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Laura Ashley and Federal Express Strategic Alliance

Laura Ashley and Federal Express Strategic Alliance. Team 1 Charlotte Chen Jessica Crane Dave Christensen Emilio Fabico Beau Herman Shane Hunt. Background. Laura Ashley (LA) 18 months of warehouse inventory Availability at 80% (Stock out 20%) Outdated systems

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Laura Ashley and Federal Express Strategic Alliance

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  1. Laura Ashley and Federal Express Strategic Alliance Team 1 Charlotte Chen Jessica Crane Dave Christensen Emilio Fabico Beau Herman Shane Hunt

  2. Background Laura Ashley (LA) 18 months of warehouse inventory Availability at 80% (Stock out 20%) Outdated systems Extended lead times Multiple distribution contractors Delivery problems

  3. Product Flows

  4. Background FedEx • Renowned for logistics expertise • Systems • Tracking • Information • Inventory management • Desire to develop Pan-European business • Transportation network / infrastructure • European warehouse space

  5. Strategic Alliance?? • Replace outdated LA systems with FedEx • FedEx to manage all aspects of LA distribution • FedEx gains entry into Europe and clothing business • Develop / Promote new FedEx business model YES !!!

  6. Areas for Concern • Length of Contract • Financial Arrangement • Leadership • Contract Firmness

  7. Length of Contract • Minimum of 10 years • Pros • Stability • Eliminate the need for constant renegotiation • Promotes trust • Cons • Too aggressive for a new business relationship • Limited options

  8. Length of Contract • Alternatives • 2 year trial agreement • 5 year with a 5 year option • Recommendation • 5 year with a 5 year option

  9. Financial Arrangement • Cost plus • LA pays: • Direct costs in managing logistics • Freight • Management fee (percentage of cost)

  10. Financial Arrangement • Pro • Simplicity • Con • Promotes inefficiency • Recommendation • Performance-based management fee

  11. Leadership • Stability • Success of alliance is heavily dependent upon leadership stability. • Pros • Maxmin’s level of determination • Flexibilty • Cons • Any change may lead to challenges

  12. Leadership • Recommendation • Succession plan - Implement a contract stipulation that accounts for the possibility of a change in leadership.

  13. Contract Firmness • “Loose Contract” • “Agree to agree” philosophy • Outcomes not clearly defined • No penalties for failure to perform • No incentives for performance

  14. Contract Firmness • Pros • Flexibility • Adaptability • Encourages “win-win” atmosphere • Empowerment • Cons • Lack of specific direction • Lack of contingency plan • No consistency in event of leadership change

  15. Contract Firmness • Recommendation • Implement more structured contract • Focus on length of contract, financial agreement, leadership issues • Implement written incentives and penalty programs • Provide contingency plan

  16. Conclusion • Good fit for strategic alliance • Implement recommendations “A partnership is a marriage. No matter how positive, cooperative, and helpful the partners are at the start, it is essential that they see their relationship in the cold light of the practicalities. They have to look at it as if it doesn’t work and walk through the consequences.”

  17. Questions???

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