Question

The Company:

Eco Bottle

You have just been hired as the Director of Logistics for Eco Bottle (EB). In your new

role

, you will have

responsibility for general logistical planning including functions such

as inbound and outbound freight

and any logistics

-related functions within EB.

EB is a ten year old Canadian manufacturer of premium refillable water bottles. EB is

loc

ated in Winnipeg

Manitoba where their manufacturing facility, warehouse, and

administrative offices are contained within

a single building. EB employs seventy staff

members, 35 of them dedicated to manufacturing, 15 to

warehouse operations, and the

remaini

ng 25 in various administrative positions.

EB has positioned their product in the ‘

premium’

category and is enjoying year over year

growth. Their

primary product is a 750 ml refillable water bottle that is manufactured

using two primary raw materials:

stai

nless steel for the body of the bottle and high

density plastic for the removable lid. EB has spent

considerable effort on research and

development and the bottle is considered to be industry leading in its

ability to maintain

both hot and cold temperature

s.

75% of EB

’s sales are done through an online distributor called Skyway who maintains

distribution

centres in Calgary AB, Mississauga ON, and Montreal QC. Skyway

specializes in selling athletic and

outdoor goods direct to Canadian consumers and uses

smal

l package providers and couriers to provide a

one or two-

day delivery to most

Canadian households. EB currently ships product over the road to

Skyway

’s distribution

centres and if ordered in TL quantity, EB pays for the freight expense. When LTL

quantities

are ordered, EB charges the freight expense to Skyway. The remaining 25% of

sales are done

through a small group of boutique specialty stores across Canada that

have requested the product

specifically to stock. These sales are normally low volume

and shipped via a small package or courier

service to the boutique specialty store.

EB p

urchases its high density plastic from a distributor in Shenzhen China. This

specialty plastic is

transported by a conference ocean carrier as LCL through the port of

Vancouver BC where it is then

destuffed and transported by intermodal rail to EB in

Winni

peg MB. The plastic is purchased in a small

pellet form and packed in double

-

walled corrugate gaylord cartons measuring 48 inches x 40 inches wide

and 36 inches

tall. Each carton is lined with a plastic bag and then capped with a corrugate lid. When

filled, each gaylord carton weighs 1,500 lbs. For both the ocean and rail portions of

transportation,

nothing occupies the space above the gaylord boxes in the containers as

they are not capable of being

stacked.

A potential new supplier of plastic has been found in Halifax Nova Scotia. This

manufacturer produces a

comparable product to the Shenzhen supplier. The new

supplier in Halifax would transport the

plastic

pellets in a bulk hopper car via rail to a

transloading facility in Winnipeg Manitoba. A packaging facility

operates adjacent to the

rail terminal in Winnipeg where the plastic would then be packaged in the same

gaylord cartons currently being use

d for delivery over the road to EB only a few

kilometers away. You have

not been given costing information yet but have been asked

to prepare a preliminary report that would

highlight the logistical differences between

the two options.

Business Case Assignment Part two :

EB

’s primary method of shipping goods to Skyway is via TL service. When shipping in

TL quantity, EB has

paid the freight expense. Skyway represents the majority of EB

’s

sales and Skyway has recently been

pressuring EB to provide LTL service at EB

’s

expense. Skyway often has larger inventory volume than they

require and this requires

storage space that could be used for other, fast moving products.

EB

’s manageme

nt is concerned that they may lose Skyway as a customer if they don

’t

provide LTL service

at their own expense. In anticipation of this, you have received

estimates from three large LTL carriers.

Each carrier has classified the product at

different levels.

The management team is not familiar with freight classification systems and has asked

you to provide

clarification on what this is and how it might impact LTL service. In

addition, the management team has

requested that you provide a summary of the

impact

s on the product during transportation and any

administrative or operational

changes.

Specifically, you have been asked to:

1.

Provide a summary for the management team of the factors that influence freight

classification

and what the impact of a different classification would mean to EB.

2.

Discuss the impacts of a change from TL to LTL service on the product (such as

handling

) and the

organization (such as administration and internal processes).

Answer 1

Being a director of Logistics in Eco Bottles, it is important to cover and manage the logistics department effectively and efficiently. After analysing the case study, we will specify some parts which are-

Business Case Assignment Part one:

1. Under this, we will have a comparative analysis on transportation modes such as railways and water transportation and also specify the effects of transportation mode on EB.

2. There are many organizational changes which will impact EB in change of suppliers such as increased cost, quality products, and much more.

Business Case Assignment Part two:

1. Factors that influence freight classification are: Capacity, time, much more, and impact of different classification on EB.

2. Impact of changing from TL to LTL shows many changes on products as well as in the organization such as lesser cost, multiple suppliers, and much more.

Business Case Assignment Part 3:

1. Logistics impact of expanding a direct to consumer services are: packaging, time transit, and cost.

2. Organizational impact of a change in services that is shown as a change in administrations, growth of internal processes.

Rest explained below.

Explanation:

Business Case Assignment Part one:

1. Mode of transportation ensures and saves energy, time, and minimizes cost. It helps in making products available from one place to another so that people can easily satisfy their needs. There are various types of transportation mode such as roadways, railways, water, air, and pipeline transportation.

Analysing the case study, here we will consider two modes of transportation which are railways and water transportation, and have comparative analysis over that.

Railway transportation- It helps in transferring products from one place to another place, although it also ensures to transfer the passengers from one destination to another one. It is a very cheap means of transportation which could be used for covering long destinations. Due to having much space, people try to use this for their goods to be transferred.

Water transportation- It is the mode of transportation which can be used to do a movement of goods from one ocean or sea to another one. The weight of goods is much heavier in comparison to any other means of transportation. There are many places where transport means other than water transport cannot be used.  

The comparative analysis between railway and water transportation is-

-Railway transportation is economical in nature, whereas water transportation is comparatively more expensive.   

-Railway transportation promotes trade nationally, whereas water transportation promotes national as well as international trade.

-Under the railway, goods and products are protected from the sun and the dust as it is fully covered. On the other hand, water transportation is not fully covered.

-Water transportation gets affected due to seasonal variations, whereas there is no such effect that could be seen on railways.  

Impact of railway and water transportation on EB is-

- Water transportation will positively impact EB as it will help in promoting Eco Bottles worldwide and encouraging business development.

- Both, railway and water transportations have larger space to carry out the items or goods in bulk. So, it will be best to perform or transfer the goods.

- They both are flexible and economical which can be considered as a positive aspect. Therefore, it would positively impact the operations and transportation of EB.

2. The organizational changes that may impact EB by making change in suppliers will be-

Quality products- Suppliers can also affect the business positively or negatively that totally depend on their product quality which they are supplied to the company. Higher quality will increase higher satisfaction of customers or else it will affect negatively.

Affects profit- Due to the change in supplier, the profit ratio of the company can also be affected. It could be negative or positive that is totally dependent on how EB is using their policy in context of new suppliers.

Increased cost- Suppliers can easily increase their cost if they have monopoly in the relevant market, which will also affect the cost ratio of the company. So, it is important to have a clear agreement over the cost of the products which they are going to supply.

Business Case Assignment Part two:

1. Under management team, the factors which influence freight classifications are-

Capacity- Capacity of available trucks or carriers can show that this much quantity can only be loaded by given data at a time. If truckers and carriers are getting inadequate data, this will lead to failure or delay in delivery. This will also influence freight classifications in a team.

Mode of transportation- The mode of transportation plays an important and crucial role as a factor which influences freight classifications. Whether it will be less than truckload, full truck load, or it will be parcel. So, the freight charges will be considered according to the mode whichever the company is choosing.

Consolidations- Freight consolidation includes smaller parcels such as parcels and LTL into larger shipments to decrease the cost on that way. It requires advanced data, planning, and creative ideas to perform accurately on the given time.

The impact of different classification of freights that would mean to EB will be mentioned down below-

Freight consists of the entire supply chain process, it includes sourcing, packaging, labelling, transportation, and delivery. Not all products are the same, some are having bigger packaging, some are heavy, or some could be small. So, the greights are different for each product according to the capacity, time, mode of transportation and much more. Due to different classification of freights will help EB to work efficiently. As, sometimes, companies have to deliver smaller quantities and sometimes big, companies should use different types of freight to decrease the cost, and decrease the time for shipment which will lead to satisfied customers.

2. TL is known as truck loaded, in this the whole truck is loaded with the goods of the same company. It takes lots of freights to make that particular shipping economical. It is a 20-25 feet long trailer which has been used for shipping.

LTL is known as less truck loaded, it is shipping for small freights. It will only take a few spaces in the truck and will be charged for that portion only. Under LTL, the person is bound to pay the amount of specific space which he will be using.

Impact of changing from TL to LTL service on the product-

Misplaced- This can lead to misplacing the product with another company's product. The truck will be divided into small proportions for a particular company according to their requirements. So, changing TL to LTL can misplace the products.

Take time- A truck will be divided into parts due to other companies, so at the time of shipments, it will take time to deliver to the specific customers. So, there will be a delay in shipping products.

Freight charges- Due to the LTL, freight charges will get reduced as it will be divided between two companies. So, this will prove to be beneficial for the company at the time of shipment.

Handling- Due to the change from TL to LTL, it helps in handling the products easily and could easily deliver to the customers. If we sort the products in small proportions and deliver it by TLT, then it will help the company as well freight too, to handle the products easily.

Impact of changing from TL to LTL service on the organization-

Multiple shippers- Changing TL into LTL will encourage organization to build relations with multiple shippers. This can help business to grow more and more and could expand in the longer period, if they get connected with multiple shippers.

Economical- Due to using a smaller proportion of trucks, there it will be economical for the company as the share of expenditure will be divided between both the companies.

Less quantity- Whenever there will be less quantity to ship, the company has not used the full truck option as it will cost the same amount whether the company ships less quantity or large quantity product.

Medium size business- It is best for any medium or small size company who cannot afford a bigger truck or full truck. As this will save their money as well as there is no need to buy a truck for shipment.

Administrative Charges- There will be autonomy in decision making and also they can take the decision easily in less time. Administration will be having more powers to work on customer's needs and wants and will satisfy them. Company will focus more on quality goods and production qualities also.

Internal processes- Internal processes help companies to run smoothly. By adopting LTL services, it will increase the workflow and the growth of the company.

Business Case Assignment Part 3:

1. Direct to consumer service means selling goods or products directly to the consumers from the company's end without any interference from third parties such as retailers, wholesalers, or any middlemen.

Eco Bottle's logistical impacts of expanding directly to consumer services are mentioned down below-

Cost- If a company wants to expand their logistics to direct consumer service, then the cost will also get reduced and will earn maximum profit. As third parties will be declined then the profit share of the company will increase and could easily understand the preference or taste of their customer face-to-face.

Transit Time- In direct to consumer service, companies can save more time and could invest those time in creating new ideas. This will also help in knowing their customer's preferences and choices and could satisfy them directly in a better way.

Packaging- Premium quality and proper packaging could be given to the customers in direct to customer services by the company. The packaging will also get cheaper at best quality. So, expanding logistics will also show impact over packaging or the products which will be given to the customers.

2. Eco Bottle's organizational impacts of a change in service are mentioned down below-

Internal processes- Due to the change in service, the internal process will also grow as cost decreases by eliminating third parties. And those costs can be used in internal processes of the company, and this will generate maximum profit.

Administrative Changes- There will be autonomy in decision making, and also they can take the decision easily in less time. Administration will be having more powers to work on customer's needs and wants, and will satisfy them. The company will focus more on quality goods and production qualities also.