4. Background
One of the world’s largest car manufacturing companies
Nine brands sold and distributed in 153 countries
A new record is set
Deliveries increased in Canada
Aggressive five year growth plan
10% year over year growth in annual sales volume
Resource: Bortolussi, A. 2012
5.
6. Challenges
An aggressive growth plan
Where to store the additional inventory to support the
growth
24 hour service level agreement
95% internal service level requirement
8. Advantages/Disadvantages
Advantages Disavantages
Expand
Exis0ng
Warehouse
Cost
less
Time
to
implement
is
dependent
High
management
control
May
affect
warehouse
performance
New
Warehouse
May
improve
customer
service
Cost
more
than
op0on
1
Time
to
implement
is
long
High
management
control
Terms
of
lease
is
long
Leads
to
higher
levels
of
inventory
Outsource Implementa0on
is
fast
Cost
more
10-‐year
contract
9. Time and Cost of Options
Expand Existing
Warehouse
Lease a New
Warehouse
Outsource
Cost $80 per Sq. Ft. $120 per Sq. Ft. $120 per Sq. Ft.
Time 6-8 months 2 years Immediately
Terms 10-years 20-years 10-year Conteact
Management
Control
High High Low
Resource: Bortolussi, A. 2012
10. Factor-Rating Method
Scores
(out
of
10) Weighted
Scores
Key
Success
Factors
Weight
Expand
Exis/ng
Warehouse
New
Warehouse
Outsource
Exis/ng
Warehouse
New
Warehouse
Outsource
Can
Reduce/
Maintain
Opera0ng
Costs
0.2 5 2 8 1 0.4 1.6
Can
Successfully
Support
Growth
Plan
0.3 7 8 7 2.1 2.4 2.1
Streamlines
Process
0.1 8 7 5 0.8 0.7 0.5
Improves
Customer
Service
Levels
0.3 5 7 7 1.5 2.1 2.1
Can
Gain
Access
to
Technology
Not
in
Company
0.1 5 5 8 0.5 0.5 0.8
TOTAL 1 30 27 36 5.9 6.1 7.1
11. Conclusion
Advantages and disadvantages indicate moving the
location of the facility to a new area and larger
warehouse
Factor-Rating indicates that outsourcing would be the
most viable option for this rapid growth plan
Inconclusive results indicate that Executives would
need to provide their input in order to make the best
decision
At this time, we recommend additional feedback from
key individuals
