Grainger: Reengineering the China/U.S. Supply Chain

1472 Words6 Pages
Exec Summary: W. W. Grainger, Inc. is recently thinking of redesigning the supply chain for shipments from China/Taiwan. The reason being as an obvious to reduce costs, lead times and to improve supply chain efficiency. The major issue identified was the lead time and a huge fixed overhead because of small shipments which then were consolidated by the company to make a full 40-feet container load. Through a thorough cost analysis and weightage of pros and cons of three alternatives, the team recommends to use an NVOCC (Non-Vessel operating common carrier) for small shipments which will lead to a lot lesser lead times and will help reduce costs as well. Along with this, the recommendation is also to increase packing efficiency for…show more content…
Now, it seems that small shipments are the issue and the question becomes what is causing Grainger to have such small shipments. Well Grainger Inc. sources from over 250 suppliers from China and Taiwan region and this is good type of sourcing whether it is because the nature of what each supplier can supply or as a part of contingency, whether or not it is a good sourcing strategy. So the issue is definitely not the Sourcing strategy of the company. So now the issue left that if the company cannot avoid small shipments then how to minimize the cost associated to the shipment of such small shipments. As of now the company is using a freight forwarder which consolidates small shipments to fill 20-feet or 40-feet containers. Cost Analysis: (Total Cost = $2,495,387.76) Shipment type Quantity Shipped (Total: 190,000 CBM) Load ability Total containers used Cost per container Other Costs Total 190000 CBM % Total Variable per CBM fixed 40-feet container (85%) 169100 133589 56.5 85% 48.025 2782 $ 600.00 NA NA $ 1,668,993.23 20-feet container (85%) 35511 27 85% 22.95 1547 $ 480.00 NA NA $ 742,713.73 Consolidated shipment (96% 0f 40ft.) 20900 20900 56.5 96% 54.24 385 $ 600.00 $ 1.50 $ 75,000.00 $ 337,544.69 Alternatives and Options: Shipment type

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