Transportation and distribution management PDF

Running head: TRANSPORTATION AND DISTRIBUTION MANAGEMENT
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Introduction
The main purpose of this essay is analyzing the three main aspects of transportation
management which are incoterms selection consideration, carrier selection criteria and carrier
relationship management. Inco terms is defines as the binding rules and terms of contract
that offer guidance to global businesses that involve movement of goods from a seller to their
buyers. The case study and organization in reference in respect to global transportation is the
proctor and gamble company. The essay discusses on this company carrier selection as well
and the determining factors towards these selection of a carrier good as a transportation
manager in this company. This paper focuses on how to maintain a relationship between a
carrier and proctor and gamble company. Moreover, it will also touch on relationship
management that exists between the carrier and proctor and gamble company , some of the
factors that should be considered when disbursing, staging and collection of orders so as to
overcharging in the carriers as way of making transportation and distribution cost very low.
Proctor and gamble company
Proctor and gamble is an organization having its headquarters in Cincinnati in the
United States of America. The company was founded in 1837 but its incorporation was by the
year 1905. It deals with packaging on goods for consumers. The company specializes in
production of goods in several segments that include beauty products like body lotions, fabric
care materials like baby diapers, home care appliances, family care products and feminine as
well as baby related products. The company has grown it services to about 180 countries in
the world shared among the world’s continents. This makes it one of the global market
present companies hence an appropriate one to help is study for transportation and
distribution management. The company as well established office branches in most of its
business operation centers. (Mason- Jones, 2007) The company operates in competitive field.
Its main competitors include companies liken uniliver, Johnson and Johnson, beiersdorf and
Henkel. (Ghatlia, 2005) Moreover, they have developed an overall brand strategy where the
company’s information tend to be uniform in a global business perspective and in the event
of rise in competition, the company upgrades their products and more so the marketing
techniques and gimmicks. Their products are mainly sold in supermarkets, chemical and drug
stores, online through the company website and distributors of beauty products like salons.
The company’s goal after many years of existence is to change everything basing on
competition and building a better company based in company’s core values. (Camm &
Thomas, 2008)

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Inco terms selection consideration
Proctor and gamble effectiveness transportation capability
Proctor and gamble company has over the past switched the mode of transporting its goods
from the road mode of transportation to rail and water inland shipping modes. Moreover, the
company conducted some analysis in instances where a lot of wastage was being experiences
and managed to reduce wastage instances in course of production and transportation. The
company has been able to outdo its competitors due to the application of waste reduction
strategies and use of other modes of transports which cut mike deliveries. These two have led
to a cost effective logistics system of transportation and distribution of their goods. One of
the projects that the company came up with to reach this success is Tina which is one of the
environmentally friendly project which helps in saving an approximate of 67000 tons of
carbon emitted each year. After the launch of the project back in 2009, many organizations
have adopted all over Europe by the Proctor and gamble company branches. Since the time of
project introduction, it has been possible for this company to redesign its supply network as
well. With reduction in waste in the transportation network, it has also been possible for the
company to move its business centers and branches closer to the customers who comprise of
retailers, individual customers and wholesale customers as well. (Bob, 2015) In addition to
that, the proctor and gamble company has changed on the volumes it has been packaging its
commodities and ensures that its products are now in compacted form where the measure has
reduced the volumes of packaged goods making the transportation very easy fast and cost
effective.
The appropriate incoterms to be used by the proctor and gamble
It’s recommendable for the proctor and Gamble to use incoterms that has covered
transportation of goods via railway and water medium of transport. The binding guidelines in
those contracts should cover by defining aspects regarding geographical locations, goods
handling conditions as well as destination for the goods. As the transport manager to the
proctor and gamble company, I would therefore recommend for certain incoterm for the
company. (Coyle, 2018) This is inclusive if FCA which is a certain incoeterm categorized
under carriage. It’s under this term of contract that the company is able to deliver all products
that have been cleared for exports to the shipping company and also that has been chosen by
the customers at the agreed pick up station. Under this incoterm, if delivery occurs at the
proctor and gamble selling centre, then it’s the responsibility of the organization to cater for

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all loading requirement. On the other hand, if delivery does not happen at the selling centers,
proctor and gamble is therefore not responsible of any loading process or charge. (Ismail,
2008)
Another incoterm I would recommend for the proctor and gamble company is the FAS which
mean a free alongside ship. With this incoterm, the company is able to deliver upon good that
have been delivered alongside the ship at the known or named shipping port. It’s after goods
delivery that the customer will be forwarded for all the cost and risks that may be associated
with goods after that. In any case that this customer intends to exports the goods, he therefore
has to clear the cost of exportation.
Another incoterm which is recommendable for our company is the DES which stands for
delivered by ex ship. According to this guideline, the proctor and gamble company will only
transport and deliver in the event goods are available to the buyers on board. Moreover, under
this incoterm, the ship is never cleared by import authorities at the goods destination ports
and the seller will therefore have to be responsible for all cost of unloading the goods.
Lastly, cost insurance and freight incoterm is very much recommendable for the proctor and
gamble company. According to this guideline, our company will be responsible for
transportation of the goods to the customer and other associated issues and risks like losses
associated with transport of goods. Due to this, the company is tied to taking insurance covers
but covers of minimum costs. This guideline is an advantage to the company incase
unexpected risks occurs. Some of these risks include, capsizing of ships ferrying the
company’s export products, development of mechanical issues which can result to losses
arising from delay in delivery of timely company goods such as baby products. However,
under this guideline, the other extra insurance charges after good shipment, the buyer is
responsible for. For rail transport Proctor & Gamble can use the incoterm EXW, the company
having embraced the idea of having the storehouses closer to the buyers, it will deliver
products to its warehouses via the rail to the packing plants next to the buyers, in this
incoterm the buyers are responsible for loading, formalities in place in exporting and
importing all costs that Proctor & Gamble will incur as it submits the goods to the buyers via
the rail.

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Carrier selection criteria
Transportation goals and needs for proctor and gamble company
According to the product and supply officer in Proctor and gamble company globally, the
main goal for this company in respect to transport is to ensure that the company’s operation
are much justified and measured from the customers end in a manner suggesting to 80%
appealing to customers. According to the company goals, it should take only one day to
distributed ordered good by retailers.
The company has considered the need of coming up with mega goods distribution centers that
have located in every country acting as a footprint of the company’s business. These centers
tend to receive goods from business units in the distribution centers and this will facilitate
fast and efficiency in product delivery as well. In order to support these distribution centers,
which will help attain the 80% delivery goal, the company has therefore restructured its
North America manufacturing base as a way of ensuring that distribution centre needs are
immediately responded upon. The company has a set a goal to achieve by 2020. This is to
reduce the goods that are being transported by use of trucks. (Foeken, 2016)

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The appropriate criteria that need to be considered when selecting the carrier
At the point when Proctor and gamble choosing a transporter, it ought to consider factors like
travel or average transit time, in light of their need to supply 80% of retailers on a given day,
speed is required here. Since the organization attempts to utilize rail and water transport more
than the road medium of transport, it is exceptionally suggested that the transporter chose
ought to be in a situation to convey the merchandise with offices that are water safe, the
storage capacity of the carrier, ought to convey the products at the coveted temperatures to
the purchasers. (Grammenos, 2013) Things such garments or diapers which are sold by
Proctor and gamble, whenever exposed to water may contribute to loses to the organization,
the carriers chosen ought to have the packaging centers that guarantees products reach the
coveted destination in the most alluring state, to the purchasers and clients.
The organization ought to likewise utilize a predetermined number of transporters, the carrier
chose ought not be serving numerous organizations in the meantime, set number of
transporters will empower it to have a decent buying request of dollars at a lower or moderate
rate and manufacture associations with the specialist co-ops who will, at last, comprehend
business tasks of proctor and gamble The transporter chose ought to be a bearer that has
agreed on quality administration and proficiency. To wrap things up the carrier chosen ought
to be in a position to deal with volumes of the products transported by the organization
particularly by the rail transport, making the supply nonstop. The majorly objective for the
proctor and gamble organization by 2020 is a decrease of transport using the trucks, ensuring
that fewer kilometers are covered while transporting products and furthermore ensuring that
merchants are an inconsistent supply of merchandise. (Myerson, 2015) The organization is
also working hard to ensure that it produces less carbon in the air.
Criteria ranking
rank criteria Weight
1 Average transit time 65
2 Reliability 20
3 Geographic coverage 15
Total 100%

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Carrier relationship management
It’s very important for a company like proctor and gamble to outsource. A company size of
proctor and gamble should adopt a clear work relationship with its carriers. From analysis of
the company activities and needs, it would be correct to recommend for the type ii
partnership with its carriers which is the longer term contractual relationship of about 3 years
and above. (Jaffeux, 2012)Under this type of relationship, the following guidelines are
practicable,
1. May require investments
2. Broader scope of activities
3. Transport examples (Vendor certification programs, Guaranteed annual volumes,
Dedicated freight lanes, Incentives for cost reduction)
Moreover the company needs to have established and bear a positive relationship with
contact personnel that link them with the carriers. This relationship with contact personnel
will help the carrier in noting the proctor and gamble company’s operations and
understanding the urgency of goods that are awaited and needed in the market. It’s from the
relationship that the company can know the state of goods in which they have been received
after transportation by the carrier agents.
Proctor and gamble company ought to have a very direct relationship with all carries linked
to them. This is an advantage to the company since it helps them in knowing what is
happening within the process of goods transportation by the carriers because the company has
been using different carrier companies to different distribution centers. These carriers differ
due to different medium of transport used to ferry these goods. E.g. rail transport and sea
transport. Moreover, it’s very important for this company to practice an intercompany
relationship. This type of relationship is brought about by making payments to the transport
urgencies without delay and responding to carrier calls for cases of emergency. Working
relationship with carrier companies initiates feedback generation in relation to experience
gained in the process of transportation and explanation on what motivates efficiency in role
play. (Taylor, 2014)

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Conclusion
The proctor and gamble company as analyzed above appears to be one of the successful
organizations in supply chain and management business. (Sell, 2009)This paper has analyzed
the company and the way it transports its products to its customers by use of carrier services.
It has defined the guidelines and set of rules that bind contract between the proctors and
gamble company and its carrier offering companies. Assuming the role of a manager in the
proctor and gamble company, the analysis is an overview of effectiveness of transport
capability of the proctor and gamble company, reduction in transport by use of road method
to rail and water means of transport. The analysis has given a recommendation for a list of
incoterms covering different aspects of goods distribution like time, risk associated and cost
incurred. Lastly, the paper has given some recommendation and importance of relationship
management between the porter and gambler company with its carrier companies.( Noel &
Wright, 2006)

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References
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