Question

When selecting suppliers and future assembly sites, how does one balance the cost and lead time for transportation with the cost of goods purchased?

Answer 1

To balance the cost and lead time for transportation with the cost of goods purchased, do the following:

• Management need to develop strategies and solutions to solve tansportation issues. For that, purchasing department can streamline vendors in order to achieve good price with high volume. Find out the best carrier at best price and also reduce the number of carriers.
• A company need to consolidate shipments to get the benefit of lower rates with the help of larger shipments. This strategy will be useful to reduce transportation cost.
• Try to use single source for all the transportation of the company in a defined period of time. When an organization offer all transportation to bid, the ability of the bidder to provide service can be evaluated.