Shipment decision: Cross-Dock Centre
Our concern is to keep low inventory and short lead time during all the distribution process. First to be responsive to the market and avoid any stock out (which can be really harmful as some sports products have high margin), second this will allow CEMS to provide better services to its customers and be more adaptable to any change in the demand. Short lead time and low inventory are a way to decrease the cost due to high inventory and/or the cost of opportunity of a missed sale.
However, a trade-off between low inventory/short lead time on one hand, and handling and transportation cost on the other hand must be taken into consideration. Some calculations will allow us in the last part of this report to know the delivery frequency to the Cross dock and the stores.
The number of shipment can be reduced thanks to cross-dock consolidation. The maximum number of deliveries will be:
• To the cross dock: 50 (suppliers) x 5 (week days) = 250
• To the stores: 100 (stores) x 5 = 500
• TOTAL = 750 deliveries (Currently the whole number of deliveries is 9710)
The minimum number of deliveries will be 300 (with weekly frequency deliveries of 2 times for the cross dock and each stores)
The layout of the cross dock will use an I-layout (the goods enter and leave the center by two different facades)
Degree of Distribution Outsourcing: Fully Outsourced
The distribution is not the core competency of CEMS. Investment in the distribution process will prevent CEMS to increase its range of product and consequently our strategy of differentiation will be slow down. Our recommendation is to fully outsource the distribution to a delivery company. ...