Case Study: Ace Dairies
Ace Dairies gives a home delivery service for milk, dairy products and a range of
related goods. Roger Smitheram has run the dairy for the past twelve years. His
product is a combination of goods (the items he delivers) and services (the
delivery and associated jobs he does for customers).
At the heart of operations is an information system which contains full details
of all Roger’s 500 customers, including their regular orders, special orders,
where to deliver, how they pay, and so on. Every day the system calculates the
likely sales of all products in two days time. Roger adds some margin of safety,
allows for likely variations and passes his order to Unigate Dairy in Totnes in
Devon (about 150 km away). This Unigate depot acts as a wholesaler for
milkmen in Wales and the southwest of England. The following evening it
delivers to a holding depot in Camborne, and then takes Roger’s goods 10 km
to a cold store in Hayle. At 5.30 the following morning Roger collects the order
from his cold store and starts delivering to customers. This normally takes until
1.30 in the afternoon, but on Fridays he spends more time collecting money
and often finishes after 5.00 pm.
There are several specific problems facing Ace Dairies. There is, for example,
some variation in daily demand, so Roger has to carry spare stock. He cannot
carry too much, as dairy products have a short life and anything not delivered
quickly is thrown away. Roger aims at keeping this waste down to 2 per cent of
sales. There are also problems maintaining a service during holidays, or when
Unigate has difficulties with their deliveries.
Perhaps Roger’s main concern is maintaining his sales over the long term.
Demand for doorstep deliveries is declining, as people buy more milk at
supermarkets. The number of milkmen in Hayle has declined from ten in 1987
to three in 2002. Most of Roger’s customers have been with him for many
years, but he generates new custom by canvassing, delivering leaflets, special
offers, carrying a range of other products, and so on.
Questions
1. Describe the supply chain for milk.
2. Where does Ace Dairies fit into this? What specific activities form the
logistics in Ace Dairies?
3. What are the main problems that Ace Dairies has with logistics?