Download - BlueStar Office Supply Company Study Case
BlueStar Office SupplyCompany Study Case
MUHAMAD ALADDAD, CONNOR BROWN, LEE H DANG, NATE MICHAUD, PAUL STEVENSONSCMT 4653, FALL 2015, DR. ANNIBAL C. SODERO
Company profile● Industry: Office Supplies and
Stationery.● Annual revenue: $950M.● Market: United States and Canada.● Customers: Mass Retailers and
Commercial Accounts.●Key Retail Accounts: OfficeMax, Office Depot, Walmart.
• Who they are, what they do
Key Issues
●Decreasing customer service levels●Weakened relationships
●Increases in transportation cost
●Decreasing profit margins● Relatively low-value products
●High transportation costs● LTL and Air freight
●Data analysis capabilities
Supply Chain Status
● Estimated Spending on Transportation from questionable data:
●Transportation costs = 30% of Product costs
● Customer Service levels are dropping, costs are increasing.
oNew carriers have had unintended costs.● Bottom Line: BlueStar is facing
numerous issues with their Supply Chain.
• Customer service levels and Costs.
• Corporate sales.• Product margins.
May-Aug $ 56,894,378.83
Annual (estimated) $ 170,683,136.50
Outlook
●Efforts are being focused on improving● BlueStar’s production facilities;● Regional distribution centers.
●Executives at BlueStar want to see both immediate and long term improvement.
●Key Goal: Reduce Transportation Costs● Low value and high density nature of
most office products makes shipping complicated.
● Rising fuel prices.
Going Forward
BlueStar attempted action, cause and effect
● Moving away from established core carrier relationships and long term contracts;
● Placing every load on every lane up for bid.
● Lost Economies of scale;● Service requirements;● Late shipments, extended delivery
times, and dissatisfied customers;● Relationship with Carriers and Key
Customers;● Price increases from most of the
old core carriers.
Data Discrepancies
●Some data values for freight paid were off by one or two decimal places.
● This created substantial changes in some of the data we were analyzing.
●Perhaps due to the data integration process as formatting for certain data are different.
●Miles are also affected.
A lot of the data is believed to potentially be erroneous.
TL and LTL
●TL and LTL shipments make up the huge majority of our shipments.
●TL, LTL shipments account for 84.3% of the total 50,454 shipments .
● TL freights account for 14,041 compared to the 28,478 LTL shipments.
●Data was too fragile to justify changes.
Intermodal To keep or not to keep ?● Short distance / Avg. 341
miles ● High rates/ Avg. $1,259● SC not dependant on IM /
only 1.60%● Inefficient● Rail industry issues
AirScale Down our usage ● Rates are too expensive to
justify such a short distance travelled.
● For any reason we never want to have to be dependent on air.
● Long distance expedited
SP Minor alteration ● expedited● Less than 500 miles ● Transshipments down with
consolidation
Average Miles, Weight, and Cost
●LTL●Avg. miles : 469●Avg. Weight : 5,328●Avg. Cost : $ 1,128.10
●TL●Avg. miles : 413●Avg. Weight : 4,759●Avg. Cost : $1,122
Top LTL and TL Carriers
Top 5 TL carriers by number of shipments
Carrier Shipments
CROUSE CARTAGE 5,023
USF BESTWAY 2,051
OLD DOMINION FREIGHT LINE INC 1,744
AMERICAN FREIGHTWAYS INC 1,289
A DUIE PYLE INC 841
CRETE CARRIER CORP 451
Top 5 LTL carriers by sum of weight (lbs)
Carrier Total Weight
U S XPRESS ENTERPRISES INC 45,854,050
USF HOLLAND INC 18,274,549
SOUTHEASTERN FREIGHT LINES INC 12,087,708
FOX MIDWEST 8,390,558
RAINBOW TRUCKING SERVICES INC 6,743,564
Recommendations
●Invest in new/improved transportation management system
● Improved LTL routing● Better utilization of DCs● Increased employee performance
●Invest in quality employees and training
● Reduced cost● Increased performance
●Analyze DC locations in relation to LTL shipments
● Determine if costs justify results
●Revisit Dedicated Carrier Decision● Regionally or seasonally ● Short term fuel surcharge contracts
Suggested Solutions
● Consolidation● Shipments● Locations
● Contracted LT Carriers● build relationships● Promote long-term partnerships
● Outsourcing● Provide relief for contracted carriers● Ensure on-time shipments
Consolidation ●Building better/longer relationships● Dedicated Contract Carriage● Lower rates
●Higher volume, easier to fill TL shipments
●Better asset utilization
IdeasRelationshipsDedicated Contract Carriers
Contracted Carriers
●Move away from open bidding process●Contract top performing carriers●Issue RFQs
● Volume● Price● Performance
●Lanes and projects are awarded based on Tier qualification
● Drives performance● Encourages lower rate quotes
Paul
Tier System Example:
Outsourcing
BlueStar concern:●Price ●Service Level ●Costs ●Efficiency ●Service level
Reasons for Outsourcing●Resource network●Rebuilding costs structure and Save
time●Expertise●Scale and Flexibility●Continuous Optimization and
Support
Future Collaboration
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