Inventory and Growth Plan
Decision Sheet I
Case: Warehousing Strategy at Volkswagen Group Canada
Warehousing helps to regulate and control demand fluctuation. It stores goods when the production is more than demand and release the goods when demand exceeds the production capacity.
There are different options for making a warehouse namely
1. Self Owned
2. Lease/Rental
3. Outsource
Automobile Industry player has to focus on distribution network of the following products.
1. Automobiles
2. Spares and Service
There are different distribution network for these different categories.
Automobile’s demand is more predictive and it can be forecasted in a rational way. Hence warehousing can be done in a near factory location and lot delivery can be done directly to distributors and dealers as per the projected demand. It may follow time based reorder point. The SKUs are very limited. (Automobile Models)
The spares and services demand is largely dynamic and un-predictive. The service business is driven by the response time and delivery speed. Customers are very critical about these attributes. Therefore the Warehousing for spares would be ideally in a near market location to facilitate faster delivery. Furthermore it may be noted that there are two types of spares.
1. General/Fast Moving
2. Rare/Slow Moving
The warehousing can be designed in a Hub and Spoke model where the Hub would be a master warehouse containing 100% inventory and the spoke end would keep a optimum level of fast moving/general inventory based on the past trends and Pareto chart. This will ensure high degree of customer satisfaction. The Spares would contain a high level of SKUs. This presents the challenge of organizing the warehouse that would ensure that minimum time is spent for locating and mobilizing the spare. The size of each SKU is very varied. The reorder point is based on critical stock amount (Number based).
Decision:
There are many parameters or factors affecting a business decision. To accommodate
Case: Warehousing Strategy at Volkswagen Group Canada
Warehousing helps to regulate and control demand fluctuation. It stores goods when the production is more than demand and release the goods when demand exceeds the production capacity.
There are different options for making a warehouse namely
1. Self Owned
2. Lease/Rental
3. Outsource
Automobile Industry player has to focus on distribution network of the following products.
1. Automobiles
2. Spares and Service
There are different distribution network for these different categories.
Automobile’s demand is more predictive and it can be forecasted in a rational way. Hence warehousing can be done in a near factory location and lot delivery can be done directly to distributors and dealers as per the projected demand. It may follow time based reorder point. The SKUs are very limited. (Automobile Models)
The spares and services demand is largely dynamic and un-predictive. The service business is driven by the response time and delivery speed. Customers are very critical about these attributes. Therefore the Warehousing for spares would be ideally in a near market location to facilitate faster delivery. Furthermore it may be noted that there are two types of spares.
1. General/Fast Moving
2. Rare/Slow Moving
The warehousing can be designed in a Hub and Spoke model where the Hub would be a master warehouse containing 100% inventory and the spoke end would keep a optimum level of fast moving/general inventory based on the past trends and Pareto chart. This will ensure high degree of customer satisfaction. The Spares would contain a high level of SKUs. This presents the challenge of organizing the warehouse that would ensure that minimum time is spent for locating and mobilizing the spare. The size of each SKU is very varied. The reorder point is based on critical stock amount (Number based).
Decision:
There are many parameters or factors affecting a business decision. To accommodate