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Chapter Two Cases
Role of Logistics in Supply Chains
Case 1 : Jordano Food Products
Case 2 : Senco Electronics Company
Supply Chain Management Dr. Assrar Sabry Presented by Mohamed Khamis Ashraf Said
Case 1 : Jordano Food Products
- (^) Jordano Foods Tracie Shannon, Vice President for Logistics, sent the following email to members of the executive committee of the company: I just returned from a lengthy meeting with Susan Weber, CEO of SAB Distribution. She is under great pressure from her Board of Directors to continue to grow market share and improve profitability. SAB has received a recent tender offer from another larger food distributor to buy the company and several members of their board have recommended that the offer be seriously considered. Susan feels that SAB can continue to improve their “bottom line” with additional changes in service offerings. Ms. Weber is meeting with all of SAB’s major suppliers and customers to discuss new services that SAB can offer to enhance the competitiveness of the SAB supply chain.
- (^) Jordano Foods was founded in 1950 in Lewistown, Pennsylvania, by two brothers, Luigi and Mario Jordano. Their parents operated a restaurant in Burnham, Pennsylvania, featuring Italian cuisine. Marie Jordano was famous for her culinary skills. She developed her own recipes for pasta sauce, meatballs, fresh and dry pasta, and other Italian food item. Luigi and Mario worked in a restaurant prior to establishing Jordano Foods. The brothers felt that they could capitalize on the family recipes by selling pasta, sauces, and other related Italian food products to other restaurants in nearby communities in central Pennsylvania.
1. What is your overall evaluation of the potential for Jordano Foods in this new relationship with SAB? Explain your position.
- (^) Two major strengths of Jordano Food Company is its manufacturing and marketing departments that help it to grow in supply chain. Its manufacturing and marketing strategies are very strong that Jordano brothers successfully spread their business in major functional areas. Currently, they have three plants and their revenue is $600 million per year. However, their logistic section is a cornerstone for the success of their company. So, they need a better management strategy in logistic.
- (^) On the other hand, SAB has two options either sell their company or collaborate with a successful company like Jordano. In my opinion, collaboration is a best option for both companies. In that way both can get the support of each other to get expertise in their weak areas.
2. What areas of logistics do you think have the most potential for Jordano and SAB to collaborate for the benefit of SAB’s customers? Why?
- (^) The collaboration can help to decrease the cost for both companies. No doubt, under the supervision of Tracie some improvements can be seen in logistics but Susan Weber has expertise in this department. Jordano can get better strategy to solve its logistic problems. It helps to come down its cost by improving the efficiency and productivity. Susan can also come up with a better packaging and transportation strategy for Jordano food products.
- (^) On the other hand, SAB can get opportunity to serve the customers of Jordano and can also get financial stability from it. SAB’s customers get better service on low cost. Jordano can help SAB by building warehouses near to SAB’s customers in that way they can improve their customer service which will expand their market.
Case 2 : Senco Electronics Company
- (^) However, we expect this demand to grow by 5 percent annually over the next five years. Although the air transportation system appears to be the more expensive option right now, we need to take into consideration our growth and how each mode will help us achieve our product and service goals.” The relevant cost information for each alternative is presented in the following table. OCEAN AIR Total Transportation costs : $150,000 $290, Inventory costs : Carrying 48,000 23, Handling 20,000 22, Ordering 7,000 15, Fixed cost 600,000 450, Total costs $823,000 $800,
1. If you were Skip Grenoble, which alternative would you advise Jim Beierlein to implement? What criteria would you use to arrive at your decision?
- (^) If I were Skip Grenoble, an alternative I would advise Jim Beierlein to implement is to use air transportation initially then switch to ocean transportation once they have reached their profit and service goals.
- (^) This strategy will allow the flexibility they need at the beginning when they are getting a feel for the market and if their projected annual demand holds true.
3. Graphically represent these two alternatives and their tradeoff point.
4. Which alternative would you recommend be in place to accommodate future demand growth? What additional factors should be considered?
- (^) Ocean is the best option for future demand growth since it becomes less expensive after about the third year.
- (^) Other factors that the company should consider are the availability, security, & speed of the different modes.
- (^) If any of these factors are deemed to be more important than just cost, another analysis may need to be done.
