...HOW WAL-MART USES DISTRIBUTION CENTRES TO REDUCE TRANSPORTATION COSTS AND AT THE SAME REPLENISH INVENTORIES FREQUENTLY 1.0 Introduction Daskin, Snyder and Berger (2003) noted that achieving efficiency and effectiveness in the movement of goods from source through processing, fabrication, finished goods assembly, distribution centres, wholesalers, retailers and right down to the final consumers is highly important in today’s global world especially considering that cost of goods/products in a number of instances can be higher than the value placed on the goods/products by the final consumer. Similarly, Chopra and Meindl (2010, p.41) stated that the ability of supply chain to perform in relation to responsiveness and efficiency is determined by how the logistical and cross functional drivers of supply chain namely facilities, inventory, transport, information, pricing to mention just a few interact with one another. Furthermore, Daskin, Snyder and Berger (2003) also offered that taking decisions on locations constitute the most “critical and difficult” of all decisions required in making supply chain effective and efficient largely because other decisions on the other drivers such as inventory, information, pricing can be more easily changed in response to changes in the market, raw materials, labour to mention just a few. Chopra (2001) offered that distribution entails the process of moving and storing products right from the supplier down to the final consumer within...
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...overlap, there is definite overlap in their distribution systems. Both the demand and cost data is provided in spreadsheets to facilitate a total cost analysis. This case provides students with a comprehensive and realistic distribution center location problem that can be solved using a spreadsheet analysis. While the analysis can be completed using a supply chain design planning tool such as CAPS, Supply Chain Planner, Supply Chain Navigator, or Logic*Net, it is often useful to have the students completed the analysis using a spreadsheet so they develop some insight regarding the logic and dynamics of such planning tools. This case can also be used to illustrate and apply the Logistics Planning Process discussed in Chapter 16. This case is an effective tool for students understand the process of developing a total cost model and then using it to determine relevant total cost curves includes the major logistics cost components. Solution The first step in solving the case is to define the critical assumptions for completing analysis. Specific assumptions include: 1. All demand is assigned to a single point within each state. A representative point is the capitol or the largest city; 2. All demand is shipped to customers in either less-than-truckload (LTL) or truckload (TL) volumes and each state receives a combination of both; 3. Service level is measured as the percent of volume within 750 miles of distribution centers. In effect the demand point in each...
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...Background: The case involves a company named The Darby that manufactures and distributes meters used to measure electric power consumption. Before gradually building a customer base throughout Texas, the Darby Company started as a small production plant in El Paso. As a first step, a distribution center was created in Fort Worth, Texas and then in Santa Fe, New Mexico. The El Paso plant then marketed its meters in different states, including Arizona, California, Nevada, and Utah. A third distribution center was opened in Las Vegas and a second production plant in San Bernardino, California. Manufacturing costs alter from one production plant to another. El Paso plant produces at a cost of $10.50 per meter. However, the San Bernardino plant’s cost are $0.50 less than the cost of the El Paso plant since it utilizes newer and more efficient equipment. Concerning the efficiency of the distribution system, not much attention was paid because of the company’s quick growth, but the company’s management crew decided to start addressing this issue due to its immense importance. As shown in the book, the cost of shipping a meter from each of the two plants (El Paso and San Bernardino) to each of the three distribution centers (Fort Worth, Santa Fe, and Las Vegas). The El Paso plant produces quarterly 30,000 meters, while the San Bernardino plant manufactures 20,000 meters. One of the limitations...
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...ROLE OF PHYSICAL DISTRIBUTION A Graduate Seminar Paper Submitted to the Department of Marketing Faculty of business administration University of Nigeria Enugu Campus In partial fulfillment of the requirements for the degree Master of Business Administration (MBA) Graduate seminar (MKT 803) By Onah Godfrey C. PG/MBA/12/62555 AUGUST 2014 APPROVAL PAGE This review by: GODFREY. C. ONAH Titled: Ensuring efficient marketing of petroleum product; the role of physical distribution Has been approved for meeting the research requirement for the award of Degree of master of Business Administration (MBA) in Marketing Prof. Ogwo E. Ogwo Date Approved SupervisorProf. Ugwuonah | Date Approved Head, Department of Marketing | INTRODUCTION The marketing of petroleum products in Nigeria has been inefficient and has faced a lot of problems over the years. Therefore this paper examines the role of physical distribution and how it can help to ensure greater efficiency in the marketing of petroleum products. We shall be reviewing the problems of inefficiency in the marketing of petroleum products in Nigeria, the essence or thrust of physical distribution in marketing, and how physical distribution can help ensure...
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...DECENTRALIZED PLANT DISTRIBUTION SYSTEM IN THE LOGISTICS OF THAI CEMENT Pairoj RAOTHANACHONKUN Graduate Student Department of Civil and Environmental Engineering Nagaoka University of Technology 1603-1 Kamitomioka-machi, Nagaoka, Niigata, 940-2188, Japan Fax: +81-258-47-9650 E-mail: pairoj@stn.nagaokaut.ac.jp Shinya HANAOKA Assistant Professor Transportation Engineering School of Civil Engineering Asian Institute of Technology P.O. Box 4, Klong Luang, Pathumthani, 12120, Thailand Fax: +66-2-524-5509 E-mail: hanaoka@ait.ac.th Abstract: Siam Cement Public Company Limited (SCC) faced stiff competition after the economic crisis in 1997, decided to close most of their warehouses for the change of logistics system. SCC presently operates five cement plants located whole regions in Thailand with except of the northeast region where three warehouses are still operated. This plant distribution system can be called the decentralized plant distribution system. Which plant distribution system is more efficient for SCC as the logistics strategy between centralized and decentralized? Based on this background, total logistics costs of both systems are formulated and calculated. In addition, the locations of a single warehouse without plant operation are evaluated using linear programming to minimize total logistics costs, which calculated with and without environmental cost. The results of calculation showed that transportation cost was the most significant cost of the plant distribution system and...
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...June 16, 2015 MKTG 630-1502b-02: Applied Managerial Marketing Colorado Technical University The two pricing strategies that M&M need to take in consideration are Penetration Pricing and skimming strategy. Our book for this class outlines four strategies that are essentially used in the business, which are skimming, economy, penetration, and premium pricing strategies (Definition of Pricing, 2015). Organizations may diversify the four mentioned strategies, or may include even more strategies that are found through researching, such as the high and low strategy, marginal cost pricing, and market oriented pricing. Price may maximize revenue and profits, or may backup existing market from new competitors (Definition of Pricing, 2015). However, for this assignment I’ve chosen the before mentioned strategies, penetration & skimming as I’ve compared and analyzed M&M’s benefits in comparison to the cost associated with gaining them. Penetration pricing is set preciously short in order to gain market share swiftly. After a new service is launched, there is an understanding that prices increase after the period of promotion and also after there are achievements of market share objectives (Definition of Pricing, 2015). With penetration pricing, there is a goal of customers’ attraction from setting prices low. Skimming strategy’s idea is to recuperate maximum money upon services attract more competition that will decrease profits for the organization (Applied Managerial)...
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...to address distribution center over-utilization and overcome its operational challenges. Coming off a great year for the company, Dollar Tree’s 19% compound annual growth rate proved that the company’s strategy was working. In order to deal with the company’s over-utilization of its Briar Creek, PA distribution center, Dollar Tree should build a new 600K-square foot distribution center in Hartford, CT. This new distribution center should be built, instead of building a 400K-square foot expansion at the existing Briar Creek, PA facility, because the new facility is a more efficient use of capital investment in the long term. An analysis of specific costs the distribution center incurs support the decision to build the new plant. These costs include: • Lower outbound transportation costs as the Hartford, CT center would be closer to a portion of the stores currently located in Briar Creek’s distribution territory, thus lowering the average distance from DC to store • There is small advantage with regard to inbound costs as Hartford, CT is ~17 miles closer from the Port Authority of New York/New Jersey than Briar Creek, PA is, and thus there is a trucking cost advantage The fixed cost of building the new Hartford, CT facility is $3,751,782 versus $1,425,805 for the Briar Creek, PA expansion, as shown in Exhibit 1. While the fixed cost for the Briar Creek facility expansion is almost half the cost of that incurred by the Hartford facility’s construction, this cost savings is minute...
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...kemsley@yale.edu, (203) 432-3780, fax: (212) 432-6974. ** University of California at Los Angeles, Anderson Graduate School of Management, Box 9511481, Los Angeles, CA 90095-1481, (310) 825-4720, michael.williams@anderson.ucla.edu. Debt, Equity, and Taxes Abstract In this study, we extend Miller’s (1977) capital structure analysis by adding potentially high personal taxes on dividends and share repurchases, and by focusing on mature firms with at least some pre-existing equity. We demonstrate that personal taxes on equity distributions push new equity financing to an inferior corner, but they do not push internal equity (i.e., reinvested free cash flows) to a corner. Therefore an interior capital structure solution remains, in which firms are indifferent between using debt and internal equity financing, while preferring to avoid issuing additional external equity. Interestingly, many attributes of Miller’s model survive high personal taxes on equity distributions, including the aggregate debt-equity ratio, the identity of the marginal investment clientele, and investors’ portfolio allocations between debt and equity securities....
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...Chapter 11: Distribution Customer Service and Logistics Physical Distribution gets it to Customers * Logistics (Physical Distribution (PD)): the transporting, storing and handling of goods in ways that match target customers’ needs with a firms marketing mix * Within individual firms and along a channel of distribution * Must determine the best way to provide a level of distribution service that customers are willing to pay for * A firm may spend over half of its total marketing dollars on distribution * Small changes can have a big effect on a whole macro-marketing system and consumers quality of life * ECR = a computer system linking grocers and suppliers that U.S. consumers $30 billion (spread to Canada and Europe as well) Physical Distribution Customer Service * Marketing strategy is aimed to meet customers needs, and logistics is part of it * Customer Service Level: how rapidly and dependably a firm can deliver what the customer wants * Don’t care how it got there * Physical Distribution is (and should be) a art of marketing that is “invisible” to consumers * Only catches their attention when something is wrong (too late) * Those in U.S. don’t think much about it * Market-directed macro-marketing system is working pretty well * Trade-offs of costs, service, and sales * Most people want the best service at the lowest prices (not possible) * IT has lead to improve d service levels and lower costs * Better...
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...Table of Contents Introduction 2 Objectives of the report 2 Methodology 2 Scope 2 Comparative Performance analysis of Delivery Network Designs 3 Factors Influencing Distribution Network Design 3 Design Options for a Distribution Network 4 Comparative performance analysis among six distribution networks 7 Response time 7 Product variety 8 Product availability 8 Customer experience 9 Order visibility 9 Returnability 10 Inventories 10 Transportation 11 Facilities and handling 11 Information 12 Conclusion 13 References 14 Introduction Distribution refers to the steps taken to move and store a product from supplier stage to a customer stage in the supply chain. Distribution is the key driver of the overall profitability of a firm because it affects both the supply chain cost and the customer experience directly. To meet the customer need properly every supply chain manager should have deep knowledge about supply chain distribution network. Supply chain manager should know the strength and weakness of all distribution networks to achieve strategic and increase supply chain profit. The report entitled “Comparative Performance analysis of Delivery Network Designs” originated from the partial fulfillment of the supply chain management course. The main purpose of the preparation of the report is due to the partial fulfillment of the course of the EMBA Program conducted by the Faculty of Business Studies, Dhaka University...
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...heavily depended upon its wholesalers to distribute its products, because it cannot setup retails store unlike its competitors. How is the industry segmented? The industry is segmented through large and small industries that have retailers that who are willing to purchase carpets and rugs. The mainstreams of the company’s manufacturers work are done through wholesalers to elevate their profits. The retailers are segmented by mass merchandise, discount stores and chain stores. Crafton Industries is also segmented through distribution to clients that visit large and small stores often. Crafton is a small industry, which uses different strategies to compete against firms like Carpet Max. What are the pros and cons for Crafton of a wholesale vs. company distribution system from a qualitative perspective? The qualitative perspective of Crafton can sell its products through wholesalers, which are the existing structure or can sell through its own distribution network. Both of the options have pros and cons. Crafton can get direct sales from the manufacturing facility straight to 4000 retailers which will eliminates distributor margin. This strategy reduces “touch points” in the supply chain, as the inventory doesn’t need to be stored in a distributor’s warehouse prior to being reshipped to the customers. Retailers are more credit worthy than...
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...multiple distribution centers and shipping locations across the U.S. is to have the ability to meet customer demand at all major locations. Other pros include lowering the transportation and freight costs to diverse customer locations. Reducing the travel area when establishing multiple distribution centers and shipping locations lower transportation costs. The expectation is that multiple distribution centers will help to lower the time frame for customer servicing by meeting current customer demand. Effectively, linking demand with inventory (Fortna, n.d.). Intuitively, cons include the cost of land, buildings, labor, and equipment, for the development of multiple distribution centers and shipping locations. The rate of domestic sales for each region should increase faster than the rate of cost of operations for each regional distribution center. The benefit of having more than one international distribution center is to manage more effectively the distribution of international sales. Cons include the higher cost of labor (Blackerby, 2003). Cost of labor is reflective of the underlying exchange rate of the euro/USD or 1 euro = $1.50. The cons of an international shipping location instead shipping from the U.S. manufacturing warehouse are the increase in labor cost. Section II: Decision-Making The ability to maximize profits and minimize costs is imperative to the decision-making process. The West Coast customers are currently satisfied with paying the local freight cost of shipping...
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...but I totally lost in the Monash Clayton, becasue it is so huge...I study in Monash Caulfield, just few buildings in there. But Monash Clayton...I think 70 buildings in there...it took me 20 minutes to find the bus loop... next, I put on some old assignment, Advanced Managment Accouting. there were a lot of case study when I learned that unit, but now, the teacher was changed, so the assignment was changed... anyway, the requirements: 1. Conduct a SWOT analysis 2. Using the information in the text and in Exhibit 5, calculate ‘ABC’ based service costs for the TFC business. 3. Using your new costing system, calculate distribution services costs for ‘Customer A’ and ‘Customer B’. 4. What inferences do you draw about the profitability of these two customers? (hint: you can compare the ‘old’ method to the ‘abc’ method using customer profitability analysis in a table format; you can show this by: Sales less Product Costs less Service Fees = Gross Profit You can also show Gross Profit as a % 5. Should TFC implement the SBP pricing system? Give reasons. 6. What managerial advice do you have for Allied about the Total For Control (TFC) business? How does Exhibit 1 relate to this question? 7. Can ‘lean manufacturing’ practices be implemented in a company such as Allied? Explain. 8. Google ‘Allied Office Products’. Are they still in business? What other information have you discovered on Allied? SOME ANSWERS SAMPLES: Allied Office Products Case 8.1 1) Conduct a...
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...competitor and compare switching cost or prices. Buyer Power: Increase in buyer’s power, product differentiation of RIM, buyer’s incentive. Barriers to entry: Government policy, entrance of new firms with old technology, access to distribution, Brand Identity. Threat of Substitute: switching costs, Supplier Power: Discuss the differences between processors used by RIM and its competitor and compare switching cost or prices. Buyer Power: Increase in buyer’s power, product differentiation of RIM, buyer’s incentive. Barriers to entry: Government policy, entrance of new firms with old technology, access to distribution, Brand Identity. Threat of Substitute: switching costs, Supplier Power: Discuss the differences between processors used by RIM and its competitor and compare switching cost or prices. Buyer Power: Increase in buyer’s power, product differentiation of RIM, buyer’s incentive. Barriers to entry: Government policy, entrance of new firms with old technology, access to distribution, Brand Identity. Threat of Substitute: switching costs, Supplier Power: Discuss the differences between processors used by RIM and its competitor and compare switching cost or prices. Buyer Power: Increase in buyer’s power, product differentiation of RIM, buyer’s incentive. Barriers to entry: Government policy, entrance of new firms with old technology, access to distribution, Brand Identity. Threat of Substitute: switching costs, Supplier Power: Discuss...
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...combination of producing and delivering (logistics). That is the way the headquarters of Ikea find the cheapest manufacture for their products, including transport and all the other logistic costs. This fits into Ikeas cost leadership strategy. As a second result the Trading Areas plus the suppliers are in a competition, which makes them very efficient. b. Long term orientation Ikea tries to have long contracts with their suppliers. They grant their suppliers a lot of advantages. Ikea shares their knowledge and experience in logistics with them. If a supplier could not deliver a product as cheap as Ikea wants, Ikea helps the supplier to reduce costs. They prefer doing that instead of changing the supplier, it shows the long term orientation of Ikeas supply chain. Ikea is very connected to their suppliers. From the prospective of the suppliers it is a good thing because they can also make long term plans or investments. Ikea helps their suppliers with Investments as well, if they could not make the investment. Ikea gives them financial security for the future. This leads the suppliers to accept a lower price for the products paid by Ikea, than they could get from another customer. So Ikea is again able to lower the cost, which matches again Ikeas cost leadership strategy. c. Bypassing distribution Centers The...
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