John Deere Logistics Cost Analysis Essay

1022 Words 5 Pages
John Deere & Company manufactures and distributes agriculture equipment as well as a broad range of construction and forestry equipment. The company is partnered with FedEx in order to maintain the logistics flow involved with the company’s transactions. FedEx is responsible for providing outsourced transportation services to 11 Deere facilities across the US and Canada. The 11 Deere facilities have different service agreements with FedEx in terms of cost and service depending on the type of business unit.
With different prices and services across the facilities, management is trying to identify opportunities to standardize costs and services across the business units. The goal of this case study is to update Deere and Company’s
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Managers may be more organized knowing exactly what services will be provided to their own plants as well as other plants. Decision making will be more streamlined and there will no longer be any confusion trying to discover the other plant’s supply chain when trying to communicate with them. Fedex will also not be able to gradually take over Deere’s operations (scope creep) unless the change is proposed to be corporate-wide in scope. Deere will be able to retain its leverage and not have its business slowly encroached on.
Standardizing on-site transportation on a corporate-wide scope will not result in the $69 million in savings over three years regardless of the lower price per unit of service. Synergies will eventually lead to these cost reductions, as will steps towards continuous improvement and movement further along the experience curve. As briefly mentioned above, enhanced ease of communication due to the similarity of supply chains of Deere’s plants will lead to fewer complications between plants and the enhanced ability to understand corporate processes. Promotion from within will be easier because managers will be able to lead any single location whether in Canada or the US.
Deere has shown executive interest in making logistics are core competency. We would agree that this goal should begin with the consolidation of the inbound an

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