Purchasing Motor Carrier Service: An Investigation of the Criteria Used by Small Manufacturing Firms

Abstract

PURCHASING MOTOR CARRIER SERVICE: AN INVESTIGATION OF THE CRITERIA USED BY SMALL MANUFACTURING FIRMS(*) Managers of businesses, large and small, are frequently asked to respond to customer demands for special orders, unscheduled orders, small shipments, and so forth. In fulfilling these requests, large firms typically rely upon their internal professionals to determine the most economic and expeditious means of transporting such orders. The decision will be based upon such considerations as the amount of stock in inventory, use of the company's annual freight volume as leverage with carriers to obtain lower freight rates, and ability to consolidate its special orders with other shipments. Managers of small businesses, however, are typically at a comparative disadvantage in purchasing motor carrier service. Because such firms usually do not employ traffic professionals, they may lack the necessary expertise and inventory space to consolidate orders. Consequently, they often incur increased expense for less-than-optimal truckload/carload shipments. In addition, these firms must rely upon the information supplied by carrier sales representatives to make efficient and effective decisions. Yet, the carrier representatives, if they are interested in obtaining the business at all, often are not familiar with the actual transportation needs of the small firm. The small firm manager - or the employee to whom the carrier-selection task is delegated - normally lacks distribution or transportation expertise. Yet he or she must somehow select an appropriate carrier from the forty thousand potentially available trucklines in existence. The complexity of this selection problem is increased because of the firm's need both to control costs and respond to customer demand. In order to survive, small businesses require the prompt and efficient support services of a good transportation carrier. This article explores the decision making process preceding a small manufacturing firm's purchase of motor carrier service. Furthermore, this study seeks to prove the contention that previous studies, which have focused on large businesses's selection of motor carrier service, cannot be used to characterize the small manufacturing firm's purchases. Hopefully, the results of this study can be used by practitioners and academicians alike to advance their understanding of the key factors affecting the small manufacturer's selection of motor carriage. By doing so, improvement can be made in both the offering of motor carrier service to small firms and their use of such service, thereby contributing to the understanding of the behavioral differences between small and large firms. Physical Distribution Physical distribution activities have begun to receive increased attention from businesspeople and academicians alike. The importance attributed to these activities has been growing, primarily due to increased operating costs associated with transportation. As transportation becomes increasingly important to firms, perhaps even acting as a significant competitive advantage, the attention paid to it should grow commensurately. To the extent that physical distribution activities have been studied, researchers have generally examined two questions: (1) what are the key components of physical distribution systems; and (2) how do physical distribution activities satisfy customer needs? Research has also been conducted to determine both the responses of buyers to physical distribution service(1) and the managerial implications of these responses.(2) Several earlier studies have identified the relative importance attributed to various criteria by traffic managers when selecting a carrier. For instance, Flood identified seventeen criteria in order of importance.(3) Jerman, Anderson, and Constantin(4) asked 270 traffic managers about the motor carrier selection criteria used by their firms. …