UNIVERSITY OF HOUSTON-DOWNTOWN
SCM3320
Fall 2017
Student: Mohamed Kouanda
Professor: Jonathan Davis
Case Study #2
1.Spanner supply Inc is facing high transportation costs which is hurting their margin. Ernesto who is the transport manager, is using Air transport as much as Ocean which is not efficient. As he mentioned, they use air to expedite hot orders and Ocean for Full Container Loads. There is an unnecessary use of air shipment since SSI does not order in advance is forced to rely on air transport for short term deliveries. They also buy their products from vendors that are not strategically located and do not make optimum quantity purchases which increase their transportation costs. There is a lack of order planning and as Ernesto mentioned they most likely conclude their deals with suppliers at the last …show more content…
The company provides restaurant supplies and equipment which are not perishable and can go a long distance.These type of products are not immediately needed and it gives the company a certain flexibility. It is therefore adequate to use road transport which is significantly cheaper than air shipment and has a higher capacity. By having a constant volume order, SSI can keep a security stock and reduce its ordering frequency which will result in freight costs saving. Air shipment can still be used but only for hot or emergency deliveries but not on a regular basis. Certain products are often needed immediately without notice; air cargo will be the perfect mode of transport in such situation. The use of ocean transport is a good and cheap way for longer distances that cannot be covered by trucks. It should be utilized for very large quantity orders and for bulky items. The majority of the company’s product will obviously be handled by ocean service, therefore ordering the right quantity from the right location at the right time is
SCM3320
Fall 2017
Student: Mohamed Kouanda
Professor: Jonathan Davis
Case Study #2
1.Spanner supply Inc is facing high transportation costs which is hurting their margin. Ernesto who is the transport manager, is using Air transport as much as Ocean which is not efficient. As he mentioned, they use air to expedite hot orders and Ocean for Full Container Loads. There is an unnecessary use of air shipment since SSI does not order in advance is forced to rely on air transport for short term deliveries. They also buy their products from vendors that are not strategically located and do not make optimum quantity purchases which increase their transportation costs. There is a lack of order planning and as Ernesto mentioned they most likely conclude their deals with suppliers at the last …show more content…
The company provides restaurant supplies and equipment which are not perishable and can go a long distance.These type of products are not immediately needed and it gives the company a certain flexibility. It is therefore adequate to use road transport which is significantly cheaper than air shipment and has a higher capacity. By having a constant volume order, SSI can keep a security stock and reduce its ordering frequency which will result in freight costs saving. Air shipment can still be used but only for hot or emergency deliveries but not on a regular basis. Certain products are often needed immediately without notice; air cargo will be the perfect mode of transport in such situation. The use of ocean transport is a good and cheap way for longer distances that cannot be covered by trucks. It should be utilized for very large quantity orders and for bulky items. The majority of the company’s product will obviously be handled by ocean service, therefore ordering the right quantity from the right location at the right time is