It was August 7th and Brandt Womack had just been given his first assignment by his purchasing manager at Miami based Snedeker Global Cruises Inc. It was the ‘‘E-Auction Development Program’’ (EDP). The purpose of EDP was to identify potential products that could be purchased through e-auctions, to determine the necessary steps to conduct a successful e-auction, and assess the impact of e-auctions on supplier relationships. As a newly hired supply chain manager Brandt wondered how to proceed.
Snedeker Global Cruises incorporated in 1986 and is a cruise company with 35 cruise ships and over 70,000 berths. Snedeker Global serves the contemporary and premium segments of the cruise vacation industry and offers a variety of itineraries to destinations worldwide, including Alaska, Asia, Australia, the Caribbean, Europe, Hawaii, Latin America, and New Zealand.
In 2005, Snedeker incurred its highest-ever procurement costs in sourcing the products and services needed for cruise ship operations and wanted to combat this trend.
To that end Snedeker had been working on changing its buying practices. In the past, each individual cruise ship made all of its own purchases for the upcoming season.
Purchasing was decentralized, with each ship making purchasing decisions based on its needs alone. The company began moving away from this practice and put into place a centralized purchasing department in charge of making purchases for the entire cruise line. The centralized purchasing strategy provided many cost-saving opportunities for the company and greatly reduced the overall order costs of the company. The company wanted to continue to pursue ways in which the centralized purchasing practice could reduce costs and e-auctions became a viable option. However, senior management at Case Study: Snedeker Global Cruises 173 www.freebookslides.com
Snedeker was concerned about the impact on quality and the effect e-auctions might have on suppliers.
At Snedeker, the purchasing cycle began with a master forecast for the upcoming year with orders being placed eight to 10 months prior to need. This master forecast included everything from replacement engine parts to chocolate mints placed on pillows in cabins. When the forecast was generated it was given to the Senior Purchasing Manager, Kasey Davis. Kasey scheduled a meeting with Brandt to discuss the E-Auction Development Program giving Brandt the master list of all the products needing to be purchased for the next year. Kasey instructed Brandt to determine which products would be best to purchase through e-auctions and wanted to know how the e-auction process would work. In addition, Kasey wanted Brandt to determine the effect that e-auctions would have on relationships with current suppliers.
Brandt walked out of Kasey’s office overwhelmed. It was his first assignment and he did not know where to begin the E-Auction Development Program (EDP).
CASE QUESTIONS
1. Suggest steps Brandt should follow to begin the EDP process.
2. Identify differences between traditional purchasing and use of e-auctions. How can Brandt use these differences to make his selection? What types of items would be best suited for purchase through e-auctions?
3. Assume Brandt has identified products to purchase through e-auctions. What steps does he need to take to conduct a successful e-auction?
4. What negative impact can e-auctions have on supplier relationships and how can Brandt ensure that they do not occur?
REFERENCES
Aftuah, A. ‘‘Redefining Firm Boundaries in the Face of the Internet: Are Firms Really Shrinking?’’Academy of Management Review, 28(1), 2003: 34–53.
Amaral, J., C. A. Billington, and A. A. Tsay. ‘‘Outsourcing Production Without Losing Control.’’Supply Chain Management Review, 8(8), 2003: 44–52.
Coase, R. H. ‘‘The Nature of the Firm.’’Economica, 4(1), 1937: 386–405.
Ellram, L. ‘‘Purchasing: The Cornerstone of the Total Cost of Ownership Concept.’’
Journal of Business Logistics, 14(1), 1993: 161–183.
Ellram, L. ‘‘A Taxonomy of Total Cost of Ownership Models.’’ Journal of Business Logistics, 15(1), 1994: 171–191.
Fisher, M. L. ‘‘What is the Right Supply Chain for Your Product?’’Harvard Business Review, March–April 1997: 105–116.
Hamel, G., and C. K. Prahalad. ‘‘The Core Competence of the Corporation.’’Harvard Business Review, 68(3), 1990: 243–244.
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Hamel, G. and C. K. Prahalad. Competing for the Future. Boston: Harvard Business School Press, 1996.
Lambert, D. M., A. M. Knemeyer, and J. T. Gardner. ‘‘Supply Chain Partnerships: Model Validation and Implementation.’’Journal of Business Logistics, 25(2), 2004: 21–42.
Lee, H. L. ‘‘Aligning Supply Chain Strategies with Product Uncertainties.’’California Management Review, 44(3), Spring 2002: 105–119.
Trent, Robert J. Strategic Supply Management. Fort Lauderdale, Florida: J. Ross Publishing, 2007.
References 175 www.freebookslides.com
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Chapter 7
Logistics
& LEARNING OBJECTIVES
After completing this chapter, you should be able to:
1. Define logistics and explain its impact on supply chain management.
2. Identify and describe key logistics tasks.
3. Explain reverse logistics and its challenges.
4. Explain differences between modes of transportation.
5. Explain the role of warehousing on logistics and describe cross-docking.
6. Explain the role of third-party-logistics (3PL) providers.
& Chapter Outline
& What Is Logistics?
The Logistics Function Evolution of Logistics Impact on the Organization Impact on the Supply Chain Reverse Logistics
& Logistics Tasks
Transportation Storage
Material Handling Packaging Inventory Control Order Fulfillment Facility Location
& Transportation
Truck Water
Air Rail Pipeline Multimode
& Warehousing
Role of Warehouses in the Supply Chain Cross-Docking
Facility Location
& Third-Party Logistics (3PL) Providers
& Chapter Highlights
& Key Terms
& Discussion Questions
& Problems
& Case Study: Strategic Solutions Inc.
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