Complete the sentences with words from the box.

happy ● provide ● range ● specialize ● major ● ensure ● customized

II. Reading Comprehension Section

Read the following text. While reading, you will probably come across a number of words you don’t know. Don’t stop to look up these words, but try to understand the main points of the text. Pick out 5 – 7 sentences which convey the basic information in it.

Organization for transportation decisions

Purchased goods must be transported from the point they are grown, mined, or manufactured to the place needed. The purchase of transportation services demands a high degree of skill and knowledge, if the costs of movement are to be minimized while at the same time meeting service needs. Due to the complexity of the transportation industry, the multitude of rules and regulations, and the significantly larger number of alternatives available as a result of deregulation, getting the best value for an organization’s transportation money involves much more than simply getting the best transportation rate.

Depending on the type of goods being moved, transportation may account for as much as 40 percent of the total cost of the item, particularly if it is relatively low value and bulky, such as construction materials. But in the case of very high value, low weight and bulk electronics goods, transport costs may be less than 1 percent of total purchase costs. It is not unusual in many firms to find that an average of 10 percent of their purchase expenditures go for incoming transportation costs. While target savings vary from firm to firm, many have found that only a modest effort to manage incoming transportation services more efficiently will result in substantial saving, often from 10 to 15 percent of the freight bill.

If minimization of costs were the only objective in buying transportation services, the task would be easy. However, the transportation buyer must look not only at cost but also at service provided. For example, items are purchased to meet a production schedule, and the available modes of transport require different amounts of transport time. If items are shipped by a method requiring a long shipment time, inventory may be exhausted and a plant or process shut down before the items arrive. Also, reliability may differ substantially among various transportation companies, and service levels, lost shipments, and damage may vary greatly between two different carriers. The buyer should use the same skill and attention in selecting carriers as used in selecting vendors.

Due to the large sums of money involved in the movement of goods into and out of an organization and the potential effect on profits, large firms have a separate traffic department with logisticians in areas such as selection of carriers and routing, determination of freight classification and rates, tracing shipments, and handling claims in the case of loss or damage to goods during shipment. In the very large firm, the transportation function may be specialized even further, based on the purpose of shipment. For example, an automobile producer may have three separate transportation departments, one concerned with incoming materials shipments, one making the decisions on in-plant and interplant materials movement, and the third concerned with the shipment of finished goods through the distribution channels to customers. In an organization operating under the materials management concept, the traffic manager may have responsibility for all types of materials movement.

The logistics manager must recognize that handling and shipping of raw materials and finished goods does not add value to the product itself. Instead, it is a key cost element in the operation of the firm and should be managed to minimize costs, within the parameters of needed service.

In the medium-size and smaller organizations, the number of traffic decisions may not be enough to warrant a full-time traffic specialist. Here the transport decisions are handled by the buyer or purchasing manager. This means that the buyer must have enough knowledge to make decisions on preferred free on board (FOB) terms, classification of freight, selection of carriers and routing, determination of freight rates, preparation of necessary documentation, expediting and tracing of freight shipments, filing and settlement of claims for loss or damage in transit, and payment procedures for transport services received. The involvement of the purchasing department in transportation decisions is significant and growing, as a result of the added alternatives opened up by deregulation.