Westminster Company ?

Luis Camilo Cortes

Edison Su
Macieek
 Back Ground
Westminster is one of the largest manufacturers of
consume health products.
It is global and maintains regional offices in Europe,
Latin America and the Pacific Rim to support overseas
manufacturing and distribution.
Domestic operations consists of three separated but
wholly owned companies that each manufactures and
distributes unique products lines..
Products: 37% grocery, 20% drug, 35%percent mass
merchandise and 8%miscellaneous
 Westminster just completed several study focusing on the
costumers current and future supply chain requirements.

Two key topics were identified: customer composition and

customer service requirements.

Mass merchandise have become the fastest growing category.

70% of domestic consumers sales volume is concentrated with

10% of Westminster consumers

Customer service improvement: inventory replacement

procedure, order cycle times and meet specific customers
requirements.

Distribution Network
Company A
Newark
L.A
Atlanta
Atlanta
Dallas
Jacksonville

Company B
Philadelphia Philadelphia
Customers
L.A Newark
Atlanta

Company C
Newark
Chicago
Chicago
Houston
L.A
Trenton
1. What impact would the three new
alternatives have on transfer and
customer freight cost?why?

1. POS driven information system,

2. Cycle time reduction,

3. Specific customer requirements

Advantages

* Production of gods according to customers

requirements.

* Monitoring of SKUs sold and accurate inventory

replenishment, avoiding over or under stocking caused by
inaccurate forecasting, minimizing the bullwhip effect.

* Frequent orders of the same products by a customer.

* Helps to prevent excessive or unnecessary operations,

reduction similar inventory, and reduces the holding cost
of inventory.
Disadvantages

* Investment on the technology needed to apply this

system may be too big in comparison to the return it
would provide.

*It would be necessary to buy tracking software for the

operations, such as ERP.

*Handling more orders frequently can increase the

amount of personnel needed on the warehouse.

*Smaller quantities would create a greater challenge to

achieve economy of scale.
2. What impact would warehousing
consolidation have on transfer on inventory
carrying costs, customer service levels and
order fill rate?
Allows the Company to have one distribution warehouse for
all its plants.
Match the strategy of inventory replenishment based on
demand.
Inventory carrying costs like storage cost, inventory service
and inventory risk will be reduced as will stay short time on
the warehouse.
Consolidation is perfect for economies of scales. The central
location and the order cycle time of three deliveries per day
will improve the customer service levels.
Company will loaded fully a trailer and will use mixed
shipments this will allow to warehouse manage a fast
preparation of packages and deliveries.
3- How are warehousing costs affected by the decision to use
third party or private warehousing facilities? What effect would
this have on handling, storage and fixed facility cost?

Private warehousing is when a business build or buy its

own warehouse
It requires substantial investment of capital.
It has a fixed facility cost.
It is expensive in the short run.
 Third party or public warehousing is when a business
hire or rent a warehouse.
It has a special handling cost and storage cost.
It is cheaper in the short run compare to private
warehousing.
But comparing the two in the long run, private
warehousing is cheaper because the company gets tax
break due to depreciation of the building and
equipment. It is also cheap because private facility is
not run for profit, so the variable cost is low.
4.What effect would shipping mixed
shipments from consolidated distribution
centers have on individual Company cost
and performance?
Distribution cost represents almost 60% of each order
cost .
Before the company used to many trucks to delivery
many products. Now it will use less numbers of tracks to
deliveries various orders.
Westminster will be able to reduce the delivery time on
specific orders that customer require.
The customer will receive only one shipment instead 3 or
four.
The company could use a 3pl to supply the distribution
service.
 A

Customers warehouse B

C
5. Evaluate the eight supply chain process in terms of
customer classification and degree of centralization /
decentralization of required funcionality.
6. Given all available information briefly
describe the logistical system design you
would recommend for Westministers
integrated consumer products
Evaluate the cost Benefit of introduce the consolidated
warehouse.
The use of sophisticated ERP system to control all
supply chain of Westminister.
Locate the consolidated warehouse in a central point
according the location of the customers which demand
more quantity of orders volume.
Use a 3pl to supply distribution process as it will reduce
the costs of the logistic used on each order.
Conclusions

Todays companies have to find the way to reduce

logistics cost to create a strong competitive advantages.
Companies with high volume of demand per order should
consolidate the distribution center to reduce inventory,
order cycle times and satisfy specific customer orders.
3 PL is a perfect option to outsource the Distribution
process in company's like Westminster