Nomad Oil Corporation

Abstract

Oliver Slophe, the manager of Nomad Oil's European Aviation Logistics, must evaluate his European distribution system for cost savings by rationalizing the inventory system and the distribution network. He must also evaluate a proposal for consolidating stock into one central warehouse. This case can be used to show the effects of inventory pooling.

Excerpt

UVA-OM-1336

NOMAD OIL CORPORATION

In March 1998, Oliver Slophe, Nomad Oil's manager of European Aviation Logistics, sat in his Paris office and thought again about the business objective that had been presented earlier that week, during the quarterly aviation-group meeting in Madrid, Spain. Slophe had been told at the meeting that his group would be responsible for reducing logistics costs in Europe by 10% in 1998. He thought it might be time to consider looking at the benefits of different methods of getting aviation lubricants from Nomad's New York production facility to their various customers at more than 35 European airports.

Slophe had amassed considerable quantitative and qualitative data about Nomad's European lubricants-logistics system, and he believed he was beginning to gain some real insights into the cost drivers in the process. He had a good team of staff working for him, and the company had strong relationships with its third-party logistics contractors. Working together, they had already reduced the costs of delivering Nomad's line of aviation lubricants to its many European customers. But in order to meet the new business objective, Slophe thought he needed a breakthrough, which would only be achieved by reevaluating the whole supply chain and finding ways to do things differently. Slophe needed to run the numbers in order to convince management of the value of his qualitative assessment so they would buy into his recommendations for creating a new system for delivering Nomad's aviation lubricants in Europe.

Nomad Aviation

Nomad's aviation business was organized as a single global team, offering round-the-clock service through its main offices in New York, Paris, and Singapore. The team was small and built along matrices of managers, engineers, and sales and customer-service staff. Despite the group's small size, aviation sales accounted for about 10% of Nomad's global product sales. Nomad Aviation offered its products and services in 163 airports in 55 countries around the globe, and supplied products to more than 200 major airlines.

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Keywords: UVA-OM-1336, pooling, inventory, supply chain, logistics