forecast for tubs etc. Those forecasts would than fuel the scheduling of transportation requirements. This would also suggest that there would be no separate demand forecast for the transport department and jobs are randomly assigned as soon as orders are received. The car transport company would however create a separate demand schedule for the amounts of jobs expected and actual capacity of operations. The whole forecasting of revenues and sales would than focus primarily on increasing the capacity of operations. This would also suggest towards the pull and push factors for both models of operations. The Splash spa model would use the push model. The orders of transport would be pushed to the department of delivery which would than execute orders as best as possible. This would increase emphasis on timely and efficient service. The W Allen model is however a pull model. The operations have to pull sales from the market according to their capacity. The types of trucks used are also a point of discussion. The car transport company would use heavy trucks (Exhibit 1). The bath tub delivery services however would use small wagons (Exhibit 2). Appendix Exhibit 1 Pete with Cottrell C12LTB Exhibit 2 Qingdao Hentanch Wagon Truck Read More