Totalline Transport Case Study

Table of Contents

Executive summary………………………………………………………….2

Issue Identification……………………………………………….…………. 2

Environmental and root Cause Analysis…….………………………….…3

Alternatives and Options……………………………………………….……4

Recommendations and Implementation...………………………………...7

Monitor and Control………………………………………………………….8

Executive Summary

Totalline transport has become a pioneer in third party logistics services within Canada in its business history of about quarter of a century. Their success can mainly be attributed to their business philosophy of customer success. When their customer succeeds it translates to business growth for Totalline transport and cost savings as a direct result of mutual gain. Totalline had developed expertise in the transportation of electronics and high tech goods. As a transport carrier for Electronics International, Totalline faced some challenges that affected its bottom line profits. Due to bottleneck process in receiving goods and the tight scheduling at the distribution centre resulted in extra ‘soft-costs’ for everyone in the supply chain. This paper proposes three options to tackle the problem and recommends a solution of proposing Electronic International to assign two dedicated doors to Totalline at the receiving dock of Electronic International distribution centre. Further explanations are provided how the recommendation can result into saving costs for all the players in this supply chain.

Issue Identification                                     

Electronics international shipped from two distribution centres, Vancouver, BC and Brampton, Ontario to about 100 locations throughout Canada. The process of transporting an electronic good such as Aino TV from Aino TV warehouse to Electronics International warehouse starts with the sales interaction between Aino TV and Electronics International and resulting in a sales order. Aino TV would inform Electronics International when the ordered amount of TVs become available and would directly arrange a shipping date and time to be delivered to Electronics International warehouse. This scheduling could take up to 5 days and in the meantime Aino TV would bear the cost of holding inventory. Totalline transport as a chosen logistics company would be informed of this schedule who would arrange a pick up date with Aino, transport Aino TVs to one of five consolidation points and consolidate with other Electronics International goods headed to the same warehouse. Upon arrival, Totalline trucks would wait in the parking lot to be offloaded by the Electronics International. If the trucks arrive later than the 15 minute grace period from the scheduled time, Electronics International would levy a $1000 fine to Totalline for missing the appointment. Many a times, the carrier would pass on this fine to the shipper. Alternatively, if the Totalline arrived on time and have to wait to be offloaded at the Electronics International warehouse, Totalline would charge Aino $60 an hour as a detention fee. The process was standard to what Totalline’s competitors offered. However, Totalline would like to offer value added business to eliminate these fines and charges and can be mutually beneficial for Aino, Totalline and Electronics International.

Environmental and root cause analysis

• Electronics International had plans to expand its Brampton warehouse to double its capacity from 500,000 sq. ft. to 1,000,000 Sq. ft. without any plans of expanding the parking lot. This expansion would result in more bottleneck scenario where trucks would wait long times to offload their goods and as a result with the current arrangement will increasingly incur detention fees.
• There is no strategic planning to get the electronics on the retail locations shelf as fast as possible without incurring extra soft-costs.
• The supply chain model is not very efficient and as a result the inventory sits too long in the warehouses. It begins with Aino holding inventory for as long as five days while it tries to arrange drop off scheduling with Electronics International. Second, Electronics International warehouse expansion plans further shows their plans of holding big boxes of inventory in the warehouse, rather than quickly cross dock it to retail locations.
• Totalline Transport has a proven success and brand image as a complete third party logistics provider. Yet, Totalline is excluded from any schedule planning, arrangement or seeking any logistics solutions. They are merely providing trucks at the schedule provided to them by Aino TV. This proves the core competency of a business is left underutilised.
• Levying fines is not solving the problem instead eating into precious margins. Due to the thin margins in electronic products, adding extra ‘soft-costs’ is hurting everyone in this supply chain and is not solving any problem at hand. Further, administrative hours are wasted in determining fines, detention fees etc.
• There is a missing link of communication between Totalline Transport and Electronics International. As a result, any sudden changes on either side cannot be relayed to each other which could help in accommodating the deliveries. Instead, any changes would only result in fines or detention fees.

Alternatives and options

1/ Dedicated doors: The first option offered by Roger Eacock, Vice President and General Manager of Totalline Transportation, is to have two dedicated doors assigned at the Electronics International warehouse.  Totalline provided 20% of Electronics International electronics products. This would enable Totalline to deliver the products to Electronics International directly, when it becomes available to Aino TV, without the need to schedule the delivery with Electronics International. This would save 5 days of inventory cost for Aino and the savings can be passed down on the supply chain. Furthermore, most importantly, the trucks will not have to wait at the parking lot to get offloaded and neither party will have to bear incidental soft costs like detention fees or late appointment fees. Getting a buy in from Electronics International would be difficult, because why would they give up two receiving gates from its warehouse and assign it to Totalline? Proper cost benefit analysis will have to be presented in order to get them to see the potential in the deal and benefit to them. The potential benefit should also tie in with their future expansion plans.