Denver Transportation Club 2017 Collegiate Competition

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Jemima Charles
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1 Denver Transportation Club 2017 Collegiate Competition Case Study: The Better Baby Boomer Blender Company The Company Overview: The Better Baby Boomer Blender Company (4BC) is a United States based company that makes kitchen appliances. Senior management has decided to add a new product to the quality line of personal kitchen appliances; the new Model A1 Blender. In order to remain competitive in the personal appliance industry, it has been decided to outsource the parts needed to assemble their high-quality blender by sourcing from new suppliers located in other countries. Company Strategy: The corporate strategy of the Better Baby Boomer Blender Company (4BC) is to source parts and components away from the current U.S. supply base and source from the Asian and/or Latin American markets with the focus being to lower costs while still maintaining high quality for the product. The potential target countries are: China Chile Taiwan Brazil Philippines India Malaysia Australia S. Korea Vietnam Japan Argentina Company Information: Company Name: The Better Baby Boomer Blender Company, a.k.a. 4BC Company corporate location: 1000 Peachtree Street, NE, Atlanta, Georgia Company manufacturing location: 123 Main Street, Columbus, Georgia CEO and Founder: Bill Boomer Goode Company Founding 2009 Annual sales: $600 Million Number of employees: 150 Product offerings: Consumer goods appliances -Microwave ovens, food processers, toaster ovens, all models of coffee making appliances and grinders. A new item has been presently introduced - high-end market consumer blender.

2 Case scenario: The Better Baby Boomer Blender Company (4BC), is looking to enter the global consumer goods market. The sourcing manager, Jim Cox is responsible for sourcing components and parts that make up the Better Baby Boomer Blender Model A1. This is a new model to the product line offering and in order to be competitive with the company s industry competition, it is his initiative to find new global sources of supply. Jim feels that the best way to achieve this requirement is to put the sourcing task and total supply chain responsibilities out to bid to global consultancy companies who can act as a virtual company to manage the entire supply chain process for 4BC. Because of this initiative and through a thorough bidding process, Jim and his team selected the Atlas Logistics Consulting Company as Jim s 3PL solution partner. You are employees of the Atlas Logistics Consulting Company and your company was selected to implement and manage the 4BC complete supply chain process. Atlas is a 3PL global consulting firm that specializes in being a 4PL solution provider that designs strategic supply chain and logistics solutions for companies with revenues below $2 billion. Jim has called a strategic planning meeting with the Atlas team and together they discussed the requirements needed to develop an effective and efficient strategic sourcing solution for the Better Baby Boomer Blender Company (4BC). Jim is looking towards the Atlas team to be his department to manage the entire supply chain process for the new blender. Jim s requirements and directions to the Atlas team are: Put out an industry bid for the manufacturing volumes for all the parts of the Modal A1 blender. Identify suppliers by country and establish a production schedule from each manufacturing point of the supplier. This production schedule should indicate daily production lead-time to meet the weekly production of the blender parts. Only choose four (4) countries with each country specialty by makeup of the parts i.e. plastic, metal/steel, glass, and motor. Put out an industry bid for freight volumes to select the best global solution for a smooth, controlled logistics process through a global freight forwarder, obtaining best prices and customs brokerage capability. Develop a Gantt chart reflecting production lead-times and ocean transit-times for each sourced country showing all parts arriving in the same week at Columbus, Georgia the final destination for the Better Baby Boomer Blender Company. Develop a Total Cost of Ownership (TCO) spreadsheet for Jim to reflect last year s sourcing model s total annual costs compared to the new sourcing model s projected costs. Jim needs the 2017 TCO to be more accurate in that the total costs of manufacturing and logistics including custom s duty and clearance charges are to be included into the individual part s total cost. Help identify the list of blender parts with the descriptions and harmonized reference numbers from the Harmonized Tarff Schedule (HTS) to make sure that the 4BC s import activity complies with U.S. Customs and that all duty charges are identified. Generate the necessary Customs import documentation for establishing The Better Baby Boomer Blender Company as a recognized U.S. Importer and those documents that will support the role of customer brokerage for the freight forwarder.

3 Product Break-down Note: Part number 4 is part of part number 3 and sourcing should be for part 3. Part number 8 and 9 are manufactured as one combined part therefore part #8 is not an individual loose part and your sourcing should be for part #9 Product/Parts Characteristics #1. Feeder Cap made of regular plastic #2. Cover - made of regular plastic #3. Blender Jug made of glass #4. Lug part of blender jug #5. Sealing Ring made of standard rubber #6. Agitator Blade made of stainless steel #7. Container Bottom regular hard plastic #8. Stop part of container bottom. #9. Motor Base 37 watts of output maximum with 19 watts minimum, AC motor current.

4 Product Facts for the Better Baby Boomer Blender Model A s market production: 3,600,000 units target of production: 4,600,000 units s unit costs and carton counts/weights per part (all costs in US dollars) o #1 Feeder Cap $.60/ea. 500/10lbs o #2 Cover $1.25/ea. 200/10lbs o #3 Blender Jug $1.95/ea. 24/50lbs o #5 Sealing Ring $.02/ea. 3000/ 5lbs o #6 Agitator Blade $2.96/ea. 100/10lbs o #7 Container Bottom $.90/ea. 100/10lbs o #9 Motor (38watts) $4.50/ea. 36/50lbs Unit production cost: $12.18/ea. part US Transportation costs: $.20/ea. part Total inventory cost $12.38/per blender Target Retail selling price: $36.27/per blender

6 Note: Air freight delivery via truckload from Atlanta to Columbus, Ga. is a flat price of $500 Note: transit time are in calendar days.

7 Things to know Note 1: You are working with a 12-month year, but only 50 weeks of manufacturing by 4BC. Note 2: The warehouse space at the plant in Columbus, GA. only has available space to hold one (1) weeks worth of parts inventory. There is room in the yard at the plant for holding 45 full ocean containers. Note 3: Work with a 50 weeks-in-a-year schedule to establish your annual production schedule for all Note 4: For establishing transportation costs per unit, you must figure out the entire cost of the standard consistent method of shipping a specific part (unit) and divide the total freight cost by the total units in the shipment. Note 5: Fuel surcharges are applied to the cost of freight/transportation according to the mode of transport. This cost is part of the total transportation costs and is part of the unit cost calculation as stated in the carrier freight cost chart above. Note 6: Duty charges are the percentages applied on imports of your units based upon the total value of the units in the shipment. Transportation costs and fuel surcharges are not part of the calculation for duty charges. Note 7: The phrase door-to-door is a freight cost phrase that means the cost of moving a shipment from your supplier s facility shipping dock (door) to your final destination s facility receiving dock (door) is an all-inclusive cost for freight. Fuel Surcharge is an extra cost and is not part of the Door-to- Door freight costs. Note 8: The manufacturing plant in Columbus, GA has limited warehouse space and can only hold one week s worth of parts needed for a weekly production schedule and requires all parts need to be delivered to the plant one week before each week s production schedule. The plant works on a 24/7 modal with three shifts. Note 9: Manufacturing (4BC): The plant in Columbus, Ga. produces an equal amount of blenders each week with the annual blender quantities made within a 50-week work year. The plant shuts down the last week in December and the first week in January. Note 10: Suggest that you spend some time looking at to see what is involved in import documentation. Note 11: Go to: to find the appropriate descriptions and duty rates in the Harmonized Tariff Schedule for the items you will be importing.

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