BlueStar supplies products to major retailers, distributors, wholesalers, small business owners, and consumers. BlueStar generates annual revenue of $950m. Their primary market consists of the United States and Canada also supplies a minority of business revenues. BlueStar company has made some regretful decisions in the last year that is affecting product margins and the sustainability of the entire company. BlueStar has a large market share, but they have experienced numerous problems within their supply chain and more specifically in their transportation group.

1. BlueStar Office Supply
Company Study Case
MUHAMAD ALADDAD, CONNOR BROWN, LEE H DANG, NATE MICHAUD, PAUL STEVENSON
SCMT 4653, FALL 2015, DR. ANNÍBAL C. SODERO

2. Company profile
● Industry: Office Supplies and Stationery.
● Annual revenue: $950M.
● Market: United States and Canada.
● Customers: Mass Retailers and Commercial
Accounts.
●Key Retail Accounts: OfficeMax, Office Depot,
Walmart.
• Who they are, what they do

3. Key Issues
● Decreasing customer service levels
●Weakened relationships
● Increases in transportation cost
● Decreasing profit margins
● Relatively low-value products
● High transportation costs
● LTL and Air freight
● Data analysis capabilities

4. Supply Chain
Status
● Estimated Spending on Transportation from
questionable data:
● Transportation costs = 30% of Product costs
● Customer Service levels are dropping, costs
are increasing.
oNew carriers have had unintended costs.
● Bottom Line: BlueStar is facing numerous
issues with their Supply Chain.
• Customer service levels and
Costs.
• Corporate sales.
• Product margins.
May-Aug $ 56,894,378.83
Annual
(estimated)
$ 170,683,136.50

5. Outlook
● Efforts are being focused on improving
● BlueStar’s production facilities;
● Regional distribution centers.
● Executives at BlueStar want to see both
immediate and long term improvement.
● Key Goal: Reduce Transportation Costs
● Low value and high density nature of most
office products makes shipping complicated.
● Rising fuel prices.
Going Forward

6. BlueStar attempted action, cause and effect
● Moving away from established core
carrier relationships and long term
contracts;
● Placing every load on every lane up for
bid.
● Lost Economies of scale;
● Service requirements;
● Late shipments, extended delivery
times, and dissatisfied customers;
● Relationship with Carriers and Key
Customers;
● Price increases from most of the old
core carriers.

7. Data
Discrepancies
● Some data values for freight paid were off
by one or two decimal places.
● This created substantial changes in some of
the data we were analyzing.
● Perhaps due to the data integration process
as formatting for certain data are different.
● Miles are also affected.
A lot of the data is believed to
potentially be erroneous.

9. TL and LTL
● TL and LTL shipments make up the huge
majority of our shipments.
● TL, LTL shipments account for 84.3% of
the total 50,454 shipments .
● TL freights account for 14,041 compared
to the 28,478 LTL shipments.
● Data was too fragile to justify changes.

10. Intermodal
To keep or not to keep ?
● Short distance / Avg. 341 miles
● High rates/ Avg. $1,259
● SC not dependant on IM / only
1.60%
● Inefficient
● Rail industry issues

11. Air Scale Down our usage
● Rates are too expensive to justify
such a short distance travelled.
● For any reason we never want to
have to be dependent on air.
● Long distance expedited

12. SP Minor alteration
● expedited
● Less than 500 miles
● Transshipments down with
consolidation

13. Average Miles, Weight, and Cost
●LTL
● Avg. miles : 469
● Avg. Weight : 5,328
● Avg. Cost : $ 1,128.10
●TL
● Avg. miles : 413
● Avg. Weight : 4,759
● Avg. Cost : $1,122

14. Top LTL and TL Carriers
Top 5 TL carriers by number of shipments
Carrier Shipments
CROUSE CARTAGE 5,023
USF BESTWAY 2,051
OLD DOMINION FREIGHT LINE INC 1,744
AMERICAN FREIGHTWAYS INC 1,289
A DUIE PYLE INC 841
CRETE CARRIER CORP 451
Top 5 LTL carriers by sum of weight (lbs)
Carrier Total Weight
U S XPRESS ENTERPRISES INC 45,854,050
USF HOLLAND INC 18,274,549
SOUTHEASTERN FREIGHT LINES INC 12,087,708
FOX MIDWEST 8,390,558
RAINBOW TRUCKING SERVICES INC 6,743,564

15. Recommendations
● Invest in new/improved transportation
management system
● Improved LTL routing
● Better utilization of DCs
● Increased employee performance
● Invest in quality employees and training
● Reduced cost
● Increased performance
● Analyze DC locations in relation to LTL
shipments
● Determine if costs justify results
● Revisit Dedicated Carrier Decision
● Regionally or seasonally
● Short term fuel surcharge contracts

16. Suggested
Solutions
● Consolidation
● Shipments
● Locations
● Contracted LT Carriers
● build relationships
● Promote long-term partnerships
● Outsourcing
● Provide relief for contracted carriers
● Ensure on-time shipments

17. Consolidation
● Building better/longer relationships
● Dedicated Contract Carriage
● Lower rates
● Higher volume, easier to fill TL shipments
● Better asset utilization
Ideas
Relationships
Dedicated Contract Carriers

20. Contracted
Carriers
● Move away from open bidding process
● Contract top performing carriers
● Issue RFQs
● Volume
● Price
● Performance
● Lanes and projects are awarded based on
Tier qualification
● Drives performance
● Encourages lower rate quotes
Paul

21. Tier System
Example:

22. Outsourcing
BlueStar concern:
● Price
● Service Level
● Costs
● Efficiency
● Service level
Reasons for Outsourcing
● Resource network
● Rebuilding costs structure and Save time
● Expertise
● Scale and Flexibility
● Continuous Optimization and Support

23. Future Collaboration

24. Questions and Feedback