Change and Win-Recommended solutions for For Cuttengrass Case

Introduction to the Report

Due to recent developments including increasing labor costs in China, customer demands for shorter lead times and the rising cost of fuel, the alternative option of manufacturing the engines in northern Mexico is also on our table. We need to have a look at what the best inbound logistics options for our new supply.

Moreover, as Cuttengrass Inc. has recently been awarded a significant contract with a European big box store with 50 stores located all over Europe and we already have planned for the development of environmentally friendly re-chargeable products that cater to a more affluent clientele, we need to make an updated outbound logistics plan for our new market and new clients as well.

Our Supply Chain Team has made a careful study on customer needs, market situation and government initiatives for feasible and competitive solutions.

This report shall discuss the economic impacts of manufacturing the engines in Mexico versus China, specific to the following aspects:

  • Supply and demand of air, road, rail and ocean and the resulting changes in rates. Make sure you address the positive and negative implications on supply and demand of the alternative modes for each manufacturing option.
  • Government’s role in facilitating the increased trade
  • How trade agreements with Europe and Canada will affect transportation pricing and lead times
  • The economies of scale that will be achieved by the transportation firms servicing Cuttengrass.
  • How environmental initiatives within the transportation industry may affect the firm’s decision.

This report then shall provide a recommendation based on above analysis.

Report

  1. Transportation mode comparison and feasibility study
  • Supply and demand of Air mode, impact to rate and our feasible choice
    • Supply and Demand of air mode transportation

Air transport provides an efficient solution for low inventory, short lead time and high value items. Due to the nature of air shipment, it always require high fixed cost investment and strict entry controls, therefore there are less competition in the market and only a few giant air carriers are providing the air cargo delivery services.

Since “A competitive industry is characterized by a uniform product being produced by many firms for many consumers with all parties operating with near-perfect information and no barriers to entry and exit being in place” ,  the airline industry does not have a typical supply function as under full market conditions, we can hardly use traditional supply and demand curve to describe the mechanism in rate and quantity relationship, as they are not “marked by competition in the way an economist would strictly classify it.” (CITT, 2016[1]).

Actually the supply and demand transaction is always one-to-one and case by case, and it is not rare that for the same quantity or volume delivered, price is totally different.

  • Impact to freight rate and our feasible choice

Because of the non-perfect market characteristics and some special features in operation, the air transport mode has some unique rate-setting mechanisms, most of which are used to maximize the long term profit for airline carriers and forwarders.  We would like to discuss 3 special phenomena in air transport supply and demand area: S-curve effects[2], passenger pushing and price discrimination and their implication to our case:

What will be the S-effect implications for our freight rate?

Since we are comparing the options of delivering engines from Mexico and China, we then need to ask, which option would offer us better opportunity in using dominant carriers for the cargo delivery, if air mode is used?

The answer is there are no big differences if we use dominant airlines in either Mexico or China, as both of them would have host advantages due to S-curve effects, the air delivery service we get would be more efficient, less delay and with better cost options. After arrival to destination, services in Vancouver however, might be a little bit different. Since Vancouver air-port is a trade corridor for import and export between North-America and China and the import volume over Vancouver airport is higher than that of Mexico (statistics Canada, 2014), the negative impact under S-curve to China airlines could be less serve. But the impact to supply chain would not be huge, maybe just a few hours longer transit time.

In general, from S-curve point of view, there is no significant gap for the air cargo delivered from Mexico and China, if local dominant air lines are selected.

Needless to say, if air Canada is used for such delivery, the difference would be even smaller.

Passenger push effect on freight rate

As the passenger planes offers more spaces for air delivery and the excess supply would reduce the price level for the cargo service[3].

According to Tourism Vancouver, the number of visitors from China to Vancouver has outstripped those from the U.K. for the first time and China is now the biggest overseas market for the city — with domestic tourism and visitors from the U.S. coming in first and second overall[4].While the passenger airlines with Mexico are growing however the speed is less than that with China so far. Due to this passenger push effect, the rate for air mode delivery from China is under pressure of higher passenger demand, thus become competitive as that from Mexico. In fact, for a quick estimation[5], for a 60kg delivery, the freight rate we got from both origins is nearly same-around USD1300 per shipment.

This finding means if we use air mode, the China option would not be less competitive in terms of cost.

Price discrimination

Both secondary and third degree price discrimination[6] are widely used in air transport industry.

The secondary price discrimination is easy to operate and is in use all the time. The principle is very simple, the larger volume you are delivering, the higher discount. This rule has nothing to do with supply but more focus on demand management. If the customer can leverage its demand, aggregate its shipment volume, more competitive rate would be available.

For our case, as for both Mexico and China option, the volume of delivery would be same, so there is no difference if only the engines are put into consideration. All volume aggregation opportunities under service provider should be taken into consideration, if the supplier delivers more cargoes using the same air service provider, the rate could be even better. Then the China option might have a better chance as China exports more to Canada than Mexico does.

The third degree price discrimination needs more and deep segmentation of customer’s needs. For customer with urgent, special needs, premium would be charged and consumer surplus transferred into supplier’s profit.

This price discrimination has same impact to our two options. For stable supply chain, we would see same goods under same urgency for delivery either from Mexico or China.  It’s all about supply chain planning and shipment arrangement. However, if the air mode is just a backup solution, most likely the air delivery needs are showed up under urgency, and then we have to pay more and offer our premium under service provider’s third degree price discrimination.

In general, considering the special feature of the supply and demand for air mode transport, we do not see many differences on rate and lead time between Mexico and China options even the distances to China is much farther away.

We believe if we decide to phase out China option gradually, it should not happen overnight. We might need to keep this air mode option from China as a backup solution for Cuttengrass should there be any problems in Mexico new source of supply.

 

  • Supply and demand of ocean mode, impact to freight rate and our choice
    • Supply and demand of ocean mode

Ocean shipping is one of best option for regular and large volume shipment due to its cost competitiveness. With regard to supply and demand, unfortunately they are not functioning along standard curves showing in perfect market situation either.

In a perfect market situation like the case for bulk shipping, the increase of demand would move the demand curve right and increase the rate, the short term rate increase would attract more supply into the market. For long run, due to external intensified competition and internal economics of scale, there will be a new equilibrium between supply and demand for a stable and balanced freight rate.

However, container shipment industry is not a perfect market due to historic reasons. Due to the needs for global operation, the shipping market is dominated by a few big ocean carriers after rounds of merging and acquisition. Instead of making price wars among each shipping lines, the carriers have formed Cartels under the name of shipping conferences.

The tools used by the shipping conferences are published minimum shipping rates and volume allocations (quota) to each carrier. This would resist the member’s temptation to increase its volume of supply so the supply curve would not be able to move towards right and the equilibrium prices are artificially kept at a high level.

As long as there is no cheating, this is good for all industry as carriers can get a premium charge from shippers. In fact, few carriers want to let their vessel sleep somewhere as there will be cost as well, in order to realize the goal, the carriers are normally move slowly to save fuel, call more ports.

That’s why the financial crisis and global economic slowdown did not put ocean shipping into jeopardized situation, as it did to bulk vessel delivery which we can judge from the BDI collapse.

  • Impact to freight rate and our feasible choice

As the ocean shipping is most cost competitive choices for both Mexico and China options. Theoretically, the Mexico option should be more competitive given it has much less geographic distance to Vancouver. However, the reality is the supply of ocean shipping service for Mexico option (short sea shipping[7]) is still not yet widely available and reliable than the China option.

Let us have a look at the real situation for both options.

  • For China option

As Vancouver is gateway[8] in Canada’s trade corridor with China, and meanwhile the transport is just a derived demand of trade, the growth of ocean shipment is mainly contributed to the trade growth between Canada and China.

In spite of global economic recession, the demand for trade between Canada and China is growing continuously[9]. For instance, between 2008 and 2013, Canada’s bilateral merchandise trade with China has increased faster than any other country in the world[10]. More impressive, is that China’s annual bilateral merchandise trade with Canada is worth $41.1 billion more than Canada’s third most important merchandise trading partner, and second fastest growing partner – Mexico[11].

Obviously, the high demand of trade has increased the derived demand for transportation especially for ocean shipping, and makes the China-Vancouver lane busiest ocean shipping lane in Canada. Therefore, the operation efficiency and economy of scale is already there and ready to use any time.

  • Mexico

For the ocean shipment from Mexico to Vancouver, we have to face the fact that it is still quite challenging to operate the ocean shipment from Mexico to Vancouver through the coast of Pacific Ocean which are normally called short sea shipping among people in the industry.

Everyone understands that, theoretically, Short Sea Shipping could be a smart and cost effective solution for the cargo delivery between Mexico and Canada, and for our case, from Mexico pacific ports to Vancouver. Comparing with ocean shipment from China, It would shorten the transit time from 35 days to 7 days, and reduce cost by ⅔.

 

 

……………

By Charles Yang, CITT, Copyrights Reserved.

Which Cars with non-standard wiper blades arms

Do not buy wrong model. It may not fit to your car!

As there are different connectors of wiping arms, , you need to make sure the the wipers matches your arms compatibly.

12 adapters & suitable wiper arms

But you do not need to worry too much as most of cars on the road using hooks type arms.

Here is a list of car models with special wiper arms.

AUDI

S5 2007+
Q5 2008+
A1 2012
A4L 2012+
A6L 2012+
A7 2012
A8L 2012
A6L 2006+2011
R8 2007+
A3 2004-07
A5 2007+
Q7 2005-07
Q7 2007+
TT/ TTS 2007+

BMW

X6 2012+
X3 2011
X5 2005-07
X5 2007-
X6 2007+
5 Series 2005-10
MS 2006+
1 Series 2007+
1 Series 116i /118i 2011+
3 Series 2009+
650 i 2007+
M3 2010
X1 2010
MINI COOPER 2011

BUICK

Encore 2012
ENCLAVE 2008+
PARKAVENUE 2007+
PARKAVENUE 2012
ENCLAVE 2012
GL 8 2011

CADILLAC

CTS 2003-07
SRX(SUV)
SLS 2007+
ESCALADE 2007-
SLS 2012
CHEVROLET SPARK 2003-05

CHRYSLER

JEEP 2003-05
CITROEN Exclusive C5 2012
PICASSO 2008+
Exclusive C5 2006-08
Exclusive C6 2006-08
Coupe C4 2005-07
C-TriOMBYphe 2006+
PICASSO 2004-07
FIAT 500 2008
BRAVO 2007+
BRAVO 2007+
PUNTO NEW 2007+
PUNTO 2007+
LINEA 2008-

FORD

FIESTA 2008+
FOCUS 2012
MONDEO III 2007+
S-MAX 2007-08
FOCUS II 2005-
FOCUS C-MAX 2007-

HONDA

ACCORD 2000-04
EQUUS 2012
HYUNDAI i30 2007+
VERACRUZ 2008+
ROYENS 2008+
INFINITI EX25 2011
EX35 2007-
FX35 2011
G35/M25/ M37 2010

JAGUAR

ALL-NEW 2008+
XF 2008+
XF 2011
XF.SV8 2008+

KIA

CEE’D 2007+

LAND-ROVER

DISCOVERY 3 2008+
FREELANDER-2 2008

LEXUS

IS 300 2006+

MAZDA

3 2000-05

MERCEDES BENZ

C Class 2007+
GLK 2008+
CLS 2005-
E Class 2002-06
E Class 2012+
GL 2008+
GLK 2008+
S Class 2002+
SL Class 2005+
A Class 2004+
B Class 2005+
E Class 2009+
GL 2007-
ML Class 2008+
R Class 2007-
SLK Class 2009+
SLR Class 2004+
Smart 2011
VITO 119 2008-
VIANO 3.0 2007-
SPRINTER 2004+

MG

MG3 2012
M7 2008+
MG3 2009+
MG5 2012
MG6 2008+
MG6 2011+
MG7 2007+
MG7L 2007+

MITSUBISHI

LANCER 2006+

NISSAN

TEANA-NEW 2008-
QASHQAI 2007-
OPEL Α 59 ASTRA 2003-07
ASTRA 2007-
ZAFIRA 2007-
CORSA 2006-

PEUGEOT

308 2011
308SW 2010
RCZ 1.6T 2012
408 2010+
508 2011
207 2006-07
407 2006-07
407 2008+
307 2006+

RENAULT

TWINGO 2007+

MEGANE 2005+
Laguna 2005+
Laguna 2012
KOLEOS 2012
KOLEOS 2009+
SAAB 900
93 CONVERTIBLE 2008-
93 SPORTHATCH 2008-
TURBO X 2008-
350S 2010
750S 2007-
750 2012
550D 2008-
N1 2009-
MATIPLAN 2008+
SEAT IBIZA 2006-
LEON 2006-

SKODA

SUPERB 2008+
FABIA 2007-
ROOMBYSTER 2006-
SUPERB 2001-07
OCTAVIA 2005-07
OCTAVIA 2008+

SSANGYONG

Chairman

SUBARU

VIVIO

SUZUKI

SX4

TOYOTA

CAMRY 2.0 1996-99
SEQUOIA 2011

VOLKSWAGEN

GOLF 2012
CROSS Golf 2012
Golf R 2012
Polo 2006+
NEW BORA 2011
PHAETON 2007+
TOURAN 2008+
TIGUAN 2009+
TIGUAN 2012
TIGUAN 2008+
SCIROCCO 2008+
GTI 2007
ECOFAET 2008+
VOLKSWAGEN CL 2008+
R36 / EOS 2006+
TIGUAN 2008+
CC 2009+
POLO 2006-
GOLF 5 2005-
JETTA 2006-
PASSAT 2005-
TOURAN 2006-
R36 / EOS/ SCIROCCO 2006-
CADDY 2007-
Golf cabriolet 2012
NEW POLO 2011
PASSAT 2012
CADDY 2005-08
PASSAT 2011
PHAETON 2012
Sharan 2001.06
TOURAN 2004-06
TOUAREG 2007
TOUAREG 2008+

MULTIVAN 2007
VW BORA 2002-06
GOLF 4 2002-03
VW POLO 2001-05
PASSAT 2002-04
CADDY 2004-06
GOLF 5 2003-05
JETTA 2005-06
Sharan 2012
VOLKSWAGEN SANTANA-2000 2000-05
PASSAT 2008+

VOLVO

C30 2006-08
C30 2012
S40 2006-08
S40 2009-12
V50 2006+
V60 2011
V60 T6 R-Design 2012
S60 2012
XC60 2009+
S80 2006-08
S80 L 2009+
C70 2006-
C70-T5 2008-
A3 2003-04
S40 2003-05
S60 2004-06
S80 2003-05
V70 II 2004-07
V70 2007+
XC70 I 2004-07
C70 2005-06
XC90 2012

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————————————————————————–

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  • Active green & Ross Brampton, 149 West Drive
  • Wheels for less
  • JDM auto parts
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  • Prefered muffer and brake
  • Carquest
  • PHD group
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  • Quicklane
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  • Discounterstar auto glass
  • Michael’s car star
  • Sili’s auto care center
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  • Personalautoservice
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  • Ali motors
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  • Fix auto
  • Laker Auto Repair
  • OK AutoTire
  • Shritan Auto service
  • Royal Atlantic Collision centre
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  • KBR repair shop
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  • Integra Tire Auto Centre
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  • KR Auto Repairs
  • MB auto repair
  • GARY’s Automotive
  • Aossactive green and ross Markham
  • VAP Silver Creek
  • All Fix Auto Motive
  • Racewerks
  • Pacific mall
  • Capital motos
  • Dixe market
  • Teamsis
  • Dr. flea
  • Elite Tunerz
  • Autoglass
  • Speedy auto car
  • Pride Auto
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  • Eagle Eye Events
  • Auto image
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  • Petro Canada
  • K&B auto services
  • Speedyglass
  • Carquest
  • Meineck vough
  • Midas woodbridge
  • Quick fitt lakeshore
  • GCR car
  • Winsmart shop
  • Active green
  • Master mechanic
  • Yung autoactive
  • MB auto repair
  • Perfect canada
  • Speedy glass
  • Superior tire
  • Good year
  • Midas tomken
  • Auto Stream repair
  • Star auto glass
  • Midas woodbridge
  • Midas Brampton
  • Master Mechanicmaster mechanic
  • BHS auto repair
  • Platnum auto parts
  • Lakeshore Gas station
  • ROSA auto sales
  • Active green and ross
  • MS carcarecentre
  • Matrix
  • DNATINK
  • KINGLA Auto repair
  • Pro oil changeactive
  • A-one auto glass service
  • Atlas Auto glass
  • APC
  • Sonic auto repair
  • prolineaccurate tire
  • SOS auto repair
  • High tech auto repair
  • weston star auto
  • Cliff auto repair
  • Premium Auto repair
  • Mizurata Auto repair
  • A1 GT auto repair
  • car by car auto repair
  • Ontario truck cap
  • Acton Motors
  • Kambros
  • R$R complete Auto
  • AADCO auto parts
  • Carter’s Auto body and glass
  • Lucarclli auto tech
  • Pirana automtive
  • Surjit Auto service
  • JNB auto center
  • Premium oil change
  • Blue ribbon auto center
  • VP autoautomotive sales and repairs
  • Peak auto
  • Megatronix

 

 

micro wave project update day 7

Day 7

 

The soil of grass becomes more dry. so today I need to water it.

Again, I prepared two glass of water. One treated with microwave oven, another glass is just city water from tap in kitchen.

after watering, those withered or shrunk leaves will boom again.

I see no big differences between two sections. However, it seems the grass in left part suffered more from drought.

shall we through away microwave oven? day 5 and 6

IMG_3617

Day 3

IMG_3620

Day 5

IMG_3630

Day 6

Sorry I did not take photo on day 4 and I did not update the progress yesterday.

Now Grass B grows well and we see no differences in grass between microwaved watered ones and normal watered ones yet.

Just remind that I have only water those grass once, as I see no needs of watering it everyday. If the soil is wet, why should I water it?

It seems now grass A become thirsty (shrink a little bit), I will water them tomorrow.

 

SHALL WE THROW AWAY OUR MICROWAVE OVENS DAY 2

This is second day. Let me have a look my grass.

It seems both of them are look quite healthy. They are recovered from post pain of transplanting.

Image

 

All grass looks great!  Maybe it is too early to show adverse impact of microwaved water, maybe there is no impact all.

Some withered leaves on grass A, but it show be due to replanting impact, some yellowish leaves on right side, they were in that state before replanting, according to my memory.

Image

 

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