PRESENTATION ON NETWORK PLANNING FOR BIS CORPORATION

Phungkha Bargayary Aditya Pratap Singh Brijesh Kumar Priya Ranjan Patra Ujjwal Kumar Mandal

Presented By:

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CONTENTS

• About the Bis Corporation

• Case Background

• The Problems

• Solution Alternatives

• Conclusion

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About the Bis Corporation

• Established in 1964 as a family venture manufacturing paints.

• Based in Atlanta and Denver, it serves about 2000 retail stores such as Wal-Mart, Home Depot including it’s own stores.

• Produces and sells about 4000 different SKUs of paints.

• Is now owned by 12 shareholders and run by a newly appointed CEO.

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THE CASE BACKGROUND

• Bis Corporation enjoys high profit as the gross margin in the paint industry is about 20%.

• But the new CEO feels that the efficiency in inbound truck utilization, inventory turns and service levels are low.

• The Bis Corporation needs to improve the effectiveness of it’s logistics network and supply chain strategy to improve profit.

• The newly appointed CEO feels that it can be accomplished by reengineering the entire production, inventory, and logistics functions.,

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THE PROBLEM

• The current production and distribution system used by Bis Corporation was designed about 20 years ago and was never modified.

• It is a single tier network where all products are shipped from 8 plants to 17 warehouses, located all over the (United States, and from there to retail outlets.

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BIS CORPORATION’S SINGLE-TIER NETWORK

17 Warehouses

Retail Outlets

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BIS CORPORATION’S SINGLE-TIER NETWORK INVOLVED FOUR FOLLOWING STEPS:

• Produce and store at the manufacturing plants.

• Pick, load, and ship to a warehouse center.

• Unload and store at the warehouse.

• Pick, load, and deliver to stores.

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ALTERNATIVES

Three important issues that needs to be addressed:

• What is the best network configuration that the Bis Corporation should use ?

• Given the network configuration, where should the company position inventory ? How much ?

• Which plant should produce which product ?

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ISSUES

The Bis Corporation would like to address the following issues:

• Should Bis Corporation switch from the current distribution network to a two-tier logistic network? How many primary and secondary distribution centers should be established and where should they be located?

• Does the model used in this process truly represent Bis’s network? How can the Bis corporation validate the model? What is the impact of aggregating customers and products on the model accuracy?

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ISSUES

• What is the optimal inventory positioning strategy within the network? Should each facility keep stock of all SKUs?

• Should Bis manufacturing strategy change to one in which each facility specializes in a few products? What is the impact of transportation cost on the manufacturing strategy?

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Thank You