Supply Chain Management at Dream Beauty Company
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Supply Chain Management at Dream Beauty Company
The three-day fulfillment cycle, as the Dream Beauty Company manager says, is a standard in the industry. The three days are generally composed by half day of order processing, half day packaging, and half day of labeling and one and a half day of delivery. Maintaining this policy of three-day fulfillment cycle gives to the company and to the clients a given time to plan all the supply chain process.
The recommendation to the company about the three-day fulfillment cycle must start to the costs of every step. Making an ABC order to the cost per step we obtain in the first place the shipping cost and in the second place the order processing.
For the delivery process that cover the 60% of the total supply chain-related cost the company must work with shipping companies to obtain better prices and the other recommendation is consider moving the warehouse where the inventory is stored and fulfilled. Cities located in the central states of the U.S like Kansas or Indiana (have better geographical situation than Money City, Nevada) to attend the demand of all the U.S. Having a better location, with more shipping services around will allow to the company to reduce delivery costs and shipping times (Bowersox et al, 2012).
For the Order Processing costs, the easiest way to reduce costs is establishing a minimum amount order. Considering one pack per order for mass merchants, 2.3 packs per order for convenience stores and 1.25 packs per order for retail store, the company must consider a value of 2 or 2.5 packs per order in order to reduce the cost in order processing.
For the time of receiving payments for the delivered orders, the company has a policy written in the invoice of 30 days, the company must establish a discount policy for anticipated payment (under 30 days) and penalizing the clients with delays in their invoices. A penalty of 9% of the invoice could be used for every 30 days of delay, amount that will be charged in the following invoice.
At the beginning this new policy will benefit to the mass merchant and will affect to the convenience stores.