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Case Study Objectives

Case Study Objectives. Reduce freight costs while ensuring machines and parts arrive on-time and undamaged Develop a transportation management organization that integrates well with the Tetra Laval group, can respond quickly to customer needs, and can manage the quality of delivery services

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Case Study Objectives

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  1. Case Study Objectives • Reduce freight costs while ensuring machines and parts arrive on-time and undamaged • Develop a transportation management organization that integrates well with the Tetra Laval group, can respond quickly to customer needs, and can manage the quality of delivery services • Devise an Incoterm policy that both protects Sidel's reputation as a reliable provider of high-quality equipment and affords customers the flexibility they need

  2. Tetra Laval DeLaval Sidel Tetra Pak Company Overview

  3. Product Characteristics and Assumptions • Shipments are project based rather than transactional • High value shipments with a considerable amount of capital tied up in transit • Time sensitive with precise synchronization required on arrival • Destinations are global, non repetitive • Zero tolerance for damage and transit delays • Installation, service and sales of equipment and accessories are key aspects of operations • Assumed they have similar characteristics of DeLaval products • Shipments are multi-modal, heavily dependent on air, sea, road • Specialized packaging and handling are required

  4. Freight Volume Required Modes 47K TEUs 50 - 747 chartered aircraft 12K truck loads 300K parcel shipments Logistics Spend 200M Euros on transport of 4.5MT of equipment 100M Euros on travel

  5. Objectives of Delivery • Control of execution • Dollars/Cost • Direct Costs • Packaging/handling, Insurance, Intl shipments, Domestic shipments • Fees import export duties, Taxes VAT, GST • Indirect Costs • Legal • Execution • Damages • Time in transit • Contractors • Set up / assembly • Regulatory / environmental compliance • Risk Management • Avoid Bad Debts/write-offs

  6. Analysis of Incoterms Incoterms 2000 - published by the international chamber of commerce - icc publishing 1999 Ex Works Named place, Sellers Premise, Buyers Carrier Free Carrier Named Place Free Alongside Ship Named Port of Shipments Free On Board Named Port of Shipments Cost & Freight Named Port of Destination Cost, Insurance & Freight Named Port of Destination Carriage Paid To Named Port of Destination Carriage & Insurance paid to Named Port of Destination Delivered at Frontier Named Port of Destination Delivered Ex Ship Named Port of Destination Delivered Ex Quay Named Port of Destination Delivered Duty Unpaid Named Port of Destination Delivered Duty Paid Named Port of Destination

  7. Recommendations • Suggest primarily using Incoterms of DDP and DDU to insure Sidle has control of quality of transport process right through to installation, also allows total control over landed cost • Take advantage of Tetra Paks global purchasing clout however suggest DDU as the term of choice • Tetra Pak can possibly control freight directly with lines but outsource project management of job to a specialised forwarder

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