Exec Summary:
W. W. Grainger, Inc. is recently thinking of redesigning the supply chain for shipments from China/Taiwan. The reason being as an obvious to reduce costs, lead times and to improve supply chain efficiency. The major issue identified was the lead time and a huge fixed overhead because of small shipments which then were consolidated by the company to make a full 40-feet container load. Through a thorough cost analysis and weightage of pros and cons of three alternatives, the team recommends to use an NVOCC (Non-Vessel operating common carrier) for small shipments which will lead to a lot lesser lead times and will help reduce costs as well. Along with this, the recommendation is also to increase packing efficiency for
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Now, it seems that small shipments are the issue and the question becomes what is causing Grainger to have such small shipments. Well Grainger Inc. sources from over 250 suppliers from China and Taiwan region and this is good type of sourcing whether it is because the nature of what each supplier can supply or as a part of contingency, whether or not it is a good sourcing strategy. So the issue is definitely not the Sourcing strategy of the company.
So now the issue left that if the company cannot avoid small shipments then how to minimize the cost associated to the shipment of such small shipments. As of now the company is using a freight forwarder which consolidates small shipments to fill 20-feet or 40-feet containers.
Cost Analysis: (Total Cost = $2,495,387.76)
Shipment type Quantity Shipped (Total: 190,000 CBM) Load ability Total containers used Cost per container Other Costs Total 190000 CBM % Total Variable per CBM fixed
40-feet container (85%) 169100 133589 56.5 85% 48.025 2782 $ 600.00 NA NA $ 1,668,993.23
20-feet container (85%) 35511 27 85% 22.95 1547 $ 480.00 NA NA $ 742,713.73
Consolidated shipment (96% 0f 40ft.) 20900 20900 56.5 96% 54.24 385 $ 600.00 $ 1.50 $ 75,000.00 $ 337,544.69
Alternatives and Options:
Shipment type
According to market players in the maritime transport, inland logistics are one of the most significant segments still enhancing economic signals in order to add value and enhance profitability. Bundling is regarded as one of the most probable solutions on ways to enhance the intermodal transport and could also improve competitiveness. As a result, the concept or process enables resolving suitable intermodal conditions since it can be utilized in situations where container flows are not economically adequate to meet the needs of a direct service.
Challenge two: Inventory/Shipping: Shipping and receiving are sharing facilities due to one railroad spur being available. The company is having problems producing enough products for the customers. This lack of production cause large quantities of finished materials to be stored
The facilities need to be made larger. The area that holds the raw materials should be expanded and should be close to the receiving area. Finished products should be close to the shipping area. This would cut down on time by not having to move product from such a long distance. The receiving and shipping should be together on the side where imports and exports are done.
Currently, the shipping and receiving departments have materials coming in and going out at the same time. With the rail handling shipping and receiving, this is creating a bottleneck of materials. By creating certain shipping and receiving times that do not conflict, this will allow for a smooth process that will help the supply chain. (Russell, R., et al., pg. 423) Not only does the actual manufacturing process need to run smoothly, but the shipping and receiving of materials needs to run the same.
Second, costs could be reduced by consolidating deliveries so as to eliminate the additional cost of transporting less-than-full truck loads. Additionally, packaging could be standardized so as to reduce changeover times on the production floor. Should none of these options (or any appropriate combination of them) be acceptable, Kemps may need to consider discontinuing the relationship with the customer.
T. C. Edwin Cheng Department of Logistics, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong E-mail: lgtcheng@inet.polyu.edu.hk
Greating shipping is a comprehensive logistics service suppliers, focus on transport solution for the manufacturing and retail industry. The company has a wealth of experience in the logistics transportation more than 20 years, plenty of logistics resources to meet the logistics needs of customers. Company has been providing logistics solutions for your needs, make sure to keep competitiveness in the field of business. Company attaches great importance to create and maintain a long-term cooperative partnership, through expanding global network support. With the high quality service to ensure every step of the goods for a smooth transition. Huge global network of company cooperate with a wide range of cost savings and value-added service tracking
Today we are going to explain and possibly solve Lynden Transport’s problem of more inbound freight than out-bound. While our solution is not necessarily out-bound freight in the true sense, it is a way for the company to save money. This problem is not unique to Lynden Transport and with them possibly leading the way in the use of our solution, they can continue to be at the forefront of the transportation industry.
Once the shipments reach an Australian port they are transported, to one of APL’s five distribution centres, by truck due to low accessibility of rail at Australian ports placing a reliance on road transport (The Allen Consulting Group 2010, p.5). The shipments are deconsolidated and packed into LTL or FTL for delivery direct to outlets; or multiple outlets along a route using trucks (APL Logistics 2016b). Additionally, the introduction of omni-channel marketing by Billabong (Barrie 2015) has necessitated frequent and small parcel delivery in a timely fashion. This function is handled by Star Track Express, who employ a combination of air freight and light truck as modal choices (Star Track Express 2012). Air freight is ideal for the movement of small parcels and time sensitive items (Coyle et.al 2009, p.406) that online purchases demand. Light truck is ideal for pickup and delivery to multiple end customer locations (Coyle et.al 2009, p.403), at the cost required.
Recently, China and Colombia trade relations are stronger than before. Colombian Java International sells their coffee to Guangzhou, Hong Kong, Beijing and Shanghai in China and the rate of export products is increasing. Therefore, our team suggests Colombia exports their products from Tumaco seaport to China’s Hong Kong port and Shanghai port by using Maersk Group shipping company and China COSCO company. After the products are arrived in Hong Kong and Shanghai port, we recommend to use S.F. Express logistic company to deliver the products to Guangzhou and Beijing city.
Today for large multinational corporations (MNC) to build or retain their competitive advantage requires effective methods in managing the global supply chain in order to assess their raw resources, inventory supplies and factory productivity. MNC look to global sourcing for several reasons including: scarcity or high cost of local raw materials, low cost of labor in developing countries, and to increase market share into new geographical areas. Effectively managing the global supply chain is quite literally the lifeblood of an MNC that produces goods to be sold around the world.
The attached copy is furnished to the author for non-commercial research and education use, including for instruction at the
Management Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation: Analysis of a Case Study
Evolution of the supply chain stems from Physical internet. Montreuil“If you think about the early days of computers, people loved using them, but they had no way to connect their computers to a community,” he says. “To get connectivity, we looked to transportation for a model and the information superhighway became the metaphor for the Internet.” The Physical internet approach is influenced by the internet network system where information is moved globally efficiently. The Supply chain system could use the Internet as a metaphor for a new way to move physical objects through the supply chain. As said by Meller “Imagine an EBay like exchange with all freight specified based on smart modular containers and visible to a vast community of users that rate each other to drive performance’’. This is a decentralised system that enables networking by aligning and coordinating the processes between customers’ suppliers and providers to manage logistics units efficiently and in a sustainable manner.
The first group of researches cover the studies that brought the ABC concept to analyse logistics cost. According to the researches of Lin (2001) Stapleton