Brunswick Motors – Case Analysis


 

 

 

 

 

 

 

 

 

 

 

Brunswick Motors – Case Analysis

Sahr E. Kondokwi

Keller Graduate School of Management

 

 

 

 

 

 

 

 

 

Grainger: Reengineering the China/U.S. Supply Chain

According to Jacobs & Chase (2013), “TCO actually draws on many areas for a thorough analysis; these include finance (net present value), accounting (product pricing and costing), operations management (reliability, quality, need, and inventory planning), marketing (demand), and information technology (systems integration); and it is probably best to approach this using a cross-functional team representing the key functional areas” (450).


Concepts Used
(Jacobs & Chase, 2013):

Inventory turnover is calculated as follows:

Weeks of Supply is calculated as follows:

1.

Given Data
Total Current Volume (CBM) 190,000
Direct Ship Percentage 0.89
Direct Ship Volume (CBM) 169,100
Consolidation Center Volume 20,900
Shipping Cost Calculations
Direct Ship by Container Type 20’ 40’
   Volume (%) 21% 79%
   Volume (CBM) 35511 133589
   Container Capacity Used 85% 85%
Consolidation Center by Container Type
   Volume (%) 100%
   Volume (CBM) 20900
   Container Capacity Used 96%
Container Capacity (CBM) 34 67
Containers Shipped 1,229 2,671
Shipping Cost per Container $  480.00 $ 600.00
Shipping Costs by Container Size $  589,920 $ 1,602,600
Total Shipping Cost $  2,192,520
Consolidation Center Operating Cost Calculations
Number of Centers 4
Annual Fixed Cost per Center $ 75,000
Total Annual Fixed Cost $  300,000
Variable Cost per CBM $  4.90
Total Annual Variable Cost $ 102,410
Total Annual Consolidation Center Costs $  402,410
Total China/Taiwan Logistics Cost $  2,594,930

 

Basic Data
Total Current Volume (CBM) 190000
Direct Ship Percentage 0.7031
Direct Ship Volume (CBM) 133589
Consolidation Center Volume 56411
 

Shipping Cost Calculations

Direct Ship by Container Type 20′ 40′
   Volume (%) 0% 100%
   Volume (CBM) 0 133589
   Container Capacity Used 85% 85%
Consolidation Center by Container Type
   Volume (%) 100%
   Volume (CBM) 56411
   Container Capacity Used 96%
Container Capacity (CBM) 34 67
Containers Shipped 0 3223
Shipping Cost per Container $ 480.00 $   600.00
Shipping Costs by Container Size $      – $  1,933,800
Total Shipping Cost $ 1,933,800
Consolidation Center Operating Cost Calculations
Number of Centers 1
Annual Fixed Cost per Center $ 75,000
Total Annual Fixed Cost $ 75,000
Variable Cost per CBM $ 1.40
Total Annual Variable Cost $ 78,975
Total Annual Consolidation Center Costs $ 153,975
Total China/Taiwan Logistics Cost $ 2,087,775

 

Assuming the new consolidation center has the same fixed cost as before (questionable given the increase in volume), the new approach saves $507,155 per year.

 

  1. Consolidating the 20’ volume and using only a single Consolidation Center looks very attractive from this analysis. However, there are other issues to be considered.

 

  • For one, we have not considered the increased cost to the suppliers that currently pack their own 20’ containers. These suppliers will need to bear the cost of shipping their goods to the Shanghai/Ningbo consolidation center. This cost will probably be pushed back to Grainger in the long run.
  • There will also be some added cost for the suppliers that currently ship to consolidation centers directly. These will all need to use the Shanghai/Ningbo now, which might not be as close as their current consolidation center.
  • The cost calculations also assume that the Shanghai/Ningbo center can handle the increased workload and the fixed cost will remain the same. Neither of these assumptions is guaranteed (or even likely).

 

We may want to seriously consider using two consolidation centers with the other being in Yantian/Hong Kong. It may be attractive to have consolidation centers in both Shanghai/Ningbo and Yantian/Hong Kong since these are the most heavily used ports. Assumptions regarding the consolidation center fixed costs would need to be tested as well.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

 

 

Jacobs, F., R., & Chase, R., B. (2013). Operations and supply chain management: the core. Eds McGraw-Hill.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case Study Rubric

Content and Organization (70%) Points Possible Points Earned Comments
All calculations/answers are correct and key elements of the assignment are covered in a substantive way. The content is comprehensive, accurate, and/or persuasive. The paper links theory to relevant examples of current experience and industry practice and uses the vocabulary of the theory correctly. 30
Readability and Style (20%) Points Possible Points Earned Comments
Paragraph transitions are present and logical and maintain the flow throughout the paper. The tone is appropriate to the content and assignment. Sentences are complete, clear, and concise. Sentences are well-constructed, with consistently strong, varied sentences. Sentence transitions are present and maintain the flow of thought. 6
Mechanics (10%) Points Possible Points Earned Comments
The paper, including the title page, reference page, tables, and appendices, follow APA guidelines. Citations of original works within the body of the paper follow APA guidelines. The paper is laid out with effective use of headings, font styles, and white space. Rules of grammar, usage, and punctuation are followed. Spelling is correct. 4

 

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