For every manufacturing company, transportation is a very vital process and is at the core of the supply chain. If the transportation is inadequate, products either get to the consumers out of time or arrive in poor conditions thus jeopardizing the image of the company that produces them (Moore, 2014). In accordance to the recently made discoveries on the impact of product quality on customer loyalty, this could cost the company quite a lot. However, it becomes too costly for most companies to transport by themselves especially because of the high cost of acquiring machinery like trucks, ships, and airplanes. As a result, they end up working with other transporting organizations through what is termed to as contemporary transportation management.
Contemporary transportation management sees the reviewing of bids from transporting companies and settling for the ones that best suit their need. They come up with a transportation bid collaboration system which they use to select from the various bids placed. In so doing, some factors are considered: with freight rate being the key factor. The freight rate is established after an analysis of key factors like the amount of commodity to be transported are analyzed as well as the distance, mode of transport required, and the nature of good being carried (Zhenya, 2014).
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The major advantage of having a transportation bid process is that it enables the company to find the best-suited transportation agencies for their products, as it was earlier on mentioned. The company can conduct an analysis of the cost friendly bids that ensure their product is safely delivered and on time. This way, they are even able to establish long-term relationships with those that prove to be the best. Alternatively, it also provides an opportunity for them to find other transporters in the case one is found to be at fault.
References
Zhenya, B. (2014). Freight rates: How they are determined. Freightera . Retrieved on 8 June 2017 from https://www.freightera.com/blog/how-freight-rates-are-determined/.
Moore, P. (2014). Transportation best practices: collaborative LTL contracting. Logistics Management . Retrieved on 8 June 2017 from http://www.logisticsmgmt.com/article/transportation_best_practices_collaborative_ltl_contracting.
