Contracts and Procurement

The purpose of this report assessment is to assess the advantages and disadvantages associated with acquiring a company owned fleet of trucks for the delivery of goods. This brief report overviews current delivery services being used versus the time, cost and other overhead necessities of owning a private fleet for delivery services.

Current Delivery Services: Outsourced - Contract Freight Delivery (Annual)

The company currently outsources all deliveries on an annual contract basis to ABC Shipping & Freight Services. The costs associated with this service are reviewed upon an annual basis, at the start of a new contract however the costs continue to increase each year.

The company currently relies on the availability of for-hire drivers and the schedule of deliveries is limited to two days a week with orders needing to be submitted a week in advance prior to the ship date.

New Investment: Private- Company Owned Fleet (for delivery of goods)

Advantages: Under a private owned fleet the company has the capabilities of scheduling deliveries and pick-ups when necessary, rather than relying on third-party schedules that typically have more than one client. With the right professional guidance operating a private fleet can cut damage costs and other overhead figures that can come with outsourcing to for-hire carriers. Some of the advantages listed (Starling, 2012) are the possibilities of less transit time, reduced damage of goods in transit, driver as a salesperson, more flexible operation and greater control over shipping schedules and frequency.

Disadvantages: There are also some major disadvantages to the company operating its own private fleet. Most of these disadvantages are due to lack of training and knowledge operating an in-house fleet service. One of the bigger concerns that needs to be considered is the cost to initially implement the fleet, this includes acquiring vehicles, licensing, software and other equipment necessary to run a full service in-house delivery service.

Once the fleet is established it will need to be maintained and overseen by management as well as the HR department to ensure all safety compliances are met and kept up to date. Some of the major disadvantages associated with this are (Starling, 2012) the added overhead costs, inexperienced management, capital costs and requirements, liability,