CASE 10-2

RIoT Athletic

Glenda Litchee, chief technology officer for RIoT Athletic has developed a revolutionary running shoe that uses Internet of Things (IoT) technology. Sensors in the sole, heel, and tongue of the shoe monitor temperature, pressure, and moisture. Automatic adjustments are made to the shoe's venting and sole density in response to the readings. The goal is to reduce foot stress and improve comfort for long-distance runners. Litchee has a patent on the shoes but fears that cheap, copycat models will arise as soon as her $200 RIoT Runners hit the stores. Thus far, news of these revolutionary shoes has not leaked out and that has prevented the major shoe companies from responding. She needs rapid market entry with precise, stealthy delivery to fend off competition, acquire shelf space in retail stores, and gain a foothold in the running community. Production is on schedule and two large North American retailers have quietly committed to participate in a star-studded product launch, similar to what happens when a new iPhone is released. The last issue to resolve is directly delivering 5-10 cases of shoes to each of the retailers' stores. Litchee has hired Rick Rasgen, a transportation expert, to analyze delivery options. After conducting a thorough analysis of 12 different transportation providers, Rasgen has narrowed the list to three potential carriers:

Arrow Speed is an integrated package carrier with a national network of terminals, company-owned planes, and delivery trucks. The company has experience with domestic operations but RIoT must find other carriers to handle deliveries to Canada and Mexico. Arrow is a popular carrier, often used by RIoT Athletics' competitors, and its capacity is often stretched thin. The delivery quote from Arrow averages out to $100 per case with a three-day transit time to U.S. locations. Bravo Freight is a freight forwarder. Bravo is a non-asset-based logistics service provider that contracts with air cargo companies and regional trucking companies to move freight from origin to destination. The company has international experience and a network of partners in Canada and Mexico. The delivery quote from Bravo averages out to $150 per case with next-day delivery service to U.S. locations and two-day service to Canada and Mexico. Clipper Transport is a less-than-truckload carrier. Clipper has recently been created through the merger of three regional U.S. carriers. Solid alliances are in place with a Canadian carrier but two different freight forwarders are used to serve Mexico. There are some reports about problems with the integration of Clipper's three different operations. The delivery quote from Clipper averages out to $60 per case with a five-day transit time. Ragen presented his analysis to Litchee for a final decision. However, Litchee was concerned that each option presented some risk. Was she just being overly anxious or were her concerns valid? Litchee needed some time to think it over and to talk through the options with one more expertyou!

Give me detailed answers to the following questions

Questions:

1. What issues should Litchee take into consideration in her assessment of transportation risks for RIot runners?

2. Analyze each carrier option that Rasgen presented. What specific risks does each carrier present?