WESTMINSTER COMPANY

Westminster Company

Case 4 - Westminster Company

Question 1

Traditional inventory replenishment procedures are replaced by POS driven information systems. This will assist Westminster Company in the production of goods according to the customer's requirement. Demand forecasting can be erroneous, and this system will reduce the need to forecast demand. This helps prevent wastage of excess, redundant inventory, and reduces the cost of storage. Westminster should ideally implement ERP software, which will enable its customers to give the position of their inventory, accurately and timely. The software will allow real-time inventory management of all its points of sales and its various plants and warehouses. The daily sales and inventory requirements of the customers can be assessed, and accordingly, shipments can be readied. This helps prevent wastage, which can become a major cost in the long run.

Three deliveries per week as opposed to the earlier one delivery will increase the transportation costs, but if these deliveries can be consolidated such that one trailer can provide deliveries for all the three companies at the same time, instead of all three companies sending their own trailers individually, this will balance the increase in cost caused by three deliveries per week. Due to only one trailer moving in a day, this will further decrease the cost as economies of scale are reached. Direct store deliveries (DSD) will give a competitive edge to the company and most of the key retailers would prefer to have that service. This would effectively reduce the customer's freight costs, without affecting the cost of transportation for Westminster much. The customers would not need to transfer the goods from their warehouses to the various stores. Westminster's trailer would normally need to travel a large distance to deliver the products to all its customers, so it wouldn't really be a costly matter if they are able to deliver directly to the stores for some of its key clients.

Large clients often need specific requirements in their product shipments. They generally have a large shipment, and to maintain that, they need certain implementations. Bar-coding the entire stick in accordance with the international standards is a must in today's world. With the company looking at warehouse consolidation, proper inventory management is a necessity to ensure efficient operations. Bar-coding allows easy stock-taking and SKU monitoring. RFID labels can be attached to big pallets for large clients. This allows for instant stock-taking, just by scanning the RFID label. The label has all the details about the stock within the pallet. Details include number of SKUs, number of total units, and details about the SKUs.

Question 2

Warehouse consolidation allows the company to have a single warehouse for all its plants, wherein the products will be categorically placed and maintained. Having a single warehouse storing the products, coupled with the strategy of inventory replenishment based on demand, leads to a significant reduction in the inventory costs of storage and handling. It reduces wastage due to expiring products, because there is never a highly excess level of inventory for ...