Wheels Group: Evolution of a Third-Party Logistics Service Provider Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

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Disadvantages of Supply Chain Opportunity

The disadvantages associated with the option of exploring the supply chain opportunity is that it takes too long to be succeed. With this system, the company has to wait for profits for a longer period of time. The cost of supply chain management is transactional rather than being process driven. It takes extra efforts to secure the attention of customer’s executive management. With an inefficient supply chain network the cost for the customer increases as they pay extra money. Along with this the consultancy service under SCM is also quite expensive. Another disadvantage is that you do not know the potential customer because many people just come in and take consultancy rather than opting for Wheels International to provide them supply chain solutions.

Under this system the company becomes more of a broker for logistic services. Along with this the company’s low brand recognition is also affecting the company to penetrate in the United States market which is quite lucrative. This means the company does not have a large market size. The supply chain management model may not be valued as a positive opportunity by the general public in the United States. Asset based third party logistic are considered as the better option for companies than non asset based third party logistic service because they are more capable of managing 3PL.

Advantages of Dedicated Contract Carriage and Warehouse Opportunity

Under the option of dedicated contract carriage and warehouse opportunity Wheels International can increase its asset based revenue which can be valued more by the public in general. This opportunity will give the company industrial contacts which can be leveraged to attract more employees who have experienced the asset based strategy in the past. The company is currently managing a large asset base (73 power units, 99 box trailers, 35 flatbed trailers). Under this system, Wheels International spends large amount of time to deliver high level of customer satisfaction and services to ensure long-term relationship with customers. Pursuing Wheels dedicated business plan provides Wheels Group an opportunity to circumvent the reduction of North American trucking capacity. The benefits of going for a non asset based growth are better in long term but not in the short term as conflicts of interest can arise. It is possible that the company might use some other networks to manage logistics, whereas the firm's planned network falls elsewhere.

With this strategy, another advantage is that the company needs to focus on limited number of customers and meeting their demands and needs in the industry to increase the brand equity. Another advantage will be to overcome the shortage of trucking capacity through diverting its route to less trucked model to gauge any market opportunity.

Disadvantages of Dedicated Contract Carriage and Warehouse Opportunity

The disadvantage associated with dedicated contract carriage and warehouse opportunity is that, with this system in operations Wheels International will have to incur large amount of high cost technical systems to actually monitor all asset utilizations and to also coordinate the overall movement of its assets. Another disadvantage is to leverage the balance sheets and also the incurred debts. Over the period of time Wheels International has been unable to secure much of the warehousing business to date.

Targeting a small customer and generating large revenue volumes from them will put this venture at risk of excessive exposure to any one customer. Another disadvantage is the suppliers working with Wheels International have to pay extra premium to their insurance and liability exposures too. The company Wheels Group has few employees who have the practical experience of asset based sector of the third party logistic service industry. Under this system, Wheels International has to bear the subsidiary of the trucking shortage and to retain and maintain the drivers along to manage customer orders and their requirements.

Question 03: What should Jamieson and Tozer do?

Under the current situation, the option which is more feasible for Jamieson and Tozer is to go for the non-asset-based strategy for Wheels International. Because it will give company the opportunity to enhance the profits by being a fourth party logistic supplier with its supply chain management capabilities. Moreover, benefit of opting for non-asset-based strategy is that this strategy has been in operations by Wheels International for the past 15 years and has been a success factor for the company. The company has got good command in operations with this strategy. Non asset based strategy basically brings more trust in clients with their supply chain that were to be managed and it assures stability to each and every supplier. Furthermore, a shift from non asset based model to an asset based model will be an unsafe move for the company....................................

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