BPW Corporation (BPW) is a Canadian based firm that supplies electronic controls to the wind-power/turbine industry. The firm is twenty years old and is a subsidiary of a fifty-year-old electronics supply firm that specializes in supplying electric power generating components to the military, atomic energy and space industry. It is a publicly traded firm that employs 25 full time staff. This includes three teams of four installers that work all over the world on new-build wind turbine projects. The company prides itself on its commitment to clean, ethical sourcing and ethical labour practices. 

Your Role:

You are the newly hired Director of Operations (You have been there for 2 months).

You have been in the transportation industry for ten years and have your CCLP designation. Your responsibilities include warehousing, selecting and coordinating work with 3PLs, transportation, and the scheduling and coordination of service crews for the installation and service of products worldwide.

The Location:

BPW is based in Waterdown Ontario. That Waterdown facility contains offices, and a small product testing centre for new designs. Other than the centre that holds a few components to help build and support new product evaluation, BPW uses no other company owned space.

The Product:

BPW revolutionized the wind turbine industry by creating an ultra- light, and ultra efficient generator for the transmission of electrical power from the top of the wind powered blade-style turbine to the electrical system that carries the power to market.

Utility firms that maintain the wind turbines prefer BPW’s product because of its compact size, efficiency and uniquely simplistic replacement during servicing, and repair.

This generator module can be changed out in minutes, drastically reducing downtime for the wind turbine. It was designed to fit most of the wind generated turbines built and operated around the globe. The module is patented and remains so unique that there are no other products of its type in the industry. The module/unit weighs 60 kilograms and can be split in two for ease of transfer and assembly at the top of the wind turbine.

Each complete generator module is valued at $10,000 USD. Its crated dimensions are:

120 cm x 90 cm x 90 cm high. We stated that the module can be split for ease of installation. The dimensions represent the entire module, un-split. Lead time to build, crate and ship one module is ten days. With the present production set up at the 3PL, they have the capacity to build three modules per month. That production process is expandable with 30 days’ notice to the 3PL. One note: BPW does not make, sell, or use the giant propeller blades that we associate with wind power. Their parts are contained in the central hub of the “windmill” where the giant blades meet on the top of the tower. For a better understanding of how the generator and associated parts look or fit into the wind turbine, do a browser search for “wind turbine nacelle”.

The Market:

BPW sells its product worldwide. They service two distinct markets: One market serves new-build wind turbines. BPW works with designers of new-builds to ensure compatibility. The lead times for this market are long, as wind turbine projects can take many months to develop and to build. BPW maintains zero inventory for these units, building them and staging them at the 3PL until all units for one project are complete.

The other market is for the repair/service sector of the wind turbine industry. BPW works with the owners of the turbines, and with the firms that service them to both ensure compatibility and ease of changeover from competitors’ products to theirs. Lead times for this market are typically short, as maintenance firms servicing the turbines rarely stock BPW’s modules due to cost and potential obsolescence in the everchanging green energy world. The modules may be needed at a site within hours to replace a defective unit that is costing the electrical utility thousands of dollars per day.

BPW maintains a safety stock inventory of six units at the 3PL. 

The 3PL that BPW uses:

All storage and distribution of BPW generator modules and related parts are performed by a 3PL (Third party provider) located in Stoney Creek Ontario. That 3PL has been in existence since 1994, operating out of a 200,000 square foot building also located in Stoney Creek. It has a mixed customer base of approximately 30 customers, all of them related to non-consumer products that include electronics, engineered specialty metal products, high tech assemblies/fabrications and highly specialized unfinished materials such as specialty metals, specialty plastics/composites and specialized fasteners; those fasteners used for assembling parts for customers that operate in highly specialized, limited markets.

The 3PL not only stores and ships on behalf of their clients, they also do assembly of electronics and other components for some of them. One of those clients is BPW .

The 3PL takes electronic sub- assemblies and creates the primary component that they then ship to customers of BPW. These assemblies are built by technicians that the 3PL hire, with training performed by BPW.

The Logistics:

Components for the BPW module are purchased from three primary suppliers:

• Electronic circuitry: Ulsan, South Korea

• Specialty fabricated metal frames and component parts: Houston, Texas

• Specialty Fasteners: Montreal, QC

BPW is constantly expanding its customer base, but at this moment, customers are located in:

• Western Europe: 10% of total sales

• Scandinavia: 25 % of total sales

• North America, including Mexico: 65 % of total sales

The DAT INCOTERM is used in these export transactions

As part of its commitment to service, BPW takes full responsibility for shipment and installation of its primary components to new installations and retrofits. For the repair/ service market, BPW only takes responsibility for the transportation of the shipment. Installation is the responsibility of the wind turbine owner and/or its service crews. Currently BPW uses an international courier to ship all its units worldwide.

Part 3: Small Package Providers

BPW arranges for the freight from their Stoney Creek 3PL to customers worldwide. Much of the work is done by staff that work at BPW using their own contacts over time or using third party providers suggested by their customers. Your 3PL provider has approached BPW offering to arrange all freight through an independent freight forwarder for a 10 percent premium.

You have been asked to prepare a preliminary report that would discuss the logistical impacts including general cost assumptions, risk, transit time, internal process and administrative changes that would be required to support such an initiative. Specifically, you have been asked to:

1. Highlight the logistical impacts of allowing your 3PL to arrange all transportation and related services either directly or through an independent freight forwarder. Consider cost, transit time, packaging, documentation and handling implications.

2. Discuss the organizational impacts of a change in service (i.e. internal processes, administrative changes, risk).

Answer rating: 100% (QA)

1 Highlight the logistical impacts of allowing your 3PL to arrange all transportation and related services either directly or through an independent freight forwarder Consider cost transit time packag... View the full answer