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Abstract
The purpose of this paper is to find out the least cost solution for truckloads that will be shipped on each transportation route and the cost incurred when using that transportation route. Lowering down the total cost would result in the profitability margin for the company. Data for this purpose has been taken from the MGM375-0903A-01 Quality and Supply Chain Management and Supply Chain Project files. Results indicate that the use of different production centers is costing the least. Justification for the use of transfer centers is also discussed in this paper.
Solution
Introduction to CANTECH Corporation
CANTECH Corporation is a U.S based firm that operates worldwide, a publicly-traded, manufacturing company having annual sales of about $10 billion. CANTECH is one of the initiators of the petrochemical industry and it is considered as the technology leader in numerous market sectors. CANTECH is the low-cost producer for a number of commodities. CANTECH is currently an effective marketing approach which is based on providing a broad collection of products from one location.
Major challenges
Being the senior analyst in the distribution engineering, maintenance, and productions management group of the Central Engineering Department of the CANTECH Corporation, and based upon my earlier successes in the electronics division, I have been assigned a task to find the least cost solution for the truckloads that will be shipped for transportation of goods by analyzing the tables of production capacity, monthly demands and shipping costs. The three major projects which I have to look after include product quality and distribution problems at the Denver facility, a new distribution facility in the Northeast, and a quality program for CERG. The first project which is of product quality and distribution problems at the Denver facility has shown very slow physical growth since its foundation in the 1930s. Customer service has not yet been put into practice due to budgetary limitations; basically, customers desire to pick up multiple products from one location and due to this reason waiting for lines at each loading point could be observed easily. It is creating problems for the arrival of trucks picking up products on these centers. Additionally, there are some quality problems due to the latest policies i.e. the automotive industry (ISO 9000) is currently imposing on all of their suppliers (Scott, 2006). This problem has to be resolved very quickly.
Secondly, if we observe a new distribution facility in the Northeast, It can be easily monitored that the divisional sales and marketing departments are currently demanding a new distribution facility which should be located near New York to provide services to as many clients as possible all through the Northeast. So this issue has to be resolved also. Thirdly and finally the quality program for CERG is the biggest challenge for me. Due to the increasing dominance of ISO 9000 programs, Company has now launched corporate-wide excellence through the quality program. Mr. Harkins who is the vice president of Central Engineering and Research Group (CERG) has chosen me to assist him in the development and implementation of this excellence through quality (EQ) program.
Proposed solution and recommendations
Now to solve all the problems mentioned above, firstly I have to resolve the issue of truckloads that will be shipped for transportation of goods. For this purpose, I have analyzed the tables of production capacity, monthly demands, and shipping costs and I have found the following total costs shown in the last column of the table.
As I have highlighted the costs to be considered while taking into consideration the truckloads, so we can see that the transfer points are of no use here, hence their presence here is not justified. In the highly scrappy truckload transportation industry, a considerable portion of truck movements involves empty trucks, i.e., moves that relocate those trucks (Ergun et al., 2007). According to Dane 2009, though reducing the quantity of truck repositioning is hard because the necessity for a carrier to relocate the trucks depends on the connections between the shippers and the carrier who is serving. Now if we see that what cost is least one, we can easily observe it from the costs calculated in the last column and row of the table given above. The transportation route that can be used to produce the least cost will be 75 truckloads to be delivered from P1 to W1 which will cost $33,900 and the remaining 5 truckloads required at W1 can be transferred from P2 location and this will cost $1,680. Now for W2 the 65 truckloads can be transferred from P2 location and this will cost an amount of $26,455. If we move towards W3 warehouse location, the requirement here is 70 truckloads. So for W3 the P3 will be the most suitable option as it will cost at least about $24,990. Lastly, for W4 there are 85 truckloads required and that includes 55 truckloads from P2 location and the remaining 30 truckloads from P3 location. And this will cost up to $63,055. And the total cost incurred will be $150,080 and in my point of view, in this case, the cost will be the least. A decrease in total cost results in an increased margin of profitability, hence it is in the favor of a company (Tsung, 2009). So this is the most suitable option.
References
- Ergun et al. (2007).Reducing truckload transportation costs through collaboration. Transportation Science, 41(4), 206-221
- Dane,T. (2009). How to reduce transportation cost.
- Scott, W. (2006). Principles and tools for supply chain management with student. New York: McGraw-Hill/Irwin.
- Tsung, C. (2009). Decision support for truckload carriers in one- shot combinational auction. Transportation Research , 526-527.
Do you need this or any other assignment done for you from scratch?
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