Sudsy Soap, Inc. - Logistics Management Mrk 622

Case #1  “Sudsy Soap, Inc.”

Professor: Phil Cohen

Logistics Management MRK 622

Frank Johnson was the outbound logistics manager for Sudsy Soap Inc. He had held the job for the past 5 years and had just about every distribution function under his control. His task was made much easier because shipping patterns and volumes were unchanging routines. The firms’ management boasted that it had a steady share in a stable market, although a few stockholders grumbled that Sudsy Soap had a declining share in a growing market.

The Sudsy soap plant was in Akron, Ohio. It routinely produced 100,000 48 ounce cartons of powdered dish soap each week. Each carton measured about a half cubic foot, and each working day 15 to 20 railcars were loaded and shipped to various food chain warehouses and to a few large grocery brokers. Johnson worked with the marketing staff to establish prices, so nearly all soap was purchased in railroad-car lots. Shipments of less than a ½ car lot did not occur very often.

Buyers relied on dependable deliveries, and the average length of time it took for a carton of soap to leave the Sudsy production line and reach a retailers shelf was 19 days. The best time was 6 days (to chains distributing in Ohio), and the longest time was 43 days to retailers in Alaska and Hawaii.

Sudsy Soaps CEO was worried about the stockholders’ criticism regarding Sudsy’s lack of growth, so he hired a new sales manager. E. Gerard Beaver (nicknamed “Eager’ since his college days at a Big Ten university). Beever had a one year contract and new he must produce. He needed a gimmick.

At his university fraternity reunion, he ran into one of his old fraternity room- mates, who was now sales manager for an imported line of kitchen dishes manufactured in China and distributed by a firm headquartered in Hong Kong. The product quality was good, but competition was intense. It was difficult to get even a toehold in the kitchen dinnerware market. Beever and his contact shared a common plight. They were responsible for increasing market shares for products with very little differentiation from competitors’ products. They both wished they could help each other, but they could not. The reunion ended and they both went home.

The next week Beever was surprised to receive an email from his old roommate.

“We propose a tie-in promotion between Sudsy Soap and our dishes. We will supply at no cost to you 100,000 each 12-inch dinner plates, 7-inch pie plates, 9-inch bread and butter plates, coffee cups, and saucers. Each week you must have a different piece in each package starting with dinner plates in week 1, pie plates in week 2, and so on through the end of week 5. Recommend this be done weeks of April 7, 14, 21, 28 and week of May 5 of this year. Timing is important because national advertising will be linked to a new television show we are sponsoring. Also, we will give buyers of five packages of Sudsy Soap, purchased 5 weeks in a row, one free place setting of our dishes  Enough of your customers will want to complete table settings that they will buy more place settings from our retailers. Timing is crucial. Advise immediately.

Beever was pleased to receive this offer but realized a lot of questions had to be answered before he could recommend that the offer be accepted. He forwarded the message to Johnson with the following added –

Note: attached message offering tie-in with dishes. Dishes are of good quality. What additional information do we need from dish distributor, and what additional information do we need before we know whether to recommend acceptance?

Advise ASAP. Thanks.

Questions

1. Assume that you are Frank Johnsons’ assistant and he asks you to look into various scheduling problems that might occur. List and discuss them.

The starting date of this partnership was not mentioned in this case, however assuming they are in the month of June according to the proposal they would like to start the cross promotion by October 5th.  Their average length of shipping varies between 6 up to 43 days.  In addition the delivery time was not mentioned. This will affect production schedules and delivery will have to be altered to ensure that all markets are included during the TV campaign.

Extra time will be needed to put dishes in the packages, and they might require special printing that tells them what the package contains. Packing problems in shipping and the size of railcars, additional fees for shipment, will all come into effect.

1.  What packaging problems might there be?

They will need to take account of the packing method, assuming some kind of pick and pack method which will require extra time especially because the dishes are fragile and may need special packaging to avoid breaking.  They will also need extra labels marked for “fragile products” and more time will be needed for ordering and putting on labels and allocation.

1. Many firms selling consumer goods are concerned with problems of product liability. Does this ‘dish offer’ present any such problems? If so, what are they? Can they be accommodated?

Product liability is the area in which manufacturers distributors, suppliers, retailers, and other who make products available to the public are held responsible for the injuries those products cause in addition to this, product liability is the defect that might occur for any product. Dishes are fragile products but this can be accommodated by safety packing which will mean extra costs will incur. Since it is a cross promotion they cannot guarantee a good quality and are liable if they are offering a low quality product