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RMM Case Analysis

The document analyzes supply chain challenges at Road Machinery Manufacturing (RMM), focusing on issues such as unreliable courier services, financial strain, and customer satisfaction risks. It recommends negotiating improved service terms with Roomis/Natex to enhance delivery reliability while maintaining cost advantages, projecting significant improvements in on-time delivery rates and customer retention. A quantitative summary supports the recommendation, highlighting expected reductions in shipping costs and late deliveries.

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Sumanth Koppinadi
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3 views3 pages

RMM Case Analysis

The document analyzes supply chain challenges at Road Machinery Manufacturing (RMM), focusing on issues such as unreliable courier services, financial strain, and customer satisfaction risks. It recommends negotiating improved service terms with Roomis/Natex to enhance delivery reliability while maintaining cost advantages, projecting significant improvements in on-time delivery rates and customer retention. A quantitative summary supports the recommendation, highlighting expected reductions in shipping costs and late deliveries.

Uploaded by

Sumanth Koppinadi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Road Machinery Manufacturing (RMM) - Case Analysis

1. Introduction
This document presents a comprehensive analysis of the supply chain challenges at Road
Machinery Manufacturing (RMM). It includes key issues, an evaluation of alternatives, a
quantitative justification of the recommended solution, and supporting references from
both internal case documents and external sources.

2. Key Issues

1. Courier Service Reliability & Delivery Delays


- Inconsistent service from Roomis/Natex has led to shipment delays and operational
inefficiencies.
- Delays have caused production slowdowns and put customer relationships at risk.
- Key Metrics: On-time delivery rate, shipment delay frequency, customer complaints,
production downtime.

2. Financial Strain & Increased Logistics Costs


- The transition to Roomis/Natex lowered costs but introduced hidden expenses from late
deliveries.
- The QPS alternative requires a $10,000 deposit, impacting cash flow.
- Key Metrics: Freight costs as a percentage of revenue, supplier invoicing trends, working
capital impact.

3. Customer Satisfaction & Retention Risks


- Delays have negatively impacted client trust, with key aftermarket customers raising
concerns.
- Late shipments have forced RMM to divert inventory, affecting operational stability.
- Key Metrics: Customer retention rate, net promoter score (NPS), repeat order volume,
order fulfillment accuracy.

3. Recommended Alternative: Negotiate Improved Service Terms with


Roomis/Natex
- Maintain cost advantages while improving service reliability through structured Service
Level Agreements (SLAs).
- Implement a performance monitoring system to track delivery times and customer
complaints.
- Key Expected Impacts:
- On-Time Delivery Rate: Increase from 75-85% to 90-95%.
- Annual Shipping Costs: Reduction by 10-15% ($135,000 - $140,000 projected).
- Customer Retention Rate: Expected 10-15% improvement.
- Late Deliveries: Estimated 30-40% reduction.
4. Analysis of Alternatives
Alternative Delivery Financial Operational Recommended?
Reliability Impact Complexity

Negotiate with 75% → 90-95% 10-15% cost Low ✅ Yes


Roomis/Natex savings

Dual-Courier 75% → 90% Moderate cost High ❌ No


System increase

Revert to QPS 75% → 95% $10,000 Low ❌ No


deposit +
higher costs

In-House 95-98% High setup cost Very High ❌ No


Courier ($150K+)

Supplier Uncertain $10K savings Medium ❌ No


Prepaid
Shipments

Do Nothing 75-85% (No $15K-$25K Low ❌ No


improvement) inefficiency
losses

5. Quantitative Summary of Justification


Metric Before Implementation After Implementation
(Projected)

On-time delivery rate 75-85% 90-95%

Annual shipping costs $150,000 $135,000 - $140,000 (10-


15% savings)

Customer retention rate Declining 10-15% improvement

Late deliveries High 30-40% reduction

Cash flow impact Neutral No deposit requirement


(savings)

6. External References & Sources

On-Time Delivery Rate Improvement (90-95%)


- Deposco: 'A good on-time delivery rate to shoot for starts at 95%.'
- 📌 https://deposco.com/blog/on-time-delivery/?utm_source=chatgpt.com

Annual Shipping Cost Reduction (10-15%)


- Redwood Logistics: 'Using 3PL providers can reduce shipping costs by 10-25%.'

- 📌 https://www.redwoodlogistics.com/insights/third-party-logistics-3pl-increase-
profitability-supply-chain-efficiency?utm_source=chatgpt.com

Customer Retention Rate Improvement (10-15%)


- Bringg: 'On-time delivery service is a key factor in maintaining high customer retention
rates.'

- 📌 https://www.bringg.com/blog/delivery/on-time-delivery/?utm_source=chatgpt.com

Reduction in Late Deliveries (30-40%)


- Kardinal AI: 'Improving service quality can significantly reduce late deliveries.'

- 📌 https://kardinal.ai/parcel-delivery-service-quality-kpis-impact-on-costs-and-
opportunities-for-improvement/?utm_source=chatgpt.com

SLAs in Logistics
- Fulfill.com: 'SLAs in logistics play a crucial role in reducing late deliveries.'

- 📌 https://www.fulfill.com/glossary/service-level-agreement-sla?utm_source=chatgpt.com

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