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Case Study For Exam Test Final

Deere & Company manufactures agricultural, construction, and forestry machinery. It was facing high supply chain costs from weekly replenishing of dealer inventories. [1] It launched an initiative to reduce supply chain costs by 10% in four years. [2] It redesigned its network, adding merge centers and optimizing locations. It consolidated shipments, used break-bulk terminals, and increased use of third-party logistics. [3] As a result, it reduced inventory $1 billion, cut customer delivery times in half, and saved 5% annually on transportation costs.

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348 views

Case Study For Exam Test Final

Deere & Company manufactures agricultural, construction, and forestry machinery. It was facing high supply chain costs from weekly replenishing of dealer inventories. [1] It launched an initiative to reduce supply chain costs by 10% in four years. [2] It redesigned its network, adding merge centers and optimizing locations. It consolidated shipments, used break-bulk terminals, and increased use of third-party logistics. [3] As a result, it reduced inventory $1 billion, cut customer delivery times in half, and saved 5% annually on transportation costs.

Uploaded by

htet san
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Operations & Project Management (MGT 501)

Exam Test Assignment


No.1 Deere & Company (brand name John Deere) is famed for the manufacture and supply of
machinery used in agriculture, construction, and forestry, as well as diesel engines and lawn care
equipment. In 2014, Deere & Company was listed 80th in the Fortune 500 America’s ranking
and was 307th in the 2013 Fortune Global 500 ranking.

Supply Chain Cost Reduction Challenges: Deere and Company has a diverse product range,
which includes a mix of heavy machinery for the consumer market, and industrial equipment,
which is made to order. Retail activity is extremely seasonal, with the majority of sales occurring
between March and July.

The company was replenishing dealers’ inventory weekly, using direct shipment and cross-
docking operations from source warehouses located near Deere & Company’s manufacturing
facilities. This operation was proving too costly and too slow, so the company launched an
initiative to achieve a 10% supply chain cost reduction within four years.

The Path to Cost Reduction: The Company undertook a supply chain network-


redesign program, resulting in the commissioning of intermediate “merge centers” and
optimization of cross-dock terminal locations.

Deere & Company also began consolidating shipments and using break-bulk terminals during the
seasonal peak. The company also increased its use of third-party logistics providers and
effectively created a network that could be optimized tactically at any given point in time.

Supply Chain Cost Management Results: Deere & Company’s supply chain cost-management
achievements included an inventory decrease of $1 billion, a significant reduction in customer
delivery lead times (from ten days to five or less) and annual transportation cost savings of
around 5%.

Questions:

1. Point out some of the important elements of logistics for Deere & Company.
2. What distinction among supply chain management and logistics?
3. What are the challenges of Deere & Company carried out inside logistics?
No.2. Frito-Lay, the multi-billion-dollar subsidiary of food and beverage giant PepsiCo,
maintains 36 plants in the U.S. and Canada. These facilities produce dozen of snacks, including
the well-known Lay’s, Fritos, Cheetos, Doritos, Ruffles, and Tostitos brands, each of which sells
over $1 billion per year. Frito-Lay plants produce in the high-volume, low-variety process model
common to commercial baked goods, steel, glass, and beer industries. In this environment,

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preventive maintenance of equipment takes a major role by avoiding costly downtime. Tom Rao,
vice president for Florida operations, estimates that each 1% of downtime has a negative annual
profit impact of $200,000. He is proud of the 1.5%, unscheduled downtime his plant is able to
reach—well below the 2% that is considered the “world-class” benchmark. This excellent
performance is possible because the maintenance department takes an active role in setting the
parameters for preventive maintenance. This is done with weekly input to the production
schedule. Maintenance policy impacts energy use as well. The Florida plant’s technical manager,
Jim Wentzel, states, “By reducing production interruptions, we create an opportunity to bring
energy and utility use under control. Equipment maintenance and a solid production schedule are
keys to utility efficiency. With every production interruption, there is substantial waste.” As a
part of its total productive maintenance (TPM) program, Frito-Lay empowers employees with
what it calls the “Run Right” system. Run Right teaches employees to “identify and do.”

This means each shift is responsible for identifying problems and making the necessary
corrections, when possible. This is accomplished through (1) a “power walk” at the beginning of
the shift to ensure that equipment and process settings are performing to standard, (2) mid-shift
and post-shift reviews of standards and performance, and (3) posting of any issues on a large
whiteboard in the shift office. Items remain on the whiteboard until corrected, which is seldom
more than a shift or two. With good manpower scheduling and tight labor control to hold down
variable costs, making time for training is challenging. But supervisors, including the plant
manager, are available to fill in on the production line when that is necessary to free an employee
for training. The 30 maintenance personnel hired to cover 24/7 operations at the Florida plant all
come with multi-craft skills (e.g., welding, electrical, plumbing). “Multi-craft maintenance
personnel are harder to find and cost more,” says Wentzel, “but they more than pay for
themselves.”

Questions:

1. What might be done to help take Frito-Lay to the next level of outstanding
maintenance?

2. What are the advantages and disadvantages of giving more responsibility for machine
maintenance to the operator?

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