1. Motivations

A major manufacturer of consumer durables has set up a rapid delivery system for its distributors, enabling them to receive their goods within 24 to 48 hours anywhere in the United States.

The primary aim of this system was to increase on-time performance and enable distributors to improve service levels to their customers. It also gave distributors the opportunity to reduce inventories considerably. Logistics subcontractors managed regional distribution centers and the manufacturer's fleet of delivery vehicles.

Six years after implementing Economic Value Added (EVA) measures to improve financial performance, the manufacturer reduced service by adopting 48- to 72-hour delivery times, and chose a single subcontractor who was not one of the original three partners.