Transport Field Specialization CBTM211

1. Transport Field SpecializationCBTM211 Chapter 1 The Road Transport Organisation

2. Study Objectives • Understand the transportation services function in an organisation. • Explain the objectives and principles of the management of transport. • Have insight into organisational and management structures, Specifically with respect to the transport function. • Understand differences between public and private carriers. • Be able to explain why an undertaking should establish its own transport function as well as the consequent disadvantages thereof.

3. 1.1 Introduction to Transport Management 1.1.1 Introduction • Need to consider the role of transport in the wider function of distribution or logistics. • Distribution implies movement. • It is the performance of all business activities involved in moving the goods from the point of processing or manufacture to the point of sale to the customer.

4. 1.1.1 Introduction cont’ Distribution includes: • Warehousing • Inventory control of finished goods • Materials handling and packaging • Documentation and dispatch • Traffic and transportation • After-sales services to customers Distribution thus includes all the activities between the point where the goods finally leave the manufacturing process and the point at which the customer accepts the final delivery.

5. 1.1.2 The Transportation Service Function • Any business will need mobility for personnel, materials, and goods from the time of initial customer contact to the point of ultimate customer satisfaction. • This is the responsibility of the transportation services, a function charged with providing a service to ensure that the right goods are in the right place at the right time. • This is the only way to achieve a successful sale and a satisfied customer and is the key to a profitable business.

6. 1.1.2 The Transportation Service Function cont’ Off equal importance as delivery of goods: • movement of personnel, • the provision of vehicles for the sales and service function, • and the supporting of the manpower function in providing policies for the supply and control of company cars to executives and managers.

7. 1.1.2 The Transportation Service Function cont’ However, the transport function used to be a more simple operation which was generally responsible for: • Providing vehicles to convey the product to the customer • Maintaining and repairing all company owned vehicles. • Advising on replacement policies for vehicles. • Advising on buying policies for vehicles. • Controlling fuel stocks.

8. 1.1.3 Transport Management Objectives • Many industrial organisations form separate transport and distribution companies within their own group organisation, and although these companies may show ‘profit’ in their annual financial accounts, unless they are ‘selling’ transport outside of their own parent organisation, no ‘profit’ is possible • E.G. ?????? • A haulier, on the other hand, carriers goods for profit.

9. 1.1.3 Transport Management Objectives cont’ • Industrial transport managers will only realise overall profitability by minimising costs and maintaining a high standard of customer service. • Cost-effectiveness is a measure of management efficiency and this should always be the first objective of transport management.

10. 1.1.3 Transport Management Objectives cont’ • The transport function needs to establish itself as an efficient function contributing to the productivity of industry in order to give the consumer a product or service at minimum cost.

11. 1.1.3 Transport Management Objectives cont’ • Government together with industry, has a role to play, in improving the efficiency of the whole transport system, by ensuring that: • (i) The customer is offered a more efficient freight service. • (ii) Wasteful and inefficient competition is eliminated. • (iii) Existing road and rail assets and manpower are used more efficiently. • (iv) Maximum use is made of the railways. • (v) The safety and efficiency of road haulage is improved. • (vi) The willing co-operation of transport workers is secured in order to achieve the various objectives. ENDENDENDENDNENDNENDNE

12. 1.1.4 PRINCIPLES OF TRANSPORT MANAGEMENT The basic principles or rules practised by transport management include: • Keep the traffic and equipment moving. money is only earned when the equipment is on the move. • Move it as fast as possible.

13. 1.1.4 PRINCIPLES OF TRANSPORT MANAGEMENT cont’ • transport systems (air, road, rail, sea, pipeline) are interdependent, thus they are influenced by each other. • the longer the distance and the bigger the load, the more economic the act of transportation • Keep in mind that there is no fixed capacity over a term - it depends on the utilisation of ‘fixed’ and ‘moving’ units. • Get rid of anything that is not being used.

14. 1.1.4 PRINCIPLES OF TRANSPORT MANAGEMENT cont’ • Spread the ‘peak’ periods. This will result in the ‘spreading’ of fixed costs over more hours per day or units/people transported. • Plan on both the short and the long term. • Render quality service which will ensure market share and satisfied customers. • Make use of the latest methods and techniques, thereby reducing costs.

15. These principles must be adhered to in order to achieve the objectives essential to a higher standard of efficiency in all sectors of the transport industry.

16. 1.2 ORGANISATION AND MANAGEMENT STRUCTURE 1.2.1 INTRODUCTION • The size of the organisation will play a big part in determining the number of managers needed etc.

17. 1.2 ORGANISATION AND MANAGEMENT STRUCTURE cont’ • Figure 1.1 shows an organisational chart representing a manufacturing concern, however the principle is equally applicable to a professional haulage operation, a bus operator or a municipal refuse department.

18. 1.2 ORGANISATION AND MANAGEMENT STRUCTURE cont’

19. 1.2.2 DECIDING ON THE STRUCTURE • The specific organisational structure of the transportation activity is affected by the overall corporate structure. • Establishing a good organisational structure will enable a manager to delegate work to his subordinates, confident that they will have full knowledge of their responsibilities and of the authority they possess when acting on his behalf in the course of their duties.

20. 1.2.2 DECIDING ON THE STRUCTURE cont’ • Two types of organisational structure: • Centralised vs decentralised type.

21. 1.2.2 DECIDING ON THE STRUCTURE cont’ • Centralization is the process where the authority and power of an organisation is in the hands of only a few.  • The top management takes all the important decisions if an organisation is centralized. • These decisions are then enforced on the lower tiers of the organization. • E.G?????

22. 1.2.2 DECIDING ON THE STRUCTURE cont’ • Decentralization can be defined as the delegation of authority at all levels of an organisation. • In a decentralized organisation, a lot of the decision-making is delegated to the lower levels of the organizational structure. • E.G.???

23. 1.2.2 DECIDING ON THE STRUCTURE cont’ The main principles to be followed in building up an organisational structure are: • The lines of authority should be clearly established, thereby ensuring that everyone knows the personnel they control and to whom they are responsible.

24. 1.2.2 DECIDING ON THE STRUCTURE cont’ • The lines of reporting should be clearly established as these may differ from the lines of authority, especially where staff functions are concerned. • Line functions, those which carry operating responsibility, should be clearly distinguished from staff functions, which provide only an advisory service.

25. Line vs Staff functions: • The functions which have a direct responsibility of achieving the targets for production or sales are line functions. [contribute to the business directly] • The staff functions are those which do not participate directly in the activity but aid line functions to achieve the targets. [Support function / contribute indirectly]

26. 1.2.3 FITTING TRANSPORT SERVICES INTO A COMPANY STRUCTURE E.G. 1 • A company whose activity is centred around packaging, warehousing and distributing goods to retail outlets would find that transport used, is a high percentage in the annual turnover and would require a direct representation on the board of directors in order to ensure full responsibility at that level in the organisation of the transport function.

27. 1.2.3 FITTING TRANSPORT SERVICES INTO A COMPANY STRUCTURE cont’ E.G 2 • Acompany whose activity is confined to providing a legal and secretarial advisory service, needing only a few cars for its executives would not need this type of representatiqn for the transport function. • A supervisor reporting to any other service function in the organisation would be quite adequate.

28. 1.2.3 FITTING TRANSPORT SERVICES INTO A COMPANY STRUCTURE cont’ • Unless the company is one which sells transport as a means of adding to the profitability of the company, and this usually means a company involved in haulage activities, then transport is a service in exactly the same way as the postal, telephone and catering activity in a company.

29. 1.2.3 FITTING TRANSPORT SERVICES INTO A COMPANY STRUCTURE cont’ To determine an organisational structure suitable for the control of transport services in a company, it must first clearly state its basic objectives, i.e.: • Distribution of the company product to the customer. • Control of personnel movements. • Ensuring the maximum utilisation of the company fleet by maintaining its vehicles at a high standard of roadworthiness and within the requirements of any associated legislation.

30. 1.2.3 FITTING TRANSPORT SERVICES INTO A COMPANY STRUCTURE cont’ • The word ‘executive’ implies responsibility. • ‘Manager’ means that a person is required to perform a function of controlling either personnel or plant. • E.G. of titles: mechanic, fitter, vehicle tester, garage supervisor, vehicle inspector, fleet engineer

31. 1.2.3 FITTING TRANSPORT SERVICES INTO A COMPANY STRUCTURE cont’ • In building the organisation structure the correct balance should also be maintained between the number of operatives and the amount of supervision and management. • Reason why? Otherwise there will be lack of responsibility of decision making.

32. 1.2.3 FITTING TRANSPORT SERVICES INTO A COMPANY STRUCTURE cont’ E.G. • Too few supervisors may lead to decisions being made without careful consideration being given to all relevant facts and future implications. • Too much supervision will lead to the junior supervisor tending to automatically pass responsibility to his superiors.

33. 1.2.3 FITTING TRANSPORT SERVICES INTO A COMPANY STRUCTURE cont’ Line vs Staff function E.G. • The purchasing departments of a manufacturing company would be regarded as a staff function, but in a retail organisation this would be a line responsibility, essential to the main objectives of the business.

34. 1.2.3 FITTING TRANSPORT SERVICES INTO A COMPANY STRUCTURE cont’ • The management and organisation of a road haulage operation would be a line responsibility in that the main objective of the company is to achieve profit by selling its transport services to prospective customers.

35. 1.2.3 FITTING TRANSPORT SERVICES INTO A COMPANY STRUCTURE cont’ • The needs of a large company will differ in each manufacturing location and the transport services function must have built-in flexibility to deal with these problems and at the same time the lines of authority and the lines of reporting should be clearly established. • END ENDEND

36. 1.2.4 JOB DESCRIPTIONS The basic requirements of any job description are: • ? • ? • ? • ?

37. 1.2.4 JOB DESCRIPTIONS cont’ The basic requirements of any job description are: • To name the job. • To state to whom that person is responsible. • To identify those who are directly controlled by that person. • To define the responsibilities of the job.

38. 1.2.4 JOB DESCRIPTIONS cont’ • A job description is an extension of the organisational chart and both documents should show exactly how the person appointed to a particular job fits into the company organisation. • Care must be taken in defining the responsibilities of the particular job because it is from this document that the ‘job requirement specification’ will be produced to enable the recruitment of a suitable person to fill the position.

39. 1.2.4 JOB DESCRIPTIONS cont’ • A job description is an extension of the organisational chart and both documents should show exactly how the person appointed to a particular job fits into the company organisation. • Care must be taken in defining the responsibilities of the particular job because it is from this document that the ‘job requirement specification’ will be produced to enable the recruitment of a suitable person to fill the position.

40. 1.2.5 JOB REQUIREMENTS AND PERSONNEL SELECTION • FLEXIBILITY - This is the ability to adapt his thinking into the channels of packaging, marketing, warehousing, movement of goods by land, sea and air as well as being able to evaluate the cost- effectiveness of his operation in relation to the capital employed and service given. • Thus, a transport manager needs to have knowledge in Logistics as well.

41. 1.2.5 JOB REQUIREMENTS AND PERSONNEL SELECTION cont’ This does not mean that the transport manager must be able to do everything, it means that: • He must head a function comprising specialists in each particular field of transport and distribution • He must understand the problems of budgetary control, interpret accounts and budget

42. 1.2.5 JOB REQUIREMENTS AND PERSONNEL SELECTION cont’ • He must be able to deal with the problems of capital investment and be able to evaluate proposals for the purchase of additional equipment. • He must understand the current financial advantages in respect of investment.

43. 1.2.5 JOB REQUIREMENTS AND PERSONNEL SELECTION cont’ • He must be able to assess the advantages and disadvantages of using a professional haulier (contract carrier) instead of using his own transport. • He must be able to use, with the help of computers in his everyday routine, the information available to him - about traffic routing, depot siting, unit costs, planned maintenance programming, stock levels and inventory control

44. 1.2.5 JOB REQUIREMENTS AND PERSONNEL SELECTION cont’ • It is also most important for transport managers to be good communicators. • The manager and supervisor are responsible to keep their staff informed and by doing so will be a lot nearer to obtaining the willing co-operation of the staff. • Communication minimises industrial and labour problems

45. 1.2.5 JOB REQUIREMENTS AND PERSONNEL SELECTION cont’ • The quality of management, supervision and operatives can only be as good as the quality of personnel selection procedures within a company. • Level of care used when buying a truck must be the same when hiring people

46. Question 1: When you to buy a truck, what factors are you going to take into consideration? • Question 2: When you are to hire an employee, what factors are you going to take into consideration?

47. 1.2.5 JOB REQUIREMENTS AND PERSONNEL SELECTION cont’ The type of evaluation can be used when hiring a person: • What job the person will do. • What responsibility (load) he will carry. • What his future place in the organisation will be.

48. 1.2.5 JOB REQUIREMENTS AND PERSONNEL SELECTION cont’ • In section 1.2.4 two job descriptions were given within the transport services function. • However these are of no use if the job requirement specification is not available to assist in the selection of the person who is required to carry out the duties outlined in the Job description.