Case Study Strategic Solutions Inc.
Strategic Solutions (SS) is a small 3PL provider that was started by Scott Crash in 1992. Scott
began his career working in the logistics division of a large trucking company. He worked with
fleet scheduling, customer support, and route scheduling before he saw the opportunity to start
his own business offering similar services. Strategic Solutions provides logistics services to
small businesses in Columbus, Ohio, and has recently acquired major accounts with two wellknown grocery store chains. Their core competency is specializing in the movement of cold and
frozen food products. Refrigerated trailers can be expensive, and if not transported using reliable
equipment, it can prove to be very costly for all parties. Scott started his company by
strategically combining LTL (less-than-truckload) shipments for small stores such as gas
stations, pharmacies, and small grocery stores. He found his niche in climate-controlled trailer
movements. Business has been growing since.
The Business
Strategic Solutions operates by arranging customer shipments with the best for-hire
transportation service they can find. Two of their main transporters are Frigid Movements and
Problem Solved Shipments. Strategic Solutions has long-term contracts with most of its
customers, but they also accept one-time shipments and business from random customers on a
regular basis. Customers can either call or e-mail Strategic Solutions with the details, such as
identifying the products that need to be shipped, the destination, and required time of delivery.
Once Strategic Solutions has this information they can then arrange for the outbound shipments
from the customer’s distribution centers to the desired location. The customer base has increased
substantially as a result of the company’s success in the cold food movement area, and they have
acquired new contracts with major grocery store chains.
The Problem
Scott’s company has begun to struggle with the business growth due to information technology
constraints. Their current method of telephone and e-mail information exchange has become
outdated, and customers have found it hard to communicate with Strategic Solutions. Customer
satisfaction has dropped in the recent past, and Scott fears the loss of some of his top business
clients. Something must be done so that Strategic Solution’s reputation isn’t damaged and no
customers are lost.
The Need for EDI or TMS
Scott understands that logistics depends on accurate real-time information, but isn’t sure what
type of system would be best suited for his operation and has decided to take a customer-oriented
approach. He personally spoke with each of his customers to find out what would be the best
system for them and how the two companies could best work together. He also spoke with his
transportation providers to see what type of information exchange and transportation scheduling
arrangements would best work for them. It seems that the ideal system would be a single point of
contact for customer orders where information is updated in real time. It is inconvenient and time
consuming for a customer to call and deal with busy phone lines and unanswered phone calls, or
wait for an e-mail reply. There could also be clerical errors when transferring the information
between different parties.
The EDI versus TMS Expansion
Scott is not sure which system to implement and what would be the best investment. He assumes
that electronic data interchange (EDI) can accomplish real-time information sharing with all of
their customers as well as potential carriers. For customers, information can be available online
with proper access codes so that scheduling arrangements involving shipments, equipment, and
time schedules can be made with a single point of contact. The downside of an EDI system is the
expense. Also, system failure could halt the business, potentially resulting in significant financial
losses.
Another option is a transportation management system (TMS), which is a software system
designed to manage transportation operations. TMS would enable Strategic Solutions to directly
link to their transporters’ systems to more efficiently identify and find potential routes. They
wouldn’t have to arrange shipments through telephone or e-mail, but could simply schedule them
using the TMS. A downside to TMS is that it would leave out noncontracted carriers. If a certain
time or route wasn’t available through Frigid Movements or Problem Solved Shipments,
Strategic Solutions would have to find other ways to schedule the transportation of their
customers’ goods.
Scott has estimated the following costs for both systems as well as customer preferences:
Customer rank (13)
Systems considered
Cost
EDI (for real-time information and single point of contact)
$15,000 3
TMS (to link into transporters system and find routes and
lanes)
$20,000 2
Both systems
$35,000 3
Case Questions
1. Identify the characteristics of an ideal information system for this logistics environment.
Gather information on both EDI and TMS, and compare their suitability for this
environment.
2. Help Scott decide if he should invest in either EDI or TMS, or both. Is there another type
of system that you would believe would be better? What kind of benefits, including
performance and customer satisfaction, can Scott expect by making these proposed
changes to the business process?
3. What are the key considerations for Scott when deciding on the best possible systems to
implement?
.
Case Study Strategic Solutions Inc.
Strategic Solutions (SS) is a small 3PL provider that was started by Scott Crash in 1992. Scott
began his career working in the logistics division of a large trucking company. He worked with
fleet scheduling, customer support, and route scheduling before he saw the opportunity to start
his own business offering similar services. Strategic Solutions provides logistics services to
small businesses in Columbus, Ohio, and has recently acquired major accounts with two wellknown grocery store chains. Their core competency is specializing in the movement of cold and
frozen food products. Refrigerated trailers can be expensive, and if not transported using reliable
equipment, it can prove to be very costly for all parties. Scott started his company by
strategically combining LTL (less-than-truckload) shipments for small stores such as gas
stations, pharmacies, and small grocery stores. He found his niche in climate-controlled trailer
movements. Business has been growing since.
The Business
Strategic Solutions operates by arranging customer shipments with the best for-hire
transportation service they can find. Two of their main transporters are Frigid Movements and
Problem Solved Shipments. Strategic Solutions has long-term contracts with most of its
customers, but they also accept one-time shipments and business from random customers on a
regular basis. Customers can either call or e-mail Strategic Solutions with the details, such as
identifying the products that need to be shipped, the destination, and required time of delivery.
Once Strategic Solutions has this information they can then arrange for the outbound shipments
from the customer’s distribution centers to the desired location. The customer base has increased
substantially as a result of the company’s success in the cold food movement area, and they have
acquired new contracts with major grocery store chains.
The Problem
Scott’s company has begun to struggle with the business growth due to information technology
constraints. Their current method of telephone and e-mail information exchange has become
outdated, and customers have found it hard to communicate with Strategic Solutions. Customer
satisfaction has dropped in the recent past, and Scott fears the loss of some of his top business
clients. Something must be done so that Strategic Solution’s reputation isn’t damaged and no
customers are lost.
The Need for EDI or TMS
Scott understands that logistics depends on accurate real-time information, but isn’t sure what
type of system would be best suited for his operation and has decided to take a customer-oriented
approach. He personally spoke with each of his customers to find out what would be the best
system for them and how the two companies could best work together. He also spoke with his
transportation providers to see what type of information exchange and transportation scheduling
arrangements would best work for them. It seems that the ideal system would be a single point of
contact for customer orders where information is updated in real time. It is inconvenient and time
consuming for a customer to call and deal with busy phone lines and unanswered phone calls, or
wait for an e-mail reply. There could also be clerical errors when transferring the information
between different parties.
The EDI versus TMS Expansion
Scott is not sure which system to implement and what would be the best investment. He assumes
that electronic data interchange (EDI) can accomplish real-time information sharing with all of
their customers as well as potential carriers. For customers, information can be available online
with proper access codes so that scheduling arrangements involving shipments, equipment, and
time schedules can be made with a single point of contact. The downside of an EDI system is the
expense. Also, system failure could halt the business, potentially resulting in significant financial
losses.
Another option is a transportation management system (TMS), which is a software system
designed to manage transportation operations. TMS would enable Strategic Solutions to directly
link to their transporters’ systems to more efficiently identify and find potential routes. They
wouldn’t have to arrange shipments through telephone or e-mail, but could simply schedule them
using the TMS. A downside to TMS is that it would leave out noncontracted carriers. If a certain
time or route wasn’t available through Frigid Movements or Problem Solved Shipments,
Strategic Solutions would have to find other ways to schedule the transportation of their
customers’ goods.
Scott has estimated the following costs for both systems as well as customer preferences:
Customer rank (13)
Systems considered
Cost
EDI (for real-time information and single point of contact)
$15,000 3
TMS (to link into transporters system and find routes and
lanes)
$20,000 2
Both systems
$35,000 3
Case Questions
1. Identify the characteristics of an ideal information system for this logistics environment.
Gather information on both EDI and TMS, and compare their suitability for this
environment.
2. Help Scott decide if he should invest in either EDI or TMS, or both. Is there another type
of system that you would believe would be better? What kind of benefits, including
performance and customer satisfaction, can Scott expect by making these proposed
changes to the business process?
3. What are the key considerations for Scott when deciding on the best possible systems to
implement?
.
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