Grainger: Reengineering the China/U.S. Supply Chain Essay

1456 Words Sep 23rd, 2015 6 Pages
Exec Summary:
W. W. Grainger, Inc. is recently thinking of redesigning the supply chain for shipments from China/Taiwan. The reason being as an obvious to reduce costs, lead times and to improve supply chain efficiency. The major issue identified was the lead time and a huge fixed overhead because of small shipments which then were consolidated by the company to make a full 40-feet container load. Through a thorough cost analysis and weightage of pros and cons of three alternatives, the team recommends to use an NVOCC (Non-Vessel operating common carrier) for small shipments which will lead to a lot lesser lead times and will help reduce costs as well. Along with this, the recommendation is also to increase packing efficiency for
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This will reduce costs by a great deal. As of now, out of the current company’s shipment via 20/40-feet containers 79% is 40-feet and 21% is 20-feet. If the company tries to make it somewhere around 90% 40-feet and 10% 20-feet, it will be highly cost efficient. (Total Cost = $2,592,602.59)

Alternative #2: One option for cost reduction can be to fill up the 20/40-feet containers to more capacity i.e. instead of 85% full, if the company can achieve up to 95% full containers, it will also reduce cost to great extent. (Total cost = $ 2,495,387.76)

Shipment type Quantity Shipped (Total: 190,000 CBM) Load ability Total containers used Cost per container Other Costs Total 190000 CBM % total Variable per CBM fixed
40-feet container (85%) 169100 133589 56.5 95% 53.675 2489 $ 600.00 NA NA $ 1,493,309.73
20-feet container (85%) 35511 27 95% 25.65 1384 $ 480.00 NA NA $ 664,533.33
Consolidated shipment (96% 0f

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