Case Study 2: RBC Corp: Searching for Delivery Efficiency

Purpose

The purpose of this case study is to evaluate the costs and benefits of using its own fleet for delivery versus outsourcing to a third-party logistics provider (3PL) for an organisation.

Background

Rubbermaid Corporation (RBC Corp.), a giant Melbourne-based clothing retailer serving both B2B and B2C customers, is facing challenges in its logistics operations.

Glen Hodgson, CEO of RBC Corp., read an article in The Economist on “outsourcing efficiency in retail logistics”. The article revealed that 65% of retail company CEOs favoured using 3PL services. However, many CEOs opposed outsourcing due to the risk of losing direct contact with customers and missing valuable feedback.

Glen began reconsidering his company’s logistics system, as delivering across Melbourne was becoming increasingly difficult and costly for the fleet. Issues included:

• Problems with fleet drivers’ associations

• Delays from maintenance companies

• Rising delivery costs

Unable to find an internal solution, Glen planned to make a strategic decision with the company’s board regarding whether to maintain its logistics fleet or outsource.

Company History

• 1978: RBC started as a wholesaler of bulk clothing items for business customers.

• Mid-1980s: Began manufacturing clothing, which increased per-unit profit.

• 1989: Became a full-line clothing manufacturer.

• 1990s: Faced tough competition from low-cost manufacturers abroad.

• GAAT agreements: Opened opportunities in China, where RBC outsourced 90% of manufacturing by 2000.

• 2000s: Maintained 10% of exclusive production in Melbourne and managed its own logistics fleet for B2B and B2C deliveries.

Operational Scenario of RBC Logistics (1980–2008)

• Since inception, RBC differentiated itself by offering direct delivery to customers, unlike many competitors.

• To sustain this competitive edge, RBC expanded its vehicle fleet as the business grew.

• Vehicles were allocated to six major stores: Bulldogs, Saints, Magpies, Demons, Swans, and Bombers, serving both large and smaller outlets in each region.

• Fleet operation was region-bound — vehicles served only their designated areas, even when nearby customers could be better served by another region’s vehicle.

Key Performance & Issues

• Responsiveness:

  • 90% of invoices delivered same-day

  • Small percentage delivered next-day

  • Only 0.5% delivered later than one day

  • High responsiveness = strong customer loyalty

• Inefficiencies:

  • Distance travelled often exceeded optimized transport models

  • Customers sometimes served by multiple stores, causing confusion and inefficiency

• Operational challenges:

  • Frequent absenteeism of drivers (esp. weekends)

  • Replacement drivers demanded higher wages

  • Maintenance contractors failed to return vehicles on time, forcing RBC to hire external providers (paying double: for external service + lost use of own fleet)

Shift Toward Outsourcing

By 2008, the rising costs, inefficiencies, and operational issues forced RBC to outsource logistics for Store A-North and Store B-South to Kaiger Logistics (3PL).