Most important facts surrounding the case
PETCO is a huge corporation that was established 1965 and is a leader on pet specialty retail market. It has nearly 1,100 stores all over the USA. From the logistic point of view, it has very complicated structure. The stores are serviced by 10 different distribution centers that are located in different parts of U.S. Moreover, the company uses plenty of carriers for logistic (more than 30 different motor carriers, 3 dedicated carriers, some private fleet, and four brokerage firms). The PETCO Company uses all this logistic system for both inbound and outbound freight movement.
Key issues
Such a complicated logistic system leads to the problem of controlling and operational management issues. PETCO faced the problem of logistic unification and managing. With more than 30 independent carriers it is almost impossible to perform without any logistical problems and to keep in touch of all transportation processes. Moreover, the company didn’t have a strategic solution to its logistic issue and didn’t know how to handle with such a sophisticated system of transportation. Also, this system was quite an expensive and hard to being scaled. In 2007 the company decided to change its logistic system with focusing on unification the transportation processes and, as a result, costs minimization. For those times, logistics’ costs were on the third place of all company’s expenses. Costs optimization (minimization) was a key driver of changes for PETCO, but not the only ones. Company realized that if it wants to expend its performance, it should optimize its logistic system. Otherwise, any further expansion will lead to the performance’s collapse.
Evaluations of each course of actions
There are few possible solutions (courses of actions) for this problem. First of all, company could focus on increasing efficiency of current system. From operational point of view, it is the easiest solution, because you do not need to create something new, but only modify what is already exist. These improvements could be reached by the better planning processes, strict contracts with carriers, on-line control system, etc. But the main idea is that PETCO will still use a wide range of carriers with sophisticated system of internal communication and operational control. On the other hand, a great solution for this particular case will be a totally new strategy of logistic operation. And this strategy should be based on minimization of carriers that serve PETCO’s operations. Company should choose some core (1-3) carriers and build a strong relationship with them in order to develop strong united system of all transportation processes. Of course, these core carriers should have appropriate network (could perform all over the country) as well as enough transport facilities. But working with few carriers (maybe, with only one) will totally help the PETCO to solve all its transport problems and reach the aim of costs minimization (due to unification of processes and scale effect).
Recommending the best course of actions
REFERENCES
bnfs.com. (2010) PETCO case study. Retrieved from: https://www.bnsf.com/customers/campaign/pdf/case-study-petco.pdf
