Goldfield’s Electronics (GFE) is a private distributor of a wide variety of consumer electronics such as DVD players, televisions, and MP3 players among others. Since the year 1979, they have been operating from their main distribution center in Boone, Lowa. GFE’s customers are mainly small and medium sized electronic retailers since most of the large companies manage their own distributions. GFE works on the principle of making delivery in time ever since its beginning and has since grown due to this. It has developed a good customer relationship such that most customers are long-term customers.
The company’s president, Bobby Goldfield, is worried since his company has really failed in the service provided to customers over the years. This has led to the loss of some of their long – term customers to their competitors. The company has many customers who need delivery to be made in time but GFE has been unable to do that lately. Some of the challenges facing GFE are that they are producing 400 SKU’s while they provided only 45 of them some time back. This change is among the many changes that have taken pace in the company over the years but the employees have found it difficult to adjust to the new output levels. The President has discussed with his team and has decided to work on a 97.5% customer service level.
In order to get to the root of their problems, GFE decided to monitor the cost and sales of their most desired product. The product is supplied from their facility in Guadalajara at $175 and there are about 78000 units required worldwide every year. The company transports the product in large numbers to cut on cost and due to their high demand. The mode of transportation is the inter-modal method of transportation. This method involves use of different modes of transport such as shipping, road, rail, and air to transport their products. This took a long time on the road before the goods could arrive to their destination. GFE was losing customers due to to delivery delays and was desperate to find a good solution to this problem.
The best reccommendation that could be suggested is for the company to change their mode of transportation to a direct method. This is due to the importance of time in the business world. Despite the extra cost of $1000 that would be incurred due to the direct method, it would be advisable to use the method for the following reasons. First, the company is losing customers due to delays. The major part of a business is its customers. Without them, then their would be no business at all. It is a good idea for the company to deliver their goods in time so that they could maintain good customer relations.
The other reason is that the business really depends on the sales made in order to make profits. GFE has many customers but fails to deliver in time. If customers are dissapointed oftenly, they would swithc to other options who are your competitors. GFE has a ready market, which means that a diret method would be best in order to maintain good customer relations. Since the goods sell faster in the market, good customer relations means that GFE would have to distribute its products approximately twice in a week which would increase their profit by a good margin. An increase in supply results into an increase in sales and in turn, profit. Mr. Goldfield should use the direct method of transportation to save time, maintain good customer relations, and improve the sales of the company.