| ccording to Chapter 5 of the book Guide to deliver, there are three costs components associated
with network trade-off between number of facilities and costs. What cost component does the fixed
cost correspond to? Explain why this cost increases as the number of warehouse increases. | Fixed cost corresponds to facility costs.
As the number of warehouse increases, facility related costs such as utilities (electricity, water),
laborers/workers, rent, insurance also increase. |
| Based on Chapter 5, road transport can be split into two categories – primary and secondary
transport. Using the case, describe how these two categories of road transport are illustrated. | Primary road transport – The replenishment stocks that are shipped by a factory in Asia are picked up
by bigger trucks and are delivered to the warehouse.
Secondary road transport – Small trucks and vans pick up from the distribution center the packages
that will be delivered to the customers.
Any will do:
*Delivering core promise – assuring the customers that the merchandise are in-stock and that there is
rapid delivery (OTIF)
**Meeting and exceeding customer expectations – The seamless check-out, fast delivery, and rapid
response to customers exceeded the expectation of customers.
***Service recovery – Amazon tried to capture the “lost” market share (or customers). They invested
in improved customer service and technology for improved customer experience, in a hope to gain
back these customers. |
| In Chapter 10 of the book Customer Service, there are 3 elements for delivering in relation to
customer needs. Choose 1 and apply in the case study | Any will do:
*Delivering core promise – assuring the customers that the merchandise are in-stock and that there is
rapid delivery (OTIF)
**Meeting and exceeding customer expectations – The seamless check-out, fast delivery, and rapid
response to customers exceeded the expectation of customers.
***Service recovery – Amazon tried to capture the “lost” market share (or customers). They invested
in improved customer service and technology for improved customer experience, in a hope to gain
back these customers. |
| 3 elements for delivering in relation to customer needs | 1. delivering core promise
2. meeting and exceeding customer expectations
3. service recovery |
| There are 4 types of variabilities to improve customer experience service. Assume that Amazon is
both a customer and fulfillment center of both large and small-scale suppliers. Explain how Capability
variability is illustrated in the case. | Amazon has a very good website and Alexa technology, which allows it to know the profile of their
customers. This can enable Amazon to predict the most selling goods, its quantity, etc., and thus they
streamline the flow of products lines and the operation of its distribution/fulfillment center |
| 4 types of variability to improve customer experience service | Arrival When all order to be picked in a warehouse supplying finished goods to a
customer arrive mostly Friday afternoon.
This happens because the customer only processes the order on a weekly fixed timetable. This
results in the warehouse being quiet during the normally cheaper labour hour hire times of the
week (Monday to Friday) and then very busy during the normally more expensive labour hour
hire times of the weekend. The cost efficiency is affected by this variability
Request When a customer requests a differentiated service lead-time delivery; in
other words, they might want the supplier to give them faster delivery options. This
could be easy to execute, but for large organisations it will mean system changes,
accounting changes, specialised assets and new staff training.
Capability refers to the customers’ ability to carry out tasks needed to receive
service.
Effort Where the customer expends varying degrees of energy on tasks needed to
receive service. |
| Ikea has a Buy Back & Resell service that allows customers to return their IKEA furniture in
good condition and receive a refund card to spend in their stores. This is part of IKEA’s sustainability
drive to become climate positive by 2030 and to give a furniture a second life. The processing of
return of goods, however, is outsourced by IKEA. There are a few 3PL companies that specializes in
managing return services and refurbishing furniture on behalf of the manufacturer.
5. Based on Chapter 6, what kind of returns business model does IKEA use to manage the reverse
logistics? Explain. | IKEA uses Open-loop business model because a 3PL company/operator, is responsible for the return
logistics of furniture. |
| In relation to question number 5, what are the possible reasons why a company uses this kind of
return business model? | It is cheaper to outsource, as compared to when a company (or Ikea) manages the return
themselves |
| what is third-party management (3PL) management? | this management involves outsourcing logistics and supply chain management functions to a third-party provider. This can include a range of services such as transportation, warehousing, distribution, and other logistics-related activities. Here's a simple breakdown of 3PL management |
| Reasons why the 3PL might be responsible when the outsourching relationship fails; | Too little involvement and pushing back during negotiation, design and implementation
phase
Over-promising on capabilities of 3PL
Unclear about customer requirements
Poor implementation on 3PL side
No continuous improvement
Poor service levels and performance
Not behaving as part of the customer’s supply chain |
| Reasons why the outsourcing company might be responsible: | Inaccurate volume info from customer (too low or too high)
Inappropriate resources to manage 3PL
Unclear or unrealistic expectation on outcome
Poor outsourcing contract implementation on customer side
Cost reduction focus too strong
No clear SLA in place
3PL regarded just as another supplier |
| Reasons why both might be responsible: | Unclear contract
No clear goal setting and performance measurement
Poor implementation
Poor communication |
| Benefits of 3PL Management; | Cost Savings: By leveraging the expertise and economies of scale of a 3PL provider, companies can often reduce logistics costs.
Expertise and Technology: 3PL providers typically have specialized knowledge and advanced technology systems that can improve efficiency and visibility across the supply chain.
Scalability: 3PL services can be scaled up or down based on the company's needs, providing flexibility to handle varying levels of demand.
Focus on Core Competencies: Outsourcing logistics allows companies to focus on their core business activities, such as product development and marketing.
Risk Management: 3PL providers can help manage risks related to transportation, warehousing, and compliance with regulations. |
