IMPROVING TRANSPORTATION CONTRACT MANAGEMENT USING SIMULATION

摘要

Transportation management is one of the areas that has strong impact on organization performance. If a company does not have expertise or resource, it would be better to outsource to logistics/transportation provider. The company can form contracts or hire trailers at spot rate. By forming a contract, specific number of trailers will be dedicated to the company and the cost per trip will be lower than the spot rate. However, there is a minimum number of trips requirement. If not properly managed, the company may end up paying more with the contract. The objective of this paper is to experiments with the simulation model to enable the manager to identify appropriate fleet size and negotiate for better contract condition, resulting in better on-time delivery and lower cost. The result shows that the company should increase the number of contracted trailers to match with the transportation needed and renegotiate the minimum number of trips per trailer per month. This will help the company significantly decrease late delivery and reduce costs. In addition, this study also use simulation model to plan for future contract negotiation when there are uncertainties in demand for transportation. Simulation model proves to be an important tool that enables one to gain better understanding of the contract situation and be able to manage the transportation contract that best suits the company's objective.