Essay about Reducing Logistic Costs for Ladner Building Products

1136 Words 5 Pages
Reducing Logistic Costs for Ladner Building Products

Introduction:

Ladner is a National building materials distributor with
15-distribution centres nation wide. Recently, the company had been experiencing a loss due to high costs. This issue has become a dangerous problem at Ladner, and top management is now looking to understand the causes of this problem.

Recommendations:

Ladner can take one or a combination of the following options to improve its situation:

- Reducing transportation costs by re-organizing the deliveries and encouraging pick-ups.

- Changing staff evaluation methods so that they are aware of costs involved in Ladner's processes.

- Changing and re-organizing the customer and product base.
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As for rural runs, the carriers are paid a high amount per drop ($17) also a high amount per kilometre ($0.87). It is clear here that the deliveries should be organized to reduce the number of trips for each customer (kilometres traveled) and the number of drops per trip. If possible, force customers to make large purchases, or accumulate purchases until it is profitable to deliver them to the customers.

It should be mentioned that pick-up orders are highly favourable for
Ladner. They increase customer satisfaction (products reaching customer faster) and they reduce the loss from the delivery process to zero. Ladner should encourage pick-up orders heavily by increasing the quality of that service, and by giving discounts to customers who pick up their orders. For example, if the estimated loss from delivery per customer is 2%, Ladner could give a discount of 1% to customers with pick-up orders. That way, they can instantly cut their losses hassle free. Finally, it is mentioned in the case that sometimes trucks leave without a full load because of weight requirement limitations. It is very important to manage these heavy products in order to manage successfully the number of trips and drops made by each carrier. To do that, more information is required such as which products are the heaviest? Which customers order these products the most? The management team can then categorize the products in terms of

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