Laura Ashley & Fedex

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

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A L L I A NBackground
Laura Ashley (LA)
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18 months of warehouse inventory
Availability at 80% (Stock out 20%)
Outdated systems
Extended lead times
Multiple distribution contractors
Deliveryproblems

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Product Flows

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Background
FedEx
• Renowned for logistics expertise
• Systems
– Tracking
–Information
– Inventory management

• Desire to develop Pan-European business
• Transportation network / infrastructure
• European warehouse space
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StrategicAlliance??
• Replace outdated LA systems with FedEx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 businessmodel

YES !!!
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Areas for Concern
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Length of Contract
Financial Arrangement
Leadership
Contract Firmness

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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
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Length of Contract
• Alternatives
– 2 year trial agreement
– 5 year with a 5 year option

• Recommendation
– 5 year with a 5 yearoption

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

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Financial
Arrangement
– Pro
• Simplicity

– Con
• Promotes inefficiency

– Recommendation
• Performance-based management fee

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