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Logistical Efficiencies

Massive decrease in expenses in the supply chain by consolidation to one vendor

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Logistical Efficiencies

  1. 1. Cost Reductions Through Logistical Efficiency Gains Managing the Logistics and Supply Chain for Chemicals and Safety Products
  2. 2. Vision Statement <ul><ul><li>Remove all non-value added steps in the process or processes that bring raw material to Delta Air Lines in the form of Chemicals and Safety Products. </li></ul></ul><ul><ul><li>In addition, consolidate the processes so that the management of those processes can be managed by fewer entities. </li></ul></ul>
  3. 3. Goal and Objective <ul><ul><li>Bring total visibility from Manufacturer (raw material) to Delta as a customer (Point of Use) </li></ul></ul><ul><ul><li>Consolidate all management of Value Stream, manufacture to Point of Use, to on entity </li></ul></ul><ul><ul><li>Reduction of all costs, in each currently used process step, by streamlining the Logistics System </li></ul></ul>
  4. 4. Today’s Situation <ul><ul><li>Current Logistics System includes: manufacture, shipping, Interface Chemical Management, shipping and handling, and point of use. </li></ul></ul><ul><ul><li>Each step including: </li></ul></ul>Suppliers Procurement Operations Distribution Customers
  5. 5. Today’s Situation <ul><ul><li>Current Logistics System: </li></ul></ul>
  6. 6. How Did We Get Here? <ul><ul><li>A typical business model </li></ul></ul><ul><ul><li>Value to Delta Air Lines was not in question (Value Stream) </li></ul></ul><ul><ul><li>As long as materials were in place - on time: no questions </li></ul></ul><ul><ul><li>Logistics not a Core Competency for maintaining airplanes </li></ul></ul>
  7. 7. Proposed Option <ul><ul><li>Have supplier act as all other entities and assume responsibilities of: shipping, storing, reporting, and distributing chemicals and safety equipment to Delta Air Lines </li></ul></ul><ul><ul><li>Reduce the number of resource consuming entities from 25 to 6 </li></ul></ul>
  8. 8. Proposed Option
  9. 9. Proposed Option’s Value to Delta Air Lines Cost Differentials Six Entities Twenty-Three Entities
  10. 10. Proposed Option’s Value to Delta Air Lines Single Source Supplier Real Costs per Unit Cumulative Volume
  11. 11. Proposed Option’s Value to Delta Air Lines Single Source Supplier Commodity Market for Chemicals Service – break through – Advantage Costs – break through – Advantage Service and Cost – break through – Advantage Productivity Advantage Value Advantage
  12. 12. Proposed Option: How To
  13. 13. Recommendation <ul><ul><li>Go to ‘Single Source’ supplier that would integrate the Chemical & Safety Equipment Handler role </li></ul></ul><ul><ul><li>Vast savings in Logistical, material, and management costs </li></ul></ul><ul><ul><li>Research Chemical Manufacturer base </li></ul></ul><ul><ul><li>Use a decision matrices to identify top competitors </li></ul></ul><ul><ul><li>Bid out the process to top competitors </li></ul></ul>