Page 197 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes 18. …………………… transportation combines two or more modes to take advantage of the
inherent economies of each.

8.7 Transportation Administration and Documentation

While traffic managers administer many different activities, they are fundamentally responsible
for: (1) operations management, (2) freight consolidation, (3) rate negotiation, (4) freight control,
(5) auditing and claims, and (6) logistical integration.

1. Operations Management: In large-scale organizations, traffic operations management
involves a wide variety of administrative responsibilities. From an operational perspective,
key elements of transportation management are equipment scheduling, load planning,
routing, and carrier administration.

2. Freight Consolidation: Freight consolidation is a service offered by some shipping
companies to lower the total shipping cost and to increase shipping security. It is also
known as consolidation service, assembly service, and cargo consolidation. The fact that
freight costs are directly related to size of shipment and length of haul, places a premium
upon freight consolidation. From an operational viewpoint, freight consolidation
techniques can be grouped as reactive and proactive. Each type of consolidation is important
to achieving transportation efficiency.

3. Rate Negotiation: For any given shipment it is the responsibility of the traffic department
to obtain the lowest possible rate consistent with service requirements. The prevailing
price for each transport alternative-rail, air, motor, pipeline, water, and so on-is found by
reference to tariffs.

4. Freight Control: Other important responsibilities of transportation management are tracing
and expediting. Tracing is a procedure to locate lost or late shipments. Expediting involves
the shipper notifying a carrier that it needs to have a specific shipment move through the
carrier’s system as quickly as possible and with no delays.
5. Auditing and Claim Administration: When transportation service or charges are not
performed as promised, shippers can make claims for restitution. Claims are typically
classified as loss and damage or overcharge/undercharge. Auditing freight bills is an
important function of the traffic department. The purpose of auditing is to ensure billing
accuracy.
6. Logistical Integration: For any given operating period, traffic management is expected to
provide the required transportation services at budgeted cost. It is also traffic management’s
responsibility to search for alternative ways to deploy transportation to reduce total
logistics cost.
As operational expectations become more precise, order-to-delivery performance cycles
more compact, and margins for error reduced near zero, successful firms have come to
realize that there is no such thing as cheap transportation. Unless transportation is managed
in an effective and efficient manner, procurement, manufacturing, and customer
accommodation performance will not meet expectations.

Documentation

Well-defined documentation is required to perform a transportation service. With the exception
of private transfer within the confines of a single firm, products are typically being sold between
the shipper and the consignee. Three primary types of transport documentation are bills of
lading, freight bills, and shipment manifests.

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