Progistix Solutions Inc – The Critical Parts Network Harvard Case Solution & Analysis

Company Overview

Progistix, originally started operations as a logistics subsidiary for Bell Canada in the year 1995, served only the purpose of facilitating the logistics services of the company. However, with the passage of time, Progistix started expanding its operations and network as well and transformed to become the third party logistics service provider to multiple industries.

The company has been very strongly established and placed in the industry serving multiple segments like B2B, B2C and B2T with significant strengths to play upon. The key features include the rapid delivery time, short cycles, and rich interfaces that have been serving as the competitive edge for the company. Currently, Progistix has a strong hold in the Canadian market and as the stand out third party logistics service provider in the country.

Performance Analysis: Toronto vs. Scarborough depot

In order to decide on the performance of the depots, it is important to compel upon some of the major factors and the numeric justification along with that. The Greater Toronto is dependent upon the Scarborough and the Toronto depot as the location is required to have two depots to fulfill the demand. However, the performance of each of the depots is significantly different form each other.

First of all, the value carried by both of these depots is slightly different as the Scarborough depot carried a value of around $400,000 whereas, the Toronto depot holds or carry inventory worth $500,000. However, the inventory levels are same as both the depots hold around 7,000 SKUs, which is a strong proof of the importance that Toronto depot holds in inventory management.

On the other hand, the technicians required at each facility are also different at a great deal as 81 technicians serve at Scarborough while only 65 are required and serving at Toronto. This indicates that the fixed cost in terms of salary is high at Scarborough and more people are required to maintain the facility. This is the reason why Scarborough is more havoc as compared to Toronto.

Furthermore, it is also very important to examine the total area that is consumed by the facility. Both the depots hold same level of SKUs however; the total area of Scarborough is more as compared to Toronto. Nonetheless, this can be a favoring feature for Scarborough as it will allow more SKUs to be assimilated but currently this helps in low cost for Toronto and help in enhancing the overall performance of the depot.

On the other hand, the cost of delivery in normal time and also in rush hours is also very low for Toronto as compared to Scarborough. Therefore, it can be easily stated that the performance of Toronto is far better as compared to Scarborough which is why the Toronto depot can be a vital option to excel upon in the future. The indicators sated above clearly signify the performance of the Toronto depot and justify the statement that in terms of performance the Toronto depot has outplayed Scarborough depot.

Improvement in Inventory Turns

Currently, the inventory turns of Toronto depot is around 5.94 while the estimated inventory turns for Scarborough is around 2.64. On average the required efficiency for Xerox is 95% whereas, the company is providing around 96% efficiency with the Toronto depot and the efficiency for Scarborough is bit low to be around 90%.

The decision regarding improvement in inventory turns will be critical as the decision also needs to keep the customer service levels constant. Thus, it is observed that the Scarborough facility is facing difficulty in managing the 30 minute delivery or short deliveries, which is why the inventory turns and the overall efficiency of the depot is disrupted. Thus, a decision needs to address this factor as well.

However, Xerox in collaboration with Progistix can only limit the 30 minute delivery form Toronto and the short deliveries are only transferred to the Toronto depot. In this regard the role of the call centers agents of Xerox will play a vital role as they hold the reasonability of transferring the order to the depot technicians.  Therefore, the main point will be that Xerox must transfer all the short delivery time orders or the 30 minute delivery orders to Toronto depot.

On the other hand, Progistix should only focus on serving the 60 and 90 minute delivery form Scarborough which is under the capability of the depot. This will enable it to achieve the minimum efficiency requirement of the Xerox and will be able to enhance the inventory turns of Scarborough facility as well as for Toronto as well. However, a major concerning point will occur encompassing this decision..................

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