Distribution of products to clients has fundamental significance to participants in an organizational supply chain. Lack of optimized routes, poor coordination, and planning among the participants in a supply chain increases the cost of transportation. The Widget Company distributes one product from different warehouses domestically; subsequently, the distribution to various warehouses increases the cost of shipping, variability, and customer dissatisfaction.
Recommended Distribution Strategy for the Widget Company
Accordingly, the Widget Company should implement a centralized distribution strategy to prevent increased customers’ dissatisfaction, accelerated transport costs, and increased variability. A centralized distribution system would permit the company to organize product delivery from suppliers to a central warehouse or location in large quantities as opposed to distributing products to various stores in the country. Implementation of a centralized warehouse promotes additional storage, processing, and consolidation of products from different suppliers and transport to stores in a single complete load ( Campos, 2015 ). A centralized distribution strategy would permit the Widget Company to share vital information across the company’s network and ensuring effective coordination of activities resulting in improved customer satisfaction, reduced transportation costs, and decreased variability.
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Implementation of a Centralized Distribution Strategy
The Widget Company should use a supply chain specialist to seek support and appropriate responses from distributors and retailers in the firm’s supply chain. They should explain the benefits associated with the centralization of product distribution. The Widget Company should calculate the savings that would accrue from the centralization of product distribution. The company should ensure effective negotiation with retailers to promote the implementation of a centralized distribution strategy. The company’s management should ensure effective collaboration between the sales department, information technology department, and logistics from the distributors and retailers to facilitate the implementation of a centralized distribution strategy. After series of iteration, they should sign a formal contract or agreement with the participants in the supply chain illustrating delivery or ordering cycle, the minimum amount of order, mater data inspection, and logistics prerequisite for product consolidation. The agreement should explain product return policy, level of logistics, commercial terms, and circumstances that may result in a change of the agreement.
The implementation of a centralized distribution strategy would increase logistic expenses for retailers when reducing the number of loads for transportation to various stores or storage and the entire stock level in a central warehouse and stores. Accordingly, the strategy would promote efficient stock monitoring for the Wonderful Widget Company. Transportation of a large number of products induces transport cost reduction for logistic corporations. Cumulative picking demands for products would reduce labor costs for the Wonderful Widget Company because they would eliminate quantity control, quality regulation, product loading, and consolidation expenses. Implementation of a centralized distribution strategy would minimize administrative costs associated with product order processing. Additionally, the Wonderful Widget Company would simplify reverse logistics by collecting returns or profit from the central warehouse of retailers in the country.
The Challenge in Completing the Scenario
The scenario of Wonderful Widget Company has inconsistent and inadequate information concerning the firm’s operations. The firm’s scenario lacks a comprehensive explanation of the product distributed to customers domestically and internationally. The scenario excludes the response of Mr. Smith concerning the organizational challenges. Furthermore, the scenario does not provide the reasons why Wonderful Widget Company incurs additional costs, customer dissatisfaction, and increased variability in the last twelve months.
Significance of the Additional Information in Effective Product Distribution
As the new warehouse manager for the Wonderful Widget Company, I would use the additional information to integrate vital network aspects between the entire organizational facilities to promote effective decision-making through the utilization of alliances and partnerships with distributors and retailers in the supply chain. Moreover, the additional information would allow the Wonderful Widget Company to coordinate various company operations that promote the satisfaction of their clients, reduction of operational costs, and minimization of the variability; subsequently, promoting effective product distribution domestically and internationally.
References
Campos, J. K. (2015). Integrated Framework For Managing Sustainable Supply Chain Practices . Universitätsverlag der TU Berlin.
