The Hudson Valley Juice Company is a wholly owned subsidiary of National Beverage Corporation, headquartered in Cincinnati, Ohio. At its plant in Poughkeepsie, New York, Hudson Valley manufactures a number of different natural fruit juices, based on the fruits of Local region. It's most popular juice drink products are • Apple • Grape • Cherry
New source
At a Cincinnati meeting sponsored by the parent company, National Beverage Corporation, Debbie Wagner, Hudson Valley's purchasing agent for packaging materials, had met Jeff Smith, a colleague from another National Beverage Corporation subsidiary in Los Angeles, California. Talking shop, they had exchanged information and experiences. When Debbie• had confided in Jeff that she had experienced some difficulties lately in obtaining sufficient quantities of bottle closures at competitive prices, he suggested that she contact the Tight Cap Division of American Packaging Corporation. He reported that he had long bought from this source and was very pleased with their performance and responsiveness. Upon her return to Poughkeepsie, Debbie had called Tight Cap in Chicago, requesting a price quotation and sample caps. The caps were duly tested in the company's laboratory and Tight Cap's prices turned out to be quite attractive. So Debbie had placed an initial order for 500,000 bottle caps, to be delivered on a specified date.
Surprise It is now:3:00 P.M. on Friday afternoon , and Debbie has just learned that the shipment of 500,000 bottle caps from Tight Cap, scheduled for arrival this morning, has not been received. These caps were to be used immediately in the production process, starting at 7:00 A.M. on Monday. No safety stock of these caps has been kept on hand. To make matters worse, apple juice which is to be produced using these caps is out of stock with a substantial backlog of orders on the books. As Debbie goes about sorting out the situation, people in the purchasing, production, and marketing departments nervously wonder what happened and what will happen. Amid the scurrying to attempt to determine the whereabouts of the missing caps, comments such as "it's not my job" and "why didn't you come to us earlier" are overheard.
A quick review of a copy of the purchase order tells Debbie that the designated routing is "best way." Also, instead of a specific delivery date, the notation reads ASAP (as soon as possible). The terms of delivery are noted as FOB.
Assignment: The four questions below are to be used as guidelines and thinking points for your analysis.
1. What mistakes were committed by Hudson Valley employees in this case? A: How could they have been avoided or at least minimized?
2. What are the pitfalls of routing traffic the "best way"? A: Is the delivery term "FOB" sufficient, and why or why not?
3. How can the correct selection of transportation mode help the overall profitability of the company?
4. How and by whom should decisions regarding transportation arrangements be made and why?