Introduction of the Case This case presents a company, known as Westminster and currently considered as one of the biggest manufacturer of health products. It consist of three separate companies, in which each of them manufactures their own and unique products, with a decentralized management that allows for an overall outside view of what is for best the future of this enterprise. Top managerial personnel is currently re-evaluating and assessing the company’s supply chain and how they could develop a strategies that would facilitate revamping such system. Main Discussion Points The new three alternatives being evaluated by Westminster’s CEO Wilson Mckee and his staff would reduce the cost on transfers and freight cost. By utilizing …show more content…
The customer could possibly experience longer wait times to receive their products. If this is the strategy assumed by the company, they must be able to handle larger quantities of products to fulfill the same amount of requirements abled to handle prior to the consolidation of warehouses. The personnel on the facilities that remain open must have the adequate training to support larger orders as well. The order fill rate will have a positive impact because since products will be ordered more frequently the warehouses will maintain those products readily available based on POS and customer consumption. When deciding whether or not to use a private warehouse there are several factors to consider. First of all the cost could be affected by the ability to that particular facility to be able to handle the amount products that will be store at that location. If is not adequate for that, then the company needs to start thinking about the money required to make that facility suitable to handle larger quantities or specific product, like for example storage shelving, temperature control storage, receiving docks, or any construction deficiency found after the purchase of that facility. “Some of the major benefits of private warehouses are the flexibility, control, cost, and other intangibles” (Bowersox, Closs, Cooper, Bowersox, 2013, p.235). Private warehouses compared with public or
A reduction in shelf space and warehouse space could reduce TCC’s revenue and increase transportation and storage expense due to the amplified turnaround time on processing orders.
Westminster Company is a giant Global manufacturer of health products whose brand has been recognized by the world. As the company they have three different operations which produce and distribute different product lines. Their main strategy on which they are working and which is a major success for them is decentralized management. Now they are re-evaluating their traditional supply chain strategy because the company is getting too much pressure from their large domestic’s customers and global customers. Now the company has to study on
The timing of capacity changes also needs to be taken into consideration to achieve maximum efficenty given that demands of their products varies with seasonal changes. The ability to react to market demand changes quickly will determine manufacturers flexibility in keeping up with these demands. Manufacturers needs facilities to produce, whether warehouses to store its raw materials or finished goods, or manufacturing plants to produce their products. Services facilities are needed by certain manufacturing industries such as consumer electronics to cater for returns. Distribution centres also determine the efficenty of production distribution and un-nesessary inventory holding will result in higher holding cost. Such facilities require large investments and are integral of the manufacturer’s supply chain strategy and thus proper planning is needed when making these decisions regardong the size, location which affect the overall operations. How manufacturers run their productions also determine how successful will they be in terms of productivity and quality levels. Different types of equipment and processes also affect the cost and output of the manufacturing plant. Information systems that flow both upstream and downstream affects the forecasting, planning, inventory and production levels, they must be robust to ensure the manufacturing firm is able to react accordingly to changing demands and variations. In addition to their internal environment,
Reduced need for higher capacity at the supplier. This would be reduced because suppliers would not need to size their operations to deliver on the “one shot large volume order” and would be able to space these in time with orders at
A supply chain is very important to an organization. It can and should show the relationship between suppliers, distributors, managers and consumers. This paper would detail how important suppliers and distributions are to an organization’s success. And how important a supply chain is within an organization and how managers can utilize the supply chain. It is important that companies such as Target Corporations utilize the supply chain and gain competitive advantages. Target is one of the world’s largest retail stores; the first Target was opened in 1962 in Roseville, Minnesota (Target.com). By the end of 1962 there were only four Target and they were all operated in Minnesota.
Pro: Inventory at the store level will be decreased. Store manager can better understand on which items sell more based on their current customers and communities and focus on those items. Flexibility and able to modify orders from head office will give managers better inventory quantity control. The change in current supply chain is not as drastic and lower risk.
In today’s business world, production cost was an increasing concern for companies working to stay competitive in the global marketplace. The top management must search for a global solution to drive down costs and reduce difficult activities associate with inventory management and production management. Global sourcing aimed to exploit global efficiencies in the delivery of services and goods across geopolitical boundaries, including low cost skilled labor, low cost raw materials, tax benefits, and price breaks. Whelan Pharmaceutical was the best example to illustrate how the company chose the best manufacturing site for global sourcing from different perspectives.
There is also need for maximum utilization of the company’s resources. Currently local delivery trucks only operate at 80% full while trucks run at 70% of capacity. Similarly in most cases only half of the terminal space is usually utilized. If the company is to operate at capacity then there would be increase in revenue.
With the same inventory levels, whether in a store or in a warehouse, the warehouse can drive the cost of this up, beyond that of in a store. Service charges are a cause of this inflated cost. The advantage the warehouse option has here, is there is plenty of space available to keep extra inventory versus what a store can hold, to guarantee a cushion of product in order to fill any customer demands. Also, centralizing stock allows easier monitoring of the stock levels for different products and due to service levels implemented in a warehouse, inventory checks can be easier in the warehouse.
Part D: What are the advantages and disadvantages of the newly suggested distribution strategy relative to the existing distribution strategy?
Operating such dynamic distribution centers is usually very expensive and allows possibilities of product wastage. The high capital requirement to run such large distribution centers produces a natural barrier to entry and smaller firms frizzle out if they try and compete with the larger firms.
Second, excess inventory will be reduced on items that have a lower demand. Third, there should be enhanced credibility with customers due to the better availability of product. Forecasting should also benefit scheduling and labor needs for production. Ultimately, there should be an increase in inventory for products with high demand, a decrease in overall inventory, and reduced operating expenses.
For leasing warehouses in the other five locations, including that in St. Louis, increasing the number of the facilities but not the size would have higher responsiveness. More facilities close to the end user can shorten the response time and the transportation cost can be lower. However, the facility cost will increase by building more new warehouses. The inventory cost will increase too, since the decentralized inventory will be greater than consolidate all the inventories in one big warehouse. Therefore, leasing more facilities beside in St. Louis will be more responsive but less efficient for the company.
These two organizations are retail giants of the United Kingdom and they spend heavily on their purchase and supply chain management to make their workings even more efficient. In this assignment focus will be centred on comparing, analysing, and contrasting main issues of supply chain and purchase network of these firms which include-
Warehouse design and operations are the two aspects considered for the performance evaluation of warehouses. The first one refers to the constraints on layout, the storage equipment and the high-level strategic decisions on the total inventory of the facility. The second aspect addresses the warehousing operation activities, such as put away, replenishment and order picking. These two aspects significantly affects the performance of warehouses and have direct impact on the level of service of the logistic chain (Accorsi, Manzini, & Maranesi, 2014)