Question

John Brenner had worked for the same domestic appliance retailer for over twenty years when he saw an advertisement from an East European manufacturer which wanted to start selling its brand of appliances in the UK. John answered the advertisement and spent a year preparing and negotiating with the manufacturer. The manufacturer was not keen to have all its distribution done by a new and untried company. In the end, John agreed to set up a company called Brenner Refrigeration Sales, and the manufacturers agreed to give him exclusive rights to distribute their products throughout Britain for two years. The agreement would be reviewed after a year and renegotiated after two years. John invited three other directors to join the company. Their first problem was to find a location for the head office and main logistics center. This center would receive appliances directly from the manufacturer, and deliver them to retailers around the country. The directors realized that their future success depended on this site, but found it difficult to agree on a location. They considered passing the problem to a firm of management consultants, but one of the directors discovered that similar companies paid up to £50,000 for an initial report and £125,000 for a more detailed study. The directors felt that this was too expensive and they would have to solve the problem themselves. The following summary gives an idea of their discussions. ■ Stefan Maior worked as a service repairman for many years before being promoted to service manager. He is now 54 years old and is looking for an opportunity to make some money for his retirement. Stefan argues that the location should be in Leeds. The appliances could be shipped to Liverpool or Hull, and then brought to Leeds by train. Leeds has a good transport system and it is a major population center. Two of the directors live in Leeds and they understand local conditions. ■ Pradesh Gupta has a degree in mechanical engineering, and has worked as an economic consultant in eastern Europe. He knows the manufacturer and is impressed by their progressive attitudes. Pradesh is critical of Stefan’s approach as being old fashioned and relying more on where he feels at home than on any business criterion. He says that the sale of appliances is likely to depend on the population so they should look at a map of Britain, see where the main centres of population are, see how many appliances they expect to sell in each of these, and then do some fairly straightforward analyses to find the best location. ■ Fiona McGregor worked in a retail bank, specialising in consumer loans. She is now 32 years old and is ambitiously looking for a long-term career that is both challenging and financially rewarding. She does not like the idea of only opening a logistics centre, but says that they should become more directly involved in sales to final customers. They would need a head office – probably in London – a central receiving area near to a port, and showrooms around Britain. The fastest way of doing this is to take over an existing retailer, or several retailers, to give coverage throughout the country. ■ John Brenner says that Fiona McGregor’s scheme is too ambitious, while the other two put the convenience of the company above the customers. He says there is only one way to sell appliances and that is to give customers a product they want, in a location they can get to. John’s idea is to open a logistics centre to serve retailers, combined with a cash-and-carry warehouse for sales direct to customers. To find the best location for this, they should see where successful distributors already work, and open their facilities nearby. They would need a large dominating location that customers can see from a long way off, that they pass frequently, where they regularly visit to shop, and where other distributors have traditionally been able to sell. The time is now getting short for a decision. The directors are concerned that if they delay any longer the manufacturer will consider them indecisive, and they will not have time to give a good showing at their first year’s review. To build entirely new premises could take a year. Alternatively they could find existing premises that are empty, or they could rent temporary premises until the company finds more suitable, permanent premises.

Question : If you were a director of Brenner Refrigeration Sales, what would you do now?

Answer 1

If I were a director of Brenner Refrigeration Sales, what would I do now

According to Pradesh Gupta who has a degree in mechanical engineering and has worked as an economic consultant in Eastern Europe. He knows the manufacturer and is impressed by their progressive attitudes Pradesh is critical of Stefan’s approach as being old fashioned and relying more on where he feels at home than on any business criterion. He says that the sale of appliances is likely to depend on the population so they should look at a map of Britain, see where the main centers of population are, see how many appliances they expect to sell in each of these and then do some fairly straightforward analyses to find the best location.

He has rightly said one of the factors for logistic location center has to be population concentrated. We need to see where the markets are more active and demand are continuously challenging. There are various factors that affect the logistic location center to the mainstream.

1> Geographic location: These are important that would help to reduce the costs of logistic

2> Market demand: market demand is required for growth of the business

3> Supply chain management: The most important factors which are required to be managed that reduces time and cost.

4> Warehousing: The factor which reflects the effectiveness of urgent or quick demand and manages between manufacturer and retailer

The fact to build entirely new premises could take a year. Alternatively, we could find existing premises that are empty or we could rent temporary premises until the company finds more suitable permanent premises.