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Case Analysis Operation Management Southern New Hampshire University Amen Mukhlis 8/1/2011
Background: Distribution Distribution Business Definition: its the Purchase of inventory from more than one manufacturer and its release rel ease to the retailer. retailer. Company History : Brunswick Distribution started as a small Distribution company 10 Years Years ago When Alex Brunswick started using His H is Grandmother shed ,The Company grew to buy its own 10000 SF warehouse , the company has had kitchen helper as their high end kitchen appliances representation as a Distributor in the region of moline , Illinois and their operations have expanded from the Radius of 35 miles to representing them over a 200 miles radius the company with its Growth had purchased the warehouse and expanded it to a 30000 SF capacity to serve the growth in their business With the rescission and the demise of several competitors Brunswick acquired new businesses and new customers with new products to represent and distribute Alex Brunswick Brunswick CEO of the the company company has been been looking looking at the the financial financial standing of the company and it appears that even with the steady Growth of 8% in sales the company has been having a difficult situation and its being the 4th year Alex is trying trying to save the compa company ny and and reverse reverse the the situation situation in 3 years years time
Business Challenges and Concerns: Market : t he he case suggest a very high competitive market were few distributors are sharing the cake and each doing all what it takes to stay competitive , the slow economy has resulted in lots of companies being out of business and although it meant more customers to the remaining ones , it meant a more competitive environment and do what it takes to stay In the front and survive … the few left had to deal with the change in business environment , with the retailers and the short notice promotions with the the success built over price and failure over price and delivery.
Market Challenges Solution Suggestions : 〉 Brunswick Inc. Has to perform a new market analysis that sees the trend
now , what changed , how the business is going and what are the useful changes and what are the Harmful Changes C hanges , The company Should analyze competitors their weaknesses weaknesses , their strength , 〉 They Also have to go back to the main competitors that has gone out of Business and analyze we they had to stop and what went wrong and if they are facing it how to deal with it 〉 the company should look into the market again like they are starting from scratch except this time they look at the company it self and what is going good and what went wrong.
Financial :
〉 Manufacturers Demand payment in full within 30-45 Days 〉 retailers pay Distributors 50-60 Days
The Different In period is one of the main Problems that BDI Faces and their borrowing ability seems to be exhausted.
Suggestions For solution: 〉 start in incentive program for retailers who pays in Directly and in full. 〉 incentives for retailers that pay within 30 days or before that. 〉 The article suggest that the company has exhausted their limit of borrowing
with this borrower and that another loan would be hard to get , a solution will be consolidate Debts , shop for a bank or financial institution that is willing to buy the debt from the original loaner and willing to apply less interest rate and raise the loan limit so the company company can borrow more.
Operations : Operations has the problem of the unpredictable market where you cant predict the orders orders the the article article mentions mentions that the market market is changing changing and and retailers orders does too , and that the company can suffer penalties By the manufacturer
Suggestion for Solution : Its Hard to bench mark with the current economy and with retailers having a hard time when customers change their minds , but analyzing the market and the demand – supply relationship might Help with having less trouble with operation. … depending on past data and information might prove helpful too.
Strategic Issues : The company company appears to to lack a strategy in hand to deal with with the current market and thus solutions solutions for the current situation are are not available available , the company as the article suggest is looking at different options which should be evaluated after having a complete study for today's market and then what are the options to act on.
Infrastructure Vs. streamlining the Distribution System :
Frank's Option : Frank the Vise President Has Given the option of expanding to the mid west by having a new warehouse warehouse .. the Cost for the warehouse appear appear to be in the region of 15 million dollars given a 2 million for plant , 10 million for property property , 955000 for for shipping shipping expenses expenses (As (As an increase) increase) , plus plus the 6% in labor wages increase
Mariana’s Option : Marinara head of logistic suggested to capitalize on the void left by the fallen companies and to enhance their operation and make it less costly … the suggestion is to have a new distribution system that has a better handling for inventory and process , a system s ystem that depend on information technology and save the company money , the presentation pres entation that was given predict a 16% saving in annual spending on shipping expenses and an increase in the assets of 5.8 million and the cost of 7.5 million total
Which Option would I take ? 〉 Looking at both options .. we can see that frank's option might be a good
option that will give a great return on investment .. it will help create a new base of customers , assets will increase by around 10 millions and maybe the company will have a really good sale increase by adding the new line of products products … But But the article article and and reality reality mentio mentions ns that that the econ economy omy is not stable and since orders are not really steady or predicted .. which means it is really a big risk to go out there try to lure new customers and concur new markets with out having dealt with the issues in the company now that makes it not really successful
〉 Investing on improving the system as a process management decision
would be a wiser more effective eff ective decision as it will allow the company to implant much needed new and improved system that will help the company with existing customers , new customers in the region and at the same time saving money really needed to fix the company's company's situation a look at at the financial impact would suggest that its a cheaper option , better probability of success and it will be a step in building more infrastructure that might be really useful for expanding later . 〉 The 2nd option seems to be more realistic and more efficient at the time being , the first one would be perfect in a stable market with a stable company with the right resources 〉 If I was the Owner I will try to Go for Both options but as steps with focusing on current customer as a short term plan and the expanding as a longer term plan especially if economy turns around and stabilize and the company does good with updated more efficient system
