Assignment
Spanner Supplies, Inc. is an up-and-coming retailer of restaurant supplies and equipment. They handle cooking utensils, ovens, dish washers, tables, and other necessary restaurant items from around the world. SSI's 36 stores are located in six cities- Kissimmee, (4), Orlando (6), Atlanta (6), San Diego (6), Los Angeles (10), and Las Vegas (4).
Initially, SSI focused on building stores, and very little attention was given to supply chain management until a Vice President of Logistics was hired to improve global product flows. Emily, the new VP, began her tenure by hosting a conference call with Ernesto, SSI's transport manager, and Juan, the company's senior-most buyer.
Emily: Thanks for meeting on such short notice. The CEO has instructed me to reduce our transportation spend without hurting service quality. The attitude of "let's get it to the store, no matter what" has got to go.
Juan: Ok, but I don't understand why I'm called upon. Delivery issues are not my responsibility. I don't see where my organization could cause your headaches.
Emily: Some of your decisions impact transportation, and you could give us some insights. Juan: Ok, I'll try.
Emily: Ernesto, how do you make decisions on international routes and carriers?
Ernesto: Juan's team tell me the product vendor, location, shipment size, and how soon they want it. I go to carriers that I know well and cut the best deals that I can.
Emily: What's your split between ocean and air?
Ernesto: It's about 50/50. We use air to expedite hot orders and anything smaller than a TEU. For FCL, I route it through the Port of Los Angeles, break the container, and send out smaller amounts as LTL.
Juan: No wonder our margins are terrible. You're using premium air service half the time!
Ernesto: It's not my fault that your people finish most of their deals at the last minute. Plus, if you would find me suppliers in strategically-located spots, buy larger quantities, and give me more warning, I could move 90% of our cargo on ocean carriers.
Emily: Wait, this is not the time to be assigning blame. We need strategies and solutions.
Juan: Maybe we've gotten too big to manage this cargo on our own. Can't we look for some outside assistance?
Ernesto: That's a possibility, but I'm good at what I do. With a more stable cargo volume, we could create some ocean contracts and maybe even a charter movement. For air cargo, Juan has to get our suppliers to pack in efficiently-sized boxes. They use huge boxes that weigh almost nothing and are filled with packing peanuts.
Emily: Now, we're making some progress. Let's investigate the feasibility of these ideas and also think of some new ideas for improving transportation and report at our next meeting.
Provide a thorough discussion of this case and the following case questions. Compose a 1500-word report with good business communication style. The case will, in part, be graded according to the COB writing rubric.
Case Questions:
1. Based on what you know, what are some causes of SSI's transportation problems?
2. Given their product lines, do you think 551 using the right mixture of global transportation services? Explain your answer.
3. How can SSI use Juan's idea about external assistance with transportation?
4. What about Ernesto's ideas? How could routing, contracting, or chartering impact ocean service?
5. Is Ernesto's complaint about product packing legitimate? What, if anything, should be done?