logistics strategy case study

Logistics and Supply Chain Case Studies

Review our case studies to see how we’ve helped major corporations turn logistical ideas into a reality., leading beverage distributor, penske logistics helps beverage distributor rapidly establish new warehousing operations.

When this distributor had to expand its operation quickly to counter a competitor, they turned to Penske to deploy a customized solution.

Baby2Baby Donation Transportation

Coordination and planning lead to successful transport of $3 million clothing donation.

Penske Logistics worked with Baby2Baby, a nonprofit that provides basic essentials to impoverished children, and Old Navy to transport $3M of clothing donations.

Luxury Product Manufacturer

Penske logistics reduces inventory shrinkage, improves overall inventory management.

A leading producer of fine luxury products required a partner who could improve their warehouse and distribution operations and reduce the theft.

Poultry Supplier

Transporting food items requires extra care and expertise.

Poultry producers, navigate a complex array of supply and delivery challenges to ensure their food arrives fresh, wholesome, and on-time.

Building Products Manufacturer

Customized fleet technology solution.

A leading building products manufacturer sought to streamline its supply chain operations and expand its fleet while improving visibility through the implementation of fleet management technology.

National Wholesale Distributor

A national wholesale distributor case study.

A national wholesale distributor of heating and air conditioning supplies was struggling to manage its complex supply chain and maintain high levels of customer service, which is a top priority.

Looping Process Ensures Continuous Production

Penske collaborated with Novelis to create a closed-loop recycling network that moves finished aluminum coils and transports scrap for new production.

A Global Manufacturer

Optimizing activities in the distribution center.

Penske worked with this global manufacturer to optimize its inventory routing and mode selection and to improve visibility to its supply chain.

Quick Service Restaurant

Food and beverage in-store delivery and warehousing.

Penske helped this restaurant chain get its supply chain fundamentals in place with the right logistics tools, truck driver training and warehousing solutions.

Tier 1 Automotive Component Supplier

Managing the inbound supply chain.

Penske helped this supplier minimize supply chain disruptions by designing a network that optimized mode selection, routing and analysis.

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• 25 Apr 2023

How SHEIN and Temu Conquered Fast Fashion—and Forged a New Business Model

The platforms SHEIN and Temu match consumer demand and factory output, bringing Chinese production to the rest of the world. The companies have remade fast fashion, but their pioneering approach has the potential to go far beyond retail, says John Deighton.

• 18 Oct 2022
• Cold Call Podcast

Chewy.com’s Make-or-Break Logistics Dilemma

In late 2013, Ryan Cohen, cofounder and then-CEO of online pet products retailer Chewy.com, was facing a decision that could determine his company’s future. Should he stay with a third-party logistics provider (3PL) for all of Chewy.com’s e-commerce fulfillment or take that function in house? Cohen was convinced that achieving scale would be essential to making the business work and he worried that the company’s current 3PL may not be able to scale with Chewy.com’s projected growth or maintain the company’s performance standards for service quality and fulfillment. But neither he nor his cofounders had any experience managing logistics, and the company’s board members were pressuring him to leave order fulfillment to the 3PL. They worried that any changes could destabilize the existing 3PL relationship and endanger the viability of the fast-growing business. What should Cohen do? Senior Lecturer Jeffrey Rayport discusses the options in his case, “Chewy.com (A).”

• 12 Jul 2022

Can the Foodservice Distribution Industry Recover from the Pandemic?

At the height of the pandemic in 2020, US Foods struggled, as restaurant and school closures reduced demand for foodservice distribution. The situation improved after the return of indoor dining and in-person learning, but an industry-wide shortage of truck drivers and warehouse staff hampered the foodservice distributor’s post-pandemic recovery. That left CEO Pietro Satriano to determine the best strategy to attract and retain essential workers, even as he was tasked with expanding the wholesale grocery store chain (CHEF’STORE) that US Foods launched during the pandemic lockdown. Harvard Business School Professor David E. Bell explores how post-pandemic supply chain challenges continue to affect the foodservice distribution industry in his case, “US Foods: Driving Post-Pandemic Success?”

• 05 Jul 2022
• What Do You Think?

Have We Seen the Peak of Just-in-Time Inventory Management?

Toyota and other companies have harnessed just-in-time inventory management to cut logistics costs and boost service. That is, until COVID-19 roiled global supply chains. Will we ever get back to the days of tighter inventory control? asks James Heskett. Open for comment; 0 Comments.

• 19 Oct 2021
• Research & Ideas

Fed Up Workers and Supply Woes: What's Next for Dollar Stores?

Willy Shih discusses how higher costs, shipping delays, and worker shortages are putting the dollar store business model to the test ahead of the critical holiday shopping season. Open for comment; 0 Comments.

• 26 Mar 2014

How Electronic Patient Records Can Slow Doctor Productivity

Electronic health records are sweeping through the medical field, but some doctors report a disturbing side effect. Instead of becoming more efficient, some practices are becoming less so. Robert Huckman's research explains why. Open for comment; 0 Comments.

• 11 Nov 2013
• Working Paper Summaries

Increased Speed Equals Increased Wait: The Impact of a Reduction in Emergency Department Ultrasound Order Processing Time

This study of ultrasound test orders in hospital emergency departments (EDs) shows that, paradoxically, increasing capacity in a service setting may not alleviate congestion, and can actually increase it due to increased resource use. Specifically, the study finds that reducing the time it takes to order an ultrasound counter intuitively increases patient throughput time as a result of increased ultrasound use without a corresponding increase in quality of care. Furthermore, the authors show that in the complex, interconnected system or hospitals, changes in resource capacity affects not only the patients who receive the additional resources, but also other patients who share the resource, in this case, radiology. These results highlight how demand can be influenced by capacity due to behavioral responses to changes in resource availability, and that this change in demand has far reaching effects on multiple types of patients. Interestingly, the increased ultrasound ordering capacity was achieved by removing what appeared to be a "wasteful" step in the process. However, the results suggest that the step may not have been wasteful as it reduced inefficient ultrasound orders. In healthcare, these results are very important as they provide an explanation for some of the ever-increasing costs: reducing congestion through increased capacity results in even more congestion due to higher resource use. Overall, the study suggests an operations-based solution of increasing the cost/difficulty of ordering discretionary but sometimes low-efficacy treatments to address the rise in healthcare spending. Therefore, to improve hospital performance it could be optimal to put into place "inefficiencies" to become more efficient. Key concepts include: A process improvement can inadvertently cause an increase in demand for a service as well as associated shared resources, which results in congestion, counter intuitively decreasing overall system performance. While individual patients and physicians may benefit from the reduced processing time, there can be unintended consequences for overall system performance. Closed for comment; 0 Comments.

• 25 Jan 2013

Why a Harvard Finance Instructor Went to the Kumbh Mela

Every 12 years, millions of Hindu pilgrims travel to the Indian city of Allahabad for the Kumbh Mela, the largest public gathering in the world. In this first-person account, Senior Lecturer John Macomber shares his first impressions and explains what he's doing there. Closed for comment; 0 Comments.

• 07 Aug 2012

Off and Running: Professors Comment on Olympics

The most difficult challenge at The Olympics is the behind-the-scenes efforts to actually get them up and running. Is it worth it? HBS professors Stephen A. Greyser, John D. Macomber, and John T. Gourville offer insights into the business behind the games. Open for comment; 0 Comments.

• 19 Oct 2010

The Impact of Supply Learning on Customer Demand: Model and Estimation Methodology

"Supply learning" is the process by which customers predict a company's ability to fulfill product orders in the future using information about how well the company fulfilled orders in the past. A new paper investigates how and whether a customer's assumptions about future supplier performance will affect the likelihood that the customer will order from that supplier in the future. Research, based on data from apparel manufacturer Hugo Boss, was conducted by Nathan Craig and Ananth Raman of Harvard Business School, and Nicole DeHoratius of the University of Portland. Key concepts include: Two key measures of supplier performance include "consistency", which is the likelihood that a company will continue to keep items in stock and meet demand, and "recovery", which is the likelihood that a company will deliver on time in spite of past stock-outs. Improvements in consistency and recovery are associated with increases in orders from retail customers. Increasing the level of service may lead to an increase in orders, even when the service level is already nearly perfect. Closed for comment; 0 Comments.

• 19 Jul 2010

How Mercadona Fixes Retail’s ’Last 10 Yards’ Problem

Spanish supermarket chain Mercadona offers aggressive pricing, yet high-touch customer service and above-average employee wages. What's its secret? The operations between loading dock and the customer's hands, says HBS professor Zeynep Ton. Key concepts include: The last 10 yards of the supply chain lies between the store's loading dock and the customer's hands. Poor operational decisions create unnecessary complications that lead to quality problems and lower labor productivity and, in general, make life hard for retail employees. Adopting Mercadona's approach requires a long-term view and a leader with a strong backbone. Closed for comment; 0 Comments.

• 12 Jul 2010

Rocket Science Retailing: A Practical Guide

How can retailers make the most of cutting-edge developments and emerging technologies? Book excerpt plus Q&A with HBS professor Ananth Raman, coauthor with Wharton professor Marshall Fisher of The New Science of Retailing: How Analytics Are Transforming the Supply Chain and Improving Performance. Key concepts include: Retailers can better identify and exploit hidden opportunities in the data they generate. Integrating new analytics within retail organizations is not easy. Raman outlines the typical barriers and a path to overcome them. Incentives must be aligned within organizations and in the supply chain. The first step is to identify the behavior you want to induce. To attract and retain the best employees, successful retailers empower them in specific ways. Closed for comment; 0 Comments.

• 05 Jul 2006

The Motion Picture Industry: Critical Issues in Practice, Current Research & New Research Directions

This paper reviews research and trends in three key areas of movie making: production, distribution, and exhibition. In the production process, the authors recommend risk management and portfolio management for studios, and explore talent compensation issues. Distribution trends show that box-office performance will increasingly depend on a small number of blockbusters, advertising spending will rise (but will cross different types of media), and the timing of releases (and DVDs) will become a bigger issue. As for exhibiting movies, trends show that more sophisticated exhibitors will emerge, contractual changes between distributor and exhibitors will change, and strategies for tickets prices may be reevaluated. Key concepts include: Business tools such as quantitative and qualitative research and market research should be applied to the decision-making process at earlier stages of development. Technological developments will continue to have unknown effects on every stage of the movie-making value chain (production, distribution, exhibition, consumption). Closed for comment; 0 Comments.

• 20 Dec 2004

How an Order Views Your Company

HBS Professors Benson Shapiro and Kash Rangan bring us up to date on their pioneering research that helped ignite today’s intense focus on the customer. The key? Know your order cycle management. Closed for comment; 0 Comments.

• 15 Apr 2002

In the Virtual Dressing Room Returns Are A Real Problem

That little red number looked smashing onscreen, but the puce caftan the delivery guy brought is just one more casualty of the online shopping battle. HBS professor Jan Hammond researches what the textile and apparel industries can do to curtail returns. Closed for comment; 0 Comments.

• 26 Nov 2001

How Toyota Turns Workers Into Problem Solvers

Toyota's reputation for sustaining high product quality is legendary. But the company's methods are not secret. So why can't other carmakers match Toyota's track record? HBS professor Steven Spear says it's all about problem solving. Closed for comment; 0 Comments.

• 19 Nov 2001

Wrapping Your Alliances In a World Wide Web

HBS professor Andrew McAfee researches how the Internet affects manufacturing and productivity and how business can team up to get the most out of technology. Closed for comment; 0 Comments.

• 22 Jan 2001

Control Your Inventory in a World of Lean Retailing

"Manufacturers of consumer goods are in the hot seat these days," the authors of this Harvard Business Review article remind readers. But there is no need to surrender to escalating costs of inventories. In this excerpt, they describe one new way to help lower inventory costs. Closed for comment; 0 Comments.

• 12 Oct 1999

Decoding the DNA of the Toyota Production System

How can one production operation be both rigidly scripted and enormously flexible? In this summary of an article from the Harvard Business Review, HBS Professors H. Kent Bowen and Steven Spear disclose the secret to Toyota's production success. The company's operations can be seen as a continuous series of controlled experiments: whenever Toyota defines a specification, it is establishing a hypothesis that is then tested through action. The workers, who have internalized this scientific-method approach, are stimulated to respond to problems as they appear; using data from the strictly defined experiment, they are able to adapt fluidly to changing circumstances. Closed for comment; 0 Comments.

Rapid Response: Inside the Retailing Revolution

A simple bar code scan at your local department store today launches a whirlwind of action: data is transmitted about the color, the size, and the style of the item to forecasters and production planners; distributors and suppliers are informed of the demand and the possible need to restock. All in the blink of an electronic eye. It wasn’t always this way, though. HBS Professor Janice Hammond has focused her recent research on the transformation of the apparel and textile industries from the classic, limited model to the new lean inventories and flexible manufacturing capabilities. Closed for comment; 0 Comments.

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Logistics—Essential to Strategy

• James L. Heskett

Logistical considerations have always played a strategic role in business. Among retailers and wholesalers, they transcend inventory management and transportation to include one of the most critical factors in business success—location in relation to markets or sources of supply. Among manufacturers, logistics concerns itself with matters as basic as plant location, sourcing of raw materials, […]

Logistics can spell the difference between success and failure in business. For example, a few years ago a young engineer-entrepreneur began to build a company from scratch. His first product was liquid bleach. Actually, he didn’t know much about the business at the time. He knew that liquid bleach is nearly all water and that the U.S. market is divided among two large manufacturers, Clorox and Purex, and a number of smaller producers that sell branded and private-label bleach on a regional basis. He also knew that the market for private-label bleach in New England, where he wanted to be, was dominated by a manufacturer located in New Jersey.

• JH James L. Heskett is a Baker Foundation Professor, Emeritus, of Harvard Business School, in Boston, and a coauthor, with W. Earl Sasser, Jr., and Joe Wheeler, of The Ownership Quotient: Putting the Service-Profit Chain to Work for Unbeatable Competitive Advantage , forthcoming from Harvard Business Press.

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What is a logistics strategy?

Logistics was once viewed purely as transport network and warehouse management, and it played little or no part in corporate strategy. Organisations now realise that logistics strategy is integral to corporate strategy especially when we consider the ever-pressing need for sustainability to be built into business activities. 

The effect of carbon emissions on climate change means that logistics can be key in lowering a company’s environmental impact. We are also living through a time of dramatic change internationally that is reshaping the socio-economic and political landscapes . All of these factors mean supply chains – and the wider value chain – are under increasing pressure and may need reviewing and re-thinking on a regular basis. Ultimately, a logistics strategy will help refine service levels to the point that an organisation is functioning at its most cost-effective, and hopefully, most energy efficient.

A logistics strategy is a set of principles, attitudes and driving forces that guide the coordination of plans, goals, and policies between the partners across a supply chain.

Logistics strategy looks at four different levels of an organisation:

How do strategic supply chain decisions contribute to the wider business strategy?

What is the ideal number of warehouses and distribution centres to ensure the smooth running of operations? Can products be manufactured closer by?

Is every single function operating to a level of excellence?

Implementation

How are new policies, procedures and information communicated throughout the system? Is there a change management plan?

Within these four levels, there are at least six components to be examined (some companies may need to add more according to the industry within which they operate):

Transportation

Is the current transportation strategy contributing to service levels?

Outsourcing

Could service levels be improved by partnering with a third party logistics company?

Logistics systems

Is enough of the right data being harvested from the current logistic system or are new ones required?

Competitors

Are competitors offering a better service? Either way, how might customer service help improve the logistics strategy?

Information

Is information being fed back into the logistic systems in real-time and is it accurate or leading to errors?

Strategy review

Is the logistics strategy in line with the overall business strategy’s objectives?

Unpredictability has always been a crucial factor to build into forecasting within business logistics. Each logistics function, for example, inventory control, should ideally have a tolerance for unpredictability. In logistics, sometimes these allowances are referred to as trade-offs. So, within a logistics strategy or an operations strategy there will be allowances for if X or Y happens, then Z must happen. This is part of change management and the past couple of years – with Brexit and the Covid-19 pandemic – have shown how vital this kind of planning is to avoid a cascade of uncontrollable knock-on effects within logistics processes.

What’s the difference between logistics strategy and logistics operations?

Logistics strategy and logistics operations both come under the umbrella of the supply chain management (SCM) process. Logistics strategy uses management principles to ensure the optimisation of workflow. It includes planning, implementing, and maintaining the efficiency of warehousing, goods flow, services, and information.

Logistics operations tend to focus exclusively on the manufacturing process. In a service industry, operations may be referred to as planning, but management of that arm of the business is carried out in a similar fashion. Simply put, logistics strategy is focused on the movement (flow and storage) within the supply chain – of goods, information, products, and services – while logistics operations are focused on manufacturing within the supply chain, materials handling, and inventory management. Logistics strategy and logistics operations work in parallel within the logistics management and operations management of the organisation. All of this should be viewed through the lens of the end user’s requirements for price, quality, and availability and measured by whether they’ve been met effectively. Customer satisfaction is a priority in decision-making as the end user dictates whether retailers continue to have a customer base.

How does logistics strategy help businesses?

Case studies that demonstrate successful logistics strategies often share a theme of streamlining the supply chain operations to gain a competitive advantage. This can happen by, for example, processing and bottling products on a retail site or locating a factory nearer trade customers. It can be executed by collaborating with distribution centres and coordinating delivery vehicles to pick up stock after deliveries have been completed. These examples also require a large initial investment to create differentiation from competitors. The justification of logistics costs of an investment like this are carefully calculated with the profitability of the competitive advantage being taken into consideration. The 1977 article from the Harvard Business Review titled Logistics – Essential to Strategy recognised the role logistics had to play early on and is still relevant today in understanding the fundamentals.

When it comes to logistics, Amazon’s strategy and model is often mentioned because of its ability to coordinate inventory levels, delivery time, and right pricing in a way that meets both customer and business needs. The big question is whether it is environmentally sustainable when the offer of Amazon Prime – to get anything you want whenever you want – asks for continuous freighting of inventory and large amounts of packaging waste for products that may have a short life cycle. In the 2018 fiscal year, the company emitted 44.4 million metric tonnes of carbon dioxide. Amazon’s 2020 carbon footprint reflected the demand the company felt during the global pandemic, leading the company to invest more heavily in renewable energy particularly within its transportation management systems. Carbon reduction became a key component of Amazon’s business strategy, with a goal of net-zero carbon emissions by 2040. This is a challenge that faces many businesses in e-commerce as online shopping has increased due to lockdowns and restrictions on travel. 

Traditionally, cost has been the driving force in supply chain management, so it has rarely been identified as a function which must be in line with corporate strategy. Yet here we see how it’s increasingly important that values from across the business are reflected at ground level, in sourcing and procurement within the supply chain strategy. As part of the logistics strategy, supply chain strategy directly refers to the many partners that provide raw materials and products within the chain. These can be small business partners who work at a local level through to heavyweight global logistic partners and distributors. In supply chain operations, there will also be chains within chains. Supply chain metrics should also include less easily quantified things like employee morale. This can be difficult to measure but looking at things like staff turnover with the help of logistics managers and human resources can give a more accurate picture than asking staff for their opinions.

Interested to learn more about logistics strategy?

There’s so much more to discover about logistics and supply chain management, which can start you on a new career path or help you improve your current employability status. 

Find out more about the exciting challenges in this field with the University of Lincoln’s MSc Management with Supply Chain .

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Cheers, Wonderful information.

[…] Simply put, logistics strategy is focused on the movement (flow and storage) within the supply chain – of goods, information, products, and services – while logistics operations are focused on manufacturing within the supply chain, materials handling, and inventory management. via […]

[…] A logistics strategy is a set of principles, attitudes and driving forces that guide the coordination of plans, goals, and policies between the partners across a supply chain. via […]

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Strategic Packaging Logistics: A Case Study from a Supply Chain Perspective

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• First Online: 01 January 2013
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• Jesús García-Arca 3 ,
• J. Carlos Prado-Prado 3 &
• A. Trinidad González-Portela Garrido 3  

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Few companies give importance to the impact of an appropriate packaging design on the implementation of logistic efficiency and sustainability strategies in the supply chain. Thus, this paper sets out to illustrate how a strategic view of this design (“Strategic Packaging Logistics”) makes it possible to obtain competitive advantages throughout the companies in the supply chain. To achieve this, not only the conceptual field of this new concept is developed, but also in its application, analysing a Spanish distribution company.

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García-Arca, J., Prado-Prado, J.C., González-Portela Garrido, A.T. (2014). Strategic Packaging Logistics: A Case Study from a Supply Chain Perspective. In: Prado-Prado, J., García-Arca, J. (eds) Annals of Industrial Engineering 2012. Springer, London. https://doi.org/10.1007/978-1-4471-5349-8_36

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Logistics Strategy Advisory for a Sustainable Manufacturer

Clarkston Consulting recently partnered with a biomaterials science manufacturer on a logistics partner strategy. Read a synopsis of the project below or download the full logistics strategy advisory case study here .

The global industrial complex is committed to decarbonization. Leading institutions are pledging net-zero targets, or carbon neutral, starting in 2025, and countries, including the U.S., have pledged to be net-zero countries. The Climate Pledge is a commitment to reach net-zero carbon emissions by 2040 – 10 years ahead of the Paris Agreement. Clarkston recently supported a logistics strategy advisory for a sustainable manufacturer looking to support this commitment to decarbonization.  

Carbon black is a pigment made from petroleum with a large carbon footprint; it’s also carcinogenic. The client – a biomaterials science manufacturer – has developed technology and products made from biomass waste to be carbon-negative, supporting companies’ missions to be carbon-neutral and aligned with U.S. government objectives. Our clients’ products include textile inks, packaging inks, and footwear inks. In their business maturity cycle, they are moving to late-stage adoption conversions with brands. However, our client was receiving variable adoption costs from interested brands as these brands looked toward a more sustainable approach to standard carbon black ink. Clarkston advised the client in support of determining more realistic brand adoption costs and a logistics strategy optimizing outbound logistics to lower adoption costs.  

Download the Logistics Strategy Advisory Case Study Here  

The client was modeling logistics modes and types of potential partners and services as they planned for managing export to global markets in support of their multi-phase commercial demand buildout and execution. Clarkston advised on landed cost components and cost reduction strategies, increasing the client’s understanding of controllable and non-controllable elements. Clarkston advised on best practices as the client continued to establish their strategy framework. The conversations refined the client’s needs and their logistics determinations for appropriate next steps. The definition of strategy included market-level analysis by growth phase, service expectations, and resulting cost impact as they assessed what type of service/partner would they best be served by.  Their logistics strategy balanced these components to best articulate brand costing in support of customer requirements.  

Clarkston guided their logistics partner strategy as the client looked to determine and source partners as they entered global trade. This partner strategy included carrier, forwarding, brokerage, warehousing, and distribution.   Clarkston shared best practice guidance for executing a third-party logistics (3PL) and request for proposal (RFP) process and support of a potential 3PL bid with suggested warehouse requirements to consider and additional services of value add, importing, returns, and reporting. Clarkston also discussed bid scenarios, target services, regional expectations, and RFI/RFP processes and timelines. As a result, the client was in an improved position and best understood how to continue to proceed as they continued their growth in commercial accounts.    

Download the Logistics Strategy Advisory case study here. Learn more about our Supply Chain Consulting  Services by contacting us below. 

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Case Studies in Carbon-Efficient Logistics

Logistics is a leading source of carbon. Nearly 6 percent of the greenhouse gases generated by humans come from the flow of products to consumers. Reducing these emissions takes more than setting goals; it requires clear, measurable initiatives that hit sustainability targets while delivering lower costs and higher service levels.

Sponsored by Environmental Defense Fund (EDF), Dr. Edgar E Blanco Research Director of the Carbon-Efficient Supply Chains Research Project at the MIT Center for Transportation & Logistics, worked alongside three US companies to help them quantify the carbon footprint of some of their logistics initiatives. The goal was to document the projects, and illustrate to other companies that it is possible to reduce cost and become more environmentally friendly.  

In this case study we present two Ocean Spray initiatives – distribution network redesign and intermodal shift from road to rail – that in combination led to a 20% reduction in transportation CO2 emissions, while achieving comparable cost savings across the transportation network.

Shifting to Rail – A Collaborative Approach

Ocean Spray, CSX (the rail operator), and fruit shipping companies partnered in order to enable Ocean Spray to ship more products intermodally from its New Jersey distribution center to the company's Florida facility. Prior to the collaboration, these boxcars were returning empty to the Florida region. Shipments that shifted to intermodal generated 65% less emissions while saving over 40% of transportation costs.

Distribution Network Redesign

Ocean Spray added new manufacturing and distribution capabilities in Florida to support the company’s growing customer base. To fully and effectively utilize these additions, Ocean Spray conducted a national network re-design project to determine which customers will receive product from the new location. Ocean Spray projected that over 17% of the total shipments will be served from the new facility.

Read the full Ocean Spray case study here .  

In this case study, we analyzed the inbound shipping operations of Caterpillar’s North American large mining truck facility to determine – based on weight, packaging, routing, and scheduling – opportunities to streamline shipping protocols, and thus reduce carbon emissions associated with the supply chain. When combined, the streamlined shipping and packaging efforts could reduce Caterpillar’s overall carbon emissions by 340-730 tonnes of CO2 per year.

Switching Shipment Packaging from Steel to Light-Weight Plastic

At present, Caterpillar uses steel containers to transport parts. Caterpillar has been working for the past four years to phase out these steel containers and replace them with plastic containers, which weigh considerably less.

Analyzing Inbound Shipments to Identify Potential Consolidation

To construct the very large vehicles used in the mining industry, parts are shipped from all over the globe for assembly at Caterpillar’s manufacturing facility in Decatur, Illinois. We analyzed historical shipment data to identify areas where shipments could be consolidated to save fuel and reduce vehicle CO2 emissions. More specifically, we analyzed:

Read the full Caterpillar case study here .  

Boise Inc. has launched two initiatives to improve its logistics operations and environmental performance. The Carload Direct Initiative is shifting product transport to rail, and the Three-Tier Pallet Initiative is increasing railcar utilization. Both initiatives have resulted in a combined 62-72% reduction in the company’s CO2 emissions, as well as cost savings on those shipments.

Reducing CO2 Emissions Through Carload Direct

Traditionally, manufacturers use trucks, or a mix of trucks and rail, to transport their products to customers. As trucks produce greater emissions than trains, a logical way to reduce emissions is to minimize the use of trucks and maximize the use of rail. Boise coordinated with its customers to promote rail transport so that product could be sent directly from the manufacturing plant to the customer’s warehouse. The transition from using a mix of truck and rail to exclusively rail eliminated more than 2,600 tons of C02; the equivalent of saving over 264,000 gallons of fuel consumed by road vehicles.

Optimizing Railcar Utilization with Three-Tier Pallets

Prior to this project, railcars were loaded two pallets high, leaving a space from the top of the second pallet to the roof of the railcar, thus under-utilizing the full capacity of the railcar. Boise redesigned its pallets and loading structure by creating a half-pallet, which allowed the company to rethink pallet stacking and maximize shipping capacities for its loads. These redesigns maximized carloads by reducing the number of shipments required to deliver product. Using just 930 railcars in 2011 reduced the company’s C02 emissions by 190 tons, which is equal to the C02 emissions from 21,637 gallons of fuel consumed by road vehicles.

Read the full Boise case study here .

Hear directly from Dr. Edgar Blanco, from MIT CTL, joined by EDF’s Jason Mathers, Ross Corthell from Boise, Kristine Young from Ocean Spray, and Zena Onstott from Caterpillar as they share their insights from these case studies on this webinar . 

To find out more about the case studies, contact Dr. Edgar E. Blanco , Research Director, Carbon Efficient Supply Chains Research Project, MIT CTL, and co-founder of the LEAP consortium.

The Carbon Efficient Supply Chains Research Project is addressing three challenges: how to measure the carbon footprint of a supply chain, developing strategies for reducing supply chain carbon emissions, and communicating carbon footprints to consumers and stakeholders. Further information is available here .

The Leaders in Environmental Assessment and Performance (LEAP) consortium is a vehicle for organizations to leverage MIT’s knowledge and resources as well as the lessons learned from corporate environmental efforts. LEAP is a joint initiative between MIT CTL and the MIT Material Systems Laboratory. Further information is available here .

To read this content please select one of the options below:

Please note you do not have access to teaching notes, growth strategies for logistics service providers: a case study.

The International Journal of Logistics Management

ISSN : 0957-4093

Article publication date: 1 January 2001

This article is based on two studies, partly financed by the Norwegian Research Council. The first study was carried out in six organizations cooperating in two supply chain alliances. The purpose of this study was to develop a set of hypotheses concerning logistics service providers and their roles in supply chain alliances. The second study, involved interviews carried out in 12 different logistics organizations, and concerned their perception of future trends and future position. The purpose of this article is to highlight and to describe some of the major findings in the two studies on growth strategies for logistics service providers. We propose a matrix categorizing the players and their strategic position. Given the pressures in the industry and the individual strategic position, the strategic choices in fact are limited, leading to some dominating strategic directions that to a certain extent, also explain the structural changes in the industry.

• Logistics industry
• Supply chain
• Outsourcing

Persson, G. and Virum, H. (2001), "Growth Strategies for Logistics Service Providers: A Case Study", The International Journal of Logistics Management , Vol. 12 No. 1, pp. 53-64. https://doi.org/10.1108/09574090110806226

Copyright © 2001, MCB UP Limited

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Supply Chain Management Design & Simulation Online

Supply Chain Case Studies

SCM Globe comes with a library of case studies that explore COMMERCIAL , HUMANITARIAN , and MILITARY supply chains. When you purchase an account you have access to all the case studies and their simulations.

The case studies range from relatively simple beginning cases like Cincinnati Seasonings , to quite challenging advanced cases such as Zara Clothing Company , or Nepal Earthquake Disaster Response .  Case studies are laboratories where you apply what you learn in lectures and readings to solve supply chain problems in highly realistic simulations. Each case has a " CASE STUDY CONCEPT " showing the supply chain principles and practices highlighted in that case.

SEE WHAT PEOPLE ARE SAYING ABOUT SCM GLOBE

Case studies presently available in the online library are shown below. You are welcome to use any or all of them. You can also create your own case studies, or we can create them for you. Cases are shown in the three categories. As you work with these cases you will gain an intuitive understanding of supply chain dynamics, and develop the analytical skills for designing and managing real supply chains.

People new to SCM Globe should start with the  Cincinnati Seasonings case study . Work individually at first, not in groups. Each person needs their own account. Do the three challenges shown in the online introduction to Cincinnati Seasonings. That's how you'll learn to use the software, and how to use simulations to analyze and design supply chains. Then you will be ready to work in groups or work on more advanced cases.  Click on the case studies below to see a description and introduction to each case.

Commercial Supply Chain Case Studies

Collaborative Supply Chains

S&J Trading Company – Angola

Java Furniture Company – Indonesia

Cincinnati Seasonings

Supply Chains of the Roman Empire

Ancient Silk Road – First Global Supply Chain

Zara Clothing Company Supply Chain

Fantastic Corporation – Global Supply Chain

Fantastic Corporation – Unexpected Disruptions

Humanitarian supply chain case studies.

Disaster Response Supply Chains: Flooding Scenario

Nepal Earthquake Disaster Response Supply Chain

Humanitarian Supply Chains: Syria Evacuation Scenario (CIV and MIL)

Military supply chain case studies.

Burma Campaign – 1944 Invasion of India

Battle of Smolensk – 1941 Invasion of Russia

Alexander the Great Needed Great Supply Chains

New case studies.

New cases are added based on projects we do with instructors, students, and supply chain professionals. Here are the new supply chain models in the library:

• Local and Sustainable Supply Chains – Blue Ocean Cooperative
• Aerospace Manufacturing Cluster – Rockford IL
• Hyderabadi Biryani – Paramount Restaurant 
• Western Desert War – May 1941
• Russian Logistics for the Invasion of Ukraine

Interactive Supply Chain Case Studies

Every case study has a main theme or concept that it illustrates. You will be challenged to use knowledge acquired in lectures and readings as well as your own real-world experience to expand and re-design the supply chains in these case studies.

In the commercial supply chain cases you need to improve and expand the supply chains to support new stores and still keep operating costs and inventory as low as possible. In cases that deal with humanitarian or military missions you need to create supply chains to deliver the right supplies to the right locations when they are needed, and do so at a reasonable cost.

We are glad to provide a  free evaluation account  to instructors, students and supply chain professionals interested in exploring SCM Globe simulations — click here to request an account —  Get Your Free Trial Demo  

See SCM Globe pricing for Academic and Business versions of the software.

The best case to start with is Cincinnati Seasonings . After working through the three challenges presented in the online introduction to this case you will be ready to handle further challenges in this case or move on to more advanced cases. Get a quick introduction to working with case studies in “ Working with Case Studies “.

As problems are found in the simulations, you make decisions about how to fix them. Make changes to your supply chain model in the Edit screen. Then go to the Simulate screen and run a simulation to see the results of your changes. Depending on the changes you make, your supply chain simulation runs for additional days and other problems arise. As you address these problems you see about how supply chains work. Apply what you learn in readings and and lectures plus your work experience to solve the problems you encounter.

Keep improving your supply chain model until you get the simulation to run for 30+ days. Then download your simulation results and create a monthly Profit & Loss Report plus KPIs (as shown below). This provides an objective basis for evaluating the merits of different supply chain solutions.

Monthly Profit & Loss Reports identify areas for improvement. They help you improve your supply chain to keep it running for 30 days and also lower operating costs and inventory levels. You can work on lowering the carbon footprint of your supply chain too. These are the challenges you address in SCM Globe, and they are the same challenges people face when managing real supply chains. What works well in the simulations will also work well with actual supply chains. Skills you develop in working with the simulations are directly transferable to the real world.

NOTE: You can run simulations for longer than 30 – 60 days, but there is usually no reason to do so. This is because most companies do not run their supply chains unchanged for longer than 30 days at a time. They use a 30 day S&OP ( sales and operations planning ) cycle and these simulations correspond to that monthly S&OP cycle. These simulations focus on the tactical realities of operating a supply chain from one month to the next, and finding what works best.

Accessing the Online Library of Case Studies

As shown in the screenshots below, logon to your account and access the case study library from your Account Management screen. Click on the “View Library” button (arrow 1) in upper right corner of the Account Management screen. In the Library screen you see a list of available supply chain case studies; click “ Import ” to load a selected case study into your account; give the imported case a Name , and click “ My Account ” to go back to your Account Management screen.

You are welcome to import any or as many of the supply chain models in the library as you wish. Once you have a copy of a supply chain model in your own account you can make any changes you want to it.

In Account Management, you “ Create a New Supply Chain ” or work with an existing supply chain by clicking the “ Edit ” button (arrow 2) next to the existing supply chain you want to work on. You can also upload copies of supply chain models sent to you by other SCM Globe users (arrow 3) , and check your account expiration date (arrow 4) .

Use the Default Values or Enter New Data

When you load any of the case study supply chain models from the SCM Globe library, they come with default numbers already plugged in. You can either accept the defaults or do some research to find more current data. This data (like data and prices everywhere) changes all the time.

Look for data on products, facilities and vehicles that are used in your supply chain and see what their specifications and costs are. Costs can vary widely in different parts of the world. Go to websites of commercial real estate brokers in cities of interest and see what you can find out about rent costs:

• for cities in North America start with www.cityfeet.com
• and for cities in other parts of the world start with  www.knightfrank.com

Metric System of Weights and Measures

In the case studies all weights, volumes, distances and speeds are expressed using the metric system. The metric system is used around the world in every country except three: Liberia; Myanmar; and the United States. So it is good for supply chain professionals to feel comfortable with the metric system.

Register on SCM Globe for Access to all Supply Chain Simulations

Click the blue "Register" button on the app login page, and buy an account with a credit card or PayPal (unless you already have one). Then scan the "Getting Started" section, and you are ready to start. Go to the SCM Globe library and click "Import" next to the supply chain models you want.

ZARA Logistics System & Transportation Strategy

Want to know more about ZARA logistics system? This ZARA transportation strategy case study analyzes the issue and contains recommendations for ZARA supply chain.

Executive Summary

Introduction, zara logistics system & practices.

• Evaluation of Web-Based Processes
• SCM Implementation Plan
• Recommendations

Works Cited

ZARA has been known as the most successful retailer of fashionable clothes at moderate prices. Its unique strategies of vertically integrated system of supply chain allow to produce cheap but fashionable garment within a short period.

In contrast to other retail manufacturers, their logistics system is much more effective because it meets the changing consumer demands. In addition, the company attains much importance to the development of sophisticated IT systems ensuring effective communication and information flow throughout the chains of the network.

Despite the successful growth and increased competitive advantage, ZARA supply chain management still has a number of limitations. These drawbacks are specifically connected with vertical orientations, geographically oriented demands, and high-level transportation costs. A careful re-organization of company managerial systems can be the best solution for effective handling of logistics and data exchange, as well as for increasing the company’s sustainability.

Specifically, the creation of the second center can solve several problems on the spot – eliminate problems with transportation, improve customer demand, and reduce the risk of overproduction. Finally, the integration of the web-based supply management to the North American region can also be advantageous for the company’s profitability and performance. The transportation system, distribution lines, and modes of productions will be greatly optimized.

Purpose of the Paper

The primary goal of the project is to provide an analysis of ZARA’s logistics process to identify the weaknesses and suggest corresponding improvements. The report, therefore, will provide information about the past and current practices of the company’s supply chain management to highlight the differences and track the existing inconsistencies.

A careful analysis of inbound and outbound logistics, as well as understanding the role of the information flow within the organization will also contribute to providing viable solutions and recommendations to the company’s strategies in the field of supply chain management.

Background Information about ZARA

ZARA is a Spanish fashion clothing and accessories chain of stores that was originally based in Arteixo, Galicia. It was organized as the joint venture of the Inditex group and as a new holding company in 1975 (About ZARA, n. p.). Since 1976, the Spanish network of stores has been expanded in a great number of cities all over the world. Its main concept consists in spreading a single fashion culture outside the national frontiers.

In addition, the venture owns such famous brands as Pull and Bear, Stradivarius, Massimo Dutti, and Bershka (About ZARA, n. p). ZARA has introduced the new trend of distributing fast fashion production to the developing countries. This unconventional strategy is also emphasized by a zero advertising policy to invest more moneys in creating new stores in different countries.

ZARA Supply Chain: the History

The company was founded by Ortega Gaona who has introduced an alternative outlook on the concept of clothes that should be consumed quickly rather than held in cupboard. The company has become the leading brand of the Inditex group due to its exclusive strategies and marketing concepts.

In 1975, ZARA began selling the clothes in the native city (Dutta 2). Later, the popularity of brand was spread to other cities and neighboring countries. The major marketing concept, therefore, consisted in distributing democratized fashion to masses. Because the marketing strategy was successful, the network of chains appeared in such leading cities as New York, London, Rome, and Paris.

The main scope of the company’s supply chain management lies in distributing a cheap but fashionable garment within 2 weeks. In order to meet the deadlines, garment is produced in limited supplies, which also enhances the concept of exclusivity. Hence, the retail concept is based on rapid replenishment and regular creation of small amounts of new accessories and clothes.

Judging from this philosophy, the speed of manufacture is extremely high and, therefore, the effectiveness of the product distribution largely depends on the constant information exchange throughout each stage of the company’s supply chain (Ferdows et al. n. p.). ZARA’s managers realize that performance measures, office layouts, and operational procedures can be carried out properly in case the information transparency and quick data transmission is ensured.

Flow and Cycle Diagram Identifying the Flow of Materials, Money, and Product

The network’s supply management concept is closely connected with time-based competition allowing to source products at the international level. These factors contribute greatly to trades off that have been introduced in order to develop strong relationships with supply chain managers all over the world. In this respect, Zara also supports this concept, as presented in the flow diagram below:

Regarding the diagram, the process of supply starts with cross-functional teams cooperating with the company’s design department located in La Coruna. The team’s perception of the leading fashion trends is further directed by regular inflows of EPOS information from ZARA’s stores from all over the world (Dutta 3). Further, the marketing specialists proceed to consult the supplies concerning the prices, costs, and margins (Dutta 3).

In order to define the volume of the production and establish deadlines, a global sourcing policy provides a wide variety of fabric supplied from different countries. Such an approach significantly reduces the risk of delays because if one supplier is unavailable, there are many other fabric producers to rely on.

Hence, about 40 % of garments are imported whereas the rest is produced in Spain (Dutta 5). Further, the finished products are price-tagged and labeled in La Coruna, the company’s distribution center. The entire production cycle lasts two weeks to gain a time-based competitive advantage and surpass its North American and European rivals.

ZARA Transportation Strategy: Past Key Decisions

For the purpose of controlling the marketing costs, Zara prefers creating prime retail locations to spending money on advertising and attracting the buyers to their stores. As a result, the company spends about 0.3 % only for advertising campaigns instead of 3.5 % spent by its competitors (Dutta 6). Importantly, the company prioritizes the importance of choosing highly notable locations, which makes advertising unimportant.

Unlike other leading retailers located in North America and Europe, Zara’s managers do not outsource their production completely. On the contrary, they locate about 80 % of production in Europe, near the headquarters in Spain to take closer control of the facilities (Dutta 4). Such an approach provides a greater extent of flexibility and minimizes the risk of failure. In addition, the production of limited quantities also enhances the effectiveness of risk management, as well as speed up the supply chain process.

The inventory management is sufficiently ensured by effective IT solutions. At this point, the information and communication networks that the company uses produce cost advantages to operations and allow to follow the fundamental principle of reacting quickly to the shifts in demand.

In addition, success and flexibility allows the company’s managers to define quickly the deadlines of production due to short lead-time, variety of fashion trends, and limited supplies (Ferdows et al. n. p.). In whole, ZARA’s inventory model is based on three main pillars: inventory in store, warehouse inventory, and demand forecast that is closely controlled by the creative departments.

Transportation

Because ZARA is more inclined to use high technologies for transporting and distributing products, the matter of transportation is indispensible for carrying out two-week shipments to stores (Stewart 10). The fabrics and other materials are also quickly distributed because the supplying centers are located near the headquarters.

ZARA Supply Chain: Problems & Weaknesses

Despite the incredible results that ZARA retailer has achieved, it can face a number of challenges that can create serious problems. These limitations can be connected with just-in-time management, transportation system, excess emphasis on technologies, and inappropriate management of human resources (Gallagher 4).

In addition, the transportation process and shipment of materials within the regions can also undergo unforeseen complications in the form of natural disasters, whether, terrorism, political disturbances, or labor strife (Gallagher 6). The disconnection between the center and creative department can significantly halt the information exchange within the network throughout the globe.

Aside from the operation vulnerabilities, the challenges can also be connected with financial problems. In particular, due to the fact that the low-cost regions are supported either by dollar or by Euro, the currency fluctuations can negatively influence the cost management at ZARA.

Such a situation can lead to increase in profit margins and transportation costs. It should be stressed that a twice-weekly model of delivery is directly associated with the transportation costs and, therefore, the circumstance can become the key to ZARA’s failure to control costs (Gallagher 7).

Because the time is one of the core advantages of the company, it should take possible challenges into deeper consideration. The evaluation of rivals’ strategies is also crucial for predicting their further steps because more and more companies have been emulating the vertically integrated supply chain system introduced by ZARA.

Finally, apart from strict monitoring of consumer demands, the company’s managers should also take a closer look at the economic conditions (Dutta 3). Specific, the recession periods can make consumer buy less and shift a share of wallet to lower-cost offerings (Gallagher 6). In order to eliminate the emerged threats, the firm should conduct an in-depth analysis of future marketing opportunities.

ZARA Supply Chain: Evaluation of Web-Based Processes

Existing web-based supply chain systems and processes related to electronic data interchange.

As it has been presented above, ZARA has successfully implemented a quick response program ensuring effective production and distribution of products. Hence, excess inventory and overproduction have been incorporated into the idea of customized retailing through a vertically integrated channel (Cheng and Choi 13).

In order to monitor all stages of supply, effective informational technologies and web-based supply chains should be introduced (See Appendix 1). In order to ensure quick information flow, Electronic Data Interchange (EDI) is crucial for Quick Response program being a fundament technology for processing the received data between the distributors and manufactures (Leeman 142). More importantly, the technology has been the core factor enabling technology for replenishment and efficient coordination of a supply chain process.

Provided by ERP system, this mechanism is indispensable to handling distribution and logistics processes. In addition, the information flow process is significantly enhanced through the introduction of intranet communication. The company’s intranet is necessary for a holistic evaluation of the incoming suggestions concerning the product design and price (Leeman 143). As a result, the firm designs about 10 thousand items annually.

Assistance of Web-Based Technologies in Integration and Collaboration Processes

Effective information exchange is the main condition for implementing collaborative and integrative practices. In contrast to the traditional ordering process, ZARA retailers provide the producers with all necessary information that is impossible to handle manually (Schneider 240). Second, using intranet networks enables constant flow of information and allows ZARA to eliminate the threat of overproduction.

Importantly, the integration between business activities contributes to developing information distribution leading to a tangible increase in performance and productivity. Due to the fact that the primary goal of an ERP system consists in integrating information and activities from diverse functional departments of a company, the introduction of workflow information systems can improve the data exchange and provide transparency and accuracy of communication (Dutta 7).

At this point, vertically integrated types of supply chain management require technologies that can embrace information from operational applications. In order to meet the challenges of remote data processing, the company can introduce technological systems combining the analysis of both external and internal data.

ZARA Logistics: Recommendations & Implementation Plan

Strategies for four key decision areas of supply chain.

The introduction of another distribution center can eliminate possible risks that a vertical integration system of supply presents. In order to sustain a competitive advantage and growth, ZARA should seek alternative opportunities for the global expansion in the apparel market.

In this respect, the company should develop another distribution center in the United States to diminish the logistics level and deliver fashionable clothes in a timely manner. At this point, it is possible to develop smaller distribution centers located in Brazil, Argentina, or Mexico, which enhances the possibility of meeting the demands of the American customers.

The production process can be significantly fostered through investment in Internet retailing directed toward the American market. Online marketing strategy can advance the expansion process to the U. S. market. In addition, the company should also introduce specialize products with regard to various geographic locations.

Inventory system can be improved in case Electronic Data Exchange systems are introduced as powerful tools for integrating and collaborating the internal and external data obtained from stores, designers, and marketing specialists.

The existence of several retail centers can decrease the transportation costs because air shipments are much more expensive due to the rise of prices on fuel.

Functional Decisions Based on the Established Strategies

The presented strategies do not provide tangible shifts to the vertically integrated systems of the company’s supply chain. ZARA’s managers, therefore, only need to develop the second retailing center with similar structure. The existence of additional retailing department can deprive the headquarters of certain responsibilities and provide greater control of other regions.

The integration of IT systems will eliminate the problems of coordination between the two newly introduced centers. In addition, the re-organization process will touch on the design sphere because the American department will be specifically oriented on web-based supply chain process. Hence, part of responsibilities will be imposed on this department and, as result, there will be designers oriented on different geographical regions.

Rationale for the Identified Strategies

The development of the second retail center in the American region can enable the international company to foster the policy of global expansion. What is more important, the company can create a solid platform for controlling the financial and economic conditions in the world.

As per the production process strategies, U. S. consumers are most likely to buy goods without going outside because they feel more comfortable while having more time to select a product. Further, culturally and socially oriented policy of manufacturing can have a potent impact on the increase in consumer demand. Finally, the transportation and inventory can also be improved with the integration of effective ERP systems enhanced by Electronic Data Exchange systems.

Recommendations for ZARA Supply Chain

Excessive emphasis on vertical integration system can create a threat to the effectiveness of global expansion of the world-known retailer. In this respect, ZARA should develop several other creative departments that would control certain regions.

The re-organization, therefore, can greatly increase the customer demands because the department will be specifically oriented on a particular cultural group. Hence, the centers can be coordinated by means of EDI mechanisms integrated by ERP systems that provide greater control and increase the production volumes all over the world. In whole, such a strategy enhances ZARA’s competitive advantage.

“ About ZARA ”. ZARA. 2011. Web.

Cheng, T. C. Edwin, and Tsan-Ming Choi. Innovative Quick Response Programs in Logistics and Supply Management . UK: Springer, 2010. Print.

Dutta, Devangsgu. Retail: The Speed of Fashion . 2002. Web.

Ferdows, Kasra, Michael A. Levis, and Jose A. D. Machura. “ Zara’s Secret for Fast Fashion ”. HBS Working Knowledge. 2002. Web.

Gallagher, John. “ ZARA Case: Fast Fashion from Savvy Systems ”. Gallaugher.com. 2008. Web.

Leeman, Joris. Supply Chain Man agement. US: Books on Demand, 2010. Print.

Schneider, Gary. Electronic Commerce. New York. Cengage Learning, 2010, Print.

Stewart, Thomas A. “Bound To Fail, Or Set Up To Succeed?.” Harvard Business Review Nov. 2004: 10.

Appendix 1: Vertical Supply Chain

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2024, March 26). ZARA Logistics System & Transportation Strategy. https://ivypanda.com/essays/zara-analysis-of-logistics-systems-report/

"ZARA Logistics System & Transportation Strategy." IvyPanda , 26 Mar. 2024, ivypanda.com/essays/zara-analysis-of-logistics-systems-report/.

IvyPanda . (2024) 'ZARA Logistics System & Transportation Strategy'. 26 March.

IvyPanda . 2024. "ZARA Logistics System & Transportation Strategy." March 26, 2024. https://ivypanda.com/essays/zara-analysis-of-logistics-systems-report/.

1. IvyPanda . "ZARA Logistics System & Transportation Strategy." March 26, 2024. https://ivypanda.com/essays/zara-analysis-of-logistics-systems-report/.

Bibliography

IvyPanda . "ZARA Logistics System & Transportation Strategy." March 26, 2024. https://ivypanda.com/essays/zara-analysis-of-logistics-systems-report/.

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What is Sales & Operations Planning?

The 4 supply chain metrics, static inventory an untapped source of working capital, s&op, a vision for the future. an interview with eric tinker, improving behaviours in support of world class s&op: coach for excellence.

• Planning & Forecasting Articles

How Can Data Improve Supplier Decisions

Information-based negotiations in the digital age, hurt, help or hero how to define and get more out of your most important suppliers, how to spot supplier risk during pickups & deliveries, how to spot supplier risk during on-site evaluations.

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The Long Tail of Inventory and Why It’s Important

No more excuses: transformative iot is staring you in the face, predictive analytics let manufacturers see more clearly into their supply chains, rise of the grocers, how 3d printing is set to shake up manufacturing supply chains.

• Manufacturing & Production Articles

6 Tips for Maximizing Efficiency and Productivity of Warehouse Operations

Robot trucks or autonomous vehicles will revolutionize the supply chain, data integration made sexy, how to avoid the most common warehouse safety hazards, out darn spot out, i say.

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Returns – A Threat to the Bottom Line or an Opportunity to Cut Costs?

Supply chain sustainability takes root, why the 2030 sustainable development goals matter to packaging professionals, to build sustainable products, listen to your customers, getting packaging costs down to size.

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Transform Your Supply Chain For Omnichannel

The impact of maintenance operations on supply chain management, is your supply chain strategy inside-out or outside-in, how industry benchmarks can boost your asset recovery, supply chain visibility: we should be striving for more.

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Accelerating the Shift to More Efficient Trucks

Insight – is it ok to lie, supply chain execution software convergence, 3d printing and the supply chains of the future, changing the production performance metric, supply chain management case study: the executive’s guide.

By Supplychainopz

Professionals in supply chain management use various methods to determine how to improve the performance of supply chain operations. Analysis of case study is certainly one of the most popular methods for people from business management background. In order to accelerate the learning, this article has gathered 20+ most sought-after supply chain case studies, analyzed/categorized them by industry and the findings are presented.

Boeing wants to encourage more flight frequency and direct route using a smaller capacity aircraft. Then they decide to outsource many things such as the design, testing and production of key components to key industrial partners and try to reduce number of components that go to assembly. The ultimate goal is to finish the final production process within 3 days. Airbus takes a bit different marketing approach. They want to utilize high capacity airplane to help airlines drive the operating cost down. They decide to selectively outsource the production of parts and keep the design and production of key components in-house.

Supply Chain of fashion industry involves a time based competition. Many customers have the unique product needs but a competition is very fierce because of the low barriers of entry. Many new players try to offer specialized products to customers all the time. This section features the supply chain case studies of H&M, Benetton, Zara and Adidas. –  H&M  aims to be the price leader in the fashion market.In order to materialize its vision, H&M tries to eliminate the middlemen in various stages of supply chain and consolidate the buying volumes. Product design is also the central part of its strategies. They don’t try to follow the high fashion designs but try to adopt the street trends which are easier to produce. At the end of the day, they can bring products to market within 2-3 weeks. –  Benetton , in contrast, chooses to have a full control of its production but allow its licensees to operate the stores so they can focus on production and quality control. The reason is that they would like to create the worldwide brand awareness. For fast moving products, they use the production facilities in Europe. Asian suppliers will perform production for standardized products. –  Zara  is very famous for its time based strategy. In order to launch a new product within 15 days, Zara uses a small lot production. A new product will be tested in pilot stores. If product sales is good, a larger batch will be ordered. Otherwise, remaining products will be removed from the shelves and sold as mark-down in other stores. This creates the perception among consumers that Zara’s products are unique and you have to take it while stock lasts. Vertical integration contributes to the success of Zara, they own the majority of its production facilities and stores (this is the reason why Quick Response can be effectively implemented). Its automated distribution centers are strategically located between the center of populations so products are delivered to stores quickly. Zara also works with Air France, KLM Cargo and Emirates Air in order that they can coordinate directly with the airlines to make the outbound shipments to its stores and bring back some raw materials and semi-finished materials with return legs. The last supply chain case study in the fashion retailing industry is  Adidas . In order to cope with changing customers’ demand, they decide to undertake Mass Customization strategy. The whole idea is to develop, market and deliver the product variety that most customers will find what they want. The first steps towards mass customization is to strategically offer the product choices. Too few variations will disappoint a customer but too many variations will simply postpone a buying decision. After that, Adidas asks the same key suppliers to produce custom components in order to achieve the economy of scale. In order to compensate a long waiting time, Adidas uses air freight or courier service. The reason why they can do this is that customized products are sold directly to customers so they have the higher profit margin to compensate the higher transportation cost. Supply chain strategy of the fashion retailing industry is summarized as below,

FMCG industry is typically the products sold to customers at a low cost and will be completely consumed within 1 year. The nature of this industry is the short product life cycle, low profit margin, high competition and demand fluctuation. This section will present the case studies of P&G, Unilever and Coca-Cola respectively. Forecasting and new product introduction has always been the issues for many FMCG companies,  P&G  is no exception. To cope with this, P&G conducts a merchandise testing at the pilot stores to determine the customer’s response to new product before the launch. The result is that the forecast accuracy is improved because a demand planner has an additional source data to make a better decision. Moreover, products can be shipped to stores in-time then lost sales is minimal. –  Unilever  also feels that the competition in FMCG industry has significantly increased. They have to launch the new products on regular basis but the forecasting of new product is difficult. So they create a better classification of new products (base, relaunch, repack, new) using a regression model to identify potential forecast errors for each type of new product. –  Coca-Cola  doesn’t really have many stock keep units when compared with other companies in the same industry. However, products go to over 2.4 million delivery points through over 430 distribution centers. Managing transportation at this scale is the absolute challenge. In order to streamline the delivery, Coca-Cola implemented a vehicle routing software. The reason is that is the software vendor has a very good relationship with Coca-Cola’s legacy ERP software vendor. Moreover, the vendor has a solid connection with the university who can help to develop the algorithm that fits in with the business’ needs. The result is that transportation planners at each distribution center can use the new tool to reduce travelling time/distance on daily basis.

Lean manufacturing concept has been implemented widely in the automotive industry so the case studies about lean manufacturing is very readily available. Due to the increasing competition in the automobile industry, car manufacturers have to launch a new model to the market more frequently. This section will show you how BMW manages a long term planning, how Ford applies lean concept to the new product development and how Hyundai manages the production planning and control. –  BMW  uses a 12-year planning horizon and divides it into an annual period. After that, they will make an annual sales forecast for the whole planning horizon. After the demand is obtained, they divide sales into 8 market and then select the appropriate production sites for each market, considering overall capacity constraints and total cost. As you may notice, this kind of a long range planning has to be done strategically. –  Ford  calls its product development system as “work streams” which include the body development, engine development, prototyping and launch process . The cross-functional team are the experts and their roles are to identify key processes, people, technology necessary for the development of new prototype. Each work stream team is responsible to develop timeline of each process. Detailed plan is usually presented on A3 sized paper. They clearly identifying current issues they are facing with supporting data, drawings and pictures. On weekly basis, they organize a big group meeting of all work stream team to discuss the coordination issues. –  Hyundai  deploys a centralized planning system covering both production and sales activities across the facilities and functional areas. They develop a 6-month master production plan and a weekly and a daily production schedule for each month in advance. During a short term planning (less than one month), they pay much attention to the coordination between purchasing, production and sales. Providing a long term planning data to its suppliers help to stabilize production of its part makers a lot.

Life cycle of technology products is getting shorter and shorter every day. Unlike FMCG, the launch of a new product in the hi-tech industry requires the investment in research and development quite extensively. Then, a poor planning will result in a massive loss. This section will cover JIT and outsourcing by Apple Inc, Supply Chain Risk Management by Cisco System, Technology Roadmap by Intel, Supply Chain Network Model by HP, Mass Customization by Dell and Quality Management by Sam Sung. Steve Jobs invited the Tim Cook to help to improve  Apple’s Supply Chain  in 1998. Jobs told Cook that he visited many manufacturing companies in Japan and he would like Cook to implement the JIT system for Apple. Jobs believed that Apple’ supply chain was too complex then both of them reduced the number of product availability and created 4 products segment, reduced on hand inventory and moved the assembling activities to Asia so they could focus on developing the breathtaking products that people wanted to buy. –  Cisco Systems  would like to be the brand of customer choice so they implement a very comprehensive supply chain risk management program by applying basic risk mitigation strategies, establishing appropriate metrics, monitoring potential supply chain disruptions on 24/7 basis and activate an incident management team when the level of disruption is significant. –  Intel ‘s new product development is done by the process called Technology Roadmap. Basically, it’s the shared expectations among Intel, its customers and suppliers for the future product lineup. The first step to prepare the roadmap is to identify the expectations among semiconductor companies and suppliers. Then they identify key technological requirements needed to fulfill the expectations. The final step is to propose the plan to a final meeting to discuss about the feasibility of project. Some concerning parties such as downstream firms may try to alter some aspects of the roadmap. Technology Roadmap allows Intel to share its vision to its ecosystem and to utilize new technology from its suppliers. –  HP ‘s case study is pretty unique. They face with a basic question, where to produce, localize and distribute products. Its simple supply chain network model is presented below,

From this example, only 3 possible locations result in 5 different way to design the supply chain. In reality, HP has more production facilities than the example above so there are so many scenarios to work with. How should HP decide which kind of a supply chain network configuration they should take to reduce cost and increase service to customer? The answer is that they use the multi-echelon inventory model to solve the problem. –  Dell  is one of the classic supply chain case studies of all time. Many industries try to imitate Dell’s success. The key ingredients of Dell’s supply chain are the partnership with suppliers, part modularity, vendor managed inventory program, demand management and mass customization. Also, you can find the simplified process map of Dell’s order-to-cash process as below,

–  Sam Sung  has proven to be the force to be reckoned with in the hi-tech industry. The secret behind its supply chain success is the use of Six Sigma approach. They studied how General Electric (GE), DuPont and Honeywell implemented six sigma. After that, they have created their own implementation methodology called DMAEV (define, measure, analyze, enable, verify). They use the global level KPI to ensure that each player in the same supply chain is measured the same way. Also, they utilize SCOR Model as the standard process. Any process changes will be reflected through an advance planning system (APS).

The last industry covered here is the general merchandise retailing industry. The critical success factor of this industry is to understand the drivers of consumer demand. Four case studies will be presented, namely, 7-11, Tesco, Walmart, Amazon and Zappos. –  7/11  is another popular case study in supply chain management. The integration of information technology between stores and its distribution centers play the important role. Since the size of 7/11 store is pretty small, it’s crucial that a store manager knows what kind of products should be displayed on shelves to maximize the revenue. This is achieved through the monitoring of sales data every morning. Sales data enables the company to create the right product mix and the new products on regular basis. 7/11 also uses something called combined delivery system aka cross docking. The products are categorized by the temperature (frozen, chilled, room temperature and warm foods). Each truck routes to multiple stores during off-peak time to avoid the traffic congestion and reduce the problems with loading/unloading at stores. –  Tesco  is one of the prominent retail stores  in Europe. Since UK is relatively small when compared with the United States, centralized control of distribution operations and warehouse makes it easier to manage. They use the bigger trucks (with special compartments for multi-temperature products) and make a less frequent delivery to reduce transportation cost. Definitely, they use a computerized systems and electronic data interchange to connect the stores and the central processing system. –  Wal-Mart ‘s “Every Day Low Prices” is the strategy mentioned in many textbooks. The idea is to try not to make the promotions that make the demand plunges and surges aka bullwhip effect. Wal-Mart has less than 100 distribution centers in total and each one serves a particular market. To make a decision about new DC location, Walmart uses 2 main factors, namely, the demand in the proposed DC area and the outbound logistics cost from DC to stores. Cost of inbound logistics is not taken into account. There are 3 types of the replenishment process in Wal-Mart supply chain network as below,

In contrary to general belief, Wal-mart doesn’t use cross-docking that often. About 20% of orders are direct-to-store (for example, dog food products). Another 80% of orders are handled by both warehouse and cross dock system. Wal-Mart has one of the largest private fleet in the United States. The delivery is made 50% by common carriers and 50% by private fleet. Private fleet is used to perform the backhauls (picks up cargoes from vendors to replenish DCs + sends returned products to vendors). Short-hauls (less than one working day drive) is also done by the a private fleet. For long-hauls, the common carriers will be used. There are 2 main information system deployed by Wal-Mart. “Retail Link” is the communication system developed in-house to store data, share data and help with the shipment routing assignments. Another system is called “Inforem” for the automation of a replenishment process. Inforem was originally developed by IBM and has been modified extensively by Wal-Mart. Inforem uses various factors such as POS data, current stock level and so on to suggest the order quantity many times a week. Level of collaboration between Wal-Mart and vendors is different from one vendor to the other. Some vendors can participate in VMI program but the level of information sharing is also different. VMI program at Wal-Mart is not 100% on consignment basis. –  Amazon  has a very grand business strategy to “ offer customers low prices, convenience, and a wide selection of merchandise “. Due to the lack of actual store front, the locations of warehouse facilities are strategically important to the company. Amazon makes a facility locations decision based on the distance to demand areas and tax implications. With 170 million items of physical products in the virtual stores, the back end of order processing and fulfillment is a bit complicated. Anyway, a simplified version of the order-to-cash process are illustrated as below,

Upon receipt of the orders, Amazon assign the orders to an appropriate DC with the lowest outbound logistics cost. In Amazon’s warehouse, there are 5 types of storage areas. Library Prime Storage is the area dedicated for book/magazine. Case Flow Prime Storage is for the products with a broken case and high demand. Pallet Prime Storage is for the products with a full case and high demand. Random Storage is for the smaller items with a moderate demand and Reserve Storage will be used for the low demand/irregular shaped products. Amazon uses an propitiatory warehouse management system to make the putaway decision and order picking decision. After the orders are picked and packed, Amazon ships the orders using common carriers so they can obtain the economy of scale. Orders will arrive at UPS facility near a delivery point and UPS will perform the last mile delivery to customers. Amazon is known to use Sales and Operations Planning (S&OP) to handle the sales forecast. Anyway, this must be S&OP process at product family/category level. To compete with other online retailers,  Zappos  pays much attention to the way they provide the services to customers. In stead of focusing on the call center productivity, Zappos encourages its staff to spend times over the phone with customers as long as they can so they can fully understand the customer’s requirements. They also upgrade the delivery from 3 days to 1 day delivery in order to exceed customer expectation.

All case study demonstrates that supply chain management is truly the strategic initiatives, not merely a cost cutting technique. Leading companies have a very strong customer focus because almost all of initiatives are something to fill the needs of customers. Relationship management is the unsung hero in supply chain management. It’s the prerequisite to the success of every supply chain. And at the end of the day, it comes down to the quality of supply chain people who analyze, improve and control supply chain operations. – See more at: http://www.supplychainopz.com/2014/04/supply-chain-management-case-study.html#sthash.MrnrGsyY.dpuf

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