1. Evaluate the current China/Taiwan logistics costs. Assume a current total volume of 190,000 CBM and the 89% is shipped direct from the supplier plants in containers. Use the data from the case and assume that the supplier loaded containers are 85% full. Assume that consolidation centers are run at each of the four port locations. The consolidation centers only use 40’ containers and fill them to 96% capacity. Assume that it costs $480 to ship a 20’ container and $600 to ship a 40’ container. What is the total cost to get the containers to the United States? Do not include United States port costs in this part of the analysis.
2. Evaluate an alternative that involves consolidating all 20’ volume and using only a single consolidation center in Shanghai/Ningbo. Assume that all the existing 20’ volume and the existing consolidation center volume were sent to this single consolidation center by suppliers. This new consolidation center volume would be packed into 40’ containers filled to 96% and shipped to the United States. The existing 40’ volume would still be shipped direct from the suppliers at 85% capacity utilization.
3. What should be done based on your analytics analysis? What have you not considered that may make your analysis invalid or that may strategically limit success? What do you think Grainger management should do?