Page 306 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 13: Logistics Design and Operational Planning

Notes
Example: In the formulation of a 5-year plan, each year is simulated as an independent
event.
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Caselet Optimizing Transportation

ELD-WEN Inc. is a perfect example of a vertically integrated company. From its own
timber-lands, this large manufacturer of doors, windows, millwork, and specialty
Jwood products cuts lumber and ship it off to its own cut-stock plants.
There, the lumber is prepared and sent to JELD-WEN’s manufacturing plants, which in
turn feed the company’s distribution business. The latter sells products to the end user,
thus completing a full chain of vertical integration.
Bob Smith, transportation manager in JELD-WEN’s corporate office in Winnipeg, Canada,
oversees 18 Canadian locations. The company has 150-plus divisions, more than 20,000
employees worldwide, and is well diversified. Manufacturing and distribution activities
take place in both the U.S. and Canada, making the need for a streamlined, productive
supply chain on both sides of the border critical for the company’s growth. “Basically, we
always want to make sure that our transportation system is as efficient as our plants are
when it comes to production,” says Smith. “To do that, we focus on trying to reduce both
time and waste from our supply chain.”
With that in mind, JELD-WEN embarked on an effort to overhaul its Canadian locations.
In reviewing the company’s geographically dispersed facilities north of the border, JELD-
WEN realized that some had become unnecessary over the years. “We decided that we
could provide the same type of services from larger locations,” says Smith, “and realize a
lot of improvements in our operations at the same time.” The end result was a consolidation
of five locations.
This consolidation also released a transportation fleet and an assortment of excess
equipment that needed to be disposed of efficiently. “We went in and conducted physical
inspections of all the units while also doing a detailed review of the maintenance records,”
says Smith. “We reviewed the equipment usage, the mileage, and other important aspects
of unit use over the last few years.” Smith sold a good portion of the equipment at fair
market value. “We also tapped into some other options,” he says, “such as what early
return penalties we might expect with regard to leased equipment. We also discussed
swapping those over-specified units for vehicles that would be more suitable for us.” In
addition, before disposing of any equipment or vehicle, Smith’s team first consulted with
other facilities within the JELD-WEN family to see if they could use it. “We also did careful
checks of new vehicle orders to see if they could be filled with some of these existing units
and we sought out opportunities to upgrade some of our existing vehicles at other locations
with a unit that might have had lower mileage, or that was in better condition,” says
Smith. After exhausting those options, any units left over were sold.
The consolidation process yielded positive results for JELD-WEN by reducing
transportation-related costs by more than $1 million and reducing its overall warehousing
costs. “As a company, we want to be known for providing world-class customer service all
the time,” says Smith. “Though we reduced our number of warehouses, we know we’ll be
able to meet our service objectives. In fact, without the reduction and the sell-off of the
equipment, we probably wouldn’t have been able to realize the level of transportation,
inventory, and warehousing cost savings that we did in the last year.”
Source: Bridget McCrea, “Optimizing Transportation,” Warehousing Management. March 2001, pp.
T2–T3.

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