Case Study 3: Westminster Company

Bobby Norton
Saint Leo University MGT-309
Professor Pattie Williams
08 NOV 15
 BACKGROUND

Westminster Company finds itself face to face with change as

the market in its industry forces them to reevaluate their

traditional methods of business operations. The company owns

three smaller business that services the same customer base.

Currently, the companies operates as separate entities. However,

in todays business world of collaborations, co-ops, and

globalization, Westminster must find new ways to lower overhead

cost and streamline its logistics systems as a whole. CEO Wilson

McGee has proposed significant avenues of consolidation that will

allow Westminster to operate more efficiently while gaining a

competitive edge in its industry.

 ISSUES ADDRESSED

The three alternatives suggested by CEO Wilson McKee will

have significant impacts on transfer and customer freight cost.

Specifically, the reduction of direct, indirect, and fixed costs.

Lean production emphasizes reduction of waste, continuous

improvement, and the synchronization of material flows from

within the organization and eventually including the

organizations first-tier suppliers and customers. (Leong, 2012)

Operating three separate warehouses erodes profits and demands

higher fixed operating cost excessive. The creation and

implementation a new Point of Sales (POS) information system will

modernized Westminster Companys manufacture process by

manufacturing quantities of goods based on replenishment demands

and not forecasted sales; which can be erroneous and costly.

Studying the past in order to make a future projection is

suitable only to a limited extent. (Walters, 2010) The

implementation of the point of sale system will reduce excess

waste, inventory redundancy, and reduced cost of storage.

Customer fright cost will see improvements as deliveries

rotations will be improved by more frequent deliveries with

consolidated truck loads. The consolidation of delivery truck

loads will prove economical since one delivery truck can

accomplish the delivery requirement of three trucks. Another

benefit of consolidated deliveries is less wear and tear on

delivery assets such as forklifts, trucks, and garage doors.

Warehouse consolidation will reduce inventory carrying cost,

improve customer service levels, and increase order fill rates

however, at the heart of these improvements would be

technological improvements implemented by the inventory

information systems. Leading organizations have long recognized

that the key to success in supply chain management is the

information system. (Christopher, 2011) Westminsters decision

to improve its information technology systems will provide the

company with numerous tools to make it more competitive, not only

with local competition, but also within national and

international markets as well. The incorporation of a modernized

inventory management system will streamlines Westminsters

operations while capitalizing on the strengths of combined assets

and resources.

The impacts that warehouse consolidation would have on

inventory would be immediate and cost effective. For example,

manufacturing numbers will be derived primarily from

replenishment requirements based on sales data with less emphasis

on forecasted sales. This is significant because it will enable

manufactured goods to move in a synchronized manner reducing

overstocked warehouses, equipment bottlenecks, and inefficiencies

created by overestimated manufacturing data. Additionally,

warehouse consolidation allows the company to optimize all

logistic assets of the entire company, allowing the company

greater flexibility and responsiveness to customer demands thus

increasing the order fill rate. The consolidation also increases

Westminsters ability to respond to changes in the market which

enhances the companys ability to meet and exceed customer

satisfaction and improve its agility.

Westminsters warehousing cost may rise slightly as the

company assumes greater financial liability to procure services

of another company for warehousing requirements. Noticeable

effects of this decision would include an increase in production

and distribution management. Distribution management involves

the management of packaging, storing, and handling of materials

at receiving docks, warehouses, and retail outlets.

(Christopher, 2011) Westminster would need leaders at all levels

of responsibility to actively engage in monitoring manufacturing

requirements to ensure the plant operates at maximum efficiency.

Meanwhile, fixed facilities cost will vary based on warehouse

operating hours. I believe that fixed cost would rise if

operation hours expanded to 24 hours per day. The consolidation

creates opportunities to save money and resources however, it

creates bottlenecks and delayed deliveries if not managed

correctly. With three trucks in operation at once, three

customers are accustomed to receiving their orders around the

same time of day.

Mixed shipments delivered and received from consolidated

distribution centers will positively impact companys cost and

performance if supervised and managed correctly. Satisfying

customers needs with one delivery truck per day versus three

trucks per day will reduce drivers labor cost and normal wear

and tear on delivery assets. When it comes to performance, smart

planning of delivery routes will be essential to customer

satisfaction and optimized cost reductions. Therefore, much care

must go into the packing of delivery trucks as well as ensuring

precise delivery loads. Another performance consideration is

keeping the additional drivers gainfully employed while they are

not out making deliveries. At first glance, it seems it would be

wise to let them load their own trucks for the next days

deliveries which will increase accountability and ownership of

each delivery driver.

 The eight supply chain processes are design to develop and

sustain superior business relationships. Ultimately, the

processes seeks to capture communication and collaboration

efforts between all members of the supply network with an

emphasis on providing customers with the best possible experience

in shopping options. The eight principles also embraces socially

responsibility as consideration is given to the return and

disposition of inventories. When it comes to the centralization

and decentralization of required functionality it would be in

each operations best interest to pursue the route that provides

the biggest return on investment.

In briefly describing the logistical system design that I

would recommend for Westminsters, my approach would be alone the

lines of CEO Wilson McKee. I would also consolidate and

optimized all of the companys resources. I would invest heavily

in information technologies that will enable the company to make

smart decisions about manufacturing limits both high and low. I

would gather middle managers and reemphasize the importance of

controlling what they own i.e. engaging deeply into their areas

of responsibilities to ensure there are no disconnects or

oversights that will be counterproductive to streamlined

operations. We would need 100 percent buy-in from top to bottom

in order for the consolidation to work at its very best. I would

walk around and talk with all employees to ensure them that no

one is going to lose their job if this consolidation works as

designed. This engagement with personnel would be an attempt to

eliminate internal sabotage from workers who may feel they are

one step away from being fired due to downsizing.

Conclusion
 Westminster Company has an opportunity to become a major

contender in its industry by consolidating all of its assets and

providing an agile and nimble supply system. The vision of Chief

Executive Officer Wilson McGee is futuristic and attainable. The

consolidation of asset is a major improvement for Westminster if

is lead properly. People are the greatest asset a company can

have and if people feel threatened by change they may oppose it.

In closing, Westminster is on its way to becoming a profitable

company with a promising future through the use of technology,

management, and leadership.

References
 Christopher, M. (2011). Logistics and Supply Management

Fourth Edition. Great Britain: Prentice Hall.

Leong, W. T. (2012). Principles of Supply Chain Management.

Mason,OH: South-Western.

Walters, D. (2010). Global Logistics - New Direction in

Supply Chain Management. Philadelphia: Kogan Page Limited.