CASE 9-1
Young Again Pharmaceuticals
Cliff Crandall, senior director of transportation for Young Again Pharmaceuticals (YAP), is
gearing up for his company’s most critical product rollout in more than a decade. YAP has
developed a breakthrough liquid suspension that reverses the ageing process for anyone over 35
years of age. Available only by prescription, the new product has been dubbed Twentysomething in a Bottle by the media. Demand is expected to be very high despite the outlandish
price tag of $395 for a month’s supply.
The product is being manufactured in YAP’s San Juan, Puerto Rico laboratory and will be
distributed to major retail pharmacies in the United States and Canada. Crandall is responsible
for selecting the mode and contracting with carriers to deliver the product. He is concerned about
the safe and timely delivery of the initial product shipments in May to the retailers’ distribution
centers. The product is high value, somewhat fragile, and of interest to thieves. Some product,
stolen from the laboratory, has already appeared on auction websites.
In an effort to make effective transportation decisions and minimize YAP’s risks, Crandall
decided to hold a brainstorming session with his logistics team before signing any carrier
contracts. The discussion of key risks produced the following list of concerns:
If shipments are late or incomplete, retailers will penalize us with vendor chargebacks.
You know they will hit us with small fines for delivery mistakes.
I’m worried about shipment delays or freight loss from hurricanes in the Atlantic
Ocean.
You’ve got to consider temperature sensitivity issues. If the product freezes, we won’t be
able to sell it.
I’ve been reading about all the piracy problems experienced by ocean carriers. You
know, a 20-foot container of our product has a retail value of nearly $275,000.
I’m more concerned about theft of individual cases at ports and while the product is on
the road.
We’re looking at border delays and Customs fines if we don’t properly document and
mark our freight.
Our brand image will take major damage if the product gets into unauthorized
distribution channels due to theft or misdirected deliveries.
The company sustainability push has led to reduced packaging and biodegradable
packing materials. If the cartons get wet or bounced around, we’re going to end up with a lot of
damaged, unsellable product.
Those major East Coast ports can get very congested during peak shipping season. That
will cause delays.
By the time the meeting was over, Crandall realized that he needed to spend some time looking
into these issues. While he was pretty sure that some problems were remote, Crandall thought
that it would be wise to evaluate each one. His new concern became how to conduct an effective
risk assessment.
CASE QUESTIONS
1.
Assess the risks identified in the brainstorming session. Create and populate a table
similar to Figure 9-2.
2.
Based on your answer to Question 1, what are the three primary risks that you believe
YAP must address? Why?
3.
What do you recommend that YAP do to mitigate each of the three risks identified in
Question 2?
4.
What should YAP focus on after attempting to mitigate these transportation risks?
Notes: Text is attached case study is on page 317 and the figure 9-2 mentioned in question 1 is located on page 300. each question should be answered in 2-3 paragraphs. After an introductory paragraph, provide a summary of the situation, in subsequent paragraphs , the student should present the key learning that came out of the situation and make recommendations to improve the situation presented. the paper should conclude with a summary paragraph that answers the question, “why should anyone care” about this situation.
