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Suggested Readings
Bhatnagar, Rohit and Chee-Chong Teo. “Role of Logistics in En- Kaplan, Robert S. and David P. Norton. The Balanced Scorecard:
hancing Competitive Advantage: A Value Chain Framework for Translating Strategy into Action (Boston: Harvard Business School
Global Supply Chains.” International Journal of Physical Distribution Press, 1996).
& Logistics Management 39, no. 3 (2009): 202–226. Lambert, Douglas M. and Renan Burduroglu. “Measuring and
Berman, Karen and Joe Knight with John Case. Financial Intelligence, Selling the Value of Logistics.” International Journal of Logistics
Revised Edition: A Manager’s Guide to Knowing What the Numbers Re- Management 11, no. 1 (2000): 1–17.
ally Mean (Boston: Harvard Business School Press, 2013). Keebler, James S. and Richard E. Plank. “Logistics Performance
Davis, Thomas S. and Robert A. Novack. “Why Metrics Matter.” Measurement in the Supply Chain: A Benchmark.” Benchmarking:
Supply Chain Management Review 16, no. 4 (2012): 10–17. An International Journal 16, no. 6 (2009): 785–798.
Fawcett, Amydee M., Yao Henry Jin, Christian Hofer, Matthew A. Neely, Andy. Business Performance Measurement: Unifying Theory and In-
Waller, and Vitaly Brazhkin. “Sweating the Assets: Asset Lean- tegrating Practice, 2nd ed. (Cambridge, UK: Cambridge University
ness and Financial Performance in the Motor Carrier Industry.” Press, 2007).
Journal of Business Logistics 37, no. 1 (2016): 43–58. Slone, Reuben E., John T. Mentzer, and J. Paul Dittmann. “Are You
Fugate, Brian S., John T. Mentzer, and Theodore P. Stank. “Logistics the Weakest Link in Your Company’s Supply Chain?” Harvard
Performance: Efficiency, Effectiveness, and Differentiation.” Business Review 85, no. 9 (2007): 116–127.
Journal of Business Logistics 31, no. 1 (2010): 43–62. Srinivasan, Mahesh and Akhilesh Chandra. “Assessing the Impact
Green Jr., Kenneth W., Dwayne Whitten, and R. Anthony Inman. of Sarbanes-Oxley Act on the Logistics Industry: An Explor-
“The Impact of Logistics Performance on Organizational Per- atory Study.” Transportation Journal 53, no. 1 (2014): 44–78.
formance in a Supply Chain Context.” Supply Chain Management: Stapleton, Drew, Joe B. Hanna, Steve Yagla, Jay Johnson, and Dan
An International Journal 13, no. 4 (2008): 317–328. Markussen. “Measuring Logistics Performance Using the Strate-
Hult, Thomas M., David J. Ketchen Jr., Garry L. Adams, and gic Profit Model.” International Journal of Logistics Management 13,
Jeannette A. Mena. “Supply Chain Orientation and Balanced no. 1 (2002): 89–107.
Scorecard Performance.” Journal of Managerial Issues 20, no. 4
(2009): 526–544.

CASE
CASE 3.1 BRANT FREEZER COMPANY
Located in Fargo, North Dakota, the Brant Freezer Com- QUESTIONS
pany manufactures industrial freezers. These freezers come
1. When comparing performance during the first five months
in one size and are distributed through public warehouses of 2017 with performance in 2016, which warehouse shows
in Atlanta, Boston, Chicago, Denver, Los Angeles, Port- the most improvement?
land, and St. Louis. In addition, some space is used in the 2. When comparing performance during the first five months
company’s Fargo warehouse. Young Joaquin (J. Q.) Brant, of 2017 with performance in 2016, which warehouse shows
with a fresh MBA degree from the University of South the poorest change in performance?
Alabama, returned to the family firm, where he had once 3. When comparisons are made among all eight warehouses,
worked during summers. On his first day of work, J. Q. met which one do you think does the best job for the Brant
with his father. His father complained that they were being Company? What criteria did you use? Why?
“eaten alive” by warehousing costs. The firm’s controller 4. J. Q. is aggressive and is going to recommend that his father
cancel the contract with one of the warehouses and give
drew up a budget each year, and each warehouse’s monthly
that business to a competing warehouse in the same city.
activity (units shipped) and costs were tallied. J. Q. feels that when word of this gets around, the other
Exhibit 3.A shows actual 2016 figures for all ware- warehouses they use will “shape up.” Which of the seven
houses, plus actual figures for the first five months of should J. Q. recommend be dropped? Why?
2017. Projected 12-month 2017 budgets and shipments 5. The year 2017 is nearly half over. J. Q. is told to determine
are also included. Exhibit 3.B shows the Income State- how much the firm is likely to spend for warehousing at
ment for 2016. Exhibit 3.C is the 2016 Balance Sheet. each of the eight warehouses for the last six months in
If you are familiar with Excel or other spreadsheet 2017. Do his work for him.
software, you might try using it to answer the following 6. When comparing the 2016 figures with the 2017 figures
questions. shown in the table, the amount budgeted for each

(continued )
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warehouse in 2017 was greater than actual 2016 costs. How 8. Holding all other information constant, what would be the
much of the increase is caused by increased volume of busi- affect on ROA for 2017 if warehousing costs declined 10%
ness (units shipped) and how much by inflation? from 2016 levels?
7. Use the 2016 Income Statement and Balance Sheet to
complete a Strategic Profit Model for J. Q.

2016 Figures 2017 Figures

Units Shipped Warehouse Costs Units Shipped Warehouse Costs

12 Months 5 Months 12 Months 5 Months Projected Actual Budgeted Actual Costs

Jan.–Dec. through Jan.–Dec. through 12 Months 5 Months 12 Months through
May 31 May 31 Jan.–Dec. May 31 Jan.–Dec. May 31
Atlanta 17,431 4,080 156,830 35,890 18,000 4,035 178,000 40,228
Boston 6,920 3,061 63,417 27,915 7,200 3,119 73,000 29,416
Chicago 28,104 14,621 246,315 131,618 30,000 15,230 285,000 141,222
Denver 3,021 1,005a 28,019 8,600* 3,100 1,421 31,000 14,900
Fargo 2,016 980 16,411 8,883 2,000 804 17,000 9,605
Los Angeles 16,491 11,431 151,975 109,690 17,000 9,444 176,000 93,280
Portland 8,333 4,028 73,015 36,021 9,000 4,600 85,000 42,616
St. Louis 5,921 2,331 51,819 23,232 8,000 2,116 56,000 19,191

Exhibit 3.A Brant Freezer Warehouse Performance

a
Denver warehouse closed by strike March 4–19, 2016.

Income Statement 2016

Sales $4,003,450
Cost of goods sold $937,000
Gross Margin $3,066,450
Transportation cost $657,322
Warehousing cost $735,982
Inventory carrying cost $567,987
Other operating costs $345,876
Total operating cost $2,307,167
Earnings before interest and taxes $759,283
Interest $110,000
Taxes $69,000
Net Income $580,283

Exhibit 3.B Brant Freezer Company Income Statement

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Balance Sheet 2016

Assets
Cash $706,034
Accounts Receivable $355,450
Inventory $1,590,435
Total Current Assets $2,651,919
Net Fixed Assets $803,056
Total Assets $3,454,975
Liabilities
Current Liabilities $1,678,589
Long-term Debt $398,060
Total Liabilities $2,076,649
Shareholders’ Equity $1,378,326
Total Liabilities and Equity $3,454,975

Exhibit 3.C Brant Freezer Company Balance Sheet