The Hudson Valley Juice Company is a wholly owned subsidiary ofNational Beverage Corporation, headquartered in Cincinnati, Ohio.At its plant in Poughkeepsie, New York, Hudson Valley manufacturesa number of different natural fruit juices, based on the fruits ofLocal region. It's most popular juice drink products are • Apple •Grape • Cherry
New source
At a Cincinnati meeting sponsored by the parent company,National Beverage Corporation, Debbie Wagner, Hudson Valley'spurchasing agent for packaging materials, had met Jeff Smith, acolleague from another National Beverage Corporation subsidiary inLos Angeles, California. Talking shop, they had exchangedinformation and experiences. When Debbie• had confided in Jeff thatshe had experienced some difficulties lately in obtainingsufficient quantities of bottle closures at competitive prices, hesuggested that she contact the Tight Cap Division of AmericanPackaging Corporation. He reported that he had long bought fromthis source and was very pleased with their performance andresponsiveness. Upon her return to Poughkeepsie, Debbie had calledTight Cap in Chicago, requesting a price quotation and sample caps.The caps were duly tested in the company's laboratory and TightCap's prices turned out to be quite attractive. So Debbie hadplaced an initial order for 500,000 bottle caps, to be delivered ona specified date.
Surprise! It is now:3:00 P.M. on Friday afternoon , and Debbiehas just learned that the shipment of 500,000 bottle caps fromTight Cap, scheduled for arrival this morning, has not beenreceived. These caps were to be used immediately in the productionprocess, starting at 7:00 A.M. on Monday. No safety stock of thesecaps has been kept on hand. To make matters worse, apple juicewhich is to be produced using these caps is out of stock with asubstantial backlog of orders on the books. As Debbie goes aboutsorting out the situation, people in the purchasing, production,and marketing departments nervously wonder what happened and whatwill happen. Amid the scurrying to attempt to determine thewhereabouts of the missing caps, comments such as "it's not my job"and "why didn't you come to us earlier" are overheard.
A quick review of a copy of the purchase order tells Debbie thatthe designated routing is "best way." Also, instead of a specificdelivery date, the notation reads ASAP (as soon as possible). Theterms of delivery are noted as FOB.
Assignment: The four questions below are to be used asguidelines and thinking points for your analysis.
1. What mistakes were committed by Hudson Valley employees inthis case? A: How could they have been avoided or at leastminimized?
2. What are the pitfalls of routing traffic the "best way"? A:Is the delivery term "FOB" sufficient, and why or why not?
3. How can the correct selection of transportation mode help theoverall profitability of the company?
4. How and by whom should decisions regarding transportationarrangements be made and why?
