Case Study: The Club War

The case study discusses the inefficiencies in Sam's Club supply chain and proposes solutions to improve its logistics operations. The main inefficiency identified is the movement of freight on non-truckload quantities, which can be resolved by reducing distribution centers or outsourcing to third-party logistics companies. Other options include 'milk-run' style delivery and prepayment for shipping. A system analysis is needed to determine the best option, including a risk analysis and freight cost analysis. Implementation of CPFR (Collaborative Planning Forecasting and Replenishing) can also provide benefits by providing higher visibility throughout the supply chain.

Case Study- The Club War
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Table of Contents
Answer 1:.........................................................................................................................................3
Answer 2:.........................................................................................................................................4
Bibliography....................................................................................................................................5
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Answer 1:
The first major inefficiency that has been noticed is having the freight move on non-truckload
quantities. This can be resolved by Jim by reducing the number of distribution centres. By
having large number of inventory move from lesser number of locations Jim can decrease the
incomplete truck loads. Another option that can be used by Jim is to outsource this by making
the most of the 3PL companies to ship the goods to the customers. Another option which can be
used by Jim is “milk-run” style of delivering the goods; this will help in distributing the loads to
several locations in a single run, in case TL is not an option on every run for Jim. Better
preparations will help in elimination of freight that is being shipped in small quantities.
Continuous operations in this manner results in wastage of resources and does not allow the
company to perform at optimum level. Truckload is considered to be the most cost effective
option and even the freight cost analysis also supports the fact
In order to find out various other options that are available for delivery from the suppliers Jim
needs to do a system analysis. This system analysis can be done in best manner by making it on
the basis of infrastructure available as well as the location of the shipment. Some other options
that are available for Jim include prepayment for shipping, making use of the hidden supplier
options along with offering a shipping allowance to the supplier. Delivery options should be
analysed in order to ensure that the calculations are right before any major decision is being
made regarding bringing a change in the delivery options. Some of the analyses that need to be
conducted include: a risk analysis and a freight cost analysis.
Information plays a very crucial role in both the planning as well as execution phase of the
logistics activities. Accurate as well as timely information impacts the performance of supply
chain. Thus Jim can also derive benefits through implementation of CPFR (Collaborative
Planning Forecasting and Replenishing). Which is a unique technique that combines the benefits
of VMI and EDI and also finally helps in providing higher visibility all through the supply
chain? This helps in enchain and achieving better coordination when the back-haul as well as
front-haul network is being planned.
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Answer 2:
On the basis of as-is analysis the current dynamics of supply chain were analysed by Jim and
there were 10 sources of inefficiencies that have been found. For example there was huge
amount of freight that was moving in LTL quantities. LTL collects and combines freight from
various customers stationed at various touch points and it needs material handling equipment ,
dock –personal etc. and this results in increased material handling cost (Coyle, et al. 2011).
Cross-docking facilities were being used by the firm in which the shipments from inbound trucks
or suppliers come at a transit point and then they are being sent to the buyer locations directly
without storing them. They have been able to leverage the TL economies but still there is an
opportunity for making improvements (Chopra and Meindl 2013) . Maximum benefits from
cross-docking can be achieved if the economies of scale are achieved both in outbound and
inbound shipments that requires effective transportation mechanisms as well as coordination.
Since the service and retail sector has higher demanding service needs, thus Jim should
thoroughly assess the cost as well as service trade-offs. Information will play very critical role
because the availability of timely as well as accurate information will help in enhancing the
supply chain performance. The firm can combine CPFR with Transport Management Systems
(TMS) and Warehouse Management System (WMS). In order to better design the inbound and
outbound transportation network Jim needs to synchronise it with the sourcing and distribution
network. In order to derive better advantages from CPFR Jim needs to establish stronger supplier
– buyer relationships so that both the parties work in close conjunction to achieve mutually
agreed goals (Schoenthaler 2003).
In order to make the transportation and distribution networks better Jim can make best use of
Tailored Networks which is an efficient combination of cross-docking, TL, LTL and Milk runs.
This will further help in cost reductions as well as help in improving the responsiveness of Sam’s
Club supply chain. More emphasis should be on using TL because it is a lower cost option and
the shipments need to be reduced using LTL that can be achieved by making use of TMS though
optimization of trailer capacity.
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Bibliography
Chopra, S., and P. Meindl. SUpply Chain Management- Strategy, Planning and OPerations.
Pearson, 2013.
Coyle, J., A. Novak, J. Gibsoin, J. Edward, and A. Robert. Transportation: A supply Chain
Perspective. SOuth Western Cengage Learning, 2011.
Schoenthaler, R. " Creating REal Time Suppkly Chain Visibility." Electronic Business, 2003:
12-13.
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