CASE STUDY SUPPLY CHAIN MANAGEMENT AND LOGISTICS OPERATIONS WESTMINSTER CO.

Steve GreeneSupply Chain Management, Log 215 -700 Ms. Angela Adams-Bauer, InstructorGreenville Technical CollegeOctober 9, 2016

PRESENTATION OUTLINE Westminster Business Overview

Current Westminster Supply Chain

Recent Research Findings

Three Logistics Initiatives To Be Implemented.

Improved Inventory Control, Warehousing, Distribution, and Transportation.

Corporate Suggestions

Conclusion

WESTMINSTER BUSINESS OVERVIEW

Established in 1923.

Long been one world’s largest manufacturer of health care consumer products.

Company expansion by aggressive product development.

International offices and three U.S. subsidiaries.

By corporate design, the three U.S. subsidiaries operate independently from each other and have their own product line.

CURRENT SUPPLY CHAIN STRUCTUREDecentralized.

Based on separate operations of its three autonomous subsidiaries.

Each company has its own web of manufacturing plants and distribution centers (DCs). The three manufacturing plants route products through its own DCs before a final delivery to retailer or wholesale customer. There are no direct shipments.

The DCs, eight in total, may ship product to any region in the country. DCs allow for transfer shipments to ensure product assortment.

Motors carriers are used for shipments. Plant to DC shipments are all full truck load. Shipments both between DC to DC and DC to customer are mostly less-than-truck load.

RECENT RESEARCH FINDINGS

Overall percentage of its domestic sales has increased significantly from the largest

customers. 70% of domestic sales from all three of its companies comes from 10% of their

customers.

Logistics requirements are becoming customer specific. Core customers require better

demand planning, supply chain collaboration, order fulfillment, and IT systems.

Westminster’s competition has grown mostly from private-label companies that have very

cost-efficient and integrated logistics.

Advanced integration gives Westminster competitors an advantage as the core customers

have higher profit margins from them.

THREE INITIATIVES TO BE IMPLEMENTED.

1) Production will be based much less on anticipatory, internal forecasts. Production will be based by POS driven data from its largest customers for timely product inventory replenishment.  2) Reduce order cycle: A) Deliveries to larger customers will increase to three times per week. B) Shipments from all three of its companies should be better integrated. C) More direct store deliveries. 3) Increase its use of logistics technologies. Will enable an integrated set of value added services that both control costs and meet customer specific requirements.

IMPROVED INVENTORY CONTROL, WAREHOUSING, DISTRIBUTION, AND TRANSPORTATION.

As production is based on actual retail sales, overall inventory levels and

inventory carrying cost will decrease as less product should be warehoused.

There are excessive amounts of both back-orders and small shipments using

both private parcel and less-than-truck load basis which can be decreased

using more logistics technologies and “response-based” logistics.

Use these logistics technologies so core customers receive replenishment

shipments three times per week with more direct store deliveries.

These supportive technologies will provide an integrated set of value added

services to meet customer specific requirements.

SUGGESTIONS FROM THIS CASE STUDY REVIEW1) Westminster Task-Forces APS Review. Considers production location and timing to select the lowest combined cost of supply chain operations while meeting customer requirements. Consider moving locations to have plants closer to their DCs (eg. Subsidiary A).

2) Consolidation of the DCs - Outsourcing. Both consolidation of the DCs and logistics outsourcing may free-up long-term funding to increase fill rates, reduce back-orders, and increase supply chain performance.  

3) On-site Work-teams and S&OP. Work more with its larger customer leaders to integrate and improve sales and operations planning (S&OP).  4) On-site Work-teams and CPFR. Work with larger customers to complete CPFR processes for enhanced demand creation and demand fulfillment.  5) Product Reduction. Review product sales data to significantly reduce the number of SKUs to lower asset commitment and increase turn velocity.  6) ABC Classification of both Company Products and Customer Profitability. Classify customers using the ABC method based on profitability. Also determine the profitability of each of their products per a specific customer.  7) Transform the Legacy Echelon Structure. Pick its best-selling products for either a direct distribution structure or a combined distribution structure.  8) Self-imposed Supplier Scorecard. Complete internal reviews to estimate how the core retailers and wholesalers would view their logistics performance.

Presentation Sources:

Supply Chain Logistics ManagementFourth Edition, 2013Donald J. Bowersox, David J. Closs, M. Bixby Cooper, and John C. Bowersox.McGraw-Hill Irwin

Rosalyn WilsonConference presentation “22nd Annual “State of Logistics Report”Council of Supply Chain Management ProfessionalsOak Brook, ILJune 2011 Customer Service Level.”

Mariah M Jeffrey, Renee J. Butler, and Linda C. Malone“Determining a Cost-Effective Customer Service Level.”Supply Chain ManagementMarch 2008, p. 225

David L. Anderson, Frank F. Britt, and Donovan J. Farve“The Best of Supply Chain Management Review: the Seven Principles of Supply Chain Success.”Supply Chain Management ReviewApril 2007, p. 57