Carrier operation abounds as a major challenge for many corporations. This derives from the fact that many corporations do not know the right time for outsourcing carrier services or acquiring a private fleet of trucks. Thus, various advantages and demerits abound regarding a corporation acquiring a fleet of trucks. Advantages include improved scheduling flexibility, ensured capacity and improved customer service. On the other hand, the disadvantage of a corporation not acquiring a private fleet of trucks includes the increased cost and risk on investments. Thus, it is essential for a corporation to note the conditions necessary for it to acquire or overlook investing in carrier services. Conditions necessary for a corporation to invest in carrier services include cases where timely delivery will be ensured, increased quantity required to be delivered and where costs of operation will reduce with the investment. Conditions not favorable for a corporation to invest in carrier services include where there is a need to avert risks associated with investments and when a corporation needs to save and expound on its investment.
This report explains merits and demerits of a company investing in private carrier services. In addition, the report avails conditions necessary for a corporation to invest in private carrier services.
According to Bragg (2006), a corporation investing in private carrier services is advantageous because it ensures flexibility in scheduling of deliveries. Notably, a corporation owns the total fleet, which means that emergency deliveries can be taken care of easily unlike when a corporation is outsourcing carrier services. Secondly, Bragg (2006) opines that private carrier services have ensured capacity, which derives from the fact that all the operations are scheduled with regards to the number of fleet a corporation has and the quantity of goods or services that require to be transported. Private fleet ensures that a corporations schedules its transportation in line with its production capacity and transport facilities. Thus, this ensures capacity in regards to elimination of delays and lack of sufficient transport. Lastly, Weele (2009) asserts that there is an improved customer service when a corporation invests in private carrier services. This abounds from the fact that customers can be awarded with free transportation after they have made a purchase or made an order. Improved customer service also abounds from the fact that the company drivers are instructed to make safe deleiveries, which they abound to unlike outsourced transport services that operate on the basis of profit only.
However, Coyle, Novack, Gibson, & Bardi (2010) do not concur with a corporation investing in private carrier services. They cite increased costs and risks on investments as the main reason for a corporation not to invest in private carrier services. Research by Bragg (2006) affirms that when a corporation invests in private carrier services, there is an increased cost that comes derives. The increased costs result from the fact that a corporation has to hire and train drivers. In addition, a corporation is faced with the need to maintain the fleet, which can be a challenge. Notably, it is also costly for a corporation to acquire its fleet of trucks. On the other hand, increased risks on investment result from the fact that the money utilized to acquire the trucks can end up in smoke if a truck gets involved in an accident.
Conditions for Investing in Private Carrier
First, it would make sense for the company to invest under conditions in which there is an assurance that the investment would reduce the overall costs of operation in the company. It would be more sensible for the company to invest in its own fleet of tracks in cases where it is predetermined that this investment would cut down costs of operation (Coyle, Novack, Gibson, & Bardi, 2010). The key objective of a business is making profit and this factor must be put in priority before any step of investing in new trucks is made. It would make more sense to invest in cases where it is deemed that the investment would minimize costs and maximize revenues hence boosting the level of profitability (Weele, 2009).
Second, it will make sense for the company to invest under conditions in which increased speed of making deliveries would be realized with the fleet of trucks. Speed is an essential component of any business especially those dealing with the supply of products from one place to another. It is always vital to ensure that deliveries are done within the correct time as this boosts efficiency in the business and ensures smooth flow of operations in the business environment. Speed is also vital because it boosts the profitability of the company and expands the operations of the company to new customers. Thus, it would only make sense for the company to invest under conditions of increased speed in the delivery of household goods to the Northeast (Bragg, 2006).
Last, it would make more sense for the company to invest under conditions of increased quantities in terms of deliveries of home goods to the Northeast. The company should be able to compare the amount of goods shipped in one particular day to the amounts of goods that would be carried by the trucks bought by the company (Coyle, Novack, Gibson, & Bardi, 2010). It would only make sense to invest in the new fleet of trucks in cases where the amounts of goods carried at any instance are more than those shipped to the Northeast would. Increased quantities would ensure that there is increased efficiency within the company as there would be no backlogs of goods in the company warehouse.
Conditions against Investing in a Private Fleet
One of the key benefits of not investing is saving adequate money for future expansion of the business. It is worth noting that all sound investments require large sums of money that may lead to a reduction of finances within the company. Investing in the fleet of trucks could lead to huge expenditures and would lead to increased costs of operation making it difficult for the company to operate normally and earn the required level of profits (Weele, 2009). Therefore, it would be beneficial for the company not to invest in order to save large amounts of cash for other purposes.
Another benefit of not investing in the large fleet of trucks is the avoidance of unnecessary risks associated with such investments. The company would be able to avert risks such as the failure of effective operations of trucks once bought hence ensuring that it continues with its normal level of efficiency. The avoidance of risks would reduce pressure in the company and there would be smooth operations.
In conclusion, it is always vital to take note of the advantages and disadvantages making a change within the company. For instance, in the case of this company, it would be significant to consider advantages such as improved scheduling flexibility, ensured capacity, and improved customer service. The key disadvantages that would arise from the change include increased costs and risks within the company. The company should consider appropriate conditions such as increased capacity, reduced costs, and increased delivery speed before making any investment. Therefore, making investment decisions within the company requires proper guidance and informed opinions from experts as this would save the company from any financial losses in the future.