Introduction to Logistics/Supply Chain Management (competitive disadvantage by freight equalization)

Phase 4 – Individual Project The rough draft must be a completed paper, with APA formatting, all 7 sections complete (using Roman numerals of each section per the outline), references, and good grammar .

You were recently hired as the VP of Logistics for the ABC Manufacturing Company. This is a new position. During the lengthy interview process, the CEO shared her strategic plans for worldwide growth in the company’s consumer sales. Previously, sales had been confined to domestic sales only . As a result of little staff logistics expertise, the company had kept the traditional logistics model of shipping all finished products from its warehouse and factory location on the East Coast of the United States, even though there was a growing market on the West Coast that competition was serving from a West Coast warehouse. However, the CEO pointed out that despite its national popularity from a feature and quality perspective, it seemed to penetrate poorly on the West Coast because of her need to charge higher prices as the result of higher shipping costs. The marketing manager tried to mitigate this competitive disadvantage by freight equalization so that end customers would pay the same amount of shipping costs as West Coast competition charged, regardless of where they were located. This met with some insignificant success because timeliness of delivery was another important issue. Therefore, the CEO had asked you, as your first assignment, to write a white paper to address the following specific points. She remembered that you had quite a bit of experience addressing some or all of these issues during your career. Key Assignment Draft Format As a stickler for formatting, she has specifically asked you to use the following Roman numeral sections and headings in the paper: Section I: Introduction (200 words ) A. In general, what are the qualitative pros and cons for domestic sales of having multiple distribution centers and shipping locations in the United States ?

B. In general, what are qualitative pros and cons of having one or more international distribution centers for international sales, as opposed to shipping directly from a U.S. manufacturing location warehouse? Key Assignment Draft Format Section II: Decision-Making Criteria (300 words) The CEO is considering either expanding the warehouse next to the East Coast manufacturing plant; or for the same total construction and operating costs, building a West Coast distribution center; or for the same total construction and operating costs, building a combination manufacturing and warehouse location on the West Coast. As a completely separate issue, she is also considering opening a distribution center overseas, to serve the fast -growing warm weather markets of France and Spain. Key Assignment Draft Format Given the following general information, what are at least 5 criteria that must be considered when locating a new or expanded shipping warehouse domestically?

Internationally?

a. The products are primarily medium - and large- size insulated coolers, like you might use for a picnic or trip to the beach. As a result, no matter what mode of shipping is used, transportation firms charge by space, or cubic feet, rather than weight, which is the more normal method. b. The coolers are made of 3 components, which are all produced by suppliers solely on the East Coast. c. The market is very competitive with generally stable or decreasing marketplace prices because of this competition. d. In states and countries that are warm year -round, sales are pretty steady; in countries and states that have seasons, 90% of sales occur in the May –August period. e. Domestic demand is expected to increase 5% annually; international demand is expected to increase 15% annually. f.Right now, to keep West Coast customers happy, the CEO says that they only charge those customers the local freight cost of shipping, which is $200 for anything up to half a truckload. g. The current exchange rate is 1 euro = $1.50. Key Assignment Draft Format Section III: Metrics to Assess Success (250 words) A. Describe 3 metrics that you would use to assess the success of any logistics plan involving you as a manufacturer and an internationally based mass merchandiser. Provide support for your selections. Key Assignment Draft Format Section IV: non quantitative Factors (200 words) Identify 3 subjective, qualitative factors to consider in the recommendation. Section V: Conclusion ( 200 words) What are the 3 most important points that you want the CEO to understand about this entire decision- making process? What are Metrics? A unit of measurement that provides a way to objectively quantify a process. • Aids in understanding complex processes/operations • Highlights areas of concern • Target areas for improvement Most businesses use some type of metrics. • Financial Performance Metrics • Sales • Profits vs Costs • Year-Over -Year Sales • Customer Satisfaction • Internal Operations • Strategic Performance • Compliance Metrics for Logistics Success Metrics are what tell the manager and his or her employees whether or not they met their expected results. • measuring, monitoring and reviewing information relevant to goals • weighed against strategy, effort and performance, • reflects what is important to both the customer and the company You can’t manage what you can’t measure Variation by Industry • Percentage of downtime of airplanes and average repair time • Number of planes arriving and taking off on time • Percentage of planes for which the catering or the cabin cleaning did not occur prior to take-off • Percentage of planes that had to wait longer than planned for refueling • or de- icing • Percentage of lost luggage • Inbound freight costs for raw materials • Percentage of on- time shipments for inbound freight • Outbound shipping cost and sales spending • Percentage of on- time shipments to customers • Percentage of added costs to the company for premium freight shipments caused by the firm’s shipping errors, if the firm has its own fleet • Percentage of truck miles with no backhauls (called deadhead miles ) Criteria to Use The choice of metrics is important. If a wrong or unimportant metric is chosen, and the organization focused resources and effort on excelling at that metric, time and money could be wasted .

Consider the following stakeholder groups when developing performance metrics: • Internal stakeholder group includes the firm’s owners, stockholders, and senior managers . • costs • profits • market share • External stakeholders are any and all customer groups. Criteria Examples by Industry