A global manufacturing company has hired a supply chain management consulting company to review its supply...

A global manufacturing company has hired a supply chain management consulting company to review its supply chain. The consulting company has recommened the manufacturer to conduct periodic review of its logistics network design and optimize its network of warehouses.

(i) Discuss why the manufacturer should periodically review its logistics network design.

(ii) Discuss the advantages of having a small number of centrally located warehouses and having a large number of warehouses closer to the customers.

Expert Solution

1) It is considered as a prudent practise to establish a periodical review system, to evaluate and realign the firm's supply chain policy. This is due to the fact that periodical review helps the firm counter the ever changing market and industry dynamics. It will prevent any kind of dissonance between the perfect supply chain policy and the established supply chain policy. Review activties thus help the firm establish a lean process in the firm, thus translating it into greater fiscal efficiency and greater competitive advantage. In addition to this, the review activity shall also provide insights related to the right combination of investments/disinvestment required with respect to the supply chain network. This should be done in order to reduce the supply chain risk and optimize the inventory and the cost incurred through it. Nevertheless, Periodic review also helps in proactive approach towards market trend estimation and thus making the firm ready for any change.

2) Centrally located warehouses have following advantages -

Maintaining locally placed warehouses increase the supply chain cost by increasing the cost of Warehouse setup cost and the inventory cost. The firm would be also be required to undertake regular maintenance activities at these warehouses, this regular overhead costs greatly reduces the fiscal efficiency of the supply chain. In addition to reduced fiscal efficiency, the firm would be required to establish a certain amount of inventory at the client location irrespective of the demand from a particular customer, this needlessly increase the inventory cost for the firm.
Central warehouses helps in improving the supply chain response time. Through proactive demand estimation, we shall be able to ensure product availability for the client when they need it. Maintaining local warehouses at client location creates an uncertainity over inventory utilization and it may also lead to to a situation where there is a surplus at one client location and there is a deficit in another. Therefore, we can also say central warehouses provides greater control over inventory and client servicing.
Over and above, maintaining single central warehouse improves upon the inbound cost for the firm. It is always efficient to transport goods to a single warehouse rather than transporting them to multiple warehouses. We can greatly optimize the network using the right combination of goods carriers depending upon the demand from each client and thus improving the efficiency to the supply chain network.

Please Like & Provide your reviews in comments. :-)

keosha answered 1 year ago

GLOBAL MACROTRENDS AND THEIR IMPACT ON SUPPLY CHAIN MANAGEMENT You’ve recently been hired as the production...

GLOBAL MACROTRENDS AND THEIR IMPACT ON SUPPLY CHAIN MANAGEMENT You’ve recently been hired as the production manager for a large consumer packaged goods company. In your first meeting with the sales manager, the manager said that production has always made more product than the sales force could move. He tells you that it would be much better if the sales force could create more demand than the company could supply. What would you tell the sales manager? Is it better...

Molton Inc is a small international manufacturing company. They have a global supply chain and their...

Molton Inc is a small international manufacturing company. They have a global supply chain and their products are bought and sold globally in several currencies. They employ a consulting firm to strategically advise them on exchange rate fluctuations. Do you consider Molton Inc’s strategy to be a reasonable one? In your answer consider alternate exchange rate strategies and advise Molton Inc what you consider their best strategy to be. Word limit-400 words. (should be at least 350 words) Use at...

How has the drone technology already benefited the global supply chain? As future global supply chain...

How has the drone technology already benefited the global supply chain? As future global supply chain leaders how do you predict that drones will be changing the global supply chain? What are the challenges of this relatively new technology? Select an industry that will benefit from using drones and how would you promote your ideas in order for this industry to improve reduce their carbon footprint and improve their profit margins.

Mitigation strategies are commonly adopted by supply chain managers in global supply chain management. Discuss how...

Mitigation strategies are commonly adopted by supply chain managers in global supply chain management. Discuss how managers should consider to make better supply chain network design decisions when supply is unstable.

Which role does supply chain management has to play in global climate change.

GLOBAL MACROTRENDS AND THEIR IMPACT ON SUPPLY CHAIN MANAGEMENT What are the strengths and weaknesses of...

GLOBAL MACROTRENDS AND THEIR IMPACT ON SUPPLY CHAIN MANAGEMENT What are the strengths and weaknesses of a public-private partnership (P3) in relation to infrastructure development? (2-3 paragraphs please) (5-6 sentences each)

Supply Chain Management A supply chain involves all the activities associated with how manufacturing, materials, facilities,...

Supply Chain Management A supply chain involves all the activities associated with how manufacturing, materials, facilities, personnel, transportation, inventory, and other items flow and then are transformed into goods and services. Every asset, information, and process is part of the supply chain. For this Discussion, you will be addressing how the supply chain works and possible issues you may encounter. Within this complex system, operation management responsibilities can be both strategic and tactical. Examine the place where you currently work,...

ZeroCost is a management consulting company that was hired to advise Badvibe, Inc, a company that...

ZeroCost is a management consulting company that was hired to advise Badvibe, Inc, a company that makes widgets (a fictional mechanical device). Badvibe wants to increase share value but does not tell anyone but its board of directors about its focus. Badvibe tells ZeroCost to create a range of financial plan options that “cuts the fat and the muscle down to the bone” of its hourly and middle management workforce due to an overly aggressive expansion strategy. ZeroCost is well...

Electronic Purchasing for Global Sourcing Supply chain management has become an increasingly popular and strategically important...

Electronic Purchasing for Global Sourcing Supply chain management has become an increasingly popular and strategically important topic in international business in recent years. An important recent development in supply chain management is the emergence of electronic purchasing for global sourcing. This exercise examines potential benefits and costs associated with electronic purchasing. Read the case below and answer the questions that follow. The solar energy industry generated worldwide revenues that were estimated at nearly $50 billion in 2011. These revenues have...

Describe Chiquita’s approach to human resource management in its global supply chain. What particular human resource...

Describe Chiquita’s approach to human resource management in its global supply chain. What particular human resource challenges does Chiquita face as the purchaser, producer, and supplier of a commodity?

Question