Posts Tagged With: Transportation and Logistics

Monitor and Control the Performance of the Vehicles and the Drivers

Measurement Fleet

In order to improve the performance of Fleet Management System, a system is required to monitor and control the performance of the vehicles and the drivers.

Prior of monitoring and controlling the performance of the vehicles and the drivers, there are three main areas to be considered and implemented:

1. Repair and maintenance of the vehicles. Procedures should be in place to ensure that the work is carried out at the appropriate time, to the appropriate standard and all records should be accurate and kept at vehicle level. Good repair and maintenance procedures are essential to ensure the effectiveness operational of a fleet. There are two things to be considered for this part:

  • Preventive maintenance. This to ensure that the vehicles are serviced and maintained at the correct time. Correctly maintained vehicles will be more efficient and less cost. This also will make the life of the vehicles will be extended and resale value also will be higher. Effective preventive maintenance will also enhance the safety of the drivers and passengers. It is important, therefore that the frequency of inspection of preventive maintenance is correctly established.
  • Repair situation. The procedures should be in place to deal with repairs of vehicles speedily and efficiently. The nature of repair and the reason for the repair needs to be identified. If there is an accident, all report and inspection of the vehicle to be reported in writing and copies of the report should be sent to all respective parties. All reports should be kept in the appropriate vehicle file.

2. Scheduling of the vehicles. This activity is to ensure that the right vehicles are available in the right condition, at the right place and time, to support all the planned of movement. This requires close and on-going liaison with the operational staffs. Information needs to be received from the operation staffs on the required number of vehicles and their movements and changes to activity whether planned or unplanned. Also information of non-availability of the vehicles should also be passed to all relevant parties. If non-availability of the vehicles creates shortage of resource to meet operational needs, then the fleet manager has the responsibility for securing short-term replacement vehicle to ensure operation can continue as planned.

3. Management of spare parts. The level and range of spare parts held in the garage or workshop will be influenced by factors such as the age, variety of vehicle, the usage of vehicles, etc. Procedures for spare parts will differentiate what are consumables and what are defined as spare parts. The procedures need to outline the decision rules to enable staff to decide on which parts are to be held and in what quantity. The procedures will also explain the process to be followed when identifying and requisitioning spared for service and maintenance work and who has the responsibility for re-ordering parts for stock replenishment. Parts should be ordered from authorize dealer or reputable sources that have been approved by the procurement function. The stock of spare parts needs to be accounted for and procedures need to be in place.

Once above three main areas are implemented, it is necessary to measure the performance of the vehicles and the drivers against the budgets that have been set. This monitoring and control will primarily involve measuring the availability and utilization of the vehicles and the running costs of it. The cost of operating a vehicle depends on a variety of factors, these grouped into the two costs, fixed costs – which are incurred whether the vehicle is moving or not and variable or running costs – incurred only when the vehicle is moving.

Cost

Fixed costs are easily recorded. This include wages, licenses, establishment costs for garaging of the vehicle, vehicle tax, insurance, depreciation or interest on the capital cost of the vehicle and any other fixed costs.

Running costs will be gathered from data related to the day to day activities of the vehicle. Running costs include fuel, lubricants, tires, maintenance, parking fee, toll fee etc. The level of maintenance costs is often directly attributable to the replacement policy. Fuel consumption will depends on the way that the vehicle is driven, the nature of the terrain over which it is driven and the age also fuel efficiency of the vehicle. In addition to those costs, there may be also being some capital costs and overhead costs which will complete the overall total cost figure. All information above should be completed in the vehicle logbook by the driver for every journey made. This logbook should be checked by fleet manager minimum once a week.

Vehicle Utilization and Performance

Productivity of the vehicles and the drivers are related to the utilization of those resources and the manner in which they performed.  Measuring performance of resources gives the required information that those resources are being used as effectively and efficiently as possible. In the planning stages for transportation resources, the calculations was made for required fleet size and the needs of the driver based on estimates of work to be done. Inefficient will result in unnecessary costs being occurred.

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Fleet Management for Land Transport

Fleet management for land transport is the activity that supports the various land transport activities. This could relate to the management of vehicles involved in the movement of goods/cargoes/materials, the management of light vehicle fleets used in the transportation of people and light cargo, possible motorbikes and also other equipment such as warehouse handling equipment. Fleet management supports these activities through the management of the assets that are used.

Fleet Management

In general, the functions of fleet management for land transport as follows:

  1. Maintaining the assets/vehicles in an acceptable condition to ensure the safety and security of the goods and personnel to be moved.
  2. Make an appropriate systems and procedures that enable effective management controls to be in place. This includes vehicle maintenance, driver management, fuel management, vehicle tracking, also health and safety management.
  3. Monitoring and measurement of costs and the utilization and performance of the vehicles concerned. Fleet cost effectiveness involves not only the control of vehicle operating costs, but also their maintenance and repair, the spare parts stocks and also the replacement of vehicles at optimum point in their life.
  4. Ensuring that the vehicle, in terms of both numbers and composition, is balanced with the level of activity required.

There are number of areas to consider when setting up a vehicle fleet. Initially it is necessary to understand what will be done by the vehicles, what volume of work is envisaged and the area as well as environment in which the vehicles will operate. Once those are understood, suitable vehicles need to be selected and the support infrastructure decided. Procedures and systems need to be put in place to manage the fleet and measure, monitor and control its performance.

The physical condition of the road and environmental situation in which the fleet is to be used will influence the fleet composition. There will also be both general and specific operational needs to be considered. It is necessary to consider what is going to be transported, and any legislative or regulatory influences that may impact the use of vehicle in a fleet. It is also important to know the lead time that will elapse before the vehicles will actually be delivered as it may be necessary to rent vehicles.

Simple fleet report should provide data as below:

  1. Driver’s name
  2. Driver’s licence
  3. Plate / registration number
  4. Passenger or cargo
  5. Origin
  6. Destination
  7. Purpose of the travel
  8. Signature of passenger or receiver of goods/cargo
  9. Mileage
  10. Fuel consumption
  11. Maintenance / repair
  12. Remarks

This report should be checked on daily basis or at least weekly basis by fleet manager or person in charge.

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Transportation Management – Decision Making

In the planning phase as previously, we know that there are four key criteria for selecting the mode of transport, i.e. speed, reliability, cost and flexibility. We have also seen that operational factors, terms and conditions as well as environmental, political, social and security factors will affect for decision making.

Transport pengambilan keputusan

Below are some examples of goods or materials to be transported, and we will see how the judgments made in taking a decision which mode of transport to be used.

1. A telecommunications company’s HQ in the city of A wants to send 5 device servers that are urgently needed by one of their branch office located in the city of B. Total weight of the goods to be delivered is 100kg and the distance from city A to city B is 3,000 km. City A and city B both have the airport facilities, railway lines and roads across the province are quite good. What mode of transport should be used?

For this case we will use air transport because the goods to be delivered urgently needed and total weight of the goods is suitable to be transported by air. Air transport is particularly suited to low weight and low volume of consignments, it is also good for perishable goods and in circumstances where the delivery requirement is urgent. Air transport also will be one of the best options for emergency situation. Currently there are a lot of major airlines and other global logistics service providers also an opportunity to ship consignment on passenger routes have made air transport a more cost effective option, particularly for international movement.

Back to the above case, first thing to do is we need to get quotations/offers from service providers such as DHL, UPS, TNT or others. Better to get at least three quotations/offers for comparison and transparency of the decision making process. If we will continue to send more items/goods by air transport, would be better if we issue a tender and enter into contract for a specified period of time with one of service provider.

Things to be arranged after a service provider has been selected:

  • Packaging and labeling. Transport by air (aircraft) will usually take place using some form of unit load device so it will reduce the need of packaging. The nature of goods will determine the precise nature of packaging. Labeling should include details of the sender and consignee, other relevant information and the package number.
  • Proof of delivery of goods, i.e. Air Waybill (AWB). Normally AWB and other regulations for air shipments should be in-line with IATA (International Air Transport Association) regulations. The AWB is the carrier’s receipt by air, evidence of the contract of carriage and is usually non-negotiable. Correct name and address of sender and consignee are very important for AWB.
  • Handling. It is important to note whether the goods must be handled with special care or not, for example for this case the goods categorized as fragile so it should not be slammed and so on.

 2. “Abadi” office will move from current location in city A to the new location in city B. Total distance from city A to city B approximately 700km. A number of office equipment such as desks, chairs and cabinets should be moved to city B. City A and city B both have the airport facilities, railway lines and roads across the province are quite good, however the environmental conditions across the provinces are less safe. What mode of transport should be used?

For this case, we can use rail as an option of transport mode because road condition across the two provinces are less secure. Rail offers effective method for bulk haulage, it is therefore suitable for the movement of large load size over longer distances in affordable cost. This is the major benefit of rail. If total delivery distance is not high, for example less than 500km, rail often be found to be an uneconomic option. In some cases, the size of the consignment will mean that the entire train movement. Significant quantities can be moved in one trainload. In certain circumstances, wagons can be built based on customer specifications but normally available on hire basis. Wagons come in all shapes and sizes, for example hoppers for transporting coal. However, the availability of locomotives to haul the train and the wagons will impact on the speed and reliability of this mode.

Back to the above case, first thing to do is to get three quotations/offers from transport companies. Then we should determine whether the goods need to be packaged or can be sent directly. Proof of delivery of goods, rail waybill can be also considered as a contract and usually non-negotiable. Correct name and address of sender and consignee are very important for rail waybill.

3. Supermarket “Jaya” in Jakarta, Indonesia wants to import 50 tons of instant noodles from factory in Singapore. Packaging of instant noodles is in carton box with weight per box is 5kg. So in total there will be 10,000 boxes to be imported. What mode of transport will be used?

For this case, the mode of transport is containerized by sea because goods to be imported is food and the packaging is in carton box and unavailability of transport by road.  Normally, selection of transport company for import of goods or materials will be done through tender process.

Analysis for all offers received should consider:

a. Transport rate from Singapore to Indonesia. Normally offers will be made in the basis of:

  • Door to door
  • Door to port
  • Port to port
  • Port to door

b. Rate of Customs clearance at port of origin and at port of destination.

c. Rate of Local Shipping Charges, e.g. Terminal Handling Cost, Delivery Order fee, Lift-on, lift-off, cleaning and other costs.

d. Other costs if any such as demurrage, detention etc.

After awarded the agent (transporter), we need to closely follow up the movement of the goods, from the origin factory/warehouse, loaded into containers until the vessel is sailed. As soon as possible after the vessel is sailed, proof of delivery of goods, i.e. Bill of Lading (B/L) to be issued. B/L is the main shipping document and has three roles:

  1. It is the carrier’s receipt for the carriage of goods by sea.
  2. It is evidence of the contract between the sender/consignor and the shipping line and details about the conditions of carriage.
  3.  As evidence for payment of goods transported.

The B/L usually issued in a set of three originals, signed on behalf of the ship owners by the captain or the person in command of a ship or the shipping agent acknowledging the receipt on board of specified goods. It stipulates the payment terms and details of consignor and consignee. Without an original B/L, the goods will not be released.

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Transportation Management – Planning

We know very well that the basic modes of transport are road, sea, air and rail. In general, a mode of transport is the means by which goods or materials are transfer from one point to another.

Manajemen transportasi

The criteria of speed, reliability and cost should be examined when considering the choice of mode. Different modes will have quite different characteristics, therefore, the appropriate mode must be carefully selected in order to match all the requirements. Multi-modal solutions may provide the most effective and efficient transport option.

The physical characteristics of certain goods and materials may determine a specific transport, however most of goods will be capable of being moved by variety modes.

It is important to fully recognize the operational characteristics of the modes, also necessary to consider the type of the vehicle or equipment that will be used within that mode.

So, in general, mode selection is influenced by:

I. Operational factors.

    Certain operational factors need to be considered when selecting appropriate mode:

1. The nature of the consignment to be moved. Factors to consider are:

  • the size, shape and weight of the goods or materials,
  • the value, requirement for security in transit and degree of fragility,
  • deterioration of the period,
  • the hazardous nature of goods.

2.  Aspects to be considered for customers features:

  • the geographical location and dispersion of customer to be serviced,
  • delivery time required by delivery point, for example within 24 hours and the regularity with which consignments are to be delivered must be known,
  • the features of the delivery point must be known in terms of physical access, weight restrictions and loading / unloading facilities,
  • the average consignment size.

3. Number of environmental factors, social-economic and politic conditions:

  • in some countries/cities environmental and legislative considerations, for example, vehicle and axle weight limits could substantially limit the choice of the most effective mode of transport,
  • the country/city transport infrastructure, in terms of the extent and quality of roads and railways, will define mode availability,
  • laws and taxation policies may offer incentives or restrictions on the use of particular modes of transport,
  • availability of labor and capital, specialist and technological knowledge,
  • weather conditions, for example, monsoon weather, can restrict the choice of mode.

II. Mode selection criteria

   Four key criteria can be used when comparing different transport modes, the parameters are:

  1. The speed which the mode exhibits – nature of a mode normally determines the speed at which goods can be moved. However, the nature of the modal infrastructure can have an impact on the relative speed of that mode.
  2. The reliability that the mode demonstrates in its ability to fulfill service requirements – the reliability of the transport service to deliver the correct goods, in the right condition at required time, every time, is a major aspect of customer expectation.
  3. The comparative unit costs, which the modes incur – the cost of a mode will often be expressed in terms of the unit cost for transporting the goods or materials, rather than an absolute figure. This could be expressed as a cost per sack, cost per tonne and cost per pallet or similar. The distance the goods have to travel must also be considered. Therefore, modal cost can also be expressed in terms of a value per tonne kilometer for example.
  4. The flexibility that the mode exhibits – flexibility relates to the scope for variation, which exists in a mode. The infrastructure within which a mode has to operate will affect the flexibility mode, due to the road infrastructure, which exists in most countries. Rail, for example, is less flexible, being constrained by the available fixed infrastructure.

So in conclusion we could say that all transportation needs to be carefully planned. It is important to understand the mode of transport for the benefit of both customer and transport companies or who managing the transportation.

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