Klf Electroncis

KLF Electronics

Alternative Distribution Strategy

When designing a new logistics network consisting of only a single, central warehouse, we must consider the competition, product design, customer demand and cost. The size of the warehouse and the location will also affect how it is designed. An advantage of moving to a single, central warehouse will definitely increase the service level and cost will be reduced because inventory holding costs will be lowered. However, the disadvantage is that there will be an increase in outbound transportation cost to the retailers. Below is an outline of the analysis that will be used:

I. Objective

KFL Electronics’ objective for redesigning to a single, central warehouse is to improve the service level and reduce costs for the customers while taking the competition into consideration.

II. Strategy

An overview of the KFL operations should be analyzed to determine exactly what strategy will be needed to move forward. Benchmarking another company is also a good strategy to help in redesigning. The network will need to consist of the suppliers, customers and the center for distribution. Determining what level of inventory will be needed would also be good to do prior to selecting the size of the warehouse.

III. Inventory/Costs

Data will need to be collected for the logistics of the warehouse to determine the most appropriate location to serve the targeted market and the size. This step will also involve fixed costs in regards with the warehouse. The transportation, facility costs, staff costs and inventory costs can be calculated. This is the step that will also help in determining the best network design for the cost and value.

IV. Evaluation