Case Study 1: The supply Chain 15 minutes vs 15,000 Kilometres

Case Study: Import vs. Local

Tim Lee general manager for Munching and Crunching International, under pressure from ownership to reduce fixed and variable expenses by 10%

Munching and Crunching distribute their sea food products from Vancouver Canada to all across North America. The seafood products are shipped out in corrugated cardboard boxes made by a box manufacturer nearby called Poser Packaging.

In an effort to lower the their cost of goods sold, Tim had begun looking for a less expensive source of the cardboard boxes they used to ship their products.

The cost of buying boxes from Poser worked out to 1.34 a box and since Munching and Crunching used typically 8,000 boxes a month the cost of buying boxes was $11,600 a month.

As luck would have it, Tim’s cousin Yushen in Hong Kong worked for a box manufacturer, and he’d sent a quote to Tim indicating that he could sell Tim the identical box for

$ 1.10 if Tim would order 24,000 boxes in one shipment.

Tim was immediately interested as by his calculations he would save $5,700 if he bought his boxes in Asia and then had them sent over to Canada.

Tim knew there was costs involved with shipping across the Pacific and he put his plan into action.

The box manufacturer required 30% down before they would build his boxes so he paid them just under $8,000. A week later the boxes were loaded into a container and ready for shipment and according to the terms of the agreement he paid the remaining amount, over $18,000. One thing worried Tim, that there could be no room for error, so more then once he sent measurements and details of the boxes dimensions.

There are other expenses as well. The cost for freighter transportation, brokerage fees, insurance, duties, and the monthly rental cost of having the container remain at their business address. Combined the fees come to $4,200.

Still, Tim reasoned. As he was able to save near $2,000, that’s pretty good work.

4 weeks later they opened the containers doors to discover the logo inside read Punching and Crunching, which proved to be confusing to his customers and he began to call them to advise them of the error. The feedback he received was not encouraging, they were also not happy with the boxes themselves as when they were stacked four high as that caused the bottom boxes to be crumpled and not useable.

On his lunch break Tim found Racer Boxes – a Vancouver Boxes and Packaging Manufacturer minutes away from his warehouse. Working with Racer Boxes, Tim arranged excellent pricing and better quality boxes. With no mistakes of printing or box dimension errors. Racer Boxes also created a print plate that can be used again and again with Crunching and Munching proudly displayed on his boxes.