Transport Logistics Course 2022

Transport Logistics
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Table of Contents
Introduction................................................................................................................................3
Background of Transportation Organization.............................................................................3
Outsourcing decision..................................................................................................................5
RFQ Process...............................................................................................................................6
Objectives...................................................................................................................................6
Key success factors for 3PL.......................................................................................................7
Selection Criteria........................................................................................................................7
Measurement of performance of 3PL........................................................................................8
RFQ Template............................................................................................................................9
General Terms:.....................................................................................................................10
Order profile:........................................................................................................................10
Evaluation Criteria:..............................................................................................................10
Supplier Features:.................................................................................................................11
Conclusion................................................................................................................................12
References................................................................................................................................13
List of Tables
Table 1: ABC company fleet maintenance cost analysis...........................................................4
Table 2: RFQ Template............................................................................................................12

Introduction
Transportation management is very crucial function which helps for maximizing logistics
performance for freight shippers, distribution companies, manufacturers etc. Transporting
products to its customers on systematic time is very important and one might face challenges
if there is requirement of cost-effective transportation, reliable and quick as well. In the
present scenario of companies has need of freedom through operations with context to supply
chain management system. It may be technology or infrastructure companies which are
reluctant for bearing fixed cost engaged in setting up supply chain and transportation
operations in house. Here, the companies leverage third party logistics (3PL) organizations
for carrying work on their behalf (Cortinhal, Lopes and Melo, 2018).
These 3PL companies have presence of specialty, carrier network, transportation
management software and capabilities for reporting which assures about saving both time and
cost for the shipper. With 3PL partnership, there would be increment in operational control as
reputable 3PL collaborate and report on regular basis which develops visibility and metrics
for real time within transportation process as compared to before.
The “Request for Quotation” (RFQ) is a transport tender which a transportation firm use to
search for the best available service at reasonable price and in a certain time. It usually results
in a freight contractual agreement between the transportation organization and service
provider for a given period of time (Sople, 2016). In this report, an example of a transport
organization has been considered to evaluate the decision to outsource and identifying the
RFQ process for the same.

Background of Transportation Organization
The Company ABC is in transportation business since last two decades. The organization
provides freight services to major retailers of Singapore. At present the firm has a fleet of 5
vehicles. These vehicles operate for collecting the goods from wholesalers’ warehouses and
transport the same to retailers’ locations. The vehicles are specifically designed for this
purpose which include features like covered body, tracking software, ramp for materials
loading and unloading etc. In recent times, due to business growth, the current fleet of 5
trucks could only respond to 75% of the total business. For, the remaining 25% operations,
ABC was dependent on contractual services of other transport vendors on short-term
agreement basis.
During the same time, the company has observed that the 25% business from contractual
freight vendors yields more profit margin than the 75% business for which the company itself
maintain the vehicle fleets. The following table sums up the key observations.
ABC Company fleet maintenance cost analysis
Cost per
km for 1
truck
Cost per
km for 5
trucks
Cost
loading
per km
Equipment rents and purchase
for transportation $0.47 $2.35 12.5%
Outside maintenance $0.05 $0.25 1.3%
Tires $0.03 $0.15 0.8%
Miscellaneous $0.38 $1.90 10.1%
Depreciation $0.13 $0.65 3.5%
Insurance $0.09 $0.45 2.4%
Taxes & License $0.05 $0.25 1.3%
Fuel $0.48 $2.40 12.8%
Driver Wages $0.75 $3.75 20.0%
Other wages and benefits $1.32 $6.60 35.2%
Total Costs for own fleet $3.75 $18.75