Presented by• Arka Jyoti Paul• Rajesh Kumar • Muggi Sowmya• Kondala Prabhavati• Rani Garg

Audio Duplication Services, Inc. (ADS)

Introduction to Case

ADS Inc. is a cassette and CD duplication and distribution services provider.

Three main parties indulged : a) ADS Inc. b) Big Record

Companies c) Large

national retailers

CURRENT SITUATIONRecord

companies

ADS Inc.

Large retailers‘ distribution centre

Retails

Orders are placed

Shipped

Finally reaches

(Different shippers ,Arm length’s transaction)

(order)

order

Requirement of Record Companies

Large record

companies

ADS

Orders

stores store

sstore

s

stores

1. Direct shipment

2. VMI implementation

VMI implementation

Options to evaluate

Purchase fleet of trucks to supply to retails - Costly deal

3PL implementation : Entire shipping

Take a decision of taking trucks on lease ( from warehouse to retailers)

High inventory holding cost at retails.

Unnecessary maintenance cost for Distribution Centers.

Q1: Why are ADS customers’ customer moving towards VMI arrangements?

Q2: (a)How will this impact ADS’s business?

Increase in shipping cost. Increase in inventory holding cost.

•Result in global optimization.•Reduce bullwhip effect maintaining high service level.• Strategic alliance(3PL) can be coordinated with VMI

(b) How can ADS management take advantage of this situation?

Q3: How should ADS manage logistics?

Logistics is not a core competency of ADS More crucial issues to deal with for ADS ADS Inc. should have strategic alliances.(3PL)

ADVANTAGES OF USING 3PL Provider:

Geographical location flexibilities. 3PLs generally have greater negotiating leverage with carriers 3PLs offer superior information services Expedited delivery & team trucking 3PLs offer greater shipment control through vendor relationship

management 

Large record

companies

ADS

Warehousing

stores store

sstore

s

stores

stores

(Orders)

Suggested Model

(Strategic alliance here onwards)

VMI

Q4: Why are the large national retailers moving toward a direct shipment model?

Unnecessary complexity of handling Retailer’s Distribution Center

Reduce the inventory holding cost

Reduce further transportation costs for the retailers