Case Study: RIoT Athletic

Glenda Litchee, the chief technology officer for RIoT Athletic, has developed a revolutionary running shoe that utilizes Internet of Things (IoT) technology. The shoe contains sensors in the sole, heel, and tongue to monitor temperature, pressure, and moisture. It automatically adjusts venting and sole density based on these readings, aiming to reduce foot stress and improve comfort for long-distance runners.

Litchee holds a patent for the shoes but is concerned that inexpensive, imitation models will flood the market as soon as her $200 RIoT Runners hit the stores. So far, news of these groundbreaking shoes has not leaked, preventing major shoe companies from responding. Litchee needs to enter the market swiftly, with precise and discreet delivery, to fend off competition, secure shelf space in retail stores, and establish a presence in the running community.

Production is proceeding according to schedule, and two large North American retailers have confidentially committed to participating in a high-profile product launch, similar to the excitement surrounding the release of a new iPhone. The remaining issue to resolve is the direct delivery of 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 down the list to three potential carriers:

Arrow Speed: An integrated package carrier with a national network of terminals, company-owned planes, and delivery trucks. While Arrow Speed has experience with domestic operations, RIoT needs to find other carriers to handle deliveries to Canada and Mexico. Arrow Speed is a popular carrier often utilized by RIoT Athletics' competitors, and its capacity is frequently strained. The average delivery quote from Arrow Speed is $100 per case with a three-day transit time to U.S. locations.

Bravo Freight: A freight forwarder that contracts with air cargo companies and regional trucking companies to move freight from origin to destination. Bravo Freight has international experience and has a network of partners in Canada and Mexico. The average delivery quote from Bravo Freight is $150 per case with next-day delivery service to U.S. locations and two-day service to Canada and Mexico.

Clipper Transport: A less-than-truckload carrier created through the merger of three regional U.S. carriers. It has solid alliances with a Canadian carrier, but two different freight forwarders are used to serve Mexico. There are some reports regarding integration problems with Clipper's three different operations. The average delivery quote from Clipper Transport is $60 per case with a five-day transit time.

Rasgen presented his analysis to Litchee for a final decision. However, Litchee was concerned that each option presented some risk. She needed time to think it over and discuss the options with one more expertyou!

Case Questions

What issues should Litchee consider in her assessment of transportation risks for RIoT Runners?

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

Which carrier would you recommend Litchee choose to best balance company goals with transportation and supply chain risks?

How can Litchee minimize the potential for in-transit product theft?

Source: Transportation: A Global Supply Chain Perspective by Novack, Gibson, Suzuki, and Co