Organisation Study

1) What rationale is offered by Ocean Spray in support of the idea of using a 3PL? Do you agree with the reasons cited for the interest in 3PL?

Ans: Yes, I agree with this decision if Ocean Spray able to maintain their focus on their core competency while allowing a 3PL to revamp the transportation logistics

2) Based on your understanding of Ocean Spray its business needs, what type of 3PL firm do you feel might be of greatest potential value in terms of a relationship?

Ans: I feel that Ocean Spray should look into a transportation based 3PL provider.

This will allow Ocean Spray to develop more organized transportation operations while still allowing them to focus on their core competency. A transportation based 3PL will be able to emphasize the transportation based assets of Ocean Spray and offer the company further logistics help.

3) What steps would you suggest be considered by Ocean Spray as it begins to analyze the feasibility of forming a relationship with individual 3PL providers?

Ans: Revise Shipping Loads to Maximize Savings: The first step in evaluating if this backhaul opportunity was viable was to determine if Ocean Spray and the fruit shipper had compatible shipment requirements.

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An average Ocean Spray truckload shipment holds 19 to 28 pallets of product. CSX boxcars fit an average 38 pallets. To accommodate this difference, Ocean Spray needed to revise its shipping process to target 38 pallets on each shipment.

Coordinate Logistics Between the Two Companies: The next step in this process was to have a seamless coordination between the two companies.

Ocean Spray and the fruit shipper agreed to employ third party logistics provider (3PL) Wheels Clipper to manage coordinating and billing of all boxcar movements between the rail terminals and the Ocean Spray distribution centers. Due to the volume and past experience with rail operations, the two companies decided that the fruit shipper should take the lead on this aspect of the project. To facilitate this coordination Ocean Spray notifies the fruit shipper of the number of loads (already adjusted to maximize boxcar usage). The 3PL then arranges for their carriers to pick up the shipment at Ocean Spray’s DC and transfer them to the rail boxcar at the New Jersey terminal. Once the boxcar arrives in Florida, a carrier must be ready to move the shipments to the Ocean Spray distribution center. The 3PL and CSX provide Ocean Spray in-transit information of the shipment.

Testing Out the System: Several pilot runs were executed to guarantee that Ocean Spray and the juice manufacturer were able to coordinate load pickup and delivery within the required time windows. The pilots also confirmed that the product was handled properly during the intermodal drayage transfer points and that the total intermodal transit times requirements fit Ocean Spray operational needs. When transported by truck, a shipment took 3 days to move from New Jersey to Florida. The new intermodal solution takes 4-5 days. The increased shipping time required additional logistical coordination. Ocean Spray elected to shift “transfer” shipments to intermodal, that is, planned movements within full control of the planning and transportation organizations. This allowed Ocean Spray to adjust inventory and transportation to accommodate the extra transit time without impacting service levels to final customers.

For the 12-month year that ended in February 2012, Ocean Spray shifted 616 truckloads (or 308 boxcars) from truckload to intermodal, saving an estimated 40% on transportation costs. This represents over 80% of the transfer shipments between New Jersey and Florida. Although other shipments were eligible for intermodal movement, they were not transported due to unavailable capacity in the intermodal operation.

4) Once the selection process is complete, what kind of relationship do you feel would be most appropriate: vendor, partner, strategic alliance, or some other option?

Ans: Ocean Spray redesigns their transportation networks to better customer service. These network adjustments help to reduce mileage or shifting of transportation modes into cost savings.

Ocean Spray improved more efficient distribution network that results in significant CO2 emissions savings. Which also help to reduce in transportation costs: less miles and more fuel efficient modes.

Ocean Spray is planning to include CO2 savings on a regular basis to evaluate its transportation decisions. This will allow them to refine their emission factor data over time, and further uncover emission reduction opportunities.

http://ctl.mit.edu/sites/default/files/library/public/MIT%20CTL%20Ocean%20Spray%20Case%20Study_FNL_0.pdf