Innovative Distribution Company Case 642483 Piyawat Oruc Saul

Innovative Distribution Company Case: 642483 Piyawat Oruc Saul Fierro Shay

Executive Summary Given the task to choose the Lowest Cost amongst 3 Supply Chains to IDC in Alliance, Texas • Cousins AG (Wahoo, Nebraska) • Dong Hai Supply (Chengdu, China) • Staberhofer Supply (Freising, Germany)

Questions 1 -11

Q 12–Additional Risk : IMO Implementation IMO Emissions Reduction beginning 2020 • 0. 5% Sulphur cap • Lower Sulphur Fuel Oil (LSFO) ▫ $300/MT (projected Cost for 2020) Hellenic Shipping News & American Bureau of Shipping

Q 12–Risk: IMO Implementation 15 days- Port of Rotterdam→ Port of Jacksonville 1000 TEU Container ship Consumes about 30 MT/day 15 days X 30 MT X $300/MT =$135, 000 365 day X 30 MT X $300/MT = $3, 285, 000 Shipping Companies will incur Fuel Surcharge Ship & Bunker

Question 13 Recommend and Support Improvement Install Scrubber • New Ship: $2. 5 - $3. 0 million • Existing vessel: $4 -$4. 5 million ROI within 14 months also depending on size of vessel Ship & Bunker

Packaging & Damaged Goods • UPS delivered the highest percentage of damaged carriers at 11%, followed by USPS at 10% and Fed. Ex with a 7% damage rating. By LENSDOTCOM on December 20, 2013 [https: //www. speedcommerce. com/2013/damaged-goods/] • As much as 11% of unit loads arriving at a distribution center have some level of case damage. On average, the figure is around 2%. By Gene Bodenheimer in Supply Chain on September 11, 2014 [https: //www. packagingdigest. com/supply-chain/mitigating-packaging-damageinthe-supply-chain 140910]

Packaging & Damaged Goods Standard box Value of item No. items shipped Damage percentage Total items damaged The maths… Total packaging cost 422$ Total damaged cost 1, 688$ 1. 00$ each 94$ each 422 item 1% 4 High-quality box Value of item No. items shipped Damage percentage Total items damaged Total cost 2, 110$ The maths… Total packaging cost 633$ Total damaged cost 844$ 1. 50$ each 94$ each 422 item 0. 5% 2 50% NA% 50% Total cost 1, 477$ 30% cost saving

Q 12 -Exchange rate Variation • a change in the exchange rate can raise costs • Example: • old exchange rate: 1 Yen = 0. 1585 $ • new exchange rate: 1 Yen = 0. 2 $ • old price: 80. 52 $ new price: 101. 60 $

Q 13 -Exchange rate variation. Recommendation • arrange a fixed exchange rate • no risk of variation

Q 12 -Risks: Containers lost at Sea 2008 - 2016: 1, 582 container per year lost 64% of Shipping container lost at sea due to catastrophic events ( World Shipping Council) 538 containers lost from bad shipping practices

Q 13 -Risk: Recommendation • Maintain proper inventory level • Insurance on cargo • Air Freight product

Sources https: //ww 2. eagle. org/content/dam/eagle/advisories-and-debriefs/ABS_Scrubber_Systems_Advisory_17125. pdf https: //www. hellenicshippingnews. com/the-dilemma-of-fitting-scrubbers/ https: //www. onthemosway. eu/18823 -2/? cn-reloaded=1 https: //shipandbunker. com/news/features/industry-insight/173331 -industry-insight-viability-of-scrubbers-for-different-type-ofvessels http: //www. petrolbunkering. com/price-information/ http: //www. worldshipping. org/industry-issues/safety/Containers_Lost_at_Sea_-_2017_Update_FINAL_July_10. pdf