Case Study 2.1 - Senco Electronics Company
Anonymous Student
ASCI 644 Integrated Logistics in Aviation Management
January 15, 2014

If a product has to be delivered to another country, you are basically left with only two choices, ocean freight or air freight. These two options differ in many ways and choosing between them should depend on the situation. Since the high tech computer industry reacts quickly to customer demand, using air transportation mode to transport goods across the Pacific is more reliable and provides more control over the flow rate of the product entering the U.S. market. By adopting a Just-in-Time manufacturing model, Senco or any other U.S. computer manufacturer could become more lean and efficient. This method alone would keep warehousing cost at a minimum and reduce out of stock items and keep customer satisfaction high. On the other hand, ocean freight allows for larger lot sizes, less shipment frequency, longer in-transit times and less reliability than shipment by air (Bowen & Leinbach, 2009).
While air freight is most expensive, ocean fright is one of the cheapest ways to transport goods from one country to another. Cargo ships have large cargo holds and, more significantly, the cost of the voyage is shared by a lot of other cargo that is on the same ship. When delivery time is not an issue, this is the option that should be used because it will save you a lot of money (Zinner , 2011). On the other hand, the customer should always be left satisfied. One of the factors which contribute to customer satisfaction is how reliable the retailer (or build-to-order) just-in-time manufacturer is with delivery. Typically, if a customer orders something, he (or she) expects that it will arrive at the specified date. Thus, using ocean freight as a mode of transport means that you will sacrifice some of that satisfaction. Simply, ships cannot be relied on for just-in-time manufacturing because they run on weekly schedules and the risks of something going wrong (and the shipment getting delayed) are high. While this does not mean that the goods will get damaged, the customer satisfaction will surely drop if he (or she) has to suffer a delay in delivery (Bowen et al., 2009).
In the high tech industry building computers to order has become a popular and accepted method of providing computers to retailers and individual buyers. Build-to-order process in which a product is customized and manufactured according to specific customer requests, making built-to-order manufacturing a key delivery method for today’s high tech buyers. This method of manufacturing contributes to increased accuracy of doing business, both from a customer and supplier standpoint (Gunasekaran, 2005).
The main benefit for sending goods via a plane has always been the speed of delivery. Simply, there are no other modes that transport goods faster than an airplane. This is why this mode of transport is always used in situation where speed, as in just-in-time manufacturing, is of the essence. Some goods require that they reach the destination as fast as possible, while, in other cases, the customers are impatient (Bowen et al., 2009).
Another key point that favors air freight, your goods will have the least risk of getting damaged or destroyed. Of course there are risks that the plan carrying your goods will crash, but, those risks are absolutely minimal. When it comes to handling, storing and securing your goods, airport regulations take very good care of that. There are strict rules that have to be followed when handling goods and, as was already said, due to the speed of transport, air freight (built-to-order) just-in-time manufacturing is a key delivery method for today’s high tech buyers (Bowen et al., 2009).

References
Bowen, T.J. & Leinbach, T.R. (2009). Competitive Advantage in Global Production Networks: Air Freight Services and the Electronics Industry in Southeast Asia. Economic Geography, Vol 82, Issue 2, pp 147–166, April 2006
Gunasekaran, A. (2005). Build-to-order supply chain management: a literature review and Frame work for development. Journal of Operations Management, Vol 23, Issue 5, July 2005, pp 423–451
Zinner, T. (2011). Achieving Air and Ocean Freight Flexibility. Inbound Logistics. Retrieved from http://inboundlogistics.com/cms/article/achieving-air-and-ocean-freight- flexibility