Principles of Supply Chain – Logistics and Services
Compare the nature of logistics operations and services in both international and domestic contexts.
You are a newly hired Junior Analyst at Mitchell Consulting, a firm that specializes in providing managerial expertise in supply chain management. You are assigned as a support role to a senior consultant. Your role does not allow you to make selections for clients, but you will be evaluated for future promotion based upon your work in the analyst role. A client, Lexan Shaft has contacted Mitchell Consulting to provide options to achieve cost reductions and maintain their competitive advantage. Your manager, Senior Analyst Andrea Sims, has directed you to work on this case and provide analysis and options to resolve the problems.
Lexan Shaft is finding it difficult to remain competitive in supplying golf club shafts to major manufacturers due to the rising cost of the raw materials necessary to produce their patented Win-Flex shaft. Major manufacturers prefer Lexan technology, but are considering shifting to lower cost alternatives. Nunso X is a material key to the patented design of the shaft, but the raw material is mined only in Argentina. Three US suppliers currently supply all of this recently discovered metal. Nunso X demand and cost has significantly increased due to mobile device case manufacturing which results in superior durability.
Lexan Shaft\’s Chief Operating Officer, Walter Mathis, believes that new opportunities to source Nunso X from Argentina need to be considered to decrease the cost of the raw material. The current US distributors do not manufacture any products. Two transportation companies have just entered into the global marketplace to deliver Nunso X from Argentina to the United States. Instanto and Momentus both offer a delivered cost that is below the cost prior to the new demand for durable mobile device cases. Because Lexan Shaft has always used the same supplier for their raw materials due to limited suppliers in the market, they have limited experience in building a plan for logistics decision-making. Walter has asked Mitchell Consulting to provide a plan to consider cost savings in sourcing Nunso X through a newly created Lexan transportation department or one of the two new Argentinian distributors.
Your manager, Senior Analyst Andrea Sims, has asked you to prepare a presentation to be sent to Lexan Shaft’s Chief Operating Officer, Walter Mathis, presenting your analysis and a recommended selection process they can use to choose whether to source Nunso X from Instanto, Momentus, or create a logistics division of Lexan to source Nunso X. Your presentation must include the following:
- Discuss the options to source internationally, Lexan logistics, or continue with domestic suppliers
- Propose opportunities to reduce costs with current domestic suppliers
- Compare the risks of sourcing internationally versus domestically
- Examine tools to evaluate logistics sourcing options and suppliers
- Outline the recommended steps to help Lexan Shaft make the best decision to source Nunso X
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