You have just been hired as the Director of Logistics for Eco Bottle (EB). In your new

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Question:

You have just been hired as the Director of Logistics for Eco Bottle (EB). In your new role, you will have responsibility for general logistical planning including functions such as inbound and outbound freight and any logistics-related functions within EB.

EB is a ten year old Canadian manufacturer of premium refillable water bottles. EB is located in Winnipeg

Manitoba where their manufacturing facility, warehouse, and administrative offices are contained within a single building. EB employs seventy staff members, 35 of them dedicated to manufacturing, 15 to warehouse operations, and the remaining 25 in various administrative positions.

EB has positioned their product in the ‘premium’ category and is enjoying year over year growth. Their primary product is a 750 ml refillable water bottle that is manufactured using two primary raw materials:

stainless steel for the body of the bottle and high density plastic for the removable lid. EB has spent considerable effort on research and development and the bottle is considered to be industry leading in its ability to maintain both hot and cold temperatures.

75% of EB’s sales are done through an online distributor called Skyway who maintains distribution centres in Calgary AB, Mississauga ON, and Montreal QC. Skyway specializes in selling athletic and outdoor goods direct to Canadian consumers and uses small package providers and couriers to provide a one or two-day delivery to most Canadian households. EB currently ships product over the road to Skyway’s distribution centres and if ordered in TL quantity, EB pays for the freight expense. When LTL quantities are ordered, EB charges the freight expense to Skyway. The remaining 25% of sales are done through a small group of boutique specialty stores across Canada that have requested the product specifically to stock. These sales are normally low volume and shipped via a small package or courier service to the boutique specialty store.

EB purchases its high density plastic from a distributor in Shenzhen China. This specialty plastic is transported by a conference ocean carrier as LCL through the port of Vancouver BC where it is then destuffed and transported by intermodal rail to EB in Winnipeg MB. The plastic is purchased in a small pellet form and packed in double-walled corrugate gaylord cartons measuring 48 inches x 40 inches wide and 36 inches tall. Each carton is lined with a plastic bag and then capped with a corrugate lid. When filled, each gaylord carton weighs 1,500 lbs. For both the ocean and rail portions of transportation, nothing occupies the space above the gaylord boxes in the containers as they are not capable of being stacked.

A potential new supplier of plastic has been found in Halifax Nova Scotia. This manufacturer produces a comparable product to the Shenzhen supplier. The new

supplier in Halifax would transport the plastic pellets in a bulk hopper car via rail to a transloading facility in Winnipeg Manitoba. A packaging facility operates adjacent to the rail terminal in Winnipeg where the plastic would then be packaged in the same gaylord cartons currently being used for delivery over the road to EB only a few kilometers away. You have not been given costing information yet but have been asked to prepare a preliminary report that would highlight the logistical differences between the two options.

Business Case Assignment Part two:

EB’s primary method of shipping goods to Skyway is via TL service. When shipping in TL quantity, EB has paid the freight expense. Skyway represents the majority of EB’s sales and Skyway has recently been pressuring EB to provide LTL service at EB’s expense. Skyway often has larger inventory volume than they require and this requires storage space that could be used for other, fast moving products.

EB’s management is concerned that they may lose Skyway as a customer if they don’t provide LTL service at their own expense. In anticipation of this, you have received estimates from three large LTL carriers.

Each carrier has classified the product at different levels.

The management team is not familiar with freight classification systems and has asked you to provide clarification on what this is and how it might impact LTL service. In addition, the management team has requested that you provide a summary of the impacts on the product during transportation and any administrative or operational changes.

Specifically, you have been asked to:

1. Provide a summary for the management team of the factors that influence freight classification and what the impact of a different classification would mean to EB.

2. Discuss the impacts of a change from TL to LTL service on the product (such as handling) and the organization (such as administration and internal processes).