Westminster Company Case Study

Case study 3: Westminster Company

Westminster Company is one of the largest manufacturers of consumer health products, they are recognised locally and around the world for their services. With the expansion of the markets and globalisation the company now faces new challenges, in order to satisfy their customers they realised a study to determine the market trends and their position. As a result three possible alternatives emerge to be applied (POS driven information system, order cycle time reduction, and specific customer requirements), this leads to the following question: What impact would the three new alternatives have on transfer and customer freight cost? Why?

1. POS driven information system

This system will based on the transfer of daily or biweekly data of sales by the consumers, production schedule response based on sales information, and on-site work teams to manage ordering and distribution. The advantages and disadvantages of this system are as follows:

1.1. Advantages

* Production of gods according to customers’ requirements.

* Monitoring of SKUs sold and accurate inventory replenishment, avoiding over or under stocking caused by inaccurate forecasting, minimizing the bullwhip effect.

* Frequent orders of the same products by a customer.

* Helps to prevent excessive or unnecessary operations, reduction similar inventory, and reduces the holding cost of inventory.

1.2. Disadvantages

* Investment on the technology needed to apply this system may be too big in comparison to the return it would provide.

* It would be necessary to buy tracking software for the operations, such as ERP.

* Handling more orders frequently can increase the amount of personnel needed on the warehouse.

* Smaller quantities would create a greater challenge to achieve economy of scale.

Based on the advantages and disadvantages exposed above for this alternative it can be seen that: transfer freight cost would remain the same, because...