The Supply Chain Management section invests a lot of its budget into transportation. The efficient, timely and rightful delivery and supply of goods is a costly affair that can sometimes eat into the profits. As the president of this unit, I will implement specific measures that can be used to minimize costs while increasing the efficiency of the process. An analysis of the current expenditure that was associated with transport will be the first step. A consolidated report dating back four years will be assembled. According to previous reports, there has been a lot of money was spent on fuel, servicing of vehicles, routine repairs and a high rate of returns. I will therefore breakdown these factors into categories, and each will be addressed individually.
Fuel costs were observed to be on the rise annually. Though internally, little could be done to control them, I decided to try and subsidize expenses. The company was already in agreement with a large gas station. I will further organize a meeting with a senior sales member of staff to get an overview on the expenditures and the profits on the company’s sales. The rates we had been offered previously were negotiated in return for exclusive fueling priority. Our vehicles were to fuel only at the stations under this retailer. He, in turn, provided us with filling cards that guaranteed us 7 % cheaper fuel. This measure is to be monitored by introducing cash less system that will force our drivers to only pay using the card. This card will also relay billing information directly to our accounts section in real time (Fahimnia et al., 2015).
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The second money guzzler was the servicing of our vehicles. I noted that more money was spent on the service and repair of our older cars. This was despite the fact that they were the most unreliable and they reported the highest incidences of needing rescue units. A professional team of mechanics was invited to do an overall audit of the most damaged vehicles. They were asked to give a detailed report of what each needed to run more efficiently. The report was also to include how much each vehicle could fetch if it were put up for sale in its current state. This information was used to determine which vehicles to keep and which to discard. A public auction has been organized in this regard (Taniguchi & Thompson, 2014).
The proposed sale of faulty cars is expected to reduce the number of vehicles used for transport. This gap is to be temporarily filled by leasing cars and lorries for three months. After reviewing records of a time when we had relied entirely on leases for transport, a few differences were noted. Fuel costs were the same at this time. However, no time or money will be spent on repairs or service because this was the responsibility of the lease company. This information will be used to implement a trial plan whereby the company will be able to compare its operational costs for six months. We would maintain the use of some of our vehicles and run them concurrently with the leased units. The cheaper and more efficient option would be adopted in the long term (Bhattacharya et al., 2014).
The last factor contributing to the high cost of transport is the high number of returns experienced by delivery persons. I will address the issue by analyzing the reasons for the returns. It will entail identifying the wrong orders including colors, sizes, and brands. The other reasons could include defective merchandise and wrongful labeling of packages. All these complaints will be handed to the shipping and handling unit. A training will be organized for the staff in that unit and results will be analyzed after one month. Delivery staff will also be advised to get the facts right before leaving the warehouse to avoid delays that often led to the cancellation. These methods are expected to reduce the costs of operation and transport while making the process more effective.
References
Bhattacharya, A., Kumar, S. A., Tiwari, M. K., " Talluri, S. (2014). An intermodal freight transport system for optimal supply chain logistics. Transportation research part C: Emerging technologies, 38 , 73-84.
Fahimnia, B., Sarkis, J., Boland, J., Reisi, M., " Goh, M. (2015). Policy insights from a green supply chain optimisation model. International Journal of Production Research, 53 (21), 6522-6533.
Taniguchi, E., " Thompson, R. G. (Eds.). (2014). City logistics: Mapping the future. CRC Press.
