Essay about Alko Case Study

4553 Words Apr 27th, 2011 19 Pages
TABLE OF CONTENTS

EXECUTIVE SUMMARY 1 INTRODUCTION 1 BUSINESS SITUATION 1 External Environment 2 Internal Environment 2 SUPPLY CHAIN DESIGN 4 Supply Chain Drivers 4 Assumptions, Factors and Uncertainties 6 SUPPLY CHAIN ASSESSMENT / ANALYSIS 6 Figure 6: Costs Savings from centralization 9 SUPPLY CHAIN STRATEGY 10 CONTINGENCIES 10 KEY PERFORMANCE INDICATORS 10 CONCLUSION 11 WORKS CITED 12

EXECUTIVE SUMMARY

Our objective is to analyze the distribution network in order to minimize annual system wide costs that subject to a 95% customer service level for ALKO. Integrated Minds considered a scenario approach and looked at net present values to factor inventory costs and quality over the planning horizon.
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The Distribution centers in the 5 regions order every 6 days using a periodic review while maintaining their safety stock levels to ensure a customer service level of 95% (Chopra, 323). External Environment

With many external factors affecting Alko it is important to assess these threats and look for areas of opportunity that allow for strength and improvement. First, Alko’s closest competitor has been offering new and redesigned products annually as well as adding direct shipping as an option to their customers. They have even begun offering two day shipping; something Alko is not currently capable of offering to their customers. Lightoiler has even been able to raise their prices after opening their new centralized warehouse (SCM 479, HW 4 Supplemental Information). However, Alko can use their competitions price increases to their advantage and look to becoming the low costs leaders with the potential to gain or at least maintain their market share. Their competition is by far their biggest threat but not to be forgotten is the number of defective products has been increasing from the inspection performed from the supplier deliveries, the inspections as the plants as well as the distribution centers. It has been recommended by quality to increase safety stock of items to account for the

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