Saturns Vehicle Delivery - Case Study Example

Saturn’s vehicle delivery Student’s name Institutional Affiliation Introduction The company that forms the topic of discussion is Saturn Corporation. This company is a subsidiary of the famous General Motors. It is located in the USA in Tennessee. It’s location was carefully picked as Spring Hill, which its radius covers more than 60% of the country’s population looking at a 600mile radius. The proximity to good roads and a railway is also an important contributing factor to its location. Car manufacturers have several ways to go about their daily business. For the company in question, however, their main focus is on manufacture by order rather than mass production. There are many other factors that come to play such a company. There is the issue of raw materials, how they get to the plant, and the issue of how the finished products get to the end user and many other issues. The company has to make decisions every day whether to load the vehicles that are the end products either on trucks or trains. Each of the choices is picked when it is the most convenient at the time. Various factors are considered in making the choice as will be discussed in below. Factors to consider in the selection of outbound transport providers While choosing the mode of transport to be used for the manufacture in the delivery of the vehicles, several factors come into play. It is not only a matter of picking one but a careful consideration of various factors. The very first and the most important factor is cost control. Saturn prides itself on offering vehicles at low prices. Saturn fixes their prices right at the plant, creating a uniform price for all their cars with similar specifications. Transport cost has been known to increase the cost of a product; thus, Saturn ensures the least amount of transport cost has been incurred. The importance of cost control to the buyer is an end product of low price compared to other vehicles in the market. The importance to the company increases in sales as a result of the low prices charged for the vehicles. Another factor is on damage control. During the process of transportation, there is likelihood that the vehicles may be damaged due to the delicate process of loading, motion and offloading. However, each of the means of transport has a different percentage of damage during transit. The truck has been noted to have a lower chance of damage caused by the cars as opposed to rail transport. The aim of the company is to have the least number of cars possible to avoid losses being incurred. The importance of this factor to Saturn is loss avoidance, to the customers is avoiding delays in delivery occasioned by the damage to their selected car. There is also transit time consideration. In as much as the company does not give delivery dates to their clients, they give the dates when the manufacture is completed, the clients would always want the vehicles delivered within a specified timeframe. The mode of transport used will determine the time spent in transit. The trucks have been established to take lesser time as opposed to trains. There are other factors; however, that may lead to the company choosing the train over truck such as the distance. The importance of this factor is to enhance the reliability of the company to the client. The company also considers the distance to be covered. The vehicles are transported to long distance of up to 600miles. Depending on where the vehicles are to be transported, a different mode of transport may be used. For distance within 500miles, the preferred mode of transport is mostly the truck. For distances past 600 miles, the most preferred mode of transport will be the train. The importance here is to choose the most convenient mode of transport given the distance. It would be very inconvenient, for example, to use a train over short distances given the tedious process involved of first loading them to the train and then later loading them to trucks to reach the preferred destination. It is therefore time saving to use trucks over short distances. For long distances, the price per mile will be cheaper when the train used. The other issue of consideration is the logistics. The company needs to have a good record of the vehicles and be able to track them from the point of manufacture to when the vehicles are in transit. The two different modes of transport present different modes of transport present various logistical issues. For a truck, it has been said to be easier to keep track of the vehicles as opposed to when the rail is used. The importance of this factor is being able to keep track of the vehicles at any point by the use of their unique numbers. The company should also consider other issues. One such issue is the client’s wishes. The customer should have a chance to say the mode of transport that he or she wants. This is because the company may choose, for example, train for delivery of the vehicle. The train as discussed above will take a longer time than the truck and maybe the client wants the vehicle within a shorter time. If he or she is given the chance to pick, it may lead to a higher customer satisfaction. They should also consider the number of vehicles to be transported. If the vehicles are very many on one route, then the train should be considered as opposed to using multiple trucks. On the other hand, when few vehicles are to be transported on a certain route, the trucks should be regarded as first. The other issue that should be possibly considered is the availability of each. What if there is an order that was made and now requires urgent delivery? The company should be able to pick the means that is available at the time without much consideration of other factors. This would ensure that the customer is satisfied and that the company’s reliability is improved. A flow chart of the delivery process for truck and rail Flow of events from event 38 when a train is used Flow of events from event 38 when a truck is used Recommended delivery method to minimize logistic costs per vehicle The company mostly delivers to dealers whom they call retailers. The retailers need to distribute the vehicles to buyers. The major concern is to ensure the cost of the vehicles does not go up by a huge amount. The transport cost if high will also affect the cost of the vehicle as the transport cost will be added to the cost of the vehicle. The best mode of transport, therefore, is the one that offers the cheapest transport charges. From the data given, the cost of using a truck gives a lower charge per mile as opposed to the use of a rail. The recommended mode of transporting the vehicle in terms of cost would therefore be the use of truck since it is cheaper. Table: A table showing relationship between the rail and truck cost Retailer location Truck cost Rail cost Recommendation Baton lounge LA 2405 2796 Truck Chicago LA 2440 2838 Truck Savanna, GA 2560 2935 Truck Kansas City MO 2680 3079 Truck Jacksonville, FL 22890 3272 Rail Dallas, TX 3166 3530 Truck Omaha, NE 3335 3680 Truck Watertown, NY 4100 4300 Truck Recommended mode of transport to minimize outbound logistics per vehicle A new retailer would need a very consistent mode of delivery due to the delicate nature of a new retail shop. Therefore, a mode of transport means that guarantees consistency should be selected. The delivery of the vehicles should be done at an expeditious mode to prevent any frustrations on timing by the retailer. Since their business is young, they need to use a faster means of transport to ensure that their customers are properly satisfied ant within a reasonable time frame of delivery. Between the two modes, it has been indicated by the statistics that the trucks would take a shorter period as opposed to trucks. On logistics, it has also been stated that there is more consistency when using trucks rather than when using a train. The truck should, therefore, be selected. Recommended delivery method to minimize vehicle damage Each mode of transport has been associated with a specific percentage of vehicle damage. The company as well as the retailer would always consider a form of transport with the lowest number of damaged cars during transit. This serves to reduce the losses that each is likely to incur as a result of the number of vehicles damaged. The higher the number of vehicles transported per year the higher the number of damaged ones. There should, therefore, be a careful analysis of all the methods involved and the one with the least number of damaged vehicles selected. From the statistics given, the trucks have a 0.5% damage of the vehicles transported while trains have less that 80% of non-damaged vehicles. Going by those statistics, the number of vehicles that will have been damaged as a result of transport via train will be very high. This will cause a huge loss to a retailer or the company. To minimize this number, the mode of transport used should be the truck, whose number of damaged vehicles will be considerably low compared to the use of rail Recommendation for a new retailer A new retailer will be much more demanding than a seasoned retailer. Their requirements need to be considered due to the delicate nature of a new venture. Furthermore, they require incurring the least cost in transportation possible should on top of their agenda. Other issues such a proper trail should be possible with ease. As stated earlier, time is also a crucial element for new retailers. They need to have their deliveries made within the shortest period. This will ensure that the customers get to build confidence in the new retailer. As discussed earlier in the text, there is also a need to ensure that the damage during transport is reduced to the least number possible. This would serve to cut down losses that may badly affect the retailer. Considering all the factors, only cost favors the rail, of which the difference is very small per mile, all the other factors favor the use of truck.it would be prudent, therefore, to recommend that a new retailer use the truck as the means of transport. The use of rail has an added disadvantage, that is, there is a further use of truck from the point where the train drops them off to the retailer. There many stakeholders in the outbound, the transport of vehicles being via two modes, the truck, and the rail. Agreements exist between the company and the service providers each being a partner to Saturn. They form part of the stakeholders along retailers and the company. The decision to use the truck instead of rail will mostly affect the train company and the truck service providers. This is because the vehicles that would have possibly been transported via rail will now be transported via truck. This will mean less activity and less revenue to the train company and more activity and more revenue to the truck service providers. More trucks will be required to ensure that the demand is met. The retailer will also be affected positively. This is because the time and damage to the vehicles will be significantly reduced. This will be a major effect to the retailer. The company will be the least affected even though it would end up saving a lot of time in logistics. As the statistics showed, it is much easier to follow the process of a vehicle during transit as opposed to while using rail. Another issue on which the company will be affected positively is on its goal to ensure a low and uniform price for its vehicles for every buyer of a car with the same specification. This is because the use of one mode of transport will create some uniformity in the cost since the cost incurred in transit will be uniform. Considering the effects of the decision to every stakeholder, the most affected negatively are the ones that are likely to be dissatisfied with the choice of transport chosen. In this case, the train company will be the most displeased. This is because most of the revenue that would have been gained by transporting the vehicles will no longer be available for them. Considering the fact that there has been a long partnership between the two companies, there is likelihood of the train company being dissatisfied with that decision. Despite the preferred choice of transport being the use of truck, there might arise a challenge if the vehicles to be transported are required over very long distances. This would mean that at some instances where the retailers come from very far places, use of rail will be preferred, unless no railway passes nearby. Area likely to have a truck used for transportation Conclusion Every company struggles to be unique in its operation; this uniqueness is aimed at giving the company an edge over the other companies producing the same products (Arping & Gyongyi ,2002). For Saturn, they have created a system that is far much unique from other vehicle manufacturers. They focus a lot on the delivery of the end products to the retailers making sure that the price of their vehicles does not increase unnecessary. They therefore have to be keen on the mode of transport that they select, there being two modes of transport; rail or by truck. The choice of the mode of transport to be used depends on several aspects as have been discussed above, some of them including, cost, time, damage and other logistic issues. At the end of the day, the choice of whether to use rail or truck is the responsibility of Saturn. The retailer does not have a say in the process. References Arping ,S., & Gyongyi , L .(2002) corporate leverage and product differentiation strategy retrieved from Read More