Cost Reductions Through Logistical Efficiency Gains

Managing the Logistics and Supply Chain for Chemicals and Safety Products

Vision Statement
Remove all non-value added steps in the process or processes that bring raw material to Delta Air Lines in the form of Chemicals and Safety Products. In addition, consolidate the processes so that the management of those processes can be managed by fewer entities.

Goal and Objective

Bring total visibility from Manufacturer (raw material) to Delta as a customer (Point of Use) Consolidate all management of Value Stream, manufacture to Point of Use, to on entity Reduction of all costs, in each currently used process step, by streamlining the Logistics System

Todays Situation
Current Logistics System includes: manufacture, shipping, Interface Chemical Management, shipping and handling, and point of use. Each step including:

Suppliers Operations Distribution

Customers

Procurement

Todays Situation
Current Logistics System:

How Did We Get Here?

A typical business model Value to Delta Air Lines was not in question (Value Stream) As long as materials were in place - on time: no questions Logistics not a Core Competency for maintaining airplanes

Proposed Option
Have supplier act as all other entities and assume responsibilities of: shipping, storing, reporting, and distributing chemicals and safety equipment to Delta Air Lines Reduce the number of resource consuming entities from 25 to 6

Proposed Option

Proposed Options Value to Delta Air Lines

Six Entities

TwentyThree Entities

Cost Differentials

Proposed Options Value to Delta Air Lines

Real Costs per Unit

Cumulative Volume

Single Source Supplier

Proposed Options Value to Delta Air Lines

Service break through Advantage Service and Cost break through Advantage

Value Advantage

Commodity Market for Chemicals

Costs break through Advantage

Productivity Advantage

Single Source Supplier

Proposed Option: How To

Recommendation
Go to Single Source supplier that would integrate the Chemical & Safety Equipment Handler role Vast savings in Logistical, material, and management costs Research Chemical Manufacturer base Use a decision matrices to identify top competitors Bid out the process to top competitors