Textbook: Langley, C. John; Novack, Robert A.; Brian ✓ Solved
Text book: Langley; C. John Langley; Robert A. Novack; Brian Gibson; John J. Coyle (2016) Supply Chain Management (12th Edition). Publisher: Cengage South-Western CASE 11.1 Vibrant Videos Provide substantial insight and discuss to the following case questions
Provide substantial insight and discuss the following case questions: What responsibilities, control, and costs does V2 bear under each of the FOB terms offered? What is the delivery cost and landed cost per unit for each speaker delivery option? Which delivery option do you recommend for the speakers? What is the delivery cost and landed cost per unit for each receiver delivery option? What other supply chain issues and costs must V2 take into consideration when making these transportation decisions?
Find the case in attachment. Answer all questions in a Word document in APA format with citations and at least two authored references.
Sample Paper For Above instruction
Introduction
The strategic decisions related to transportation and logistics are crucial components of supply chain management. Effective management of these aspects can significantly influence the costs, efficiency, and customer satisfaction levels within a company’s operation (Langley, Novack, Gibson, & Coyle, 2016). This paper examines the case of Vibrant Videos (V2) and evaluates the responsibilities, costs, and control measures associated with different FOB (Free on Board) terms offered by suppliers, alongside an analysis of delivery and landed costs for different shipping options. The goal is to recommend the most cost-effective and efficient transportation strategy while considering other relevant supply chain issues.
Responsibilities, Control, and Costs Under Different FOB Terms
FOB terms define the responsibilities and risks transferred from the seller to the buyer during transportation. Under FOB shipping point (or FOB origin), the buyer (V2) assumes responsibility at the point of shipment; the seller bears costs and risks until delivery to the carrier (Krajewski, Ritzman, & Malhotra, 2019). Conversely, under FOB destination, the seller maintains responsibility until the goods reach V2’s warehouse, thus retaining control and bearing transportation costs until delivery.
In the case of V2, each FOB term entails specific responsibilities:
- FOB Shipping Point: V2 is responsible for transportation costs, risk during transit, and customs clearance. This reduces the seller's responsibilities but increases V2's control over carriers and shipping schedules. The costs involved include freight charges, insurance, and customs duties.
- FOB Destination: The seller manages shipment until goods reach V2’s location, bearing all costs and risks until delivery. V2 gains control only upon receipt but may face higher shipping costs due to seller’s negotiated rates or additional insurance costs (Langley et al., 20116).
The costs associated with each vary based on negotiated freight charges, insurance premiums, and customs duties, affecting the overall supply chain expense for V2.
Delivery and Landed Costs of Speaker Delivery Options
Calculating the delivery and landed costs involves the sum of transportation, insurance, customs, and other associated costs per unit. For each speaker delivery option, these costs differ based on shipping method, distance, and carrier rates.
For example:
- Air Freight: While faster, it’s more expensive with higher per-unit costs but might reduce inventory holding costs.
- Sea Freight: Lower per-unit costs but longer transit times increase inventory holding and risk of obsolescence.
- Road Transport: Suitable for regional deliveries with moderate costs.
Assuming hypothetical figures derived from typical industry rates, V2’s delivery cost per unit via air might be approximately $10, with a landed cost of about $25 considering customs and handling fees. Via sea, the delivery cost might be around $5 with a total landed cost of about $15 per unit. Based on these, the recommended method balances cost and delivery speed depending on V2’s inventory strategy and customer demands.
Recommended Delivery Option
Given the cost analysis, sea freight presents the most economical choice for bulk delivery, especially when inventory turnover is high, and time sensitivity is moderate. For urgent needs, air freight may be justified despite higher costs. The decision should also factor in company inventory policy, customer delivery expectations, and supplier reliability.
Other Supply Chain Considerations
Beyond transportation costs, V2 must consider lead times, inventory management, supplier reliability, customs clearance complexities, and environmental impacts. Effective coordination with logistics providers can minimize delays and provide flexibility in response to unforeseen circumstances (Langley et al., 2016). Moreover, costs related to inventory holding, warehousing, and potential freight damages should be incorporated into comprehensive cost analyses.
Additional Supply Chain Issues and Costs
Other critical supply chain issues involve risks such as transportation disruptions, geopolitical stability affecting customs procedures, and compliance with trade regulations. Additionally, sustainable practices, such as carbon footprint considerations, can influence transportation mode choices. These factors collectively influence not only direct costs but also brand reputation and regulatory compliance costs (Christopher, 2016).
Conclusion
Transportation decisions significantly impact a company’s operating costs and service levels. For V2, considering FOB terms, delivery costs, and other supply chain factors, sea freight emerges as the most cost-effective option for regular, non-urgent deliveries. Nevertheless, a flexible strategy incorporating multiple modes might optimize overall supply chain performance, taking into account lead times, costs, and risks.
References
Christopher, M. (2016). Logistics & supply chain management (5th ed.). Pearson Education.
Krajewski, L. J., Ritzman, L. P., & Malhotra, M. (2019). Operations Management: Processes and Supply Chains (12th ed.). Pearson.
Langley, C., Novack, R. A., Gibson, B., & Coyle, J. J. (2016). Supply Chain Management (12th ed.). Cengage South-Western.
Chopra, S., & Meindl, P. (2018). Supply Chain Management: Strategy, Planning, and Operation (6th ed.). Pearson.
Mentzer, J. T. (2004). Fundamentals of supply chain management: Twelve drivers of competitive advantage. Sage Publications.
Harrison, A., & Van Hoek, R. (2011). Logistics management and strategy: Competing through the supply chain. Pearson Education.
Sabri, E., & Choi, T. M. (2017). Sustainable Supply Chain Management: Practical Ideas for Moving towards Sustainability. Springer.
Rao, S., & Holt, D. (2005). Do green supply chains lead to competitiveness and economic performance? International Journal of Operations & Production Management, 25(9), 898-916.
Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies. McGraw-Hill.
Waller, M. A., & Fawcett, S. E. (2013). Data science, predictive analytics, and big data: a revolution that will transform supply chain design and management. Journal of Business Logistics, 34(2), 77-84.