Design and Operation of Logistics Systems Assignment

Design and Operation of Logistics Systems - Assignment fontSavings in logistics embody accrue from reduced inventory levels, making it possible to close facilities, thus, promoting centralisation of distribution. It throw out reduces the need to keep stock at many stores, thus, bringing a shift in the role of such facilities from stock keeping to distribution (Higginson & Bookbinder 2005). Management of Gerrard Laboratories was also thinking on the same(p) lines by planning to close Cologne facility not just because it could serve the Cologne warehouse customers from the Brussels plant at Belgium but because the competitor family was serving the European market with few warehouses than Gerrard Laboratories. Serving the Cologne customer base from the Brussels plant, the largest and the oldest one, from the focus and manufacturing perspective seemed more pertinent as the Brussels manufacturing plant had been producing 25 items out of the total 35 products. The given situation in dicates that it is more practicable to serve the Cologne area from the Brussels plant. From sales operations perspective also, Gerrards 90% customers had been retailers wholly 10% formed the industrial customers. Further, there was no seasonal change in the demand of the company products. Hence, it is expected that Gerrard should manage distribution to hospital customers satisfactorily from the Brussels plant. Another aim of distribution centres has been to chase to customer needs, which a great number of researchers have analysed. Increased communication and transportation have further minimised the requirement of warehouses and distribution centres (Higginson & Bookbinder 2005). Examining Gerrard on the communication and transportation parameters for client servicing, Gerrard has been handling its logistics functions on traditional practices. otherwise than its own 4 plants and 14 warehouses, it had been sharing warehousing space of 23 other grocery products and service compan ies, not wholly occupying the total offered space. So far the practice of one-shot billing system with variable woo of manufacturing coming to 80% of the total cost could be a reasonable ratio but one-year or maximum period of 2 years for contract renewal with the warehousing service providers could be the deterrent it carried the impending risk of increased inventory cost annually. Thats why Gerrard senior management had been focussing more on closing the Cologne facility (Case Study). Financially, it would be a good termination to close the Cologne warehouse as shipments from Netherland to Brussels would not be charged with any supererogatory freight rate. The new weighted-average rates for taking the goods from Brussels plant to the Cologne customers through another truckage company are quite competitive as the trucking company has expressed its desire for lessen the rates for less-than truck loads (LTL). It has offered 100 square meters of its Cologne terminal space for tr ansit depot without charging extra, which is a big plus-point. The local delivery rates for TL per case would come to 0.58 and for LTL only marginally higher. Rate for at least 40% shipped goods would be highly competitive. Gerrard would be in a station to save revenue on this count and also by getting goods delivered via the Netherland without incurring extra cost in comparison to goods delivered v