A Career in Logistics and Distribution
A career in logistics and distribution may suit Leila if she enjoys coordination and overseeing a process to its competition. Her duty would be to organize the storage and distribution of goods. In this role she would need to ensure that right products are delivered to the right location on the right time and at a the lowest possible cost. She needs to be involved in transportation, stock control, warehousing and monitoring the flows of goods.
Understanding the whole supply chain is important so she can coordinate it effectively and liaise with suppliers of component parts.
According to the case, Mr. Lopez the warehouses manager has been very satisfied with his work as all warehouses are full with all kind of components. In my opinion this is the first mistake and problem that Leila has to work on. However, having full warehouses with stock is not the way to go. It increases the storing costs and therefore decreases the generated revenue. Leila has to figure out the way to reduce inventory costs. In my opinion the best way to such is by reducing SKU (stock keeping unit) counts. If she can make sure that they store the base items and only customize it when they have order, they could significantly reduce inventory.
In addition, another thing that might work is centralizing the inventory instead having 8 warehouses, placing inventory items into one. In total, distributed warehouses require more inventory than centralized facilities. The key driver of the increased inventory is safety stock. If centralization is possible, a reduction in order quantities may be possible. By ordering to only one location, they may be able to increase their order frequency, thus lowering their overall order quantity.
Smaller and more frequent order quantities translate into less inventories. Determining order frequencies is one of the key variables of M.L.’s supply chain. It can affect nearly every aspect of your supply chain. Leila must have a thorough understanding of company’s supply chain costs and capabilities before embarking on this strategy.
Besides reducing inventory cost, the other difficulty that the M.L. company has been facing is high transportation costs.
According to the case, Mr. Perez is sending daily a truck to each warehouse either the truck is full loaded or not.
Transportation is the largest element of logistics cost, therefore is the one that requires special attention and approach