This report focuses on the logistics and supply chain of a prime US pharmaceutical group, Westminster, which owns three companies, manufacturing and distributing differentiated products autonomously. It talks about the proposed changes in their supply chain systems, which are, creation of a consolidated warehousing system, having mixed shipments to save on costs, incorporate IT to maintain its inventory using ERP software, and have an integrated supply chain management system.
It talks about which processes within the supply chain should be centralized, and which should be de-centralized so that an efficient system is maintained.
The report concludes that the strategy ...view middle of the document...
It has three wholly-owned subsidiaries, manufacturing grocery products, Drugs, and Mass merchandise. Intense competition in the market, and concerns of having an effective supply chain, compelled it to evaluate its supply chain and logistics. The main focus of its research was the key clients of the three companies, who contributed majorly to the annual turnovers. The research gave them a good overview of their customers’ requirements, and their own company’s operations.
Due to the geographical varsity of its manufacturing plants and warehouses, it posed a critical question, how to implement a good strategy enabling them to reduce costs - transportation, storage and handling, and fixed costs. The report highlights some of these issues, like having a consolidated warehouse, and shipping mixed consignments from a consolidated distribution centre, and provides a recommended action plan.
Logistics is an important function of the business. Without a proper logistics system, all the manufacturing, marketing and other activities would fail. If the products are not in the shelves of the stores, they are as good as non-existent. Goods need to be transferred from the manufacturing plant to the storage centres, and from these to the retailers, and finally, to the customer. In this report we will see the effects of implementation of third-party logistics by Westminster and why this is a useful strategy.
Transportation, warehousing, and information systems play very significant roles in the logistics function. For supply chain in particular, logistics creates the efficient flow of goods between supply chain partners, and is responsible for the maximization of profits and competitive advantages.
What impact would the three new alternatives have on transfer and customer freight costs? Why?
Traditional inventory replenishment procedures are replaced by POS driven information systems. This will assist Westminster Company in the production of goods according to the customer’s requirement. Demand forecasting can be erroneous, and this system will reduce the need to forecast demand. This helps prevent wastage of excess, redundant inventory, and reduces the cost of storage. Westminster should ideally implement ERP software, which will enable its customers to give the position of their inventory, accurately and timely. The software will allow real-time inventory management of all its points of sales and its various plants and warehouses. The daily sales and inventory requirements of the customers can be assessed, and accordingly, shipments can be readied. The trucks can be loaded in a manner, that they are able to cover the maximum number of customers in a single trip, distributing a considerable amount of products. Since the products are delivered according to the customer’s order, returns and rejections would be potentially eradicated. This helps prevent wastage, which can become a major cost in the long run.
The software will enable efficient...