Every company has a key mandate in ensuring that it adopts a competitive strategy through cost leadership and competing as a service.Oil prices are affected by economic and the world financial crisis.For transportation business, Fuel cost is one of the most important components to consider . However, Countermeasures by private and public transport operators have been implemented to address oil prices fluctuation in the transport sector that includes consumption reduction and cost management.
The management team ought to determine ways in which the profit will not be affected by the diesel price volatility and thus reduce logistic cost.My advice to Squire management team would basically to find ways on how to reduce fuel cost and fuel consumption through purchasing vehicles that are more aerodynamic, focus on regional operation, streamlining routes and lastly fuel remix that may include waste vegetable oil.The study shows that better aerodynamic automotive leads to fuel consumption reduction.The company should outsource regional services that will help in operation cost reduction, capital investment reduction and in meeting fluctuation demand.There is a need for the Squire management to come up with a system that can monitor and support route planning this will help to shorten the trips and help alert of unauthorized excursions.Lastly, research indicates that biodiesel, a mix of Diesel with vegetable oil may be used in automotive engines vehicles and thus no modification is required and the results are less expensive.An Alternative to Reduce the Impact of High Diesel Prices
The rise in fuel price has led to the logistic industries and Carrier companies buzzing on reprioritization of the budget.Companies are looking for an expert in supply chain improvement implementation. and seeking to reevaluate their logistic day to day operation.With increasing global competition, high fuel price can affect all the logistic companies, however, this company ought to come up with ways on how this effect can be managed in order to gain a competitive advantage.There is no alternative to reducing high diesel price but there are measures that can help resolve the issue of diesel consumption that includes integrating regional operations.Advice on how Squire can develop regional operations
A transportation or logistic company may divide its operation in different part of the region.Regional operation serves longer routes and possesses big fleet, this is great for multiple distribution shippers.Regional access is beneficial to the company and to the customers.Logistic cost affects the competitiveness of the firm.However, it is important for the transport firm to enhance market competitiveness by adopting measures that seek to reduce their logistics cost.The regional operation main goal is to reduce the cost of operations that may include, cost of transportation and inventories carrying costs that include (costs of taxes, insurance, and shrinkage).
However, I would advise Squire company to operate on third-party distribution at the regional level where they may choose an operation known as dedicated distribution where the distribution is provided by the third party company.The third-party company provides customers with all the transportation requirement on a regional basis.The resources that are used may be depot, fleet, managers or the warehouses.This type of service is most common in the UK and is now being adopted by various big transport and logistics companies.This regional distribution system has become very dynamic and competitive.This system will help in ensuring that the company maximize the cost and result in economies of scale.The regional operation is also important in ensuring that the company is responsible for the regional customer's needs and thus reduce transportation cost.Regional structure of operation provides more control and coordination because of the high number of hierarchy.
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