FRASER DIRECT BY CYNDI HORNBY

15 Jul FRASER DIRECT BY CYNDI HORNBY

Part A

On February 28, 2014 Steve Hogg, Director of Supply Chain Services with Fraser Direct, a third

party logistics supplier from London ON, learned that 1000 truckers and port workers went on

strike in Vancouver. Mr. Hogg had to find ways of moving customer goods to ensure continuity

of supply for a key customer.

General Company Background

Fraser Direct Distribution Services Ltd was started by Al and Lois Fraser in Georgetown, Ontario

in January 2000 as a third party logistics supplier. In October of 2010 it acquired BTC Logistics

in London, Ontario. They currently employ 130 people at four locations. Fraser Direct offers a

wide range of services including supply chain advice, customs clearance, warehousing,

inventory control and project management.

Transportation Management

Steve Hogg, as Director of Supply Chain Services in the London office, provides transportation

management with third party provider Fraser Direct. This includes international air and ocean

transportation as well as US and Canada wide shipping. Orders to vendors from Fraser’s

customers are copied to Fraser Direct and the vendor informs Fraser when the product is ready

to be shipped. Mr. Hogg monitors the process from then on with daily status reports. Fraser

has all the information to communicate any variances in the shipments.

Mr. Hogg’s responsibilities include providing information to customer on all options available for

the shipment of goods from vendors including researching the options, offering the solutions

and making recommendations. The customer only has to make decisions on how to proceed.

Fraser Direct is the supply chain department for their customers despite working outside their

physical walls. Fraser manages transportation so its customers are not over spending but their

requirements are still met.

Cyndi Hornby wrote this case under the supervision of Professor Michiel R. Leenders and Louise Mauffette-Leenders during the

2014 Case Writing Workshop held at the Lawrence Kinlin School of Business at Fanshawe College. It was prepared solely to

provide teaching materials for class discussion. The writer does not intend to illustrate either effective or ineffective handling of a

managerial situation. The writer may have disguised certain names and other identifying information to protect confidentiality.

Copyright

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2014, Cyndi Hornby and Lawrence Kinlin School of Business Fanshawe College

Version: 14-06-20

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Every month Mr. Hogg looks at the data from the previous months shipments (broken down by

mode of transportation) and makes recommendations to reduce costs. Attached Exhibit A is the

Monthly Averages Based on Actual Shipments

report developed for Fraser’s key customer. This

demonstrates the scope of the transportation of goods from 2009 to 2013. Fraser Direct’s motto

is to “know where your freight is at all times and keep you up to date on it”.

The Immediate Issue

Thus far the winter of 2014 had been unprecedented for its cold weather across Canada.

Concerns about derailment or damage due to the buildup of snow and ice and heaving of the

rails due to frost reduced both the weight and speed of rail traffic. This caused containers to pile

up in the port of Vancouver. There were ships anchored off shore waiting to unload that could

not because the yards were full. This had a secondary consequence of causing delays for

truckers whose compensation did not include provisions for wait time.

As a result, on February 28, 2014, 1000 non-union truckers and port workers went on strike,

leaving millions of dollars of cargo stranded in Vancouver area container terminals. Although

there were “rumblings” for a day or two before, the strike was not confirmed until the day it

occurred leaving Fraser Direct and their customer with no ability to prepare.

The Key Customer’s Concern

Fraser Direct’s key customer manufactures auto parts in southwestern Ontario for the top

automakers. Most of their sourcing is from overseas, Asia in particular. As with most

manufacturing companies they operate with Just In Time inventory, keeping little on hand so

inventory is ordered and delivered just in time to use in the manufacturing process. The

customer must be adept at their lead time requirements in order for the supplier to produce

materials and to allow sufficient time for the shipping to occur. At any given time the

manufacturer would have 60 – 70 shipments of materials on the water.

Exhibit B contains the

2014 Freight Activity Report

for the months of January and February,

leading up to the start of the strike.

When the strike hit containers of essential inventory for the manufacturer were stranded in

Vancouver along with thousands of other containers.

Conclusion

These unforeseen circumstances resulted in inventory not being delivered to the auto parts

manufacturer in a timely manner from the date of the strike. Such i

nventory delays could result

in a shutdown of operations for the parts supplier, but more importantly could result in the

shutdown of the automakers, which would cost millions.

How can Mr. Hogg get the inventory

needed from the supplier to the manufacturer in a timely manner in light of the urgency of the

current situation? What are his options

Present your response to Steve Hogg in a Report format.