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Answered) Spanner Supplies, Inc. is an up-and-coming retailer of restaurant supplies and equipment.


Spanner Supplies, Inc. is an up-and-coming retailer of restaurant supplies and equipment. They handle cooking utensils, ovens, dish washers, tables, and other necessary restaurant items from around the world. SSIâs 36 stores are located in six citiesâ Kissimmee, (4), Orlando (6), Atlanta (6), San Diego (6), Los Angeles (10), and Las Vegas (4).

 

Initially, SSI focused on building stores, and very little attention was given to supply chain management until a Vice President of Logistics was hired to improve global product flows. Emily, the new VP, began her tenure by hosting a conference call with Ernesto, SSIâs transport manager, and Juan, the companyâs senior-most buyer.

 

Emily: Thanks for meeting on such short notice. The CEO has instructed me to reduce our transportation spend without hurting service quality. The attitude of âletâs get it to the store, no matter whatâ has got to go.

 

Juan: Ok, but I donât understand why Iâm called upon. Delivery issues are not my responsibility. I donât see where my organization could cause your headaches.

 

Emily: Some of your decisions impact transportation, and you could give us some insights.

 

Juan: Ok, Iâll try.

 

Emily: Ernesto, how do you make decisions on international routes and carriers?

 

Ernesto: Juanâs team tell me the product vendor, location, shipment size, and how soon they want it. I go to carriers that I know well and cut the best deals that I can.

 

Emily: Whatâs your split between ocean and air?

 

Ernesto: Itâs about 50/50. We use air to expedite hot orders and anything smaller than a TEU. For FCL, I route it through the Port of Los Angeles, break the container, and send out smaller amounts as LTL.

 

Juan: No wonder our margins are terrible. Youâre using premium air service half the time!

 

Ernesto: Itâs not my fault that your people finish most of their deals at the last minute. Plus, if you would find me suppliers in strategically-located spots, buy larger quantities, and give me more warning, I could move 90% of our cargo on ocean carriers.

 

Emily: Wait, this is not the time to be assigning blame. We need strategies and solutions.

 

Juan: Maybe weâve gotten too big to manage this cargo on our own. Canât we look for some outside assistance?

 

Ernesto: Thatâs a possibility, but Iâm good at what I do. With a more stable cargo volume, we could create some ocean contracts and maybe even a charter movement. For air cargo, Juan has to get our suppliers to pack in efficiently-sized boxes. They use huge boxes that weigh almost nothing and are filled with packing peanuts.

 

Emily: Now, weâre making some progress. Letâs investigate the feasibility of these ideas and also think of some new ideas for improving transportation and report at our next meeting.


QUESTION:


Is Ernestoâs complaint about product packing legitimate? What, if anything, should be done?

 


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