Transportation and distribution management

Intel in Singapore: Transportation and Distribution Management
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Intel in Singapore: Transportation and Distribution Management
Introduction
While logistics involves the storage of productions and materials, freight management, and inventory control, transportation entails the flow of products and raw materials. Transportation encompasses the consignment of raw materials to the producer and flow of finished commodities to the client. Intel ensures that all its raw materials and finished products are availed at the required stations through the use of appropriate and effective carriers and Incoterms, as well as managing and maintaining a healthy carrier relationship. The purpose of this paper is to analyze the effectiveness of Intel’s (in Singapore) Incoterms selection consideration, carrier selection criteria, and carrier relationship management.
Intel in Singapore is a subsidiary of Intel Company and was incorporated in 1997. The company produces and distributes several products like microprocessors and related commodities in Singapore. Intel offers products like PCs, processors, consumer electronics, motherboards and development boards, RAID, and server products. Furthermore, Intel in Singapore provides wireless products, solid-state drives, mobile communication tools, and Ethernet products. Intel runs in at least 150 locations across the globe, with the assembly and test facilities in Malaysia, Vietnam, China, and Costa Rica. It is reported that about 25 percent of Intel’s sales are attributed to the Hong Kong’s and China’s customers.

Besides, the United States’ and Singapore’s customers make up around 20percent of the sales revenues of the company. Similarly, Taiwan’s customers are responsible for more than 15 percent of the company’s sales revenues. Also, the company faces stiff competition from world-class organizations such as Oracle Corporation, Apple Inc., and International Business Machines (IBM) Corporation. Finally, the company’s goals include raising supply chain responsiveness, enhance secure partnership with external associates, and enhance the compute continuum. These goals can be attained via the set corporate strategies, which include embracing online sales and incorporating the information technology (IT) into all the business processes.
Incoterms Selection Consideration
Transportation Capability Effectiveness
Intel accomplishes its transportation and distribution functions via the effective transportation capabilities that are implemented in its logistics network. The time compression capability is seen to be effective as it contributes to the minimization of supply chain costs and reduction of the transportation time of the company’s transportation activities (Wen, 2012). Besides, the time compression of Intel in Singapore is effective as it saves time in delivery, which makes time available for other supply chain functions. Intel has applied different strategies that help enhance its transportation network. For example, the organization has maximized inventory velocity and reduced dwell-times. Velocity is the rate of inventory turnover annually. For instance, Intel runs carrier-run flow-through cross-docking processes or warehouses, as well as less-than-truckload (LTL) motor carrier terminal as opposed to user distribution centers or storage facilities, which help increase inventory turnover or velocity and, as a result, reduce total inventory costs (Morash & Clinton, 1997). Intel’s dwell-time ratios perform like other companies in the industry in regards to the dwell-time ratio as it attained a proportion of 20:1 (Wen, 2012). The company offers direct delivery by reducing dwell-time, which involves avoiding or, to a larger extent, getting rid of warehouses.
The second transportation capability is reliability. Intel puts into place the structural integration like the instrumental information exchange and technical, operational scheduling, which nurture its transportation reliability. Intel has a reliable transportation performance, with reliable and consistent delivery times as opposed to just fast. The transportation network of the organization is also observed to have no aspects of shipment damage and loss, which improves its overall supply chain performance. Finally, Intel has an effective standardization capability. The company has standardized its logistics and transportation operations, policies, and practices. The standardization has made its supply chain activities and movements less vulnerable to an omissions basis and more predictable (Morash & Clinton, 1997). With the standardization, individual activities, staff, and organizational entities can operate more efficiently concerning elements like less risk and labor costs (Song & Panayides, 2012). The transportation capabilities can be depicted in the diagram below.

Figure 1: The transportation capabilities effectiveness as obtained from (Song & Panayides, 2012).
Recommendation for the Incoterms to Be Used
On the other hand, because Intel has its market locations and customer in Singapore and other nations like Malaysia and Vietnam, together with markets situated in the United States, and also imports raw materials and exports finished products, it is suitable for the Incoterms that relate to both sea and inland waterways and those that are associated with any transport modes. Similarly, since Intel is a technology company and has both individual consumers and other organizations as its users of its products, the company can use the Incoterms such as FCA (Free Carrier), CPT (Carriage Paid To), DAP (Delivered At Place), DAT (Delivered At Terminal), FOB (Free On Board), CFR (Cost and Freight), and CIF (Cost, Insurance and Freight) (Incoterms® rules 2010 – ICC – International Chamber of Commerce, 2018). In other words, Intel should consider factors such as the revenue recognition rules, specific delivery point, liability considerations in regards to the import of products, and the company’s awareness or knowledge of the law of the importing nation (Incoterms® rules 2010 – ICC – International Chamber of Commerce, 2018). The Incoterms are shown in the chart below.

Figure 2: The Incoterms rules as obtained from (Incoterms® rules 2010 – ICC – International Chamber of Commerce, 2018).
Carrier Selection Criteria
Transportation Goals of Intel
The company has the option of utilizing the internal logistics unit to control its supply chain or third-party specialists to guarantee the steady movement of materials and products in and out of the enterprise. One of the transportation goals of Intel is to reduce costs. Minimizing the cost of warehousing and transporting materials raises the profit margin of the firm (Ashby, Leat & Hudson-Smith, 2012). For instance, costs of energy are one aspect of logistics that increases the cost of each transit. Objectives like consolidating transportation can help Intel reduce the costs of energy. Further, maximizing transportation routes lead to a reduced energy cost for the firm. Besides raising the profit margin of the company, the cost savings can be transferred to the client. Another transportation goal of Intel is to provide exceptional customer service. This goal entails the company’s ability to address its logistics and transportation needs efficiently that improves its public image and reputation in the technology industry. In this respect, Intel can increase distribution points to respond to requirements and needs of clients in various geographic regions. Also, the company must handle customer feedback, including damaged commodities complaints, and rectify deficiencies in the shipment course that led to the concern. Similarly, Intel aims at gaining the industry awareness through its transportation activities. The firm must attain a reputation in its operating environment for quality service to earn an advantage in the competitive business environment. The company has specialized operations in manufacturing and transporting electronic products to establish itself as a specialized in the industry. Achieving these goals also require proper carrier selection criteria for efficiency and effectiveness of the transportation system.
Recommendation for the Carrier Selection Criteria
The selection process for the carriers is perspective, yet, once chosen, the carriers periodically need to be reviewed for performance measurement. It is recommended that the organization considers the following criteria while selecting the carriers. The first criterion is the organizational structure. It is important to ensure that the carrier has a devoted point-of-contact exactly dedicated to Intel (Premeaux, 2010). This needs to be an individual with sufficient rank in their organization who can respond to Intel’s inquiries, yet who also has the power to make judgments on behalf of the carrier. Another criterion is the rating/pricing system. The organization needs to ask whether or not the carrier’s rating or pricing system is in line with the similar transportation suppliers. The carrier needs to have flexibility in pricing founded on the durability of the contract and volume. Besides, it is important to consider the financial stability. The carrier needs to offer financial data like the income statement contained in documents like the Annual Report (Meixell & Norbis, 2012). Likewise, the carrier’s financing/costing system should be considered. This system needs to be easy to understand and explain. Also, the system’s service provision should be consistent. Finally, it is important to consider the intermodal partners/linkages in that the carrier needs to have partnerships with reputable intermodal transport suppliers in all regions in which Intel does its business, including Central America and the Middle East (Premeaux, 2010).
Carrier Relationship Management
Type of Carrier Relationship to Be Used
In logistics, collaborative or partnership carrier relationships are compared with arm’s length or opportunistic relationships. Opportunistic relationships are described by an arm’s length communication methodology and competitive attitudes, concentration on the reduction of prices, focus on individual transactions, and unwillingness to exchange information (Lai, Lun, Wong & Cheng, 2011). These tactics can attain price decreases in the short-run. However, in the long-range, these types of carrier relationships may not be sustainable because most value-adding tactics like the innovation can barely be attained if the shipper and carrier concentrate only on the price. As a result, it is important for the organization to focus on the collaborative carrier relationships. The collaborative carrier relationships are described by shared goals, incorporation of business operations, and shipper or supplier development (Lai et al. 2011). These relationships enable collaborating companies, i.e., Intel and its carriers, to achieve gains, which they could otherwise no earn. The contemporary global business environment is turbulent and consists of unpredictable markets, which present several reasons and enablers for Intel to follow collaborative carrier relationships. These reason and enablers include internationalization, globalization, and fast developing technologies. It has been identified that Intel has already formed collaborative carrier relationships. These have been found to yield a broad variety of benefits, which improve performance and competitiveness of the organization. Some of the gains include improved cost management, enhanced resource utilization, lead time and cycle time compression, delivering incremental innovation and business value, and improved risk management (Houghtalen, Ergun & Sokol, 2011).
Process of Building Collaborative Carrier Relationships
Collaborative carrier relationships are sometimes multidimensional as they can be individual one-to-one associations yet, more often, they are intertwined and interacted links that usually engage several players, external partners or alliance partners, suppliers, different internal departments of the company, carriers, and customers, operating together (Aguezzoul, 2014). The first step of the process is to create an awareness of the collaborative carrier relationships. This involves having general strategic corporate processes and policies which run towards integrating collaborative working as an accepted methodology in which it can pinpoint added value (Gimenez & Tachizawa, 2012). Besides, identifying a senior executive leading the review and evaluation of components of strategic collaborations can help guarantee the successful execution of collaborative carrier relationships. It is also important to develop the required knowledge. This emphasizes on the creation of knowledge alongside a specifically recognized opening to form a cost-benefit analysis and business case, including the risk management. The company should then perform an internal analysis of its capability and maturity to involve in these relationships effectively.
Next, Intel should undertake partner election. This highlights the desire to implement a structured methodology of the identification, assessment, and selection of appropriate carriers or partners (Giunipero, Hooker & Denslow, 2012). Moreover, Intel should focus on working together, which concentrates on making sure that the partners establish the suitable operational systems, roles, governance, and responsibilities to efficiently and effectively attain expected business outcomes (Aguezzoul, 2014). In this stage, the contractual frameworks are formed. The last activities of building the collaborative carrier relationships are value creation and the development and maintenance of effective exit strategies for the parties involved.
Conclusion
The analysis has covered the transportation aspects of Intel in Singapore, including the carrier selection criteria, Incoterms selection consideration, and carrier relationship management. Intel manufactures and sells products such as microprocessors, PCs, consumer electronics, server products, processors, RAID, and wireless products. Further, Intel has an effective transportation capability as seen in its ability to reduce the delivery time for its products. The effective time compression capability has allowed the organization to save time in delivering items to the consumers and obtain the required raw materials, which help minimize total logistics costs. Other transportation capabilities of the company include the reliability of the delivery times and standardization of the company’s transportation operations. It is also determined that the company should use the Incoterms like FCA, FOB, and DAP, keeping in mind the factors like liability considerations, revenue recognition rules, and specific delivery point. What is more, one major transportation goal of Intel is to reduce the logistics goals. These can be achieved by conducting proper carrier selection, including, the organizational structure and pricing structure. Finally, it is recommended that collaborative carrier relationships should be embraced by Intel as these will create a win-win situation for all the parties or partners involved.

References
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