Case Study Strategic Solutions Inc.

Case Study Strategic Solutions Inc.

Strategic Solutions (SS) is a small 3PL provider that was started by Scott Crash in 1992. Scott began his career working in the logistics division of a large trucking company. He worked with fleet scheduling, customer support, and route scheduling before he saw the opportunity to start his own business offering similar services. Strategic Solutions provides logistics services to small businesses in Columbus, Ohio, and has recently acquired major accounts with two well-known grocery store chains. Their core competency is specializing in the movement of cold and frozen food products. Refrigerated trailers can be expensive, and if not transported using reliable equipment, it can prove to be very costly for all parties. Scott started his company by strategically combining LTL (less-than-truckload) shipments for small stores such as gas stations, pharmacies, and small grocery stores. He found his niche in climate-controlled trailer movements. Business has been growing since.

The Business

Strategic Solutions operates by arranging customer shipments with the best for-hire transportation service they can find. Two of their main transporters are Frigid Movements and Problem Solved Shipments. Strategic Solutions has long-term contracts with most of its customers, but they also accept one-time shipments and business from random customers on a regular basis. Customers can either call or e-mail Strategic Solutions with the details, such as identifying the products that need to be shipped, the destination, and required time of delivery. Once Strategic Solutions has this information they can then arrange for the outbound shipments from the customer’s distribution centers to the desired location. The customer base has increased substantially as a result of the company’s success in the cold food movement area, and they have acquired new contracts with major grocery store chains.

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The Problem

Scott’s company has begun to struggle with the business growth due to information technology constraints. Their current method of telephone and e-mail information exchange has become outdated, and customers have found it hard to communicate with Strategic Solutions. Customer satisfaction has dropped in the recent past, and Scott fears the loss of some of his top business clients. Something must be done so that Strategic Solution’s reputation isn’t damaged and no customers are lost.

The Need for EDI or TMS

Scott understands that logistics depends on accurate real-time information, but isn’t sure what type of system would be best suited for his operation and has decided to take a customer-oriented approach. He personally spoke with each of his customers to find out what would be the best system for them and how the two companies could best work together. He also spoke with his transportation providers to see what type of information exchange and transportation scheduling arrangements would best work for them. It seems that the ideal system would be a single point of contact for customer orders where information is updated in real time. It is inconvenient and time consuming for a customer to call and deal with busy phone lines and unanswered phone calls, or wait for an e-mail reply. There could also be clerical errors when transferring the information between different parties.

The EDI versus TMS Expansion

Scott is not sure which system to implement and what would be the best investment. He assumes that electronic data interchange (EDI) can accomplish real-time information sharing with all of their customers as well as potential carriers. For customers, information can be available online with proper access codes so that scheduling arrangements involving shipments, equipment, and time schedules can be made with a single point of contact. The downside of an EDI system is the expense. Also, system failure could halt the business, potentially resulting in significant financial losses.

Another option is a transportation management system (TMS), which is a software system designed to manage transportation operations. TMS would enable Strategic Solutions to directly link to their transporters’ systems to more efficiently identify and find potential routes. They wouldn’t have to arrange shipments through telephone or e-mail, but could simply schedule them using the TMS. A downside to TMS is that it would leave out noncontracted carriers. If a certain time or route wasn’t available through Frigid Movements or Problem Solved Shipments, Strategic Solutions would have to find other ways to schedule the transportation of their customers’ goods.

Scott has estimated the following costs for both systems as well as customer preferences:

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Case Questions

1. Identify the characteristics of an ideal information system for this logistics environment. Gather information on both EDI and TMS, and compare their suitability for this environment.

2. Help Scott decide if he should invest in either EDI or TMS, or both. Is there another type of system that you would believe would be better? What kind of benefits, including performance and customer satisfaction, can Scott expect by making these proposed changes to the business process?

3. What are the key considerations for Scott when deciding on the best possible systems to implement?


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