Part A
On February 28, 2014 Steve Hogg, Director of Supply Chain Services with Fraser Direct, a third
party logistics supplier from London ON, learned that 1000 truckers and port workers went on
strike in Vancouver. Mr. Hogg had to find ways of moving customer goods to ensure continuity
of supply for a key customer.
General Company Background
Fraser Direct Distribution Services Ltd was started by Al and Lois Fraser in Georgetown, Ontario
in January 2000 as a third party logistics supplier. In October of 2010 it acquired BTC Logistics
in London, Ontario. They currently employ 130 people at four locations. Fraser Direct offers a
wide range of services including supply chain advice, customs clearance, warehousing,
inventory control and project management.
Transportation Management
Steve Hogg, as Director of Supply Chain Services in the London office, provides transportation
management with third party provider Fraser Direct. This includes international air and ocean
transportation as well as US and Canada wide shipping. Orders to vendors from Fraser’s
customers are copied to Fraser Direct and the vendor informs Fraser when the product is ready
to be shipped. Mr. Hogg monitors the process from then on with daily status reports. Fraser
has all the information to communicate any variances in the shipments.
Mr. Hogg’s responsibilities include providing information to customer on all options available for
the shipment of goods from vendors including researching the options, offering the solutions
and making recommendations. The customer only has to make decisions on how to proceed.
Fraser Direct is the supply chain department for their customers despite working outside their
physical walls. Fraser manages transportation so its customers are not over spending but their
requirements are still met.
Cyndi Hornby wrote this case under the supervision of Professor Michiel R. Leenders and Louise Mauffette-Leenders during the
2014 Case Writing Workshop held at the Lawrence Kinlin School of Business at Fanshawe College. It was prepared solely to
provide teaching materials for class discussion. The writer does not intend to illustrate either effective or ineffective handling of a
managerial situation. The writer may have disguised certain names and other identifying information to protect confidentiality.
Copyright
?
2014, Cyndi Hornby and Lawrence Kinlin School of Business Fanshawe College
Version: 14-06-20
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Every month Mr. Hogg looks at the data from the previous months shipments (broken down by
mode of transportation) and makes recommendations to reduce costs. Attached Exhibit A is the
Monthly Averages Based on Actual Shipments
report developed for Fraser’s key customer. This
demonstrates the scope of the transportation of goods from 2009 to 2013. Fraser Direct’s motto
is to “know where your freight is at all times and keep you up to date on itâ€.
The Immediate Issue
Thus far the winter of 2014 had been unprecedented for its cold weather across Canada.
Concerns about derailment or damage due to the buildup of snow and ice and heaving of the
rails due to frost reduced both the weight and speed of rail traffic. This caused containers to pile
up in the port of Vancouver. There were ships anchored off shore waiting to unload that could
not because the yards were full. This had a secondary consequence of causing delays for
truckers whose compensation did not include provisions for wait time.
As a result, on February 28, 2014, 1000 non-union truckers and port workers went on strike,
leaving millions of dollars of cargo stranded in Vancouver area container terminals. Although
there were “rumblings†for a day or two before, the strike was not confirmed until the day it
occurred leaving Fraser Direct and their customer with no ability to prepare.
The Key Customer’s Concern
Fraser Direct’s key customer manufactures auto parts in southwestern Ontario for the top
automakers. Most of their sourcing is from overseas, Asia in particular. As with most
manufacturing companies they operate with Just In Time inventory, keeping little on hand so
inventory is ordered and delivered just in time to use in the manufacturing process. The
customer must be adept at their lead time requirements in order for the supplier to produce
materials and to allow sufficient time for the shipping to occur. At any given time the
manufacturer would have 60 – 70 shipments of materials on the water.
Exhibit B contains the
2014 Freight Activity Report
for the months of January and February,
leading up to the start of the strike.
When the strike hit containers of essential inventory for the manufacturer were stranded in
Vancouver along with thousands of other containers.
Conclusion
These unforeseen circumstances resulted in inventory not being delivered to the auto parts
manufacturer in a timely manner from the date of the strike. Such i
nventory delays could result
in a shutdown of operations for the parts supplier, but more importantly could result in the
shutdown of the automakers, which would cost millions.
How can Mr. Hogg get the inventory
needed from the supplier to the manufacturer in a timely manner in light of the urgency of the
current situation? What are his options
Present your response to Steve Hogg in a Report format.