Logistics Management, Group Number: 5 (B), Team Member Names: Anunay Jallan, Bhaskar Ghosh,

Musaid Helal Khan, Varun Gokhale

CASE 1 (Sessions 2-3): Deere and Co. / All Groups

Question for Case Analysis: What are the different logistical activities that have been outsourced by
Deere and Co.? What can be the potential advantages and disadvantages of such an outsourcing
arrangement by Deere?
Answer: There are three different services that have been outsourced by Deere and Co. which include
different activities. The three services are given below:
1. Centralized Transportation Management Services: It included various activities like:
 Brokering transportation services – Inbound LTL, TL; outbound returnable
containers; domestic and Canadian transportation; small package; some outbound
return and miscellaneous; third party processors
 Carrier Management – Rate negotiation; contract administration; performance
reporting; claims management
 Freight Bill Audit and Payment
 Shipment routing analysis
 Multi-shipment consolidations of inbound freight
 Supplier compliance reporting
2. On-Site Transportation Services: This included various activities like:
 Preparing reports – Carrier performance; supplier compliance; cost as a percentage of
material purchases; tracking freight costs; debts for FedEx Management; quarterly
analytical reports
 Route guide approval and implementation
 Transportation and logistical analytical services
 Lead operation/unit in resolving transportation supplier compliance issues
 Carrier damage claim functioning and resolution
 Critical shipment expediting
3. Warehouse Management: This included activities like handling inbound materials and
returnable container management.
Potential Advantage:
1. It helps in vertical differentiation of a manufacturer.
2. It helps Deere to concentrate on their core activity (production).
3. Since FedEx core competency is logistic management and it also has economies of scale, it
provides efficiency to the operations of Deere.
4. The capital that is saved by Deere which it would have otherwise invested in activities like
warehouse leasing, equipment, etc. can now be invested in activities yielding higher returns.
5. Deere does not need to recruit and train personnel, purchase equipment for logistics and apply
for transport licenses, regulations regarding driving hours and other legal provisions.
Potential Disadvantage:
1. One of the biggest disadvantages that Deere may face because of outsourcing is less direct
customer contact. This less interaction may result Deere missing on opportunities of changing
customer desires.
2. Deere loses the direct control and ability to react quickly as it has outsourced transport.
3. Deere may also have concerns over protection of company’s information and confidential
data.
4. There are various agriculture, construction and forestry commercial products of Deere which
may require installation processes, so for such cases outsourcing logistics is not a good
option.
5. Once the logistics process is outsourced, they will lose the expertise in the field, and it will be
difficult to convert the process to in-house later in future.

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Logistics Management, Group Number: 5 (B), Team Member Names: Anunay Jallan, Bhaskar Ghosh,
Musaid Helal Khan, Varun Gokhale

6. As the costing of different services varies across the different units, there is no standardized
pricing for similar services availed by Deere and Co from FedEx.
The case dilemma revolves around the intern, Kevin MacAuley completing his report and providing
recommendations and mentioning areas of opportunity to his manager. To make this process more
efficient and appropriate to a firm’s current condition (infrastructure, capital availability etc.), the ‘Do
or Buy Score List’ can be utilized.
During the analysis of
the units of the
company, filling out
this sheet could
provide MacAuley
with a scorecard that
could highlight which
services should be
insourced by Deere &
Co or left to be
outsourced to FedEx.
If MacAuley added
weights to these
factors, he would be
able to get more
appropriate results
when it comes to the
scores obtained.
For instance, if the
firm understands that
the Tracking/ Tracing
system should be top
of the line, it will give
more weightage to
that factor which
could potentially skew
the decisions
regarding capacity factors in favour of insourcing or outsourcing; depending on which alternative has
better resources for Tracking/ Tracing system.
With this scorecard in hand, the management of the firm can decide precisely which services to
insource or outsource. However, if the Buy score only slightly exceeds the Do score of a particular
service, there is a concern of completely shifting to insourcing the service as the such changes effect
the structure on an organization-level meaning that such changes are irreversible without financial
losses.

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