Logistics

Logistics

1. Modern Book Distribution, Inc. Case Study Evaluation (20 points). Richard Guy, CEO of Modern Book Distribution, Inc. (MBD) scanned the “Executive Summary” of the consulting report he had just received. Guy saw the report was filled with the latest buzzwords and hot concepts: Establish cross docking facilities for high-volume deliveries to large customers…centralize storage operations to decrease safety stock levels…leverage point-of-sale data to move toward a pull distribution strategy…Guy was familiar with all of these phases and concepts at a superficial level, of course – anybody who occasionally picked up The Wall Street Journal or Business Week would be. He was less sure, however, if the consultants were trying to dazzle him with fads or if the kind of radical operating changes that were being proposed in the report would help to position MBD for the future.

Founded 80 years ago, MBD had been for many years one of the largest book distributors in the country. From its seven regional warehouses, MBD services major bookstore chains and smaller independent booksellers throughout the country. The company had continuously strived to improve its service levels and operating efficiency, and it was considered the most efficient book distributor in the industry. Using advanced forecasting techniques to control inventory levels and technologically advanced warehouses to control operating expenses. MBD shipped virtually all of the orders it received within two days from its stock of nearly 500,000 books, the largest in the industry.

The bookselling industry, however, had been changing dramatically, and Guy realized that MBD would have to make changes to remain a book distribution powerhouse. In particular, two relatively new types of retailers were becoming more and more dominant in the industry: large superstores and online booksellers. Both of these categories of retailers presented new and unique challenges to their distributors.

In the...