Drop shipment process in supply chain management, the advantages and disadvantages, based on implementation of drop shipment process during summer internship with TE Connectivity.
The Covid-19 pandemic had a huge impact on the supply chain industry and disrupted this industry globally. Before the Covid-19 pandemic, cost reduction productivity, workforce enhancement is one of the most important driving factors in the supply chain industry and these factors helped in improving supply chain efficiency, overall logistics and operations of a company. But the pandemic era forced companies to change their supply chain management strategies with the companies not being able to meet the customer demands. Amidst the slowing economic activity since 2020, the pandemic has led to a surge in the e-commerce and digital transformation. This rapid development of e-commerce led to the development of this new operational model called drop-shipment model. The idea of implementation of drop shipment model is based on the summer 2022 internship work with TE Connectivity, where this drop shipment model was implemented for the TE Connectivity automobile logistics team. This report focuses and dives deep into the emergence of drop shipment in the recent years and the steps for implementation of the drop shipment model with detailed cost analysis for any company to make their supply chain and order fulfillment operations more efficient. Through this report, we will be discussing what drop shipment is in detail, its advantages and disadvantages in the supply chain industry, the process flow model required for the implementation of drop shipment, constraint analysis with respect to drop shipment and different entities involved through the implementation of this model. We further discuss a detailed cost analysis by taking a sample of 15 data points with customers and automobile suppliers from regions of Nicaragua, El Salvador, Texas, China and France. (exact customers not taken due to confidentiality purposes with TE). The cost analysis compares cost reduction and transit time reduction with these 15 sample data points with the traditional shipment model and drop shipment model. It gives a detailed analysis of monthly and annual cost savings, transit time savings and warehouse costs savings (holding costs, inventory costs) with the implementation of this drop shipment model. Last but not the least, the report concludes with next action steps which need to be taken to ensure the feasible implementation, expansion to further more customers/regions, and continuous improvement of this drop shipment model.
Advisor: Dr. Paul Griffin
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|Work Title||Drop shipment process in supply chain management, the advantages and disadvantages, based on implementation of drop shipment process during summer internship with TE Connectivity.|
|License||In Copyright (Rights Reserved)|
|Work Type||Research Paper|
|Deposited||November 04, 2022|
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