| "The first step is to attempt to define flow through capacities, performance levels, weaknesses and limitations of the existing distribution system..." |
"...he should immediately buy stock in his company, queer the Bigger Scott endorsement idea and go to work for the acquiring company..." |
"I was pleased with your first chapter. It definitely makes my adrenalin run. It is the challenge that makes logistics exciting to work in..." |
| "Gan should suggest that the quick manufacture and distribution of the Corn Dogs be outsourced to Zip..." |
"Gan should suggest his company go about handling their situation the same way PlayStation marketed the PS2..." |
Gan was right on the money with his interest in the "strikepoint". Though each business unit faces their own limitations, the CEO seemed most interested in determining the opportunities with the shipping and transportation groups.
The first step, before preparing a strategic processing plan, is to attempt to define flow through capacities, performance levels, weaknesses and limitations of the existing distribution system. Any currently used performance metrics and historical production management reports would be useful in determining the systems designed capacities, current production rates, its weakest links, situations that can disrupt operations, and average performance under normal conditions with the existing level of resources.
By breaking the operations down into functional components, improved detail and expertise can be focused on each step of the process. These components would include: inbound movement of raw materials, handling and distribution activities, cross-dock operations, and outbound movements of finished goods.
Once this has been determined a BPI, business performance improvement, analysis is performed to identify each sequential activity step performed in the overall process and capacity through-put for each activity. Starting with the activity experiencing the lowest flow through rate, opportunities for adding capacity are identified. The analysis determines investments and resource needs, training and lead-time periods, and the finally the estimated improved capacity and performance levels for that activity. Moving on to the next activity with the lowest capacity this routine continues until a point is reached when no more improvements can be determined or their costs relative to their gains are prohibitive. At that point the lowest flow through activity rate establishes the capacity of the to the overall distribution system. This analysis process must address both the processing and movement of goods and of information.
A risk factor is then estimated for each activity improved to reflect the probability of meeting the new forecasted capacity level of that activity. This step is important as it reflects increased risk associated with increasing the number of improvements.
The final step of their strategic capacity plan is to identify any additional opportunities to increase volume beyond the use of their existing system:
- Excess capacity outsourcing to a 3PL could increase capacity if achievable without disrupting performance of the existing system
- Direct ship from remote manufacturing sites
- Add temporary remote or regional cross-dock or distribution operations
- Review the possibilities of outsourcing B2C web site sales movements
- Be creative and review each distribution category independently possibly increasing capacities to some greater than others
Joe Pfeiffer
Translogic Consulting Svcs
Translogic Consulting Svcs
Let's be practical...
Upon leaving the strategy meeting:
A. Gan should immediately sneak off and call his stock broker and buy as much stock in his current company as he can.
B. Then...based on the fact that in his current position at Cornelius Co. they have been ignoring him for a long period of time (as always happens internally to logistics persons, regardless of thier knowledge, abilities and constructive ideas) and only now do they come to him in a time of crisis. He should sabotage the Corn Dog / Bigger Scott endorsement idea and attempt to convince the executives that it is impossible for them to meet the logistics / supply chain criteria to be able to support such a program and that in the long run the company would be better off accepting Ike's offer to but acquire the company for a premium. Note...by president Enright's own admission...the company had suffered "ongoing 'financial doldrums". It's time to sell.
C. It's unreasonable to expect a low level guy on the totem pole like Gan to step in and save the day. As suggested in (A.) above, he should immediately buy stock in his company, queer the Bigger Scott endorsement idea and go to work for the acquiring company...Laughing all the way to the bank as his stock more than doubles. Then in good time he should take his profits from the sale and reinvests them in Microsoft stock prior to this fall's launch of their new game machine, operating system & business suite launch...And...then in a year or two he tells everyone to pound sand as he quits work all together and retires at a young age...never looking back on what he always the worst decision of his life...that being...going into logistics or supply chain management in the first place.
Regards,
Bill Payne
Bill Payne
This definitely has got to be a team effort or they just as well sell the company now.
Each area of the company has to assess what they can do and how fast. They need to check for bottlenecks on their production floor and work through those problems first. They can only sell as many as they can make.
Then Purchasing and Finance needs to go to work to see how much money they have that they can begin to purchase the materials needed. How fast can Purchasing find the needed materials and get them bought.
Traffic then has to get the materials to the plant the quickest way possible at a reasonable rate to begin the flow into production. At the same time they need to be looking at shipping the finished product to the customers on a timely basis.
At the same time Customer Service is working hard to keep every happy and on those toes.
I was pleased with your first chapter. It definitely makes my adrenalin run. It is the challenge that makes logistics exciting to work in.
Keep up the good work. I will be looking forward to your second chapter.
Deon Hull
The following is our suggestion for the continuation of the "Strikepoint" article in the May 2001 issue of Inbound Logistics:
Gan should suggest to the CEO and Corporate board that the quick manufacture and distribution of the Corn Dogs needed to fulfill the influx of demand be outsourced to Zip. In exchange for the use of Zip's resources, manufacturing facilities and distribution channels, the Cornelius company would offer to sell 40% of its stock to Zip at face value. In doing so Cornelius stock holders would maintain controlling interest in the company while at the same time benefitting from the capabilities of the larger Zip company.
Most importantly for Cornelius, the demand that the unexpected Bigger Scott endorsement had created would be met with an acceptable customer service level which in turn would greatly enhance Cornelius' bottom line. Zip would also win in this arrangement because they would receive the Cornelius stock at a much lower price than the $33/share they had originally offered and in doing so would realize a greater appreciation in their stock investment than would take place with an outright buyout.
As an aside to this, negotiations could also take place wherein if an adequate increase in sales and stock value is not realized by the above arrangement, Zip Corporation will have the option to buy out the remaining shares of Cornelius at no less than $33/share upon shareholder approval.
David White
Student Co-op
Penn State University
Student Co-op
Penn State University
I think Gan should suggest his company go about handling their situation the same way Playstation marketed the PS2. Ship everything they've got in inventory to their vendors, create a huge media buzz, get the cool people out there who are ahead of the curve wearing their product (more advertising), while meantime stepping up production in their factories and implementing Gan's ideas on how to steamline their supply chain. Getting their name out there puts them in the game and buys them a little time. When the initial supply runs out, everyone will be talking about which store has got five pairs left in stock. That way they can get their act together while even more of a buzz is created because everyone is scrambling around trying to find Corndogs, similar to the way your kids drove everyone nuts last December trying to get Playstation 2.
Anonymous
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