The Bis Corporation

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Logistics Network Configuration Designing & Managing the Supply Chain Chapter 2 Byung-Hyun Ha bhha@pusan.ac.krOutline  Case: Bis Corporation  What is logistics network configuration?  Methodology  Modeling  Data Aggregation  Validation  Solution TechniquesCase: the Bis Corporation  Background  Produce & distribute soft drinks  2 manufacturing plant  120,000 account (retailers and stores), all over the US  3 existing warehouse (Chicago, Dallas, Sacramento)  20% gross margin  $1,000 for each SKU (stock-keeping unit) for all products  Current distribution strategy (designed 15 years ago)  Produce and store at the manufacturing plant  Pick, load, and ship to a warehouse/distribution center  Unload and store at the warehouse  Pick, load, and deliver to storeCase: the Bis Corporation  You, consulting company  Proposal as reengineering the sales and distribution functions  First phase, identifying 10,000 direct delivery account, based on • Dock receiving capabilities • Storage capability • Receiving methodologies • Merchandising requirements • Order-generation capabilities • Delivery time window constraints • Current pricing • Promotional activity patternsCase: the Bis Corporation  Redesign distribution network  Grouped accounts into 250 zones, products into 5 families  Data collected • Demand in 1997 by SKU per product family for each zone • Annual production capacity at each manufacturing plant • Maximum capacity for each warehouse, new and existing • Transportation costs per product family per mile for distributing • Setup cost for establishing a warehouse  Customer service level requirement  No more than 48 hours

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