Assessment Brief Case BTC Freight

Assessment Brief Case BTC Freight

Introduction

The given case is a transportation company operating mainly across mainland Europe, which is an invented case but will have similarities to existing businesses.

Facts that are not given can be taken from typical real-world cases about the industry, but please remember to give in-text references for these.

Key facts about Big Truck Company

• BTC (Big Trucks Company) Freight operates a fleet of approximately 10,000 trucks, which is one of the largest fleets in Europe.
• They market themselves as having a high level of service and maintain high standards of reliability for each delivery. On Time In Full (OTIF) is a key message delivered to existing and potential customers, regardless of the size of the consignment.
• BTC Freight provides transport services to nearly 20 million residential, government, retail, and industrial customers across all European and some North African/Middle Eastern countries.
• BTC Freight own and maintain all the trucks and see this as a Unique Selling Point (USP) helping to control costs and maintain the high standard of OTIF to their extensive customer base.
• BTC Freight buy the fleet from 4 Global manufactures and upgrade all trucks when they 6 years old, regardless of mileage or type, see figure 2.
• They currently have an extensive network of just over 1,100 different suppliers of parts for the maintenance sites using many different legacy Information Technology (IT) systems.

• Due to the product range (4 different Truck supp iers) they have a wide range of sourced direct and indirect products.
• BTC Freight currently operates out of 1,000 locations strategically placed across their area of operation, see figure 3, of which 800 of these centres also host maintenance facilities to keep the trucks available for operation 12 hours per day.
• Head Office is based in France

Figure 2 – Current Truck Procurement Structure

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Main Issues

BTC Freight faces some challenging issues:

• There is not a fully integrated or structured procurement process in place.
• The board proposes a more centralized and fully integrated IT system for truck spares purchases and controlling the resultant inventory.
• Following a recent financial survey the board is seriously concerned with the number of parts suppliers BTC are dealing with; and the operation costs of running all the distribution centres (some with service bays). The Board is looking for suggestions from senior management to rationalise these centres to reduce costs whilst maintaining the same high standards of OTIF deliveries contracted to all customers.
• The number of occurrences of with truck down time (i.e. truck Out Of Service, OOS) due to spares availability have been increasing over the last few years to a point that they are causing serious customer complaints and BTC risk losing contracts.
• The company have very recently formed 10 strategic sourcing teams working closely with the maintenance and service staff to clearly define the needs, find the best suppliers and help develop process and systems for streamlined purchasing of truck parts.
• A recent study by senior management also suggested by levering purchase volumes across the entire business significant savings could be made. These should initially focus on high usage spares with tighter more co-ordinated stock controls put in place.

Assessment Brief Case BTC Freight PMA questions

Introduction

• Answer 2 questions
• Select either question 1 or question 2
• Selection either question 3 or question 4
• Each question is worth 40 marks
• LO = Learning Outcome

Question 1 or 2 : Procurement – Considering the needs for maintaining the 10,000 trucks from 4 different manufactures

Question 1 – Categories of Supply

1. From the case study information above, create a Bill Of Materials (BOM) list for the major/significant components of a typical truck. From the BOM list Identify and explain the A, B & C class assemblies/parts using cost v usage volumes as the parameters. You should test these volumes against the information provided in the case study and data you can find on truck manufactures recommendations found in your research. (20 marks, LO 1, 3)
2. From the case study information above, discuss the differences in the supplier/s selection process for the different supply categories A, B and C. Provide a justified argument to either support a single sourcing strategy or recommend and give reasons why alternatives are more appropriate. (20 marks, LO 1, 2)

Question 2 – Supplier development

1. Define an approach to enable BTC Freight to identify and select a new supplier to replace one of the current four. Appraise suitable best practice to identify the critical capabilities a new supplier needs to support the services BTC Freight provides to their customer base. Identify the benefits and risks from this approach. (20 marks, LO 1, 2)
2. Complete the answer by defining and prioritising a set of key performance indicators you would use to monitor the performance of the Truck suppliers and the performance of BTC Freight in line with changing customer expectations if you were the major decision maker for the BTC Freight. (20 marks, LO 4)

Question 3 or 4 : Inventory Management

Question 3 – Location of Distribution (Truck Service) Centres

Currently there are over 1,000 Distribution Centres based strategically across the area of operations (shown figure 3 above). BTC Board have decided to drastically reduce the number of centres to 500; accounting for truck service requirements and maintaining the level of OTIF deliveries.

Explain what are the key cost factors discussed in the case study above and what are the internal and external influences required for maintaining an appropriate inventory level of truck spares to support the current business. Discuss the impact of these changes on the current problems faced by BTC Freight described in the case study above. (40 marks, LO 1, 3, 4)

Question 4 – Options for the order penetration point

Identify and explain the different options for the order penetration point (make-to-order, etc.) and options of (push/pull-systems) for different supply categories of Truck spares to better align your service offering with changes in customer markets (provide at least 3 different examples) using material and knowledge from the module and your research. Focus on cost maintaining adequate stock levels VS service offering for each of the examples you provide. You should illustrate the answers graphically and give recommendations for the preferred alternatives for BTC Freight that could result in performance improvements and cost savings. (40 marks, LO 1, 3, 4)

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Assessment Brief Case BTC Freight