Case $3$:H$.$Stevens inc

H$.$ Stevens Inc. has operated in the United States for sixty years. The firm's primary business was marketing and selling fast$-$moving consumer goods' and medicines, but upper management saw additional opportunities in third$-$party logistics$.$ In $2015,$ the firm's two sales divisions each operated its own logistics team, and Stevens also run a fleet of twenty$-$five vehicles. Management saw an increasing demand for integrated logistics services. Many of its customers had inefficient and costly logistics operations and were looking for ways to reduce costs and improve service, Several customers lacked experience in operating large$-$scale warehousing and distribution functions.

In February $2015,$ Stevens established a new logistics division to design integrated logistics systems for other firms, Management decided to treat the new division as a profit center

In May $2015,$ Leewick Ltd$,$ a multinational food and household products company,contracted with Stevens for logistics services. Six months later another multinational medicine and nutritional manufacturer, Nutricare Ltd$,$ entered into a similar contract with Stevens.

According to the agreements, logistics assets and personnel could be transferred to Stevens when they took over the operation. A few warehousing employees from both multinational firms joined Stevens but most continued to work for their respective companies. To ensure a smooth transition to third$-$party operations, transportation teams from Leewick and Nutricare were managed and supervised independently according to their old practices.

Stevens had four fleets:A$,$B$,$C$,$D$.$Fleet A took care of the

fast$-$moving consumer goods and bulk delivery?. Fleet A served supermarkets and small stores, selling household and food products. Fleet $B$ delivered medicines to doctors and hospitals, Fleet $C$ was the ex$-$Leewick delivery team, serving customers similar to the customers of Fleet A$.$ Fleet D was the ex$-$Nutricare delivery team, serving dispensary stores, hospitals, and supermarkets. $($See Table$2-2$ and $2-3$ for fleet information.$)$

Table $2-2$ Transportation Fleet Structure

$\backslash$table$[[\backslash$table$[[$Type of$],[$service$/$Vehic$],[$Ie Size$]],$Type,Fleet $A,$Fleet $B,$Fleet $C,$Fleet D$,\backslash$table$[[$Tota$],[$I$]],\backslash$table$[[$Estimate$],[$d$],[$capacity$],[$per$],[$week$/$t$]]],[$Expedite$,$Van,$0,5,0,0,5,20],[$Small$,$Box,$9,4,4,4,21,60],[12$ meter,Box,$3,0,1,0,4,80],[15$ meter,Box,$4,0,2,0,6,120],[,$Total,$16,9,7,4,36,280]]$

Table $2-3$ Transportation Department Organizat ion

$\backslash$table$[[$Fleet A$,$Fleet B$,$Fleet C$,$Fleet D$],[1$supervisor,$1$supervisor,$1$supervisor,$1$supervisor$],[\backslash$table$[[2$ass't$],[$supervisor$]],\backslash$table$[[1$ass't$],[$supervisor$]],\backslash$table$[[1$ass't$],[$supervisor$]],1$clerk$],[3$clerks,$2$clerks,$1$clerk,$4$drivers$],[16$drivers,$9$drivers,$7$drivers,$8$helpers$],[32$helpers,$18$helpers,$14$helpers,$],[54$employees,$31$employees,$24$employees,$14$employees$]]$

After almost twelve months of operation, Stevens' clients are satisfied with the logistics services, but profits are lower than expected. The final account for $2016$ shows that the overall profit of the integrated logistics division ${?}^3$ was well below budget. The shortfall was attributed to losses incurred by the transportation department, The general manager of the division has asked the transportation manager to take immediate action to improve the efficiency of the transportation department and to achieve cost savings.

Questions for discussion

What steps should be taken to bring the transport services back to profitability? Why?

Special care is one of the major customer service elements and strategies. How can you strike a balance between delivery