Alko Case Study Essay

4559 Words 19 Pages
TABLE OF CONTENTS

EXECUTIVE SUMMARY 1 INTRODUCTION 1 BUSINESS SITUATION 1 External Environment 2 Internal Environment 2 SUPPLY CHAIN DESIGN 4 Supply Chain Drivers 4 Assumptions, Factors and Uncertainties 6 SUPPLY CHAIN ASSESSMENT / ANALYSIS 6 Figure 6: Costs Savings from centralization 9 SUPPLY CHAIN STRATEGY 10 CONTINGENCIES 10 KEY PERFORMANCE INDICATORS 10 CONCLUSION 11 WORKS CITED 12

EXECUTIVE SUMMARY

Our objective is to analyze the distribution network in order to minimize annual system wide costs that subject to a 95% customer service level for ALKO. Integrated Minds considered a scenario approach and looked at net present values to factor inventory costs and quality over the planning horizon.
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It is also known that historically Alko has ignored its distribution system. They currently use a 3PL but it is uncertain if Alko redesigns their network whether they will be able to function efficiently or not. Alko does have an opportunity to reduce their transportation costs and increase their efficiency by redesigning their network and working towards are more centralized distribution system.

Alko can use a redesign of their distribution strategy in order to function more efficiently and cut unnecessary costs (SCM 345). If they are able to identify problems with suppliers, new suppliers with higher quality products could be used which would allow for fewer defects, reducing costs that are currently being used for additional safety stock which has brought additional holding costs of $.15 per unit per day (Chopra, 323, SCM 355, SCM 432, SCM 440).

Internal Environment

One of the biggest weaknesses that Alko is facing is having ignored their Distribution network. An initial look at their Regional design shows inefficiency in having developed too many Distribution centers. It is key to optimize their operating performance in order to increase efficiency (Chopra, 322). They will have to consider either combining some of their Distribution centers or consider creating a completely centralized system in order to reduce transportation costs and increase efficiency (SCM 345). It is important to increase their efficiency and cut costs

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