1. Analyze the logistics service and cost constraints imposed on BKI by the chain store’s request.
Answer: The logistics service and of BKI by the small chain stores request following analysis have been made for reducing the cycle time:
• Complied with the customer’s RFID (radio frequency identification) initiatives that use radio waves to identify people or objects carrying encoded microchips. RFID can help by finding products easily, reduce the possibility of losses and helps to plan product locations.
• The provision of advance shipping notification where (ASN) means notification of pending deliveries, similar to packing list. It provides information on bill of lading, whereas its major goal is to provide information to the destination’s receiving operations well in advance of delivery.
• Improvement of inventory visibility because this will helpful for maintaining the reliability and certainty for shopping online. This proves to be very powerful tool for the retailers as well, also it helps retailers by reducing the shipping costs.
Cost constraints and measures taken by Mr. JR by the director of BKI’s logistics are as follows:
• There will be increase in order processing and freight cost
• Team of the logistics should have to process smaller, case quantity order for each particular store of pallet quantity orders from regional distribution center (RDC).
• Usage of costlier less than truckload service and deliver it to the stores.
2. What is your opinion of Joe Rutner’s proposal for establishing a series of company- owned RDCs?
Although the proposed system could benefit but In our opinion we disagree with the opinion of Joe Rutners proposal for establishment of RDC, it is because of:
1) As Rutner has suggested the decentralised inventory positioning strategy may benefit to eliminate customer delivery cost and order cycle time. As the product is positioned nearer to the demand points it can be frequently dispatched to match the customer needs. Although we believe the expenses of such a system outlooked the benefits in BKI’s case.
2) Higher facilitated stocking products can rise to more handling cost, the product damage risk, an additional expense of operating and leasing the facility. In addition, by holding its own level of safety stock may rises the average inventory level.
3) The main reason for our disagreement is that Rutner proposal falls in the given extract from the case “the company is straining to produce enough product to meet retailer demand”
4) If BKI is trying to obtain enough product the last alternative they can have is to move forward decentralised distribution system. This will them to predict and stable the levels of stock at various locations, regardless resulting in surpluses in some regions and shortages in another.
5) We can support the decentralised approach only if it is able to produce enough product to maintain satisfying levels of safety stocks at all locations, but obviously this is not the case
6) The limitations for the current centralised system is the long distance to the customer which can lead to blaming for the long cycle times. However, we can realise the opportunity from centralisation including the greater control over inventory and less demand variability due to division of risk.
3.If BKI moves forward with the RDC plan, what facility ownership structure do you recommend? Why?
According to our findings in this case are follows:
If the Bath king industries are planning to move forward with RDC plan we would suggest them with Contract Warehousing. At first, we suggest organisation should be more flexible in their operations. Orders from the retailers can change any time in future. By contract warehouse there won’t be a problem in future whether order request changes. the organisation could manage if orders increase or decrease because they won’t be affected with the lease and ownership problems.
Secondly it is said that the company itself faces a strain in the production so they could also buy services. They can invite other companies for distribution services this could help to maintain larger degree and flexibility. This could also help to improve their current condition.
Thirdly, operating expenses are low for the bathking industry if they choose contract warehousing because there won’t be taxes, insurances or related expenses. This will be resulting in the overall cost of the company. The company could save more amount of money and also, they could also invest money in expanding or business-related activities.
We can also consider sole proprietorship because products can be allocated and can be delivered easily. Each store would take orders separately and that order would be processed and delivered. But it can cost company a huge amount for setting up and to find good location or accessible is difficult in these days.
To Conclude we would suggest the Bath King Industries should move with Contract Warehousing because it could save the cost and time. It is said that Bathking Industries are straining to produce products so contract warehousing is best to choose.
4. Develop a process map depicting the product and information flows in Rutner’s proposal.
The process of information flows according to Rutner’s proposal includes:
First and foremost, one is to Startup a six facility RDC network and the next is to find a distribution center whereas it should have high demand and well accessible region. While working with orders, the orders should be fulfilled within limited period of time because if orders are fulfilled quickly it helps to attain good reputation to the firm and next is to add some value services to it and enabling facilities like and pallet cross docking. The industry should always maintain a minimum level of safety stock in order to prevent the stockout also they should decrease companies overall inventory.