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SUPPLY CHAIN MANAGEMENT

CASE STUDY

PREPARED BY: NGUYEN, THI HONG YEN (S1055449)

ERICKSON (S1055440)

COMPANY PROFILE
FOUNDED IN 1927
CHICAGO

IN 2015 TOTAL
REVENUE $10
BILION

B2B DISTRIBUTOR
OF MRO

HAS 9 DISTRIBUTION
CENTERS AND
HUNDREDS STORES
THROUGHT THE US

SUPPLY CHAIN SYSTEM

COMPANY PROFILE
FOUNDED IN 1901
US
DISTRIBUTOR OF
MRO PRODUCTS

Has 8 regional
distribution centers
where all orders are
fulfilled.

SUPPLY CHAIN SYSTEM

1. HOW MANY DCS SHOULD BE

BUILT AND WHERE SHOULD
THEY BE LOCATED?
COMPANY
STRATEGY

CUSTOMER REQUIEREMENT
AND COMPANY
COMMITMENT
The decision on
number of DCs
depends on:

LOGISTIC BUDGET

FINANCIAL ABILITY
TO SUPPORT
INVENTORY
CARRYING COST

1. HOW MANY DCS SHOULD BE

BUILT AND WHERE SHOULD
THEY BE LOCATED?
THE
PROXIMITY
TO CUSTOMERS
ABILITY TO CHOOSE
GOOD
TRANSPORTATION
PROVIDERS

THE QUALITY OF
TRANSPORTATION
INFRASTRUCTURE
SELECTING
LOCATION

THE
COST
REACHING
CUSTOMERS.

OF

THE
POTENTIAL
QUALITY OF
THE
WORKFORCE

2. HOW SHOULD PRODUCT

STOCKING BE MANAGED AT THE
DCS? SHOULD ALL DCS CARRY
ALL PRODUCTS?
HOW?

SHOUL
D?

THE
SALES
FORECASTS AND THE
ACTUAL SALES.
DCS
SHOULD
HAVE
ALL
PRODUCTS,
BUT
LARGE
QUANTITY OF FAST MOVING
PRODUCTS WITH REGARD TO
STORAGE TIME.

3. WHAT PRODUCTS SHOULD BE CARRIED IN

INVENTORY AND WHAT PRODUCTS SHOULD BE
LEFT WITH THE SUPPLIER TO BE SHIPPED DIRECTLY
IN RESPONSE TO A CUSTOMER ORDER?
MORE FOR
FAST
MOVING

LESS FOR
MODERATE
MOVING

MUCH LESS
FOR SLOW
MOVING

SLOW MOVING PRODUCTS CAN BE LEFT WITH RELIABLE SUPPLIERS.

4. WHAT PRODUCTS SHOULD

W.W. GRAINGER CARRY AT A
STORE?
AT GRAINGERS STORES, THEY SHOULD CARRY:
FAST
PRODUCTS

MOVING

PRODUCTS THAT ARE USUALLY

PICKED UP BY CUSTOMERS

PRODUCTS THAT ARE USUALLY

REQUIRED URGENT DELIVERY BY
CUSTOMERS.

5. HOW SHOULD MARKETS BE ALLOCATED TO DCS

IN TERMS OF ORDER FULFILLMENT? WHAT SHOULD
BE DONE IF AN ORDER CANNOT BE COMPLETELY
FILLED FROM A DC? SHOULD THERE BE SPECIFIED
BACKUP LOCATIONS? HOW SHOULD THEY BE
SELECTED?
FOLLOWING MATTERS SHOULD BE CONSIDERED IN
ALLOCATING MARKETS TO DCS:
THE
MARKETS
CHARACTERISTICS

DC CAPACITY TO FULFILL MARKETS

DEMANDS.

TRANSPORTATION
COSTS.

IF AN ORDER CANNOT BE COMPLETELY FILLED

FROM A DC, DCS IN NEARBY REGION CAN ACT AS A
BACKUP.

5. HOW SHOULD MARKETS BE ALLOCATED

TO DCS IN TERMS OF ORDER
FULFILLMENT? WHAT SHOULD BE DONE IF
AN ORDER CANNOT BE COMPLETELY
FILLED FROM A DC? SHOULD THERE BE
SPECIFIED BACKUP LOCATIONS? HOW
SHOULD THEY BE SELECTED?
THERE SHOULD BE SPECIFIED BACKUP LOCATIONS.
CURRENT DCS WHICH ARE IN PROXIMITY, CAN ACT AS A
BACKUP FOR THE OTHERS.
THE ORDER FOR BACKUP SHOULD BE ARRANGED FROM
BIGGER DCS TO SMALLER ONES.

6. HOW SHOULD
REPLENISHMENT OF INVENTORY
BE MANAGED AT THE VARIOUS
STOCKING LOCATIONS?
THE COMPANY SHOULD REPLENISH THEIR INVENTORY
USING CONTINUOUS REVIEW OR PERIODIC REVIEW.

7. HOW SHOULD WEB ORDERS BE HANDLED

RELATIVE TO THE EXISTING BUSINESS? IS IT
BETTER TO INTEGRATE THE WEB BUSINESS
WITH THE EXISTING BUSINESS OR TO SET UP
SEPARATE DISTRIBUTION?

APPLY AN ELECTRONIC DATA INTERCHANGE (EDI)

CONSOLIDATE WEB ORDERS WITH NORMAL ORDERS.

TO

INTEGRATING THE WEB BUSINESS WITH THE EXISTING

BUSINESS HELPS COMPANIES TO SAVE TIME AND COSTS IN
MANAGEMENT.

8. WHAT TRANSPORTATION MODES SHOULD

BE USED FOR ORDER FULFILLMENT AND
STOCK REPLENISHMENT?
TRANSPORTATION MODES SHOULD BE COMBINED AMONG
AIR/OCEAN/COURIER DEPENDING ON:
THE
DESTINATION
WEIGHT
AND/OR
VOLUME
SHIPMENTS

OF

CUSTOMERS REQUIREMENTS IN CASE OF ORDER

FULFILLMENT.