Presented by• Arka Jyoti Paul• Rajesh Kumar • Muggi Sowmya• Kondala Prabhavati• Rani Garg
Audio Duplication Services, Inc. (ADS)
Introduction to Case
ADS Inc. is a cassette and CD duplication and distribution services provider.
Three main parties indulged : a) ADS Inc. b) Big Record
Companies c) Large
national retailers
CURRENT SITUATIONRecord
companies
ADS Inc.
Large retailers‘ distribution centre
Retails
Orders are placed
Shipped
Finally reaches
(Different shippers ,Arm length’s transaction)
(order)
order
Requirement of Record Companies
Large record
companies
ADS
Orders
stores store
sstore
s
stores
1. Direct shipment
2. VMI implementation
VMI implementation
Options to evaluate
Purchase fleet of trucks to supply to retails - Costly deal
3PL implementation : Entire shipping
Take a decision of taking trucks on lease ( from warehouse to retailers)
High inventory holding cost at retails.
Unnecessary maintenance cost for Distribution Centers.
Q1: Why are ADS customers’ customer moving towards VMI arrangements?
Q2: (a)How will this impact ADS’s business?
Increase in shipping cost. Increase in inventory holding cost.
•Result in global optimization.•Reduce bullwhip effect maintaining high service level.• Strategic alliance(3PL) can be coordinated with VMI
(b) How can ADS management take advantage of this situation?
Q3: How should ADS manage logistics?
Logistics is not a core competency of ADS More crucial issues to deal with for ADS ADS Inc. should have strategic alliances.(3PL)
ADVANTAGES OF USING 3PL Provider:
Geographical location flexibilities. 3PLs generally have greater negotiating leverage with carriers 3PLs offer superior information services Expedited delivery & team trucking 3PLs offer greater shipment control through vendor relationship
management
Large record
companies
ADS
Warehousing
stores store
sstore
s
stores
stores
(Orders)
Suggested Model
(Strategic alliance here onwards)
VMI
Q4: Why are the large national retailers moving toward a direct shipment model?
Unnecessary complexity of handling Retailer’s Distribution Center
Reduce the inventory holding cost
Reduce further transportation costs for the retailers