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16 April 2013

ergo, air cargo

Similarly, supplementing a factory- produced product with services is completely different from running a factory, and it is different from the usual way of selling the product. A classic example is the work of American Airlines during its early efforts at promoting air freight. The motivation was obvious. Airplanes carried people all day long and halfway through the night. But from midnight until dawn these costly but highly mobile fixed assets remains idle. Searching for new uses, American sought out the distributors who resold largely to small radio and television repair shops throughout the nation. It had five warehouses supplied from a single factory warehouse near Boston.

American studied Raytheon's distribution operations in infinite detail  The result was a proposal to eliminate all five field warehouses and supply distributors directly to overnight air cargo. American proposed that all daily orders be assembled at the factory each night, picked up by American at the plant, and transported by air cargo overnight to fourteen break bulk locations throughout the nation. From there common carrier truckers would deliver the orders immediately to distributors.

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