1. Description of the Organizational Problem
The area of study for this project will be truck tracking with an outcome which minimizes costs and maximizes efficiencies throughout the fleet of trucks. The end goals of this project are: 1. Locate the correct fleet size which is composed of both internal and external trucks, 2. Re-structure current contracts with external haulers to incentivize these haulers, 3. Integrate technology into fleet to increase efficiencies and automate back office processes.
How do we know this is a problem/opportunity?
In order to meet customer demands as well as keeping trucking costs at manageable levels the correct amount of trucks must be maintained on an ongoing basis. I believe that the best way to do this is to have an internal seasonal fleet of trucks that makes up 80% of the total fleet, with the other 20% being external haulers. By having the larger percentage of internal trucks a business is able to maintain a better level of control of its jobs and people, whereas with external haulers the ability to discipline may be more difficult. Having most of the fleet as part of the parent company also allows for more business-based comradery among employees, which may have a positive effect on the overall business.
A contract for external trucking vendors is another area of focus when building a stronger and more proficient trucking fleet. The most important portion of the contract is obviously the terms of compensation a driver will receive. This amount of compensation must be set at a nominal value that is attractive, but does cost more than the service is worth. The other portion of the contract that must be structured well is the definition of hauling policies so that external vendors know the penalties for not performing up to expectation. Most times these penalties would be simple and strict, for instance dismissal from a job and other possible legal action depending on the situation.
Despite the use of contracts to facilitate coordination and control, however, inter-firm disputes can emerge. This raises questions regarding the kind of relationship that will emerge and the viability of continued collaboration after parties have been un-successful in preventing conflict (Malhotra & Limeneau, 2011, p. 981).
Even though not all conflicts will be solved using the contract, the mere fact that this agreement is in place will prevent a large portion of business exposure to external entities. By setting the expectations at a maintainable level as well building fully disclosed business relationship a company is able to build an environment that supports loyalty as well as efficiency which should result in decreased overall cost.
As a whole budgeting becomes very difficult for internal as well as external trucking with the constant shifts in cost of petroleum based products required by larger end material trucks. According to U.S. Gasoline and Diesel Retail Prices...