BLG3000 Logistics Case Study Assessment Answers

 

Assignment Detail :-

• Number of Words: 2000

 

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CASE STUDY ONE

CENTRAL TRANSPORT, INC.

Jean Beierlein, president and CEO of Central Transport had just met with Susan Weber, the new president and CEO of SAB Distribution. Jean had recently been promoted from COO at Central Transport. Her predecessors had worked closely with the former CEO of SAB Distribution when SAB had transferred its operations about seven years earlier to respond to changes in its competitive marketplace. Now, Susan was faced with new challenges and wanted the collaboration of Jean and Central Transport to transform again.

According to Susan, she had met extensively with the old and new members of her executive team (several old times had left the organisation when Susan had announced her planned changes) and had developed a tentative plan for modifying the strategic direction of SAB. Susan was convinced that SAB could attract some larger retailers in the mid-Atlantic states if it changed its business model to add services similar to third-party logistics companies, namely, warehousing, transportation delivery, and inventory management. However, Susan felt that she needed a major collaborator with experience in these areas. She also felt that it would be better if the collaborator was a company SAB had worked with previously on a successful basis and was willing to take on some new challenges.

Susan had decided to approve Wegmans Food Markets, Inc as the final customer for these new services. Wegmans was a very successful company in the Northeast that was privately owned and had expanded carefully into new market areas over the last 10 years. it offered more value services to its customers, including an in-store bakery, deli, more take-out options, and in-store cooking demonstrations.

Susan was convinced that Wegmans had to be price competitive also to continue to grow in-store sales and expand its market opportunities. She felt that Dan Wegman would listen to her proposal to offer expanded services to help his company be more competitive. Now, she wanted control to join with SAB in making Wegmans a proposal.

Jean wants your help in developing a positive response to Susan.

QUESTIONS 1

• Why and how had the competitive market place for SAB changed in the last five to seven years?
• What advantages might Central experience in the proposed new venture?
• What issues would SAB and Central face in the proposed new approach?

 

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CASE STUDY TWO

SENCO ELECTRONICS COMPANY

Senco Electronics Company (Senco) is a U.S. based contract manufacturer of laptop and personal computers. All of its current assembly operations are located in the United states and primarily serve the U.S. market. Transportation in the United States from Senco sites to its customers is primary performed by motor carriers. Rising costs in its U.S. operations have caused Senco to begin construction of a new assembly plant in China. this plant will be used to satisfy the growing demand for laptop and personal computers in the United States. Traci Shannon, executive vice president of supply chain management for Senco, is concerned with how Senco transport its products from China to the United States. “We’ve always had the luxury of a very well-developed ground transportation infrastructure in the United states to move our products across several thousand miles of ocean. We really don’t have that much experience with other modes of transportation.”

Skip Grenoble, director of logistics for Senco, was called on for his advice. “Obviously, we need to decide on whether to use ocean or air transportation to move our products from the new facility. Air transportation will cost more than ocean but will result in lower inventory costs because of the faster transit times. The opposite is true for ocean transportation. moving products by air will also result in higher ordering costs since we will be ordering more often for replenishment for our U.S. distribution centres. Projected annual demand from the new facility is 1.5 million pounds. However, we expert this demand to grow by 10 percent annually over the next five years. Although the air transportation system appears to be more expensive option right now, we need to take into consideration our growth and how each mode will help us achieve our profit and service goals.” The relevant cost information for each alternative is presented in the following table.

 

	OCEAN	AIR
Transportation cost	$50,000	$190,000
Inventory costs
Carrying	40,000	15,000
Handling	15,000	19,000
Ordering	5,000	12,000
Fixed cost	410,000	350,000
Total costs	$520,000	$586,000

 

QUESTION 2

• If you were Skip Grenoble, which alternative would you advice Ms. Shannon to implement? What criteria would you use to arrive at your decision?
• At what level of demand (in pounds) per year would these two alternatives be equal?
• Graphically represent these two alternatives and their trade off point.
• Which alternative would you recommend be in place to accommodate future demand growth?

 

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