Executive Brief Spartan Plastics
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School
Northeastern University *
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Course
6201
Subject
Industrial Engineering
Date
Dec 6, 2023
Type
docx
Pages
3
Uploaded by ProfessorBook15248
EXECUTIVE BRIEF
– SPARTAN PLASTICS
Key issue / problem statement
• The key issue is the increasing shipping costs and lack of professionalism in
the logistics and shipping department
Options with pros and cons
1. Keep the current shipping plan (LTL)
a.
Advantage:
familiarity with the current carriers and their operations, so no
additional setup costs or training required
b.
Disadvantage:
dissatisfaction from customers who are looking for more
efficient and cost-effective shipping options
c.
Disadvantage:
high total cost of $7690 and inefficient shipping process
2. Switch to Consolidated Shipping LLC
a.
Advantage:
lower shipping cost of $4590 due to consolidation of shipments
b.
Advantage:
Improved coordination and control over shipments
d.
Disadvantage:
dependence on a single carrier for all shipments along with
increased probability of delay in delivery
e.
Disadvantage:
potential for higher stop-off charges with the milk-run
approach
3. Switch to Amalgamated Integrated Services (AIS)
a.
Advantage:
greater flexibility in terms of delivery times and locations
b.
Advantage:
lower shipping cost of $4626 due to consolidation and cross-
docking
c.
Disadvantage:
Higher cost per delivery to each assembly plant
d.
Disadvantage:
Additional setup costs and training required for cross-docking
Recommendation:
Switch to Amalgamated Integrated Services (AIS)
Shipments are split into three different shipments after being cross decked at
Ypsilanti, reducing the supply risk and driver stoppage time
Compared to CS, the timeliness in delivery of AIS will make the higher cost of
$36 worthwhile because prompt deliveries will lead to increased customer
satisfaction.
Additional setup costs and training required for cross-docking will be fruitful
in the long run and should be considered as an investment
It is $3064 cheaper than the current plan, while allowing the company to
maintain fair prices, timely deliveries, and shipping efficiency
Key Takeaway
: shows the importance of shipping department and how to
handle logistical problems by weighing both quantitative and qualitative factors
QUANTITATIVE ANALYSIS
Current Plan:
Shipment size – 10000
Carrier charges for every 100 pounds – 0.05
Location
Distance
Calculations
Cost of Shipment
Detroit, MI
552
10,000/100 = 100
552 x 0.05 x 100
$2760
Lansing, MI
487
487 x 0.05 x 100
2435
Toledo, OH
499
499 x 0.05 x 100
2495
TOTAL COST
$7690
Consolidated Shipping LLC:
Location
Distance
Cost per Mile
Stop Of
Charge
Cost of
Shipment
St. Louis - Lansing
487
$6.00
$250
$3172
Lansing
-
Detroit
88
6.00
250
778
Detroit
-
Toledo
65
6.00
250
640
TOTAL COST
$4590
Amalgamated Integrated Services (AIS):
Location
Distance
Cost per Mile
Flat Cost per
Delivery
Cost of
Shipment
St. Louis - Ypsilanti
521
$6.00
0
$3126
Ypsilanti
-
Lansing
N/A
0
$500
500
Ypsilanti
-
Detroit
N/A
0
500
500
Ypsilanti- Toledo
N/A
0
500
500
TOTAL COST
$4626
Cost Analysis:
Current Plan -
$7690 (most expensive)
Consolidated Shipping LLC - $4590 (cheapest)
Cost difference between current plan and CS - $3100
Cost difference between current plan and AIS - $3064
Cost difference between AIS and CS - $36
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