Dollar Tree Case

Dollar Tree Case Study

Executive Summary

Dollar Tree has built its success by turning over merchandise as quickly as possible at the lowest viable unit cost. In order to do this, they have relied on a logistics system that encompasses the perfect balance between maximizing company growth to avoid a bottleneck, while still ensuring that they are not over capitalizing on the logistics network. Dollar Tree is now at a point where they need to evaluate their business to ensure that they are maintaining this balance that, until now, has led to their success. This past year Dollar Tree has opened two new distribution sites, but still has one facility in Briar Creek operating at an average 92% utilization and 124% during peak seasons. This results in the expensive rental of offsite storage. The company has identified two main options to address this issue, either expand the current facility, or, build an entirely new facility within the same territory. After analysing the costs, risks, and benefits of each potential solution; it is clear that Dollar Tree should expand their current facility.

Contents

Executive Summary 1

Issue 4

Environmental and Root Case Analysis 4

Strength (Internal) 4

Weakness (Internal) 5

Opportunity (External) 5

Threats (External) 5

Root Causes 5

Relative Importance of the Issues 6

Relative Urgency of the Issues 6

Importance of Logistics 7

Alternatives and Options 7

Recommendation 9

Implementation 10

What 10

Who 11

When 11

Monitor and Control 11

Feedback and Management 11

Performance Metrics 12

Appendices 14

Issue

As a general guideline, Dollar Tree has been re-evaluating their distribution system and implementing plans for capacity expansion when a distribution center approaches a capacity of 75%. After building two new DCs, with a combined 1.8 million square feet, the Briar Creek facility in Pennsylvania remains overwhelmed with an average utilization of 92%, and a peak utilization reaching a...