The Handbook of Logistics and Distribution Management by Alan Rushton Phil Croucher Peter Baker & Phil Croucher & Peter Baker

Author:Alan Rushton,Phil Croucher,Peter Baker & Phil Croucher & Peter Baker
Language: eng
Format: epub
Publisher: Kogan Page
Published: 2016-12-15T23:16:40+00:00

Customer characteristics

The particular customer characteristics may also have a significant effect on the choice of transport mode. Most of the characteristics will need to be considered for both national and international modal choice, that is, they are not specific to overseas distribution. The main characteristics to take into account are:

Service level requirements/service level agreements. Some service level requirements and agreements can have a significant impact on choice of transport mode. Delivery time constraints can mean that certain relatively unreliable modes cannot be considered. This may occur when there is a need for delivery to be at a certain time or on a certain date, or when a specific time delivery window is stipulated. This is very common in retail delivery operations and supply industries such as oil and gas where failure to deliver on time can lead to very expensive shut-downs.

Delivery point constraints. This factor is a very important one. It refers particularly to the physical aspects of delivery, including the location of the delivery point, any access constraints concerning the size of vehicle that can make the delivery and any equipment requirements for unloading. Once again, these are common problems in retail delivery (see also Chapter 33).

Credit rating. The credit rating of a customer may impose a limit on route selection and modal choice. New customers and existing customers with a poor credit rating mean that a company will want to be sure that payment is confirmed before delivery is made. Thus, commercial arrangements may override any logistical preference for a particular transport method. It should be noted, however, that for shipments by sea the bill of lading can be held through a Letter of Credit until payment is made at a bank, although the situation is different for air freight owing to the speed of transit and the fact that an air waybill (AWB) is not a document of title to the goods.

Terms of sale preference. There are a number of different terms of sale that can be used, ranging from ex works (at the supplier factory) to delivered duty paid (at the customer’s delivery point). The terms of sale preferred by a customer therefore have a very large implication for the choice of transport mode – and, of course, who makes that choice, the supplier or the customer. The different terms of sale (Incoterms®) are outlined later in this chapter.

Order size preference. The physical size of an order clearly has an impact on modal choice, as some modes are more suitable for small orders and others for large ones. There may be significant cost implications here.

Customer importance. Most suppliers have ‘A’ rated customers who are deemed to be their most important and who really must be given a delivery service that does not fail. For these customers, service reliability is essential and so certain routes and transport modes will be preferred.

Product knowledge. Some products or orders may necessitate some knowledge transfer to the customer at the time of delivery. This may relate to the need to assemble the product in some way, or information on how to use the product.

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