Case Study 1 Report
Vineeth Jojo, ID-991292949
Submitted To: Scott Hadley
Submission Date: 16/01/2013
Road Machinery Manufacturing Company
The role of the responder: Ray Wilkins (Materials Manager)
RMM is a privately owned company that manufactures construction equipment, adding the functional body and operational control systems to a customer-provided chassis and front end. RMM has their major share of business in North America and United States and are planning to increase its market share in North America by 25 per cent in the next five years and also to expand to South America and Mexico. A financial crunch led the company to shift the courier services from QPS to Roomis. The report compares the benefits and disadvantages of continuing with this service. This report will give us detailed analysis report on the key issues faced by the company, which are required to make decision to go ahead, and also the recommendations to tackle this situation. Key Issues
1. Reluctance of suppliers to shift from QPS
* The suppliers were reluctant to shift from QPS to Roomis and they started prepaying the freight and billing RMM for it. * This would mean the company will have to pay more and going forward with the option of Roomis will not be a profitable. * This issue can be measured in monetary value as the company have already invested in the software and hardware of Roomis not opting to go forward with them would meant the invest the company made would be sunk cost.
2. Transportation issues
* Cross border transportation of goods requires an agent that needs to be hired by the company which again adds to the cost of transportation. * Also Natex acting as a secondary player in US and not meeting the requirements of the company adds to cross border transportation issues. * Roomis not delivering on time can cost RMM their market share as delays ruin the goodwill relationship between the customer and the company.
3. QPS over pricing their service
* Even if the company wants to shift back to the previous courier service QPS, QPS wants RMM to pay a minimum deposit against any shipment sent. * Also QPS do not give any flexibility against payment and would stop shipment if the cash balance on hand dropped too low which can cause delay and cause RMM market share. 4. Another minor issue would be whether to present this case to the management in the upcoming management meeting. Analysis:
* Quality Parcel Service Company (QPS)
They have maintained a seamless network in North America and received 80 per cent of RMM’s courier business. Even though they had a delivery norm of delivery on the next day it has changed since the Sept 11 incident to delivery within 2 days. They want cash up front prior to the shipment and do not grant RMM any flexibility in payment and threaten to stop shipment if the deposit on hand went too low. RMM is in a financial squeeze and to pay QPS upfront is an issue. This is one of the major reasons for RMM to shift to another courier service Roomis which offers better rates and flexibility of payment options. Another minor reason to shift QPS was that they delivered packages with damages occasionally. * Roomis
They are the present courier service provider of the company and deals with the shipment in Canada. They have allied with Natex a secondary company which operates in US to transport goods from US to other parts. They provide cheaper rates and greater flexibility in payment options. They are also receptive to customer response and cooperative with RMM for any improvement in their service levels. As the suppliers are reluctant to shift to Roomis RMM is finding it difficult to gain operational gains in shifting to Roomis. If the company is to make full use of the investment they made in Roomis they need all the shipments to be carried out by...