Key Information
The major purpose of this report is to analyze the effectiveness of the incoterm’s selection process. Incoterms generally refers to the set of collection of rules or binding contracts that are associated with guiding a business all throughout the globe and this mainly happens whenever a good or a service are moved from the seller’s end to the buyers (Nedelko & Raudeli?nien?, 2018). The report would be focusing upon the global transport of the organization Proctor & Gamble, their selection of the carrier, and what are the factors that determine the selection of carrier. The report would also be discussing about the relationship management that exists between the organization Proctor & Gamble and the carrier. This would be including the factors that are to be considered during the staging and picking up of the orders so as to make sure that the carriers are not being over charged which initially makes the transport cost very low.
The headquarter of Proctor & Gamble is situated in Cincinnati, United States and this organization was founded in the year of 1837 and was incorporated in the year of 1905 on 5th May. This organization is associated with packing of goods for their customers along with providing of goods in numerous segments and this mainly includes the beauty products, home appliances, and many more (pg.com, 2018). Customers from around 180 companies are associated with purchasing of products from the organization and along with this the subsidiaries of this organization also exists in Asia, South America, Africa and in North America.
Along with having office in most of the business operation centers the organization also has global market presence. Some of the major competitors of this organization includes the Henkel and Beiersdrof, Uniliver and Johnson and Johnson (pg.com, 2018). Along with this an overall brand strategy has been developed by the organization which has its information uniform all across the global. Whenever the competition arises the company is associated with upgrading of the products. The products of this organization are purchased in the markets, online by making use of the website, drug stores.
The organization Proctor & Gamble have been associated with transporting all its goods by making use of various modes of transport which ranges from the road to rails. Besides this they have also used an avenue of inland shipping. He company have been associated with analysis of the different instances which involved the wastage and this has been helping a lot in reducing the wastage at a drastic rate. One of the major ways by which the organization has stayed a step ahead to its competitors is by making use of the waste reduction and usage of the avenues of transport (Glowik & Bruhs, 2014). The major reason lying behind this that it helps a lot in cutting miles delivery. This has also helped in coming up with a logistic system which is cost effective. This project was named as TINA which is an environment friendly project that almost saved Europe from around 67000 tons of carbon emission. In the year of 2009 this project TINA was launched in two countries where it was seen that the project was accepted as an adaptive model all across Europe for this organization (pg.com, 2018). Since after the introduction of this project the company was also associated with the re-designing of the supply network as well.
For the purpose of reducing the waste in the transport network the organization started moving its distribution centers closer to the customers and the customers mainly included the retailers, wholesale customer and individual customers (Matikka, 2016). The organization had also been associated with changing the packet volume and this was done by making sure of the fact that the products are of compact nature along with ensuring the fact that the measures are helping in reducing the volumes of the packed goods.
The most appropriate Incoterm that can be used by the organization, should cover the transport over the waterbodies and the rails. Besides this the incoterm that can be used by the organization should be associated with defining the three major aspects that includes the handling condition, the geographical location and lastly the destination (Budarina, 2015). The incoterm that is recommended and can be used by the organization Proctor & Gamble is the FCA. FCA is an incoterm under carriage and by using this type of incoterm it is possible for Proctor & Gamble to deliver the products that are cleared in order to be exported to the carriers or to the other shipping company which is selected by the buyer at a particular place of delivery (Pathak, 2016). However, in this type of incoterm if the delivery of products occur at the selling point of Proctor & Gamble then the entirely the organization is held responsible for the loading. Along with this if the delivery is not happening from its selling premises then the organization would not be responsible for any kind of loading.
The incoterm FAS also known as the Free Alongside Ship is another type of incoterm which can be used by the organization Proctor & Gamble so as to deliver the goods by means of ship. Once the delivery is done the buyer would be fully responsible for bearing the costs as well as the risks associated with the product which has been delivered (Kim & Jang, 2015). And in case if the buyer is having the will of exporting the good then the buyer only needs to clear up the cost associated with exporting. Delivery by the Ex-ship or the DES is the incoterm that can be used by the organization so as to deliver goods once to the buyers who are available on board. However, in this type of incoterm the ship are generally not cleared for any kind of import at the port present in the destination (SunLeea & SookHuhb, 2017). So, in this case the seller is fully responsible for the unloading of the goods.
Incoterm CIF also known as the Cost, Insurance and Freight is the type of incoterm in which the organization would be entirely responsible for the transporting the goods to the customers. Along with this the organization would also be responsible any other issues like the loss which might occur during transporting the products. For this the organization is obliged to take the insurance cover at the minimum cost and this would be advantageous for the organization and this would happen in case of occurrence of any unexpected events (Yaakub & Ying Szu, 2017). In case of rail transport the incoterm that is used by the organization is EXW. The company has been associated with embracing the idea of moving their storehouse closer to their buyers so as to deliver products to the warehouse by using the rail. After this the product would be delivered to the packing plants present next to the buyers. In this type of incoterm, the buyers are solely responsible for loading, the existing formalities and importing of all the cost that is likely to be incurred by the organization whenever it submits the goods to the buyers by making use of the rails.
The product and supply officer of Proctor & Gamble globally, Annis Skoufalos stated that the major objective and the needs of the organization regarding the transport is concerned. The major reason lying behind this is for the purpose of tracking the operation or for appealing to customers at 80%. Along with this he was also associated with emphasizing upon the fact that the operations of the company are justified and are measurable by the customers. The goal of the organization includes the transporting of the goods to 80% of the retailers within a time span of 24 hours (Lee & Huh, 2017). In order to transform this goal into reality the organization Proctor & Gamble realized that there is a need of creating mega distribution centers which would be strategically be located not only in North America but also in every other country where the organization conducts in business. The distribution centers would be made capable of receiving the goods from all other business units and besides this the transportation of the goods would also be done high speed and efficiency. For the purpose of providing support to the distribution centers and for having a transportation goal of 80% to the retailers or the buyers, the organization should restructure its manufacturing base which is situated in North America (Trebilcock, 2018). This is done so as to make sure that the organization is capable of responding in accordance to the needs of the distribution centers situated all across the world. Proctor& Gamble should also be associated with campaigning for its suppliers in order to have their centers situated next to the distribution centers, this would help in making sure of the fact that the suppliers are having a continuous process of supply without running out of stock.
The organization is having the goal of reducing the transportation of goods by making use of trucks by the year of 2020. The vehicles of the organization is consisting of an improved fill rate and besides this it has also been associated with increasing the usage of multi model transport.
While selecting the right carrier it is essential for the organization Proctor and Gamble to consider certain factors such as the transit line, by depending upon their need to supply goods to their retailers on a given day. For this they would eb needing speed. Because of the endeavor that the organization is having so as to use the rails and water ways instead of the road ways, it is recommended that they select such a carrier which is in the appropriate position of carrying the goods my making use of the facilities which are resistant to water. Besides the storage of the carrier should also be appropriate and besides this they should also be capable of delivering goods at a specified temperature to its buyers (Martel & Klibi, 2016). The major reason behind this is that if products like cloths and diapers which are sold by the organization if exposed to water might cause huge loss for the organization, the carrier that is to be select should also have good packing facilities so as to make sure that the goods are reaching the desired destination in the state that is desired by the buyer or by the customer.
Along with this it is to be made sure that the company is using a limited number of carriers and it is also to be made sure that the carrier which is being selected is not serving many other companies at the same time (SunLeea & SookHuhb, 2017). Limited number of carriers would be associated with enabling the organization to get purchasing of the orders or dollars at a very low and affordable rate. This in turn would be helping a lot in building a good relationship with the service providers who would also understand the business operations of the organization, Proctor & Gamble. It is also necessary to make sure that the carrier being selected is having an accorded quality service as well as efficiency. In addition to all this the carrier must have the capability of handling large amount of goods that are to be transported by the organization especially by making use of the rail transport and the supply should also be continuous in nature.
It is essential that the organization is having a direct relation with the carrier which would be enabling the organization to know the actual happenings within the carrier. As the organization makes use of different carriers so as to conduct their business, so it is very important for them to make sure of the fact that they are having a god intercompany relationship (Martel & Klibi, 2016). The organization is contacted as it is the main carrier and it also steers the operations of the staff. This is done so as to make sure of the fact that the objectives of the organization are being met properly along with maintaining the efficiency of the business carrier. The working relation of the organization with the carrier would be enabling the company to obtain feedbacks related to the experience in the entire transportation process. Along with this it would also be helping in identifying the facts that would be motivating the efficiency. In addition to all this intercompany relationship can be facilitated by paying the carriers on time ad by answering the calls of the carriers in cases of emergency as it is the organization which needs to keep its business moving at the end.
Conclusion:
The report discussed above helps in understanding the organization Proctor and Gamble, which is an organization that has been existing since the year of 1837 and is considered to oe of the leaders amongst the supply chain business. There are various key factors that are responsible for implementing the marketing strategies and for achieving success. However, this factor might be unknown to the customers, despite of the fact that these factor helps the organization to thrive. This report has been associated with discussing the incoterms along with setting a set of rules or binding contracts that exists between the organization and the carrier. As a manager the effectiveness of the transport capability of the organization has been analyzed in this paper which would be helping in reduction of the transport by road, rail and water. There exists various type of incoterms and the appropriate incoterms have been recommended for eth organization. The paper has also been discussing the criteria’s for selecting the carriers. Lastly the report discusses about the factors that are to be considers ad what are the best option that suits the company. The report also discusses about other factors like the carrier relationship management and how it is suited for the organization.
References:
Budarina, M. (2015). Intermodal Freight Transportation of Foreign Trade Cargo (Case: Transportation of Elite Cars from Italy to Russian Federation).
Glowik, M., & Bruhs, S. M. (2014). Business-to-business: A Global Network Perspective. Routledge.
Kim, H. S., & Jang, J. H. (2015). The problems for the usage and practical application of INCOTERMS 2010 in international trade contracts. Journal of the Korea Institute of Information and Communication Engineering, 19(12), 2993-3002.
Lee, J. S., & Huh, E. S. (2017). A Study on Standard Types of Free Carrier (FCA) on Incoterms for Seaborne Container Goods Transportation: Korean Trade Companies’ Perspective.
Martel, A., & Klibi, W. (2016). Transportation in the Supply Chain. In Designing Value-Creating Supply Chain Networks(pp. 161-206). Springer, Cham.
Matikka, J. (2016). How origin consolidation can reduce transportation costs in a typical Finnish company.
Nedelko, Z., & Raudeli?nien?, J. (2018). Knowledge Dynamics in Supply Chain Management. In Knowledge Integration Strategies for Entrepreneurship and Sustainability (pp. 150-166). IGI Global.
Pathak, A. S. (2016). Understanding Incoterms 2010.
pg.com. (2018). Procter & Gamble Company. Retrieved from https://us.pg.com/
SunLeea, J., & SookHuhb, E. (2017). A Study on Standard Types of Free Carrier (FCA) on Incoterms for Seaborne Container Goods Transportation. ????, 13, 51-66.
Trebilcock, B. (2018). What Does It Take To Remain A Supply Chain Leader? – Supply Chain 24/7. Retrieved from https://www.supplychain247.com/article/what_does_it_take_to_remain_a_supply_chain_leader
Yaakub, S., & Ying Szu, L. (2017). Factors influencing the choise of incoterms among malaysian manufacturers. Internation conferenxe on social sciences research.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
