Question

I need this case solution : Has to be at least 1000 words. Please don't ruin the question by giving in less than that. Love you stay blessed.

Tools for Trade
Tools for Trade (TFT) is a Canadian company that sells high-end, specialty tools made to withstand the
rigours of every day use by tradespeople. TFT has been in business for 15 years and enjoys a strong
brand recognition and support from the trades. Their head office and main distribution center are
located in Calgary, AB.
What sets TFT apart from their competitors is their commitment to innovation. Over the years TFT
invested heavily in research and development (R&D) capabilities and secured a number of patents on
the design and features of their tools. TFT is also known for a very high quality of their products. TFT
tools carry a “Made in Germany” label and come with a 25 year guarantee.
TFT uses a franchise retail model with 120 locations across Western Canada and Ontario. TFT provides
its franchisees with sales forecasts specific for each location, arranges for transportation, invest in
marketing and advertising of their products, and provides a number of other services required to run a
successful retail chain. In addition to their retail locations, TFT entered into several partnerships with
large industrial firms whom they exclusively supply with their tools. These commercial customers enjoy
volume discounts and high level of customer service provided by dedicated account managers.
Most recently, TFT started offering their products online for purchase by individual customers. TFT
offers to ship its tools free of charge to customer home or a job site. Same day shipping is guaranteed on
e-commerce orders placed before noon. This service is currently available to customers located within
60 miles of TFT retail locations as the orders are filled from store inventory.
TFT current supply chain operates as follows:
The German manufacturer ships in FCL to Canada using the incoterms DAT Halifax. TFT has a cross dock
facility in Halifax (operated by a small local 3PL) where the ocean containers are unloaded and orders
are processed for distribution. Shipments destined for Western Canada are loaded onto 53” rail
containers while orders for Ontario stores are shipped by truck. Upon arriving to TFT distribution center
in Calgary the rail containers are de-stuffed and inventory is either put away into storage or cross
docked again to be shipped to stores on outbound trucks. The distribution center is capable of
processing e-commerce orders from customers, however the management feels it is still cheaper to ship
from stores versus a centralized location. TFT manages its transportation in-house and has agreements
with a number of service providers to ensure its transportation needs are met.
Given the success of its brand and growing demand for its tools TFT wants to expand its product line to
other provinces, and potentially USA. To support this expansion a number of challenges needs to be
addressed. TFT hired you to assess the situation, consider alternatives and provide recommendation on
the following:
1. All TFT competitors are sourcing their tools from lower cost countries. TFT are considering
importing from other countries. Given the current setup of TFT’s network, what are some
benefits and concerns of a change in sourcing? What criteria may be used to evaluate these new
vendors?
2. The current cross-dock facility in Halifax is at capacity and TFT is considering a second cross dock
operation in Western Canada. Fearful of the Halifax 3PLs inability to expand, TFT is considering

opening its own facility. Shall TFT pursue this option or work with the Halifax 3PL to facilitate the
expansion?
3. Customers are increasingly demanding shorter lead times and exceptional service. Given the
different customer segments TFT serves (individual consumers, commercial users and
franchisees), should TFT create one single service model, or practice segmentation? Explain each
model and justify your recommendation in detail.

Answer 1

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A TOTAL OF 1003 WORDS

Company Name: TFT

Product: Specialty tools

Head office and main distribution centre: Calgary, AB, Canada

Customer Segment: Individual consumers, commercial users and franchisees

Sales Strategies: TFT uses a franchise retail model with 120 locations across Western Canada and Ontario. TFT provides its franchisees with sales forecasts specific for each location, arranges for transportation, invest in marketing and advertising of their products, and provides a number of other services required to run a successful retail chain. In addition to their retail locations, TFT entered into several partnerships with large industrial firms whom they exclusively supply with their tools. These commercial customers enjoy volume discounts and high level of customer service provided by dedicated account managers. This can also be discussed as that With 120 stores throughout Western Canada and Ontario, TFT follows a franchise-retail model. TFT provides its franchisees with location-specific demand estimates, arranges for logistics, participates in marketing and advertising of their goods, and offers a host of other resources essential for effective retail chain operations. In addition to their retail locations, TFT has entered into several agreements with large industrial companies to which they sell their equipment exclusively. Many commercial clients reap volume discounts and high level customer service from dedicated account managers.

1. All TFT competitors are sourcing their tools from lower-cost countries. TFT is considering importing from other countries. Given the current setup of TFT's network, what are some benefits and concerns of a change in sourcing? What criteria may be used to evaluate these new vendors?

Sourcing their tools from low-cost Counties is a better option to be considered for the following reasons:

• It helps in achieving comparatively high profit for the organizations.
• It reduces the overall cost of operations. Since the products to be processed are bought at comparatively low cost.
• It increases the supply chain efficiency if the appropriate vendor is considered by estimating the price, distance between country, quality of the product and other such factors.
• There is likely a very high possibility of achieving better sales contract than an existing sales contract.

Criteria to evaluate vendors:

The distance between the vendor and distribution centre: less the distance more the speed of delivery.

Quality: The vendors’ product quality should never be less than the existing product quality.

Sales contract: Vendors providing favourable INCO terms such as FOB [Free on Board], EXW [Exwork] and DAP [Delivered at Place] had to be given preference. Because it reused the overall risk associated with buyers’ during transportation.

Quantity: Every vendor considered should possess a supply potential equivalent company’s forecasted demand. This will help n maintain supply and demand in balance.

Currency Fluctuation: Vendors stated in countries whose currency are stable with respect to Canadian $ should be given preference to avoid loss due to currency fluctuation.

1. Customers are increasingly demanding shorter lead times and exceptional service. Given the different customer segments TFT serves (individual consumers, commercial users and franchisees), should TFT create one single service model or practice segmentation? Explain each model and justify your recommendation in detail.

The benefit of using one single service model:

• Consumer and Customer oriented: Since the commercial users and franchisees are customer [who buys and resells the product] but not the consumer. Company’s brand image, operational efficiency, service and product quality is determined by the individual customers, hence more importance had to give to the consumer rather than customers. Further adopting one service model would help in focusing the company’s operation towards consumers and lending appropriate services to the customer in order to make them as better facilitators and intermediaries. Or in other words we can conclude that Because the business users and franchisees are buyers[ who purchase and resell the product] but not clients. The brand image, operational efficiency, service and product quality of the business was decided by the individual customers and therefore more attention had to be assigned to the client rather than to the suppliers. More implementation of one service model will help to focus the activity of the organization on customers and to provide the client with sufficient services to make them effective facilitators and intermediaries.
• Centralized control: Since the product line is concerned with only speciality tools, having a single service model will help the company to achieve better operational control.
• Reduces overall expenses and working capital: Practicing a single service model provides the company with an advantage to operate in one finite location without investing in additional assets further it helps in depleting less workforce and achieve maximum output.
• Both the above points depict only thing that, the use of the centralized control is because the product line only deals with speciality devices, having a single service model would help the company achieve better operational control. Reduces overall costs and working capital: Practicing a single service model gives the company the benefit of running in one limited area without spending in additional assets, thus helping to deplete fewer employees and reach maximum output.

Disadvantageous of Single service model:

• High workload.
• The requirement of the skilled labour force and management.
• In case of natural disaster or accident, the operations would be severely affected at every customer segments (individual consumers, commercial users and franchisees) and company would acquire a severe loss.

Recommendation to overcome disadvantageous in single service model:

Below illustrated the single service model:

Having centralized operation but decentralized departments for carrying out individual consumers, commercial users and franchisees demand is the best methodology. This would ensure business protection during natural calamity and accidents, increase the speed of operations and delivery. Further continuous training and development programme for employees and executive ensures the update of current business scenarios and improvement of skill set. Or in other terms we can say that the strongest approach is to have unified service with localized teams to accomplish individual consumers, business users and franchisors need. This would improve safety of the company through natural disasters and incidents, increase the speed of processes and production. The continuing workplace and management training and development plan guarantees upgrading of current business conditions and improving skill set.

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