The rapid increase in technological advancements has provided the business sector with huge advancements that has led to numerous growths in revenue and management. Various technological advancements in the 21st century has mostly influenced and boosted the business sector. One of the most intriguing advancements has been noticed in the logistics sector providing effectiveness in the transportation and distribution management (Advanced transportation management systems and transportation system management, 2007). Logistics sector has been the most influential and has become the need of the hour with the fast paced competitive market scenario.
About the Company
Tesco PLC is a British multinational basic need and general stock retailer headquartered in Welwyn Garden City, Hertfordshire, England, United Kingdom. It is the third biggest retailer on the planet measured by profits and second-biggest retailer on the planet measured by incomes. It has stores in 12 nations crosswise over Asia and Europe and is the staple business sector pioneer in the UK (where it has a piece of the overall industry of around 28.4%), Ireland, Hungary, Malaysia, and Thailand (Leahy, 2012). Tesco was established in 1919 by Jack Cohen as a gathering of business sector stalls. The Tesco name initially showed up in 1924, after Cohen acquired a shipment of tea from T. E. Stockwell and consolidated those initials with the initial two letters of his surname, and the primary Tesco store opened in 1931 in Burnt Oak, Barnet. His business extended quickly, and by 1939 he had more than 100 Tesco stores the nation over. Initially a UK basic supply retailer, Tesco has enhanced topographically since the mid 1990s and into ranges, for example, the retailing of books, garments, gadgets, furniture, toys, petrol and programming; money related administrations; telecoms and web administrations. The 1990s saw Tesco reposition itself; it moved from being a down-business sector high-volume minimal effort retailer, to one which claims crosswise over numerous social gatherings, by offering items going from its "Tesco Value" things (dispatched 1993) to its "Tesco Finest" reach. This widening of its allure was effective, and saw the chain develop from 500 stores in the mid-1990s to 2,500 stores fifteen years after the fact. Tesco is recorded on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a business sector capitalization of around ?18.1 billion starting 22 April 2015, the 28th-biggest of any organization with an essential posting on the London Stock Exchange (LLC, 2010).
Incoterms selection consideration
These generic set of internationally set standards are considered to be a measure to save the traders time, cost and is further considered to be invaluable and indispensable when it comes to International trade practices. There are number of incoterms such as, FCA, DDU, CFR, CPT Etc... Depending upon these trade terms, which the parties to trade agree upon, the parties, can become less worried in regards for the insurance, freight and other costs in the future of their trade agreement (Zhao, 2014).
Each of the Incoterms have a previously stipulated set of rules and regulations, which further affect the mode of transportation the company will be using, and the capability of the transportation being used for the trade purpose ("Distribution in inner cities", 2007). At present the set of Incoterms being used by the company is governed by the Incoterms 2010 which include;
Rules for all modes of transport
- Free Carrier (FCA)
- Ex Works (EXW)
- Carriage and insurance paid to (CIP)
- Carriage paid to (CPT)
- Delivered at terminal (DAT)
- Delivered at Place (DAP)
- Delivered duty paid (DDP) (Gopalia, 2016)
Rules for inland waterway and sea transport
- Cost and freight (CFR)
- Free Alongside Ship (FAS)
- Cost, Insurance and freight (CIF)
- Free on board (FOB)
Now, here are a few Intercoms which are considered to be the best possible set of rules and regulations set for the buyer and the seller respectively:
Best Incoterms for buyers
- FOB: Free on board incoterms is available for waterway or sea transport only. The origin point is the FOB point. Here, the buyer is in control of the freight and seller is liable to make the delivery to the origin port (Flood, Callson, Jablonski, & Flood, 2014).
- DDU: Delivery duty paid is available with all modes of transportation. Here the seller has to deliver the goods to the buyer’s place and is liable for any sort of damages. The custom clearance is carried out by the buyer (Christopher, M., 2005).
Best incoterms for sellers
- CFR: cost and freight is available for ocean transportation only. Here the delivery point has to be a sea port however, the seller is liable until the freight reaches the port and from here the seller cannot be held for any sort of damages and losses.
- FCA: Free carrier is available for all sorts of transportation modes. The origin might be the premises of the seller or the terminal of the carrier (Grant, 2008). The loading charges are sent to the buyer in this case. Furthermore, the buyer is in control of the freight routing.
Carrier selection criteria
Selecting the carrier for the transportation of goods is a tedious task. It is the responsibility of the logistics department to make certain that the carrier chosen for the transportation, be it via land, air or water is efficient enough to make the delivery in due time, keep the goods safe from damage and is cost effective (Scott, 2011). In order to make proper selection of the goods this section has been segregated into two parts:
- Transportation goals and needs.
- Transportation planning.
Transportation goals and needs
Before the goods are transported to their destination special care must be taken and requires a reliable transportation carrier which would be able to move the goods safely, quickly and with minimum risk of damage and thefts (Kassabian, 2013). This essentially depends on:
- Capacity of the carrier: the carrier’s capacity should be top notch concern as; the condition of the goods would greatly depend on it. If the carrier is bigger then there would remain extra space, which would in turn upset the way the goods were arranged at the origin point, resulting in them to tumble and get damaged. Similarly a smaller carrier might not be able to carry the entire quantity of goods.
- Cost incurred: the cost that would be incurred by employing a certain carrier is an important aspect ("Management information", 2013). This is as the cost should not exceed more than 30% of the total amount earned from the transaction.
- Efficient route planning: time is essence in logistics therefore, proper planning of the route must be chalked out and also it is required to ascertain that the carrier selected for the route is appropriate. For instance, if the delivery can be made earlier by means of using an air carrier mode, then using a land carrier would result in incurring extra cost, time and resource.
Transportation planning is the activity in which the logistics management delves into the various ways the goods can be delivered to their destination without any hassles. This activity further relates to knowing the highway system, air/ sea/ inland water routes and also the traffic facilities. There are three aspects which determine an effective transport planning and they are:
- Efficiency: it essentially relates to the effective managing of the available resources. Depending upon the nature of the transportation required the management is required to make use of the existing alternatives at hand and ascertain that the goods are delivered efficiently, in good time and condition (Rushton, Croucher, & Baker, 2010).
- Quality: the quality of the transportation service affects the condition of the goods being transported.
- Equity: to meet the demands of the clients properly and without any complaint in regards to transportation.
Carrier relationship management
Being a typical logistics company carrier relationship management is an essential aspect of the company. The company takes pride on being able to meet up with its clients from both ends overall business needs. The company fashions its services in a manner that they are able to come to a middle ground with their clients. As already mentioned being a logistics company the company credits its success to the efficient carrier relationship management strategies (Transportation management, 2010). This is achieved by carefully designed contract and tariff rules which enable them to help their carrier operators make the most out of each of their trips. This further enables the company to maintain a good relation with its carriers. An effective carrier relationship management depends upon two essential aspects:
- Identifying the Goals and needs.
- Outsourcing transportation services.
Identifying the goals and needs
It is the basic job of an employer to make certain that its valued employees are satisfied. A satisfied employee is capable of performing more for the employer when compared to a unsatisfied employee. Furthermore, the goals that an employer sets for the organization is explicitly carried out by the employees and the more efficient and loyal the employee is to the organization he or she is capable of performing better. This is the philosophy that drives this particular logistic brand (Kassabian, 2013).
Here, the carrier relationship management team is responsible for seeing to the needs of the various operators and make sure that a middle ground is reached between them prior to their departure with goods. The carrier operators are paid depending upon the length of the route of the delivery. In addition, it is the responsibility of the carrier relationship management to make sure the goods are delivered to and from the carriers in the stipulated time.
Outsourcing transportation services
In situations when the company’s carriers are all engaged it is the responsibility of the carrier relationship management team outsource the transportation services. This usually incurs extra costs than what the company incurs when using its own carriers but, in such situations it is required that the delivery be made by means of outsourcing the transportation services (Flood, Callson, Jablonski, & Flood, 2014). The carrier relationship management team requires keeping in mind the following while engaging such services:
- The services should not cost more than 15% than what the company is paying to its own carriers.
- The carriers selected for the job are reliable or not.
- There should be a clear agreement in between the parties in regards to the liabilities.
- The carrier company should be well aware of the nature and reputation of the company and is capable of functioning accordingly.
The entire report prolifically highlights the transportation and distribution management focusing on the effectiveness of three major aspects of transportation management i.e. incoterms selection consideration, carrier selection criteria and carrier relationship management. Tesco being one of the most influential companies in the global market has taken these three aspects into consideration simultaneously (Cooley, 2016). The strategic initiatives are the key to success of Tesco providing a significant platform for relying on the core competencies which helps the company to move forward in the logistics sector with definitive operational and financial performance. The three aspects of transportation and distribution management significantly provide a detailed overview about how Tesco works and analyzes the market irrespective of the competition in the global market.
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