Logistics case Essay
Stanley received multiple calls from customers complaining about late shipments for both truck and rail delays. Transportation delays were measured in days, not hours. Railcar delivery windows increased from two to seven days, and overall truckload service levels fell to less than 85 percent on time. Due to rise in price of the transportation cost for MAP the cost of goods sold rose from 11 to 19 percent. The transportation problems led to a demand by MAP’s largest domestic customer. Stanley tells that even a 10 percent increase in inventory levels would reduce return on asset levels from 13.7 percent to 9.1 percent. MAP’s inventory investment is 22 percent of total assets and inventory carrying costs are nearing 27 percent of inventory value, both of which are consistent with manufacturing industry norms. The outbound logistics is an essential primary activity of the value chain no matter what industry. Question 2
Agricultural commodities and products from the Midwest are shipped to locations around the globe. If global demand continues to grow, how will different transportation modes (rail, truck and barge) be affected? How will these changes impact MAP’s current supply chain strategies? Answer:
If the global demand continues to grow then there will be a tough time for the agriculture products which is being shipped from the Midwest to all locations around the globe as if there is a rise in demand then costs related with the different means of transportation will increase and the service levels will most likely fall, mainly with shipping the goods through water ways as demand for containers are increased, the fuel costs are higher and even due to slow steaming.
The single railcar shipping rates are as closely as truckload shipments which will lead to decline in on-time transportation service which will cause customer dis-satisfaction. MAP’s service levels fell to less than 85% on time and the domestic customer demand is increased and there are complaints from customers all over the globe regarding the delay in receiving their product due to the deregulation in transportation which will lead to a negative effect on its current supply chain, MAP should place supplier-owned inventory in nearby storage facility or by positioning warehouses around the globe if not will lose 100% of its business. Question 3
Many factors influence location decisions. If MAP were to relocate a facility today, what factors would seem most important? Do MAP’s past location decisions limit or enable their future opportunities? Would your answer change if MAP was a large multi-national corporation? Answer:
If MAP were to relocate to any other place, two points should be kept in mind:- Firstly, to relocate to areas where resources are in abundant as it’s the main source for their business. Secondly, transportation should be much easier and should be accessible to various areas. Distance from both suppliers and customers are important as when it comes to the efficiency of an operation suppliers are involved and delivery of goods to customers or key infrastructure is just as important. It’s better off if MAP does not relocate its facilities because in its current location in the Midwest it offers an abundance of corn and soyabean suppliers which is the main source of MAP’s business. Since transportation is the main problem for MAP, but after Mary’s talk with various other Midwest shippers to better utilize the existing transportation infrastructure it looks like a bright future ahead. I believe a large organization would choose to locate in a similar fashion, but would also strive to choose a location with easy access to rail and highways.
Manly Terminal LLC successfully enables modal shifts from truck to rail transportation, and specifically to unit-train pricing, for ethanol shippers producing single carload shipment sizes. What prevents MAP from realizing these same rate advantages? Can these challenges be overcome? How? Answer
Map is unable to realize these same advantages for a few reasons: Poor model optimization. MAP is not located near a major national and international railroad hub. They are in fact only shipping single carloads, but an individual car costs a fair amount more when we are not speaking about a until-train. With the right partnership, I believe those problems could be overcome.
Manly Terminal LLC offers the ethanol industry exciting supply chain solutions. Are the ethanol industry’s transportation needs similar to any other sectors? Could Manly Terminal expand to serve other industries? Which sectors should they target? Answer
The requirements for shipping ethanol sound very similar to what we believe it would take to ship corn syrup or soybean oil. Manly could service almost any liquid bulk product.
Manly terminal are already located in the Midwest servicing corn refineries for ethanol. They can also service the corn refineries for other by-products to make corn sweetener’s, refined corn feed products, starch, corn oil, ethanol and other bio-products. Manly terminal can target the sectors or industries who ship grains, biofuels/bioenergy and products involved in trans loading.