Selection of mode and carrier for inbound shipments
The choice of transportation mode for inbound shipment is important element in Procurement. Logistics department may only advise Procurement on freight rates and carrier options but the final decision still rest on Procurement. Wrong selection of mode and carrier can lead to higher cost and lower service levels. Thus, carrier selection requires careful consideration and numerous economic trade-offs.
The most important criteria for carrier selection are competitive rates, customer service, transit time reliability, pick up and delivery service, equipment availability, loss and damage claim, information system sharing, location coverage, problem resolution, billing accuracy and insurance coverage.
The current trend in the selection process is to have fewer carriers in order to negotiate for lower cost and higher service level.
After the transportation mode is chosen, the specific carrier within the mode must be determined. In specific market, there may be large variety of carrier to choose from. There also may be variation in the price and service level. In case of shipment borne by buyer, depending on the needs, Procurement may discuss with Logistics to choose one shipper or multiple shippers. Using multiple shippers may achieve better prices and higher service quality.
Once a particular carrier is selected, Procurement must routinely evaluate their performance in term of service quality and consistency. The performance measure could include on-time deliveries, loss and damage claim and billing accuracy.
|Question to activity 4.5
||Suggested answer to activity 4.5